Ensure end-of-year deductions will be allowable As we approach the end of this year, December 31 is the magic date. In order to include most items on this year’s tax return, payment must occur on or before December 31. The definition of “payment,” however, takes on a special meaning on December 31. The general definition today is that when a check is written, the item is paid. If I write a check on December 31, 2010, and can prove that I mailed it on December 31, 2010, in most instances—but not always—that item is going to be counted as being paid in 2010. We can look to April 15 for some guidance in this matter. If taxpayers have a balance due on their tax return, that amount is due and payable no later than April 15. The taxpayers can write a check on April 15, mail it on April 15, and it will be considered as paid on April 15 even though the check doesn’t arrive at the Internal Revenue Service until a few days later. However, the burden of proving the check was in the mail on April 15 lies squarely on the backs of the taxpayers. Since the check won’t arrive at the IRS until sometime after April 15, the IRS might question if it indeed was mailed on April 15. Anything short of certified mail with proof of mailing and proof of delivery could be questioned. Private carriers such as UPS and FedEx also provide proof of mailing and proof of delivery. A copy of an envelope with a stamp or even a meter showing April 15 can still be questioned because the stamp or meter normally doesn’t have a post office cancellation showing the envelope was mailed on April 15. Taking these same rules back to December 31 tells us that we must be able to prove the check was written and mailed on December 31 and not in January. Anything short of this proof could put the deduction in danger. In other words, if a check is written on December 31, 2010, but not mailed until January 2011, that deduction is questionable. To be safe, just write the check before December 31 so it gets to its destination before […]
Useful tax tips and information from Jerry Coon of Action Tax Service.
Out with old, in with new GM The deer season got monumentally better for me on Saturday, Nov. 20. I was able to forget all about my escapades of the opening two days. My split lip is mostly healed up and my flat tire was an easy, albeit $125, fix. I could afford to move those bad memories to the back of my mind because at about 10:30 a.m. I found myself in a position to shoot a spike horn buck. Where I am hunting, you don’t get much time to dawdle. It’s not like those television shows where the shooter has an eternity to line up the deer and seems to take forever to shoot. Through experience, we have concluded we get about five seconds from the time you hear or see a deer coming to the time it’s gone. The first three seconds you determine if it’s a buck or a doe, calculate how big you think it is, and determine if you are going to shoot at it. Then you have two seconds to make the shot. That’s not much time. It all happens so fast that there is really not even enough time to catch a case of buck fever. Fortunately, I was able to put the five seconds to good use this time and made a good shot. Other times, I have not been so fortunate. I either missed the shot or didn’t even get a shot off. Of course, those memories go to the same place as the above-mentioned opening two days memories—into the far recesses of my mind. Happy thoughts are always better. Last week was Thanksgiving. We celebrated and gave thanks to God for all that we have. There is a group of people, however, who may have found their thankfulness tempered by a dose of reality. They are the common share stockholders of the “old” General Motors Corporation. When our federal government agreed to inject approximately 50 billion dollars into General Motors (GM) in exchange for an equity position in the “new” GM, every person who owned shares in the old GM saw the value of their shares go to zero. They are allowed a tax write-off for the cost of the shares, but a tax […]
Be thankful This has not been the greatest of deer seasons. One good thing is that I get to spend some time with two of my Central Michigan University (CMU) roommates, Gary McCrimmon and his brother Grant, along with Gary’s son Jason, Grant’s son Scott, and another long-time friend, Jim Melvin. As far back as the 1970s, Gary, Grant and I have gone fishing and hunting together. Fishing usually occurs up in Canada. Hunting usually happens up near Marion, between Cadillac and Clare. We seem to always get deer, some with horns and some without, but some years it takes longer than others to bring home the venison. Since I have only seen two deer in two full days of hunting so far, this year is shaping up to be one of the “longer than others” years. Regardless of seeing or not seeing deer, in other ways it has been an interesting deer season. On the second day of deer camp, Tuesday morning, one of the guys noticed that my truck had a flat tire. I must have hit a branch or something that punctured my right rear tire Monday night while driving back to camp. When we took the tire off, it was slightly more than a puncture—about a four-inch gash in the inside sidewall. From the size of the gash, I was fortunate to make it back to camp before the tire went flat. My spare was good, but it’s still a $125 tire that wasn’t so good. The second piece of bad luck involves my face meeting up with my scope. We hunt in woods surrounding a cedar swamp. When things are really slow, someone volunteers to walk through the swamp, hoping to stir up some lazy deer. We call it “making our own luck.” It was my turn to volunteer. A few years ago, a high wind storm went through the area and blew down many of the cedars in this swamp. They are twisted every which way, making it very difficult to get through. That’s why the deer are in there hiding. It’s quite an effort, but we are often successful at getting the deer moving. As I was picking my way through, I came to a spot where I […]
Interesting time for taxes Now that we know the make-up of the House and Senate in Washington, we can make some educated guesses as to what is going to happen to our tax system in 2011. We will find out if the politicians really do listen to the voters. Based on their hearing capacity, the conclusions reached by each person may be drastically different. Health Care Reform is an excellent example. Most people were in agreement that the system was broken and that it needed fixing. Congress and the President heard this and agreed. The point at which people disagreed is this: Was a total revamping necessary or could the system have been selectively fixed? Insurance companies should not have been able to deny insurance coverage because of pre-existing conditions. Could that have been fixed in one or two pages of legislation as opposed to 2,700 pages? Perhaps. Non-dependent children living at home should be able to buy insurance as part of their parent’s plan. I bet some smart technical writer in Washington could have written that up in a page or two. Ditto for insurance companies canceling a taxpayer’s policy because the insurance company was spending too much money on that person. Of course, the biggest controversy of all seems to be: Does the federal government have the right to force taxpayers to buy insurance? Congress will now be trying to answer this question: Did the American public vote to have Health Care Reform repealed or do they want it further reformed to keep the good things and repeal the other 2,690 pages? I guess we will see what they heard in a very short time. It appears that Congress and the President did hear that the public would very much like to see the Bush Tax Cuts extended. There is some negotiating going on, but it appears that the majority of the cuts will be extended at least through 2011. I know it is hard to figure out where a politician is coming from, but if a Democrat-controlled Congress is going to extend the tax cuts for a year after the election, why would they not have extended them before the election? By acting before the election, it might have saved them a […]
What is Michigan’s future tax situation? The ringing of the telephone interrupted my concentration Tuesday night. I was listening to the national election news and also reading a book. Nowadays, that’s spreading my thought processes about as thin as I can get away with. The caller was Rockford City Manager Michael Young. Was it going to be good news or bad news? Was I successful in my run for the City Council? Since it was well after 8 p.m., I knew the votes were all tabulated. The vote count was finalized and we all know there would be no hanging chads in Rockford. I was hoping for good news and it was. Michael congratulated me on being the newest Councilman and for being the top vote-getter by one vote over Steve Jazwiec. What a relief. I can tell you that it puts a little different slant on Election Day when your name is on the ballot. I want to say “thank you” to each of the people who voted for me, “thank you” to each of the people who supported me but couldn’t vote because they didn’t live in the city, and “thank you” to all of those who encouraged me along the way. It is very gratifying and humbling to receive people’s good wishes, and I truly appreciate it. A special “thank you” goes to my wife Deb and son-in-law Devon, who, along with me, worked many hours and walked all of the four square miles of Rockford passing out information and talking to residents. The three of us now know that about 95% of all driveways in Rockford run uphill, some substantially uphill, with the remaining 5% being somewhat level. There might actually be one or two that go downhill, but those could really have been optical illusions and we just wanted to believe they were slanted downhill. I will do my best for my term to help Michael and the rest of the City Council meet the challenges and opportunities facing Rockford in the next few years. It’s going to be fun and hard work at the same time. I can do fun and I am good at working hard, so I’m confident that while I’m on the Council, we will keep […]