On Death and Taxes-but Not so Much About Death

   Rather than simply wait for New Year’s Eve parties, or watch the ball drop on Times Square and then sleep until the Packers-Lions game on Sunday, I decided I would get a head start on my taxes.

Over the last year I did some yard work for an elderly lady of 90 or so who insisted on paying me. The lawn mowing, snow clearing and odds and ends of handyman jobs added up to a few hundred dollars.

Afraid to run afoul of the law I have decided to claim this side job as income on my Federal and State Tax Returns.

Not knowing how to go about it, however, I made an appointment with my accountant and tax advisor Omar, who agreed to walk me through the process.

He explained the need to file an IRS Form Schedule ‘C’ with my Form 1040, which of course needs to be used when I itemize deductions such as property taxes, mortgage interest and now, additional income from my “side hustle.”

The first thing to do is to decide if I need my own company identity, such as an LLC, Partnership or ‘S’ Corporation and then determine whether to use an SSN, TIN or EIN, depending on the need for employees, a partner or corporate designation.

For the time being I have chosen to file as a Sole Proprietor, using my social security number.

Keep it simple. I think.              

The next step is to file a Schedule  ‘C’ (Form 1040) ‘Profit or Loss From Business’, with the accompanying 18 pages of instructions.

I could also get help from the “Small Business and Self-Employed (SB/SE) Tax Center”, which serves “taxpayers who file Form 1040, Schedules C,E,F, or Form 2106, as well as small business taxpayers with assets under $10 million.”

I think that’s me.

After identifying my business on Line A as “LP Wilson, Handyman,” I am required to provide a six-digit code from the “Principal Business or Professional Activity Codes,” on Line B.

Not finding an activity code for “lawn mowing, snow shoveling, running errands and painting the bird feeder,” I opted for “All Other Personal Services Repair & Maintenance” (Code 812990).

Part I: Income

Line one-income is pretty straightforward. Money I received for services as a handyman, etc.

Line six-other income (see instructions). Apparently I don’t have to claim the lunches she provided or the Christmas cookies she sent home for the family, as income.

That’s nice.                                

Part II: Expenses

Line nine-Car and truck expenses (see instructions). I can either claim the standard mileage rate of 54 cents a mile for the miles driven for business or I can claim the actual expenses incurred in maintaining a vehicle for business use.

To claim any car and truck expenses I must do one of the following:

  1. “Complete Schedule C, Part IV, or Schedule C-EZ , Part III, if (a) you are claiming the standard mileage rate, you lease your vehicle, or your vehicle is fully depreciated, and (b)…….”

Forget it. I’m taking the 54 cents.

So, I ended up with a net profit from my handyman services.

“If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on  Schedule SE, line 2.”

“Bear with me,” said Omar, “We’re almost finished.”

Schedule SE (Form 1040)’Self-Employment Tax’

Following the flow chart on page one I find that I need to file Section B-Long Schedule SE.

After determining that I am not a clergyman, church employee or farmer, I can skip to Line 2 unless I choose the Nonfarm Optional Method. “You may use this method only if (a)your gross nonfarm profits were less than $5457 and also less than 72.189% of your gross nonfarm income, and (b) you had net earnings from self-employment of at least $400 in 2 of the prior 3 years. Caution. You may use this method no more than five times.”

Oh.

Then I multiply the amount on line 3 by 92.35% and determine that the total is more than $400.

On to line 6. “Add lines 4c and 5b.”

Note: The maximum amount of combined wages and those from self-employment subject to social security tax for 2016 is $118,500.

Good. I hate to go over the limit.

Then I multiply the amount on line 6 by 12.4% and then by 2.9%, entering those amounts on line 12 Self-employment Tax. “Enter here and on Form 1040, line 57, or Form 1040NR, line 55″.

Line 13 “Deduction for one-half of self-employment Tax.”

I then enter the final result-you guessed it-on Form 1040, blah, blah, blah, line 27.

Under the “Paper work Reduction Act Notice” of the IRS regulations, it was determined that it should take me 34 minutes total to find records, learn about the law, prepare the form and, “Copying, assembling, and sending the form to the IRS.”

Heck, it took me that long to just find the forms and instructions on www.IRS.gov/schedulec/schedulese,etc.,etc.

Omar advised that he will bill me the 250 bucks for his services after January 1st but I can deduct it from my 2017 taxes simply by filing another Schedule ‘C’ next year.

Next year? Next year?

Next year, my mother will have to cut her own grass.

 

 

 

 

 

Why All The Fuss Over Christmas?

 

“Jacob Marley is Dead.”

Had he been real, he would have been dead some 150 years now.

His partner, Ebenezer Scrooge would have died ten years or so later, given the life expectancy of the time.

The Cratchits with “all the little assorted Cratchits”, would have long since passed into history. Even Tiny Tim.

The story however, lives on.

As old as mankind, it portrays the rift between those who have everything and those with nothing.

If you might have missed one of the 400 or so renditions of ‘A Christmas Carol’, is goes something like this.

Ebenezer Scrooge, a wretched, cold hearted, miserly “money counter”, kind of like the Bernie Madoff of the day, loathes Christmas. Or rather, he despises the poor and those less fortunate, refusing to lift a boney finger to alleviate their suffering.

At the other end of the 19th Century socio-economic spectrum, is a family of seven, the Cratchits, with a disabled child and one head of household working for less than a livable wage.

“You, a clerk with a wife and family making 15 shillings a week…” That’s about $95 today.

In the end, Scrooge, played by the likes of Jack Palance, Cicely Tyson or Jim Backus as Mr. Magoo, is redeemed after an experience with those three infallible spirits; Christmas Past, Present and Future. Add to that the ghost of his long dead partner Jacob Marley, and he has his hands full of specters, all in one night.

This story could be told at any time of the year, in any country, any city, town or village.

The disparity between the rich and poor has never been more evident in the U.S., with the wealthy having more and more while the middle class slips ever closer towards poverty.

No longer can the younger generation claim to be better off than their parents.

Over a half million Americans are without stable, affordable, maintained housing. They’re homeless.

So, why so much ado about Christmas?

This, the time of the year that retailers begin planning for in, say January, while the official start of the season is on “Black Friday” (or Thanksgiving) followed by “Cyber Monday” and “Small Business Saturday.”

Interspersed throughout are the endless sales, discounts and daily specials encouraging all to buy, buy, buy and thus, contribute to the economy’s bottom line.

We wish each other “peace, happiness and prosperity.”

You see, it’s all about the spirit. The Christmas Spirit.

That’s the thing we try to capture with all the buying, preparing, wrapping and sharing.

We try to find the exact, unique gift for a loved one, something that will change theirs (and our) lives forever. Like a new Lexus or a Red Ryder BB gun.

We decorate our homes with the latest laser lights, an animated Santa, reindeer, the Grinch and all, in an effort to display our very best image of the season.

We give to charities, The Salvation Army, serve meals to the homeless, finally visit the neighbors.

The spirit and goodwill of the season seems to be without end.

That and year-end tax deductions help to fuel the charity.

Children are more excited at this time of year than perhaps any other, including summer vacation. They know exactly how many days and minutes are left to wait.

Christmas means new snow, new stuff and a week off from school.

As adults, we try to recapture that excitement, the anticipation, that feeling of Christmas that we might have lost or forgotten years ago.

It may be buried beneath layers of family, societal or personal pain. Rejected, addicted or jaded by life it can be hidden, but not denied.

At the end of the story, Scrooge, the Grinch, the population of “Whoville” and those in the “good old cities everywhere”, find the true meaning of Christmas, “The Spirit of Christmas.”

That spirit is in each of us, those who believe and those who do not.

It’s a gift we received over twenty centuries ago. That given by the birth of a single child.

We all have it. The one given by God through his son, Jesus Christ for the salvation of us all.

Go ahead, it’s yours, open it.

Merry Christmas!

 

‘Tis The Season

“You Say Tomaatoes”

 

As the days grow shorter, colder and the winter solstice looms, I look out at the frozen landscape that is our backyard and begin to dream, of tomatoes.

Boy, could I go for a juicy, vine ripened Big Boy right about now. Just sliced with a little salt and pepper and I’m good to go.

This past summer we had both new varieties and a heritage brand which could not be beat for texture and flavor. We also tried a “Sun Gold” variety of cherry tomato that was to die for.

The combination of sweet and tangy flavors was almost better than….chocolate.

Those I would pick and eat right from the vine while on a detour to the mailbox.

With respect to full disclosure, it’s my wife’s garden. She is the one who does the tilling, planting and hoeing much like the little red hen  in the children’s bedtime story.

Unlike the lazy dog however, I show up just in time to feign helping with the harvest. That way I can justify “pigging” out on the fruits and vegetables of her labor.

A killing frost occurred almost two months ago now and the taste of those tangy red globes and other vegetables we couldn’t give away in September, is now a distant memory.

The ever bearing raspberries hung on a little while longer but those too have passed into winter slumber.

The last cucumbers were brought in from the worn out vines and tasted just as good as the first. Peeled and sliced with salt and pepper or made into a salad with brine and onions, they now follow that annual exodus of seasons.

It’s a long time between raking leaves and a really good radish sandwich.

I’m sorry but there is just no comparison between vegetables grown in the back yard and those imitations propagated in a greenhouse or ripened in a truck rolling up from somewhere in the south.

Those folks try hard but the effort comes up a little short and a lot expensive. Paying a dollar for a waxed, watery tasting cucumber just doesn’t cut the mustard.

A simple seed grown with care for 70 days or so in Wisconsin sun and soil, with a little cow manure thrown in for good measure, becomes a collage of produce that would make an artist proud.

An old farmer that I worked for many years ago, while slicing into a vine ripened melon stated with satisfaction, “Eat up boys you can’t get these in January.”

At the time he was right of course but with modern genetics and better shipping techniques you now can get them in January but the problem is- they still taste like January.

After the Christmas Holidays it’s only a few short weeks until the seed catalogs start to arrive, complete with glossy colored photos of perfect fruit and vegetables.

Then, just a couple of months later it’s planting time once again and I can’t wait.

I just hope her new knee is up to the task.

       ‘Today’s Take’ Green Bay Press Gazette, December 2009

Twelve Ways to Be Homeless for The Holidays

  • Be poor and working. It should go without saying. The sad fact is, low income families spend over 50% of their paycheck on housing and related expenses. Many become homeless due to a job loss, medical emergency or car repairs-something most of us deal with everyday without a second thought.
  • Be sick, either from a disability or mental illness. Many of the chronic homeless fall into this category. These are the shopping cart travelers most often portrayed as street people. They comprise less than 15% of the entire homeless population.
  • Have an addiction and struggling to overcome it. Most are young to middle aged men who have run out of resources or resolve.
  • Be young. Homeless children have become a growing concern, mainly because they don’t show up at shelters or, being underage are not eligible for services. They are often abused or on the street due to conflicts within the family.
  • Be in a family. Family homelessness, like that of individuals, can be the result of job loss, illness or some temporary situation that, with help, can be overcome.
  • Be a Veteran. As many as 50,000 Veterans are now on the streets, battling the physical and mental scars from multiple deployments and years of war.
  • Be middle aged-typically 50-64 who are not yet eligible for social security or Medicare. They fall through the cracks. Although relatively young, these folks age much faster and develop chronic illnesses more often than their age would suggest.
  • Be elderly. Over 65 without the resources for continuing care and unable to find affordable housing on their own.
  • Be a single parent. Usually a woman with young children. This presents perhaps the most vulnerable group, with the least available resources.
  • Live in the city. Homeless people tend to congregate in urban centers where resources are the most accessible.
  • Live in the country. The number of rural homeless is almost as high per capita as that in the cities-just not as visible.
  • Be a father, mother, brother, sister, single or married, with or without children. In other words, anyone at any time due to any number of circumstances can become homeless.

Over half a million of our friends, relatives and neighbors will be without a place to call home this Christmas.

The winter solstice marks the turning point in the earth’s pivot away from the sun in the northern hemisphere.

This leads us into the joyous Christmas Holiday, a New Year’s promise and ever lengthening days towards spring.

For the homeless, it’s just another long night.

‘The National Alliance to End Homelessness-Snapshot of Homelessness.’

 

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