Action Tax Service

THE TAX ATTIC with Jerry Coon

January 19, 2012 // 0 Comments

Tax season is here, winter is not Winter had to get here sooner or later. Usually, we get some of it, snow at least, during the deer season, but it didn’t happen this year. For the gun hunters, that lack of snow helped to make it a bit of a rough season. I think the Michigan Department of Natural Resources will conclude that about 20% less deer were harvested this year as compared to last year. That’s a lot of car-deer accidents waiting to happen over the next year. The spring fishing might be real good this coming spring. Since there isn’t any ice so far, no fish are getting caught through the ice. If I remember right, the best ice fishing occurs during the first ice. There might not be any first ice this year, so that will leave lots of fish for us non-ice fishermen to catch later. For the downhill snow skiers, the tubers, and the cross-country skiers, it has also been a bit of a tough season. Tough is not exactly the word the owners of various ski lodges might use. It has been a brutal season for them, and some of them might not make it until next year. I think, weather-wise, we are becoming Indiana. I have family down there. They take great fun in rubbing in to me the fact that they can golf year around. Over the span of the winter, the golf courses down there close for a few days now and then due to snow and cold weather. Last week the Grand Rapids Press reported that Maple Hill Golf Course in Grandville has been open this winter except for a few days. I wouldn’t claim to expertly know if this is a part of a pattern of global weather change, but it definitely looks like to me our weather is becoming more Indiana-like. The weather guys argue about the data collected, if it is technically correct, and if the conclusions made are correct. I’m not that sophisticated. What I look at is the items I discussed earlier. There is less snow during the deer hunting season. The only ice I see is being made by my refrigerator. Outdoor enthusiasts have less snow, and there is less […]

THE TAX ATTIC with Jerry Coon

January 12, 2012 // 0 Comments

Review of tax changes It may seem like I am beating this topic to death, but since it is now 2012, I think it is important to review one more time all of the Michigan tax changes that took place on January 1, 2012. I have been preparing Michigan tax returns since 1978 and there may be more changes that took effect on January 1 than perhaps all of the previous 33 years combined. Not one tax form is untouched. Almost every calculation is affected. Multiple forms became obsolete. About the only item that will not change is the actual tax rate. It will remain at 4.35%. Of course, it was slated to be lowered to 4.25% so even that technically was changed. Many of those changes will result in either a tax increase or a refund decrease. Most businesses will see a tax decrease and many individuals will see a tax increase or a refund decrease. For purposes of this article, I am concerned with individuals who will see a tax increase or a refund decrease. I emphasize the “will” because these changes will affect a large percentage of the tax filing public. The most visible change that was made was to the taxability of pensions. Now, for most people, all pensions—whether the pension comes from the state government, from the federal government, from a private company, from an insurance company, or from an individual retirement account—are lumped into the same basket and called “pension income.” Previously, the taxability of the pension depended upon who paid the pension. Now, age of the recipient is extremely important. Except for seniors born before 1946, it makes no difference where the pension is coming from. For those taxpayers born before 1946, the 2011 rules will continue to apply. Only for taxpayers born before 1946, public pensions paid by a state government or the federal government are totally non-taxable. Only for taxpayers born before 1946, the first $45,842 for singles and $91,864 for joint filers of private pensions paid by a private company, from an insurance company, or from an individual retirement account is not subject to income tax. For taxpayers born between 1946 and 1952, all pensions are thrown into the same basket and the first $20,000 […]

THE TAX ATTIC with Jerry Coon

January 5, 2012 // 0 Comments

Refining old, proposing new Welcome to the 2012 tax season! For tax professionals, this is a day that was on the horizon as soon as the previous tax season ended on April 15, 2011. There weren’t a lot of changes that Congress made last year. Furthermore, this is an election year so there most likely won’t be many moves by Congress this year before the November election. The party to the left—affectionately called by its supporters, the Democrats—won’t let the party on the right—affectionately called by its supporters, the Republicans—pass any law that might be perceived as giving them an advantage with the voters. By the same token, the party on the right won’t let the party on the left pass any law that might be perceived as giving them an advantage with the voters. That means common sense is thrown out the window in favor of trying to get elected or, what seems to be important, trying to make sure the other party doesn’t get elected. Somehow, I think George Washington, John Adams, Thomas Jefferson, and the other founding fathers would not be amused. I can’t believe they would conclude that they fought and won a war of independence and then came together to agree on one of the greatest documents in the history of mankind, our Constitution, to see the debacle going on in Washington, D.C. today. In fact, I think they would be mortified. It’s not that Washington, Adams, Jefferson and the others weren’t passionate about our country and passionate in their beliefs about how the government should operate. They were strong personalities, so there were strong disagreements. They were, however, able to put the country first and work out their differences for the good of the country. Shame on you, Barack Obama, Joe Biden, Harry Reid, Nancy Pelosi, John Boehner, Mitch McConnell, and most of the remaining members of Congress, for not putting the country before the party. What may be even worse, shame on us for electing these people for term after term. For the most part, either the people in Washington need to change how they do business or we need to find some new people who will act as Americans and not as Democrats or Republicans. Well, I […]

THE TAX ATTIC with Jerry Coon

December 29, 2011 // 0 Comments

Changes that affect tax returns The passing of The Independent a few weeks ago prompted me to go back and review those initial articles I wrote for The Rockford Squire. It’s a little known trivia fact, but I wrote my first Tax Attic on October 3, 1996, replacing a business column written by Hal Babcock. Interestingly enough, The Independent also published its first edition the week of October 3, 1996. Roger Allen and I wrote columns for the Squire for virtually every week of the existence of The Independent, and we both are continuing to write columns today. I believe that’s called perseverance and longevity. This year, the Squire is celebrating its 140th year of publishing a weekly newspaper. I can’t vouch for exactly how many of those 140 years Roger has been penning his column, but I’m celebrating my 15th year of writing the Tax Attic. Congratulations to both of us and hopefully we can keep up the good work for many more years! I wanted to re-read a few of those 1996 articles to see what in the world of taxation I was writing about back then. My intent then, as it is now, was to write an article that would educate the public about taxes but also entertain those readers while reading an article about taxes. I have always felt it couldn’t hurt to mix in a little humor with a pretty dry subject. Have you ever heard the statement: “There’s nothing new under the sun”? It definitely applies to taxes. In those first few articles I wrote about the 1996 Tax Freedom Day and our federal tax burden. That’s still a pretty popular subject. If all of our pay went to taxes, on what day would we get to keep some of our own money? In 1996, Tax Freedom Day was May 7. In 2011, Tax Freedom Day was April 12. On the face of it, we gained quite a number of days. However, the Tax Foundation makes an important clarification when comparing 2011 and 1996. In 1996, there was a budget surplus, so when they declared May 7 as Tax Freedom Day, they meant May 7. In 2011, however, there is a budget deficit in the amount of a few trillion dollars. […]

THE TAX ATTIC with Jerry Coon

December 22, 2011 // 0 Comments

Top 10 Tax Planning Strategies It’s nearing December 31. For most tax-planning strategies, December 31 is a hard deadline. I’m going to borrow from David Letterman and give you my Top 10 Action Tax Service Tax Planning Strategies. Since Herman Cain dropped out of the presidential race, I think it’s a fair bet that our current tax system is going to stay in place for the foreseeable future. Since our country is drowning in debt, I also think it’s a fair bet that after the presidential election, there will be major tax changes within that system. I believe those changes will result in tax increases. Our federal government will come to the same conclusion that was reached in the State of Michigan. In Michigan, Governor Snyder determined that balancing the budget with smoke and mirrors wouldn’t work anymore. Changes were made. Some of them are painful. At the federal level, continuing to print money isn’t the answer. It won’t work anymore and changes have to be made. Some of them will be painful. In the meantime, there are items we might consider between now and December 31. Here are my Top 10 planning considerations. 1. Make contributions to your favorite charities. Write the check by December 31 or go online and use a credit card to make the contribution. In order to ensure you get the deduction, get a receipt. As I stated in last week’s article, the great credits available on the Michigan return for homeless shelters/food banks, public TV/radio, museums/libraries, and community foundations are all eliminated as of January 1, 2012. Make those contributions before the stroke of midnight on the 31st to get the credit on this year’s tax return. 2. Consider paying real estate property taxes in 2011. If you itemize, paying them in this year may prove beneficial. If you make the payment on December 27, 2011 and you file your return on February 27, 2012, you realize a tax benefit 60 days after spending the money. However, if you make the payment on February 12, 2012 and your 2012 tax return is not filed until February 27, 2013, you will wait for an entire year to pass before you receive a tax benefit. Of course, if you don’t itemize […]

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