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].
