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Secretaries Donovan and Chu announce partnership to help working families weatherize their homes

Feb 26, 2009

Benefiting from taxesJoe Cornotaxes, tax benefits, IRS, exempt status, file taxes Disclaimer: The views expressed and written in this article are those of the author alone and do not necessarily represent the views of The Mortgage Press, the National Association of Mortgage Brokers and NAMB's state affiliates. I must warn you that one of my previous articles came with a disclaimer at the heading (as does this one). I must be much more atypical now if I come with a warning label attached. In this article, I wish to address how you can gain more in this economy and make every dollar count. I have never been in favor of a flat tax rate. I have filed (when I do submit tax forms) as "exempt status" since 1996. If a flat tax rate would be implemented, I would be funding wars, abortions and protecting Alaskan wildlife with my money. It does not matter what political side or what I am in favor of, I simply never have enough extra income to fund projects that I have no control over. Do you? I receive motivation to file taxes when a government offers a stimulus or incentive. Since I do not pay federal or state taxes, it is fun to file the last three to five years of tax forms so that I can get current for the free money that my government wishes to send to every tax filer. Since I do not owe any tax, there is no penalty for late filing. Every so often, I will receive a tax department letter, expressing that I missed paying some tax somewhere. After I go through the phone review hearing, the tax board or commission ends up abating the action, dismissing the case and needing to catch up on refunding me monies that should not have been collected to begin with. Since I have been in the mortgage industry for more than 30 years, I had to become very sharp on taxes by reading their volumes of codes and various allowances. Exempt status is part of the tax code, and is allowed. So I am legally utilizing a tax status, "exempt status," and I have just explained how it benefits me atypically. I own a house, I operate a business and I have expenses, but none of that is needed for me to keep all of my income. When the exempt status changes, I have all the other stuff to protect me, as well. Okay, so how much are you paying in 2009 for 2008 income? I know that you will say: "I am receiving a refund." Yeah, that is great. Look at your W-2s and 1099s and see the amount you contributed during the year. If you paid $11,000 in federal taxes and you are receiving a $5,000 refund, you are paying approximately 10 percent of your taxable income to live and work in America. I wish to take a moment and thank you for paying for me to live and work here along with you. If I am not paying, someone else, like you, is paying for the various services and benefits that we all share. This does not count any state taxes you paid into. I spent 45-min. on the phone talking to Trudy, a 25-year real estate veteran. She was explaining that the real estate license allows her to write-off many expenses when I mention that I am exempt and I do not pay any taxes, so a real estate license is not my objective. A hush came over the phone. Trudy and I will talk more, I am sure of it. Now, I must disclaim that this article is not meant, nor does it represent any purpose to evade paying taxes. Tax evasion is illegal and comes with prison time attached. I am suggesting that you learn what is available so that you can benefit from more income. I will list some accounting and financial positions that may benefit you in retaining income that is paid to the tax board or commission. This is a source of revenue that could be captured and used in these economic times. Please e-mail me (no calls please) for further understanding. Corporate taxation Understanding the practical aspects of using a closely held corporation which maximizes after-tax return on business operations. Recent developments give corporations an edge over other entities. You may be missing fringe benefits, retirement planning, corporate deductions and income splitting possibilities. The right business entity Learn and compare sole proprietorships, partnerships, limited liability companies, and C and S Corporations. Know the advantages and disadvantages so that you can select the best structure for you and your business, even if you are employed. For example, there are tax issues with partnerships. The formation of partnerships, the basic day-to-day operation, distributing assets and termination of partnership businesses are key elements to understand in order to benefit in forming a partnership. Federal taxes Became familiar and comfortable with issues that enable you in handling essential tax issues. It is fun for me to receive mail and to talk directly to the various tax agencies. It is fun because I know aspects of preparation, planning, theories and real applications, and new developments. Exploring tax deferral, reduction and elimination opportunities are essential to you retaining as much income as possible. Modeling, forecasting and financial techniques These are needed for you to analyze your operation as a whole and in segmenting. Know proven techniques to fix problem areas, evaluate profit potential, and forecast short- and long-term. When everyone was in the heyday of the industry, they were buying new Jaguars and BMWs. I, on the other hand, purchased the two-year new Nissan. I feel blessed that I still own the vehicle, have remained married and need no bailout for my home mortgage. There are additional topics that I could describe, but this is a limited space article. Other topics include internal control and fraud detection, compilation and review, accounting updates, risk audit updates, and specialized industry principles. For the accounting minded out there, this is referred to as "Generally Accepted Accounting Principles." Some may say that I am un-American and should pay my fair share. Others might consider me a rebel, and they would be just as wrong as the first group. I am capitalizing on the existing tax laws and codes. This is being very American, and I pay what is required of me. Since 1996, the amount required has been zero, and will continue to be so until things change. Let me go atypical in being American in regard to bailouts. Instead of sending it to corporate America or to international banks, why not send each tax filing person in the United States their equal share of the $750 billion being handed out? By population count, this would be approximately $80,000 each. I could sure use $80,000 of free money. Let us look atypically at what you and everyone else could do with the $80,000! Some could pay off or pay down consumer debt. Hey, that would be a stimulus to the credit crunch! Others could pay mortgage payments and prevent foreclosure. This is another stimulus for the good old USA. Some could keep spending and boost the economy in the manner that they are accustomed to. I see that the individual tax filing public, most of which paid in and will be paying for all the gifts being offered, could use the bailout better and have a greater impact on recession-proofing the U.S. economy. Forget Fannie Mae, Freddie Mac and the auto makers. The public could purchase a new car or purchase a Fannie/Freddie $80,000 U.S. bond for their revitalization. (U.S. Fannie/Freddie bonds are not available, yet.) Wow! I may possibly win a few of the readers over to the slogan: "Money paid by the people, should be sent back to the people." I must admit that I would benefit the most due to my tax status. I would be eligible for my $80,000, still having paid nothing for it. I love the American way of life and the pursuit of happiness. Are you happy in pursuing life? Enjoy the tax laws and codes. Learn to access more income by reducing and eliminating taxable income. I realize that I am atypical, but this makes me happy. I could not help but smile as I put this article into print. Learn how to change how you look and feel about taxes. Joe Corno is president of Utah-based We Be Consulting and Seminars. He may be reached at (801) 836-2077 or e-mail [email protected].
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