Tax Attic

Useful tax tips and information from Jerry Coon of Action Tax Service.

The Tax Attic with Jerry Coon

April 15, 2010 // 0 Comments

Last minute advice for filing The end of this tax season occurs on Thursday, April 15 for the approximately 80% of all taxpayers who file their tax returns on or before April 15. That still leaves, however, almost 20% who aren’t going to make the filing deadline. What are the consequences of not filing a return? The answer depends upon whether or not an extension is filed. The federal rules for extensions are slightly different than the Michigan rules so let me go over the Michigan rules first. Michigan only recognizes an extension as valid if the taxpayer pays any tax that may be due when the actual return is eventually filed. If there is a balance due when the return is filed, even if an extension was timely filed, Michigan will ignore the extension and access penalties from April 15 onward. Those penalties are 5% per month along with about 9% annual interest tacked on top. It’s very expensive to owe Michigan some money. We do everything possible to make sure taxpayers do not owe Michigan a cent after April 15. We recommend that they pay Michigan a safe amount of money when they file that extension. The federal rules are slightly more taxpayer friendly. If you file a valid extension, you will avoid a 4 1/2% per month penalty that would apply to the first five months a return is filed late. For those of us fuzzy on math, the total for a failure to file that extension amounts to 22.5% after five months. The federal government doesn’t like taxpayers to owe money when the return is finally submitted but they do seem to recognize that taxpayers don’t necessarily want to owe either. There are so many variables in some returns today, that a balance due happens sometimes. In the tax business, I call it having a lot of “moving parts”. The more moving parts, the more difficult it becomes to calculate a true bottom line. The Internal Revenue Service will not be happy there is a balance due. However, unlike Michigan, they will not ignore the extension. They will still assess a ½% per month cumulative failure to pay penalty along with about 5% annual interest, but this is a long way from […]

The Tax Attic with Jerry Coon

April 8, 2010 // 0 Comments

April 15 around the corner It’s Master’s week. For a large number of golfers, this tournament, the first major of the year, gets the ball rolling for golf. Everything is perfect at the Masters. Augusta National Golf Club is among the most beautiful golf courses on this Earth. The flowers are perfect; there are always birds singing in the background. Only the best golfers in the world are invited to play in the most prestigious tournament in the world. Win the Masters one time, like Zach Johnson, and your reputation is made. Only a handful of players have won it more than once. The Masters was first held in 1934. The First Annual Invitation Tournament as it was called back then was not won by the world’s best golfer, Bobby Jones. A very good player by the name of Horton Smith beat Craig Wood by sinking a 20-foot birdie putt on the 17th hole. Bobby Jones and Alister MacKenzie did design the course, but Bobby had retired from competitive golf in 1930. We don’t seem to have heroes like Bobby Jones anymore. Like all of us, he had issues. By all accounts, he had a terrible temper. In 1921, in the third round of the British Open, he stormed off the course, thereby disqualifying himself, because he was playing badly. If I stormed off the course every time I was playing badly, I would never get in a full round of golf. However, from that point on, Bobby Jones began to control his temper and began to win tournament after tournament. The culmination of his winning came in 1930 when he won the Grand Slam of Golf. At the time, the Grand Slam was made up of the British Amateur, the U.S. Open, the British Open, and the U.S. Amateur. Now the Grand Slam is made up of the Masters, U.S. Open, British Open, and the PGA Championship. Maybe it’s tougher now, and with all due respect to Tiger Woods, Bobby Jones was still the best golfer ever. Even though it’s near the end of the tax season, I think I can find a few minutes here and there to catch some golf this weekend. As it is nearing the end of the tax season, let’s […]

The Tax Attic with Jerry Coon — April 1, 2010

April 1, 2010 // 0 Comments

Big government is expensive Let’s talk about tax rates this week. According to the Tax Foundation, a nonprofit organization that studies such things as tax rates, taking into account all of our phase-outs, deductions and credits, the highest tax rate any United States individual could pay today would be 39.76%. That puts us at number 21 on the worldwide tax rate list and places us below the average worldwide highest rate of 42.95%. Currently, there are eight countries with a highest tax rate at or above 50%. This dubious list is led by Denmark at 59.74%, followed by Sweden at 56.60%, France at 55.85%, Belgium at 53.50%, the Netherlands at 52.00%, Finland at 50.90%, Austria at 50% and Japan at 50%. What most of these countries have in common is that, for the most part, they practice what is called a European brand of socialism. They have socialized medicine from the cradle to the grave. Their business environment is highly regulated by the government, making it more difficult to start a business. The government has entitlement programs in place to help citizens in need. These are all good things. The government is charged with taking care of the populace and it takes its role seriously. To argue against having medical coverage in place that will take care of a person from the cradle to the grave makes the arguer sound like a lunatic. The government has regulations in place to make sure people starting a business have the best chance for success while simultaneously protecting those people already in business. Who can think that is a bad thing? When people get beat up by the economy like we are getting beat up in Michigan today, why shouldn’t the government have safety net programs in place to protect people? Today, that sounds pretty good to most of us. And therein is the problem. The government doing more for us sounds pretty darned good to most of us. It is very enticing. The government will do more for us and it will take its role seriously. However, it comes at a cost and that cost is called higher tax rates. I’m not prepared to argue that one of those costs could also be a loss of some […]

The Tax Attic with Jerry Coon — March 25, 2010

March 25, 2010 // 0 Comments

New bill creates more complex tax system I did something on Sunday evening that I have not done previously. I watched C-Span for a solid three hours. I don’t think I have watched C-Span for three total hours in my entire life before Sunday. I would rather do just about anything than watch C-Span. However, on Sunday, a train wreck was occurring in Washington that I just couldn’t keep myself from watching. The House of Representatives was debating and voting on health care reform. The majority of Americans want health care reform. They want insurance companies to be reined in. It should be illegal to throw people off the rolls because they get sick. People with pre-existing conditions should be able to get insurance. Insurance companies should not be able to raise rates like Anthem Insurance did last month by 36%. We should be able to buy health insurance anywhere we want, if we want to buy health insurance, and insurance companies should be able to conduct business in any state they want. A child should be able to stay on his/her parent’s insurance plan until age 26. There are plenty of reasons to reform the health care system. I happen to be one of those people, however, who thinks the federal government, with the sheer magnitude of these bills, is overstepping its bounds this time. In the few hundred pages that I scanned, I did find the one five-line paragraph that prohibits insurance companies from dropping people because of a health issue. I’m sure that somewhere else within those several hundred pages was another paragraph that keeps insurance companies from unilaterally raising rates by 36% at a time or, even though I couldn’t find it, I would hope that it does. I am concerned about the potential mandated funding of abortions, but that is found in the bill. From a professional point of view, I am in the business of preparing tax returns, and this bill will be good for the tax preparation business. The bill creates new excise taxes and credits and penalties on taxpayers and businesses that will tend to make our tax system more complex. Changes, credits and new taxes tend to be good for my type of business. The bill […]

The Tax Attic with Jerry Coon — March 18, 2010

March 18, 2010 // 0 Comments

Prayer never hurts, on the course or in the office   I attend church services at Rockford Reformed Church. My minister is Reverend Richard (Rick) Tigchon. I like Rick. His sermons are Bible-based, understandable, and very down to earth. He also likes fishing, which just happens to be one of the sports that I enjoy. In fact, I would say that Rick is passionate about fishing. I, on the other hand, do like to fish but I think there are also a few other sports that are worth pursuing such as bowling, golfing, playing softball, and hunting. Even though I’m a decent bowler, I have never bowled a 300 game. I’m a better golfer than Charles Barkley, but I have yet to get a hole-in-one. I have played softball and baseball most of my life, but I have never hit a grand slam home run. Finally, I have plenty of deer horns in a box in my garage but none of them are bigger than 8 points, so no Boone and Crockett size bucks have wandered in front of me and my trusty rifle. Last Sunday, Rick’s sermon was on prayer. Prayer is a conversation with God, our Heavenly Father, and Rick said we should ask God for anything. Now, I don’t know about you, but I have never asked God to let me bowl a 300 game before. I have been close and I still didn’t think to ask God for those last few strikes. I feel it might be a bit presumptuous of me to ask for such a thing. Now, Rick has thrown another consideration into the mix when he says we should ask for anything. Where do I start praying for those strikes? Do I have to start out a game with two or three strikes or five strikes before I start praying? I think I have seen a guy or two I’m bowling against bowing their head while I’m going up to bowl, but I never considered they were praying that I would throw a bad ball. Now I’m not so sure. This summer, every time I get up to a par 3, should I pray for that hole-in-one? I still think it’s a little presumptuous, but if I’m having […]

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