The Tax Attic

The Tax Attic with Jerry Coon

October 29, 2009 // 0 Comments

Tax rebate for golf carts The amount of tax questions I receive on an ongoing basis is a sign of not only how complicated and convoluted our tax system has become, but also how often we think about our tax situations. The questions seem to have gotten a bit more complicated, too. Even though my bank of tax experiences grows year by year, the amount of questions that I have to get some help to answer also has grown. For example, I received a call from Dale Boersma this week. Dale and his wife, Jamie, moved to Iowa from Rockford several years ago. My wife, Deb, and I go to Iowa most summers to visit the Boersmas. Dale and I go to the Mecca of sprint car racing, also known as the Knoxville Raceway and soak up the Knoxville Nationals, while Jamie and Deb do the things they enjoy, like shopping. Dale also golfs and owns his own cart. This year he traded in his old one in favor of a new cart. The salesperson set Dale up with a nice new cart, but then added the fact that for $1,000 more, Dale could get a cart that would qualify for a tax credit of $4,000. Dale was a little skeptical of that statement and thought maybe that the salesman might be stretching the truth just a little in order to get a sale. After all, this is a golf cart we are talking about here and not a Toyota Prius. When Dale got home, he did two things. First, he Googled “Tax Rebate for Golf Carts” and, second, he called me to find out what I knew about golf carts qualifying for a $4,000 tax credit. As he explained the situation, I could see Dale was serious and wasn’t pulling my leg, so to speak. “Tax Rebate for Golf Carts” was not something I have ever Googled before our conversation, but I told Dale I would do some investigating. $4,000 is a lot of money and definitely worth looking into. The Internet took me to the Villages of Lady Lake Florida’s site, It was very informative. I also was directed to a Wall Street News article of October 17, 2009, titled “Cash for Clubbers.” […]

The Tax Attic – May 28, 2008

May 28, 2009 // 0 Comments

Making Work Pay tax credit problematic The provision of the American Recovery and Reinvestment Act of 2009 that is of most concern to tax professionals around the state of Michigan and the entire country seems to be the one titled the Making Work Pay tax credit. I have written about this credit previously, but feel that it is so problematic that I have to write one more article about it. The basic premise of this credit is that taxpayers will receive an additional $13 to $25 per week of take-home pay during the years of 2009 and 2010. For a single person, this should amount to about $400. For joint filers, this should amount to about $800. The credit is the smallest of 6.2% of earned income or $400 single/$800 joint. When the 2009 tax return is filed next year, a single working taxpayer will claim the Making Work Pay tax credit of $400 on the return and, since that person’s withholding should have decreased by about $400, all things being equal, the tax return shouldn’t look much different than this year’s return. Similarly, when the joint working couple file their return in 2009, their withholding should be about $800 less, but they will get the $800 Making Work Pay tax credit, and all should be okay. The taxpayers’ tax burden will have been reduced by $400 or $800 and everyone is happy. However, there are potential problems that will result in some taxpayers not ending up in that happy place. One of the key words in the entire provision is the second word of the provision:  Making WORK Pay tax credit. In other words, for taxpayers who do not work and do not have earned income, there is no Making Work Pay tax credit. That is where problem number one arises. When the Internal Revenue Service was instructed to implement this credit and adjust the withholding tables so that taxpayers would get the $13 to $25 additional take-home pay, there was a small communication error. They did not instruct all of those entities issuing pensions to ignore the new tables. The Making Work Pay tax credit does not apply to pension recipients. Pension income is not earned income and does not qualify as work […]

The Tax Attic — May 21, 2009

May 21, 2009 // 0 Comments

Two provisions of ARRA take immediate affec I attended a tax conference last Thursday and Friday in Grand Rapids. One of the instructors was Marilyn Meredith, an Enrolled Agent from Port Huron. I have known Marilyn since I started in the tax business 30 years ago. Marilyn is one of those rare really smart tax people who also have the ability to teach. I know many really smart tax people, but most of them don’t function well in front of crowds. Two-day tax conferences seem to be especially hard on the instructors for a couple of reasons. According to the National Association of Tax Professionals, the average age of all tax professionals in Michigan is 57 years of age. That means the average tax professional in Michigan is very experienced. It’s a veteran crowd that prepares lots of returns. They aren’t looking for an instructor to go over the basics of tax law. They want some meat on the bone, so to speak, and they tend to ask tough questions. Two days in the same place gives them a chance to come up with lots of tough questions. Rookie instructors tend to get flustered and over-whelmed. Instructors like Marilyn have well-written material, have the knowledge to back up the material, and tend to roll with the questions. If they don’t know the answer right off, they either get some help to research the question immediately or tell the person to talk to them later. It’s quite a highly prized skill. I think it’s kind of like being able to hit a curve ball. Either you can or you can’t and, even though practice might allow you to hit a poor or regular curve ball, no amount of practice will get you hitting a good curve ball. You just have to have the natural talent of hitting a curve ball. Marilyn is one of those natural curve-ball hitters, and the seminar attendees love and appreciate her work. One of the tough subjects she covered was evaluating how the American Recovery and Reinvestment Act of 2009 (ARRA) is going to affect many of our clients right now. She pointed out that two provisions in particular are going to be of immediate effect. First, a one-time $250 payment […]

The Tax Attic

April 15, 2009 // 0 Comments

When is Tax Freedom Day? What a difference a year makes. No, I’m not talking about April 15. That day comes hell or high water, or maybe hell AND high water is the more appropriate way of stating it. I’m talking baseball in general and Detroit Tigers baseball in particular. I’m one of those lifelong Detroit baseball fans who grew up listening to Ernie Harwell and Paul Carey on the radio and watching George Kell and Al Kaline on the television. As a youngster, what a treat it was to get to watch a Tiger game on one of those rare weekday nights when the game was on TV. Today, all of the games are on Fox Sports or ESPN, but back then usually only weekend games were shown on Channel 3. I guess bumping a regular night of programming off the air for a normal regular season baseball game wasn’t all that wise of a choice. Last year, at this time, the Tigers were zero for April. They lost their first seven games. Their bullpen gave away many of those games. I, personally, was stunned. They had more hitting firepower than any other team in baseball. Their starting pitchers were dependable pitchers. The bullpen was stocked with veteran relievers. Granted, they had a few deficiencies in the field. They were going to make some errors, but out-hitting and outscoring the opposition can make up for not catching every ball. Things unraveled quickly last year. Getting off to a 0-7 start has a way of doing that. The dependable starting pitchers either injured their arms or seemed to just forget how to pitch. The relievers couldn’t throw strikes or injured their arms, or didn’t throw strikes and injured their arms. What a disaster. However, it’s a new year, and these Tigers are off to a great start. The fielders actually do catch the ball. The hitters are hitting. Other teams have more and better hitters, but not by much. The starting pitchers are back to being somewhat dependable. Most importantly, the relief pitchers seem to be able to throw strikes, get some people out, and protect a lead in the seventh, eighth and ninth innings. Go, Tigers. Maybe by the time October and the playoffs come […]


April 8, 2009 // 0 Comments

Reasons to file The end of the 2009 tax filing season is coming up quickly. The majority of all tax returns are completed and either mailed in or e-filed. However, there are still several million, perhaps up to 20 million, taxpayers who are going to file an extension. There are actually some very legitimate reasons for filing an extension. One of the most common reasons is a retirement-planning reason. Taxpayers with an SEP retirement plan are allowed to make contributions until they file their return. By filing an extension, it effectively extends the time the taxpayer has to accumulate the money to fund the SEP. That is a huge difference between an SEP and a traditional or Roth IRA. The traditional or Roth IRA must be funded by April 15, whether the return is extended or not. If the money is not in the account on April 15, it’s a contribution that counts for the next year. A second reason to file an extension is the paperwork is just not available to complete the return. Many taxpayers today are invested in limited partnerships. Some of those limited partnerships invest exclusively in other limited partnerships. It’s their special form of diversifying. However, if just one of those other limited partnerships is late in getting their information out, it’s the domino effect, with the net effect that whoever is invested in the original limited partnership has to file an extension. A third reason to file an extension is some particular piece of information is not available for the cost basis of property that was sold such as a stock, mutual fund, or land. In today’s investing environment, many taxpayers have liquidated investments. The brokerage company involved always reports the gross sales price to the Internal Revenue Service. The IRS has one side of the story: the selling price. The part that is left to the taxpayer is to determine and report the cost of the item that was sold. If the taxpayers have purchased everything that was sold through the same brokerage company, usually they are provided with a cost basis statement. However, switching brokerage companies is a fine art today. Every time there is a switch, the new company usually has no idea of the cost […]

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