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DeTaxUS Newsletter CONTENTS:
INTRODUCTION Our Mission is to Abolish the Federal Income Tax
Quote: "...it does not require a majority to prevail, but rather an irate,
tireless minority keen to set brush fires in people's minds…." Happy Holidays to all! May 2003 be your best year ever! To our members who joined during our first two months (Nov & Dec 2001), your membership was automatically extended a month or two. You will start receiving renewal notices in January. We're looking at different membership options for 2003. We'll probably do a free newsletter and open more of the website to nonmembers, but offer various levels of membership, including membership cards or certificates, incentives like DeTaxUS mugs, caps, T-shirts, frameable copies of the Declaration of Independence and Constitution and other stuff dealing with Liberty and Tax Freedom. If you have any ideas along this line - what would appeal to you? - please let me know at: Ideas This issue is on year-end tax tips and thoughts on attacking those New Year's Resolutions we all make and then have trouble following through on. Warmest regards, Cory Layne Quote: "What you can do, or dream you can do, begin it; boldness has genius, power and magic in it." "Take the first step in faith. You don't have to see the whole staircase, just take the first step." 1. TAX NEWS States are Still After Internet Sales Tax Tax officials and legislators from 31 states and the District of Columbia met in Chicago in November and voted unanimously to proceed with a plan to simplify their respective tax laws in order to position themselves to collect sales tax on Internet sales. ============== Deemed IRA Beginning January 1, 2003, employees will have a new saving option for retirement. [Editor: Hopefully the new IRS publications will be available by year end which will include the new higher limits on multiple retirement accounts. There is still a lot of confusion on that issue as was pointed out in our November newsletter supplement. We'll give you the details as soon as we figure them out. ============== IRS has new talking tax form. The screen readers used by people with visual impairments can now read electronic versions of the 1040A and the 1040EZ forms. And by the end of the year, the IRS plans to rework 25 to 50 of the most frequently downloaded tax forms so that taxpayers who are blind or have other visual impairments can fill them out online. 2. JOKE OF THE MONTH Driving to work, a gentleman had to swerve to avoid a box that fell out of a truck in front of him. Seconds later, two policemen came by. While one pulled the gentleman over, the second stopped traffic and recovered the box so as to avoid any further mishaps. When they opened the box, they found it contained large upholstery tacks. "I'm sorry sir," the first trooper told the driver, "but I'm going to have to write you a ticket." Amazed, the driver asked, "For what?!" The trooper replied, "Tacks evasion." 3. END OF YEAR TAX TIPS Review your stock portfolio and consider using capital losses to offset capital gains. Keep in mind that a net capital loss of up to $3,000 can offset ordinary income and any excess can be carried forward to offset future gains. ============== If you have stocks that decreased in value this year and you already have exceeded the $3,000 loss deduction or have excess carryover from last year, consider donating the stock to charity rather than realizing the loss. You can claim a charitable deduction for your basis in the stock (your cost plus broker's fees). ============== Take maximum advantage of the 2002 contribution limits for both traditional and Roth IRAs. If you're 50 or older, you can use the "catch-up" provisions to sock away even more. ============== If you have self-employment income, start a Keogh or SEP plan by December 31, 2002. If you open one, you have until you file your return to fund it for 2002. ============== If you are enrolled in an employer-sponsored dependent care program and/or a medical expense reimbursement plan, make sure you use up any funds in your account by year-end. You can prepay your doctor, dentist, day-care provider or purchase new glasses or contacts. Unused funds are forfeited (returned to the employer). ============== Accelerate deductions into this year by prepaying some of next year's deductible expenses, and defer income, where possible, until next year when rates will be 0.5% lower. ============== Pay the final installment of state-estimated tax by December 31 to receive a deduction for 2002, rather than 2003, but be aware of possible AMT consequences. ============== If you are one of the many people who lost your job in 2002, tally up all job search expenses. You may be eligible for a deduction if your total miscellaneous expenses exceed 2 percent of your adjusted gross income. 4. PLANNING for 2003 The standard mileage rate for the use of a car for business purposes will be 36 cents a mile for all business miles driven in 2003, down from 36.5 cents a mile in 2002. ============== Question: Answer: Key Man (or Woman) insurance, on the other hand, if owned by a partnership, LLC, or corporation and paid to the business on the death of a key employee, partner, or officer of the corporation is deductible to the business. ============== Employers may provide their employees with up to $5,250 a year in tax-free educational benefits. This provision is now a permanent tax deduction for businesses. It also includes graduate studies, for courses beginning after 2001. Put your kids on the payroll. Let them earn wages (up to $4,700 tax free) during vacations and summer break and provide tuition reimbursement or outright grants. (Of course, if you have other employees, the same benefits must be available to all.) Note: I had a question from a grad student who started her degree program in Sep 2001. Though her employer can't take a deduction for the classes (courses) he paid for during her first semester unless he treats it as a taxable bonus, any courses she took from Jan 2002 on come under the new provisions. The money her employer paid directly to her as reimbursement for 2001 classes is taxable income in the form of a bonus if he includes it on her W-2 or is treated as a nondeductible gift. Had the employer paid the university on her behalf (as an unendowed scholarship for a specific recipient who is not a close relative), it would not be taxable to her and the employer might have qualified for a charitable donation. ============== Question: Answer: The partnership option would not be available since you are the only member and a partnership would require at least two members. If you choose to be taxed as a sole proprietorship (which is the only option that would provide "pass-through" taxation) you will file a Schedule C for the business. If you choose to be treated as a corporation you would file an 1120 as a "C" corporation which would not give you the pass-through advantage. Another option would be to form a one person corporation and elect "S" corp. status. NOTE: If your spouse or another family member is going to be helping you with the business, you can make that person a member of the LLC and file Form 1165 as a partnership. You don't have to be equal partners. You'd generate a K-1 for each member of the LLC showing his/her relative share of the LLC's income (loss). The primary tax benefit of an LLC is the ability to allocate losses to whichever member needs the tax loss. As long as it is agreed by the members in the membership agreement, losses do not have to be allocated based on percentage of ownership as they must in corporations and partnerships. Memberships in LLCs with significant losses have been sold to individuals with high taxable income just to take advantage of the tax loss. ============== Question: Answer: Nevada corporations can issue stock in exchange for personal property contributed to the business or "sweat equity" in lieu of wages in addition to capital contributions. In those cases the stock's basis is the value of the trade less any residual value of saleable personal property. 5. RESOURCES Have a problem paying for expensive drugs or have a parent with high prescription bills? This website lists the various drug companies which offer assistance programs for drugs they produce. Rx Assistance Programs 6. EDITORIALS and ARTICLES
Quote: "If we attend continually and promptly to the little that we can do, we shall long be surprised to find out how little remains that we cannot do." "No man made a greater mistake than he who did nothing because he could only do a little."
THE DAFFODIL PRINCIPLE Several times my daughter had telephoned to say, "Mother, you must come see the daffodils before they are over." I wanted to go, but it was a two-hour drive from Laguna to Lake Arrowhead. "I will come next Tuesday, " I promised, a little reluctantly, on her third call. Next Tuesday dawned cold and rainy. Still, I had promised, and so I drove there. When I finally walked into Carolyn's house and hugged and greeted my grandchildren, I said, "Forget the daffodils, Carolyn! The road is invisible in the clouds and fog, and there is nothing in the world except you and these children that I want to see bad enough to drive another inch!" My daughter smiled calmly and said, "We drive in this all the time, Mother." "Well, you won't get me back on the road until it clears, and then I'm heading for home!" I assured her. "I was hoping you'd take me over to the garage to pick up my car." "How far will we have to drive?" "Just a few blocks," Carolyn said. "I'll drive. I'm used to this." After several minutes, I had to ask, "Where are we going? This isn't the way to the garage!" "We're going to my garage the long way," Carolyn smiled, "By way of the daffodils." "Carolyn," I said sternly, "please turn around." "It's all right, Mother, I promise. You will never forgive yourself if you miss this experience." After about twenty minutes, we turned onto a small gravel road and I saw a small church. On the far side of the church, I saw a hand- lettered sign that read, "Daffodil Garden." We got out of the car and each took a child's hand, and I followed Carolyn down the path. Then, we turned a corner, and I looked up and gasped. Before me lay the most glorious sight. It looked as though someone had taken a great vat of gold and poured it down over the mountain peak and slopes. The flowers were planted in majestic, swirling patterns -- great ribbons and swaths of deep orange, white, lemon yellow, salmon pink, saffron, and butter yellow. Each different-colored variety was planted as a group so that it swirled and flowed like its own river with its own unique hue. There were five acres of flowers. "But who has done this?" I asked Carolyn. "It's just one woman," Carolyn answered. "She lives on the property. That's her home." Carolyn pointed to a well-kept A-frame house that looked small and modest in the midst of all that glory. We walked up to the house. On the patio, we saw a poster. "Answers to the Questions I know you are asking" was the headline. The first answer was a simple one."50,000 bulbs," it read. The second answer was "One at a time, by one-woman. Two hands, two feet, and very little brain." The third answer was, "Began in 1958." There it was. The Daffodil Principle. For me, that moment was a life-changing experience. I thought of this woman whom I had never met, who, more than forty years before, had begun -- one bulb at a time -- to bring her vision of beauty and joy to an obscure mountaintop. Still, just planting one bulb at a time, year after year, had changed the world. This unknown woman had forever changed the world in which she lived. She had created something of ineffable beauty, magnificence, and inspiration. The principle her daffodil garden taught is one of the greatest principles of celebration. That is, learning to move toward our goals and desires one step at a time -- often just one baby-step at a time -- and learning to love the doing, learning to use the accumulation of time. When we multiply tiny pieces of time with small increments of daily effort, we too will find we can accomplish magnificent things. We can change the world. "It makes me sad in a way," I admitted to Carolyn. "What might I have accomplished if I had thought of a wonderful goal forty years ago and had worked away at it 'one bulb at a time' through all those years. Just think what I might have been able to achieve!" My daughter summed up the message of the day in her usual direct way. "Start today," she said. It's so pointless to think of the lost hours of yesterdays. The way to make learning a lesson of celebration instead of a cause for regret is to only ask, "How can I put this to use today?" ...Author Unknown We convince ourselves that life will be better after we get married, have a baby, then another. Then we are frustrated that the kids aren't old enough and we'll be more content when they are. After that, we're frustrated that we have teenagers to deal with. We will certainly be happy when they are out of that stage. We tell ourselves that our life will be complete when our spouse gets his or her act together, when we get a nicer car, when we are able to go on a nice vacation, or when we retire. The truth is there's no better time to be happy than right now. If not now, when? Your life will always be filled with challenges. It's best to admit this to yourself and decide to be happy anyway. Happiness is the way. So, treasure every moment that you have and treasure it more because you shared it with someone special, special enough to spend your time with ... and remember that time waits for no one. So, stop waiting... Until your car or home is paid off...Until you get a new car or home... Until your kids leave the house... Until you go back to school... Until you finish school... Until you lose 10 lb... Until you gain 10 lbs... Until you get married... Until you get a divorce... Until you have kids... Until you retire... Until summer... Until spring... Until winter... Until fall... Until you die. There is no better time than right now to be happy. Happiness is a journey, not a destination. -- Author of commentary also Unknown Quote: When it comes to getting rid of the income tax, which may seem like an overwhelming task, the steps are easy. Just jot down a note to your representative and two senators telling them how costly, intrusive, and time-consuming the income tax is for you, and ask them to support repeal of the 16th Amendment and reductions in the size and power of the federal government. Do this at least once a month and ask your friends to do the same. When enough of us are inundating Congress with such letters, and voting for those who promise to support repeal, Congress will have no choice but comply with our demands. It may take a few years, but it'll never happen unless We the People take those first steps toward our goal. Have a safe and happy holiday season. Cory Layne P.S. Call, write or email your congressman and senators today. You can look up contact information for your Congressman and Senators at: P.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.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: DeTaxUS Forum P.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. Portions of this newsletter may have been extracted from articles received for republication. Credit is given where the author is known. Unsigned articles and information gathered from government publications and websites are accepted as public domain. Copyright© 2002 by DeTaxUS, Inc. Copyright
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