An initial flat tax rate of 17% has been discussed but if Congress wants to keep popular write-offs, the rate would need to be in the 30 - 50% range. Once they start maintaining some deductions and not others, simplicity goes out the window. While the idea sounds so simple, it is a complex issue with many ramifications.
IRS CORNER
The IRS has recently had a big win in the war on abusive tax schemes. Losses from deals without economic substance are not allowed. Those taxpayers that deducted substantial losses from these abusive shelters are also getting hit with substantial penalties. And here is the kicker: the fund had opinions from lawyers blessing the losses. I recently heard an adage that applies here: pigs get fed, hogs get slaughtered.
QUICKBOOKS TIP
Recently, several clients have asked me
how to input their credit card payments, especially when
they are not able to pay off the balance each month. First,
it is important that each credit card charge is coded to
the proper account. While it may seem quicker to code the
entire payment to one account, the IRS requires the charge
be coded to the proper expense account. Second, if you only
record the payment instead of the charges, you may be overreporting
income and paying too much in tax. Finally, taxpayers
are allowed to deduct credit card charges based upon the
transaction date, you don't have to wait to deduct the expenses
until you pay your credit card.
The easiest way to record your credit card
charges is using a journal entry. Access it through banking,
make a journal entry. Date the entry as of the closing date
on your statement. List each charge as a debit on the journal
entry coded to the correct expense account. It is a good
idea to put a description in the memo column, ie "Office
Depot" so you have appropriate detail in your accounting.
The credit should be to a "Credit Card Payable" account,
which is set up as a current liability account. Each month
look on your balance sheet and you should be able to reconcile
the balance in this account to your ending statement balance.
DID YOU
KNOW.....
The Almanac shows the market has an obvious preference for Republican presidents. Since 1900, 10 of the 13 times a Republican president has won, the market has risen the next day an average of 0.9 percent. By contrast, the market rose on only four of the 12 occasions that a Democrat won--down an average of 0.54 percent.
