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DeTaxUS When men are pure, laws are useless; when men are corrupt, laws are broken.
CONTENTS:
INTRODUCTION Our Mission is to Abolish the Federal Income Tax
Things were a little slow in February. We had planned to double our January membership signups during February, but we missed the mark. We decided our message was a little too strong for the people we were trying to reach - the politically homeless taxpayers who aren't already committed to other causes. So, we've toned down our message to be a little less negative (anti-tax) and a little more "what's in it for me" - how will MY life be better without the income tax. If you haven't checked out the website lately, take a look and see if you approve of the changes. After all DeTaxUS is your organization, and we want to reflect the views of our members, not just our own.
Warmest regards, Cory Layne & Royal Fletcher "I am aware that many object to the severity of my language; but is there not cause for severity? I will be as harsh as Truth, and as uncompromising as Justice. On this subject I do not wish to think, or speak, or write, with moderation. No! No! Tell a man whose house is on
fire to give a moderate alarm; tell him to moderately rescue his wife from the hands of the ravisher; tell the mother to gradually extricate her babe from the fire into which it has fallen -- but urge me not to use moderation in a cause like the present. I am in earnest -- I will not equivocate -- I will not excuse - I will not retreat a single inch -- and I will be heard."
1. TAX NEWS No More Argentinas with Taxpayer Funds!
February 28, 2002 Washington, DC: On the eve of congressional hearings focusing on reform of the troubled International Monetary Fund (IMF), Congressman Ron Paul introduced legislation yesterday that will end US membership in the IMF. Paul's bill comes as Treasury Secretary Paul O'Neill prepares to testify before the House Financial Services committee on prospects for successful "reform" of the IMF, a task Paul finds specious. Paul's bill would require the Treasury Secretary to withdraw the US from the IMF within three years. "The IMF should be abolished, not reformed," Paul stated. "Congress cannot hope to reform an organization that violates basic constitutional, moral, and economic principles by sending taxpayer funds overseas to subsidize multinational corporations and questionable governments. Congress should follow the constitution and stop making bad loans to unqualified borrowers with American tax dollars." Congressman Jim Saxton, chairman of the Joint Economic committee, recently described how IMF lending worsened the Argentine financial crisis and precipitated that nation's monetary collapse. Even as Argentina's fiscal position deteriorated throughout 2001, the IMF continued to pump more than $8 billion in extremely low-interest loans into the troubled country. As Chairman Saxton stated, "The IMF's generous subsidized bailouts lead to moral hazard problems, and enable shaky governments to pressure the IMF for even more funding or risk disaster." The Argentine crisis is just the latest example of the folly of IMF policies. The IMF regularly puts taxpayers on the hook for bad loans, as evidenced by the IMF-created Asian financial crisis three years ago. While the IMF claims it seeks to alleviate poverty in Third World nations, its loans are far more likely to end up in the hands of corrupt dictators -- who use our taxpayer-provided largesse to prop up their regimes by rewarding their supporters and denying their opponents access to capital. Furthermore, multinational corporations are often the targeted recipients of IMF funds, as loans are made knowing that certain firms will be awarded contracts. "The IMF is based on a flawed philosophy that government-to-government transfers create economic prosperity," Paul concluded. "Real prosperity can be achieved only by respecting the rule of law, enforcing property rights, and keeping capital in the dynamic private market. The IMF violates all of these principles overseas, and Congress violates them here at home when it illegally funds the IMF." ============== FREQUENT FLYER MILES NOT TAXABLE INCOME By Curt Anderson "WASHINGTON -- Business travelers who use their frequent flier miles for personal trips won't get grounded by the IRS. "Seeking to clear up confusion, the Internal Revenue Service announced Wednesday it will "not assert" that frequent flier miles accrued on business or official travel should be counted as taxable income when they are converted to personal use. …. "Not all travel-related benefits are covered by the announcement. Those that are converted to cash, compensation that is paid in the form of travel or other benefits and "circumstances where these benefits are used for tax avoidance purposes" will be subject to tax, the IRS said."
============== UNCLAIMED REFUNDS totaling more than $2.3 billion are awaiting about 1.7 million people who failed to file a 1998 income tax return, according to the IRS. In order to collect the refund, a return must be filed no later than April 15, 2002. ============== Indoors or out, no one relaxes 2. JOKE OF THE MONTH The local bar was so sure that its bartender was the strongest man around that they offered a standing $1000 bet. The bartender would squeeze a lemon until all the juice ran into a glass, and hand the lemon to a patron. Anyone who could squeeze one more drop of juice out would win the money. Many people had tried over time, but nobody could do it. One day this scrawny little man came into the bar, wearing thick glasses and a polyester suit, and said in a tiny squeaky voice: "I'd like to try the bet." After the laughter had died down, the bartender said OK, grabbed a lemon, and squeezed away. Then he handed the wrinkled remains of the rind to the little man. But the crowd's laughter turned to total silence as the man clenched his fist around the lemon and six drops fell into the glass. As the crowd cheered, the bartender paid the $1,000, and asked the little man: "What do you do for a living? Are you a lumberjack, a weight-lifter, or what?" The man replied: "I work for the IRS!" 3. TAX TIPS TAX Deductions for the Home-Based Sole Proprietor or Partnership. [The deductions also apply to LLC's and corporations but use different forms of course.] You may be thinking, "I'll hire an accountant or buy one of those business tax software programs." Whichever you choose, the IRS holds you responsible for your deductions, not the tax preparer. Besides a little knowledge will benefit you. You'll not only be able to take advantage of as many deductions as possible, but you will know what you need in the way of records to back up your deductions. You are subject to Self-Employment Tax only on the net income on your Schedule C's. If you receive 1099 income as independent contractor for someone else's business, you are Self-Employed. Enter the 1099 income as revenue on a Schedule C and take as many deductions as possible against your business income. In previous newsletters we discussed hiring your spouse and children to spread the business income to low or no tax family members and providing 100% deductible medical insurance and medical reimbursement to these employees, as well as education and retirement benefits. For previous issues go to: ============== A new business can be expected to run at a loss for a few years and Schedule C losses can be used to offset other earned income. Excess losses can be carried forward. The obvious deductions based on Schedule C of Form 1040: If something is not listed as a category on Schedule C, you list it separately under "Other Expenses" and include a worksheet breaking out each category. These are often overlooked deductions: = Business Equipment = You are allowed up to $24,000 deduction for "listed" property for 2001 and 2002? It is called Section 179 property. You may deduct the cost of business equipment the year you put it into service. If you have personal property that can be used by the business, you can transfer it to the business as capital invested in the business, or you can sell it to business by writing up a Bill of Sale for the lower of cost or fair market value of the property and have the business pay you for it. It's deductible to the business and nontaxable to you. [If the business has not generated enough income to pay you for the equipment, create a promissory note from the business payable to you over time.] Fewer questions are raised if your business is an LLC or corporation since you are technically selling your own property to yourself, but with proper paperwork, this strategy also works for sole proprietorships and partnerships as well. Listed property includes equipment used for business, such as computers, cell phones, video cameras, trucks over 6,000 pounds, tools, machinery, and any other equipment that is used in the business. If it is used for business less than 100% of the time, then you may deduct a prorated portion of the cost. If family members use your computer, you will need to keep a log of its usage. Place a note pad and pen next to the computer and ask all who use it to write down the time when they start/stop using the computer. You can then segregate personal from business time to prove that the computer was used at least 50% for business. The same applies to other listed property with mixed use. Keep a log showing both business and non-business use. = Company phone = = Mileage = You should be able to deduct most of the miles you drive if you have a home-based business. Plan your local errands to include business mileage, e.g., do your grocery shopping on your way back from a delivery or pick up the kids when you make your bank deposit or office supply run. Don't overlook the value of this deduction. Every tank of gas can be worth about $100 in tax deductions. You can legally convert "commuting" miles into deductible business miles by using the "Two Business Locations" rule. If you perform some work in your home office each morning (check your email for orders) before you leave for your other job or business and again when you return home, the distance between is not commuting. Your commute is the distance from your bedroom to your home office. Everything else is business mileage. Keep good records, a notebook in your car with date, start mileage, end mileage, and purpose of trip is all you need. Make it a habit to jot down the data every time you get behind the wheel. = Health Insurance = = Tax Preparation = = Home Office deductions = You can deduct a percentage of the total cost for rent, utilities, insurance, repairs and trash collection. If you own your home you can claim a percentage of mortgage interest, property taxes, maintenance, and depreciation against the basis value (generally cost) of the home. If you claim interest and property tax here, you need to reduce the amount you claim on Schedule A. You can still take the entire standard deduction if you don't itemize. In calculating the percentage of your home office to the total size of your home/apartment, you can be exact by measuring square feet or you can count rooms. Then multiply the expenses by this percentage to get your total deduction. If you sell your home, depreciation allowed or "allowable" must be recaptured unless you convert the space back to personal use for at least two years prior to the sale. For more information or details relating to filing taxes as a sole proprietor, the following web sites will help: You can download IRS publication 334, Business Expenses for the Sole Proprietor at the IRS web site. ============== Social Security recipients under age 65 who continue to work can earn $11,280 in 2002 without losing benefits (up from $10,680 in 2001). Benefits for those age 65 and older are not reduced, regardless of earnings. ============== Quotes that are as applicable today as they were way back then:
"If Congress can determine what constitutes the general welfare and can appropriate money for its advancement, where is the limitation to carrying into execution whatever can be effected by money?" "When men get in the habit of helping themselves to the property of others, they cannot easily be cured of it." 4. PLANNING for 2002 To keep the newsletter a reasonable length, we'll hold off on tax planning until after the 2001 tax season is out of the way. 5. RESOURCES
Check out these Quicken.com URLs for a year-by-year analysis and more information about the new tax law: If you want to read the entire 345-page tax law: 6. EDITORIAL I read an interesting commentary in the Daily Herald newspaper in Provo, UT, recently. Apparently a local Hispanic tutoring service was criticized for wasting tax money. The response was astonishing. "None of the money used for this program came from your pocket or tax dollars. If anything they came from my pocket (which I will never consider a waste). This program was funded through a grant from Utah state to train paraeducators and other grants I applied for. We don't need your tax money or your sympathy…." Now just where did Mr. Enriquez think that "grant from Utah state" came from if not from "tax dollars?" Why is it people who would never think of asking their next-door neighbor for a voluntary "grant" in the form of a donation, would think it perfectly okay to ask the government for a "grant" of money involuntarily confiscated from their neighbors? Or perhaps he'd asked his neighbors for help and they had refused. Or they'd donated what they felt was appropriate, and he didn't think it was enough. Or he was too lazy to contact enough neighbors to get the funds he needed to operate this worthwhile charity. Turning to government to solve every social need (or perceived need) is far too common these days. If you have a cause you want to support, whether it is saving an endangered species or providing a home for unwed mothers or building a playground for children, the first response seems to be: let government allocate the money for it. Americans are a generous people, and many of these projects can be funded by voluntary contributions rather than money taken from people by force. Private charity is preferable for many reasons:
When we realize that the government produces nothing, that it's only resource is our neighbor's wallet and our own, perhaps we will be more concerned about the force exerted by government to confiscate our property for the benefit of other people's causes. Had Mr. Enriquez asked me for a donation, I would have given it gladly, because this is a program dear to my heart. I might even have volunteered some time as a tutor (I've taught ESL to Vietnamese, Cambodian, and Laotian refugees in the past), but I adamantly object to using tax money for this or any similar project. Cory Layne P.S. Your comments and suggestions are welcome. We will try to respond to all of them personally and will include a selection of them in future newsletters and on the DeTaxUS website. Send email to: Editor P.P.S. Let us know how you feel about the income tax. Your opinion is always welcome. You can join our online forum to discuss tax issues by going to: P.P.P.S. You can help by sharing our vision with other over-taxed Americans. DISCLAIMERS: The information contained herein is general in nature and is not intended as legal, accounting or tax advice by DeTaxUS, Inc. The reader should seek professional guidance prior to taking any action based upon this information. DeTaxUS, Inc. shall have no obligation to inform the reader of any changes in tax laws or other which may affect the information provided. Copyright© 2002 by DeTaxUS, Inc. Copyright
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