Taxes

Putting Your Tax Refund to Good Use

It’s everyone’s favorite time of year again: tax season!

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Tax Season

In the past few days, I’ve opened my mailbox and discovered 1099 forms, a W-2, as well as 1098-E forms (student loan interest statements) in my email inbox. The forms are currently being organized in a folder. Our favorite time of year has come and I’m slowly preparing for it. Today, Jan. 20, marks the official start of the tax-filing season.

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A Cautionary Tale About Generation Gig

Nearly 80% of us would be interested in dropping out of the FT workforce to go freelance.

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Would Taxes on Sugar Make You Eat Less of It

on one hand, the First Lady encourages young people to “move more” and eat right, and on the other the President signs Farm Bills encouraging agribusiness to grow cheap starch.

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It’s Time to Pony Up for an Accountant

I have always done my taxes myself, because for a long time, they were very simple. I had one job, or maybe two jobs, depending on the year, and a student loan interest form that I always lost the minute it was mailed to me. Doing my taxes is exciting, because I get to fill in the numbers, check off the boxes, and watch the amount of money that I’m going to get back from the government grow. One year, I did my taxes at the end of January, got my refund by the first week of February, and booked a plane ticket to New Orleans for Jazzfest with the proceeds. Another year, I put some of the money aside in savings and spent the rest on a Coach bag, convinced that I would have it for decades, telling myself that I deserved the purchase because that was money I worked for.

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Who’s a Real Artist? Ask the IRS

The New York Times reports felicitous news for working artists with day jobs: they can deduct the expenses associated with creating their art from their taxes, even if those expenses exceed the profits derived from the art. This is good news in the most limited of ways, because it lays bare just how difficult it is to make art profitably, and presents a victory that only a small minority of artists will likely benefit from, but still, the existence of tax benefits for fine artists takes a bit of the sting out of the usual news about tax loopholes.

In a case involving Susan Crile, a tenured studio art professor at Hunter College, the IRS asserted that her art activities were merely ancillary to her teaching, and couldn’t be treated as an independent money-making venture. (“[The IRS] agrees,” the tax court ruling reports, “that petitioner has been a successful, though rarely a profitable, artist.” Thanks, IRS!) The tax court disagreed, affirming that in fact, Crile is a real-life artist, even if only three of her 40 years as an artist were profitable.

But! This does not mean that I can start deducting the costs of cooking rice and beans and buying beer for a twenty-person band rehearsal every week.

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To Pay Back Loans Faster, Go West, Young Man

Nearly three-quarters of college students borrow funds to pay for school these days and, as we know, it is not always easy — or possible — to pay those loans back. Well, it turns out one thing you might be able to do to help yourself succeed is move. Specifically, move west.

According to schools.com, four of the top five states for student loan repayment are on the Pacific side of things: Utah, Wyoming, Washington, and Nevada. (The fifth is Virginia so the Atlantic gets a brief nod.) California and Colorado also place in the top 10. But stop short of Cali: San Francisco is a luxury ghost town these days. (“On average, 39 percent of condos built since 2000 have absentee owners, and for newer buildings like One Rincon Hill, that number is 50 percent or above.”) Also there’s no water.

Why is the West such fertile ground for loan repayment? Low unemployment rates, low cost-of-living, and high incomes boost Utah and Wyoming. Washington State, Wyoming, and Nevada make things easier on residents by not charging income tax. Wait, what?

FYI, there are only seven states that don’t charge income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.  I can understand the small and the oil-rich not needing to profit off individuals but how on earth do huge states with significant populations of poors and olds like Texas and Florida get away with that? Texas makes up the difference via property taxes, “some of the highest in the nation.” New Jersey and New Hampshire are also expensive places to own property. And Florida … is there anything good to say about Florida?

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If People Were Corporations

If individuals were treated like corporations, I could set up an affiliate called “Catherine Rampell Bermuda,” have it pay my college tuition and then declare that the affiliate owns the resulting degree. I could then tell the IRS that everything I earn above the average high school grad’s wage should be recorded as income in Bermuda, since it’s all derived from a Bermuda-based asset. Until I decide to repatriate those diploma-derived earnings, I’ve built myself a tax-free IRA.

At the Washington Post, Catherine Rampell is like, Well if corporations are people, then people should be corporations! She talks to Tax Experts who list the many potential benefits we could earn by reporting our taxes as a corporate entity rather than an unfortunate old human being. No taxes on international income! Deduct sales tax! Deduct healthcare spending!

This sounds great although I don’t appreciate being made to think about taxes outside of tax time.

Meanwhile, Rebecca J. Rosen at the Atlantic retells an “extremely literal instance of corporate personhood” wherein a 1960′s IBM employee named Susan Elliott had her husband incorporate her so that she could keep working when she was pregnant. Amazing:

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The “I Got a CPA” Update

A little over a month ago, I wrote about how I finally went out and got a CPA after a CSR working for an automated tax software program told me “you really need a professional to do your taxes.”

Here is how my CPA experience went! I am curious if it was anything like other people’s experiences with CPAs and financial advisers.

1. I had no idea how much it was going to cost. 

My CPA’s website didn’t have any rates listed, which is fine, but it took me to the end of our first in-person meeting (after a few phone conversations) to finally say “um… what do you charge, and is it by hour or by project?”

It was per hour, and since some of those hours happened without me in the room I really didn’t have any idea what my bill would be until I received it. That, of course, made me nervous because I like to plan things in advance, but it turned out fine.

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