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If you don't know about this statute and how it operates, DO NOT claim to be an expert or authority on tax law!!! These cases hold 26 USC 83 applicable to all compensation paid for personal services -

Accorting to the Code with respects to the District of Columbia and those States of the union subject to Income from the territorial United States therefrom; NRA (8233), or pursuant confession (w8-ben) of a schedule anciliary to taxable 104NR activity (1041sk1) of Personal Services are ellected (8821) of the person

Regardless of the prior forms of entrance to the tax code, Section 83 has to do with liability to file for which personal services rendered as labor are property that is exempt from taxation. Have a nice day, without willful failure to file given this disclosure.

If you don't know about this statute and how it operates, DO NOT claim to be an expert or authority on tax law!!! These cases hold 26 USC 83 applicable to all compensation paid for personal services -

Accorting to the Code with respects to the District of Columbia and those States of the union subject to Income from the territorial United States therefrom; NRA (8233), or pursuant confession (w8-ben) of a schedule anciliary to taxable 104NR activity (1041sk1) of Personal Services are ellected (8821) of the person

Regardless of the prior forms of entrance to the tax code, Section 83 has to do with liability to file for which personal services rendered as labor are property that is exempt from taxation. Have a nice day, without willful failure to file given this disclosure.

If you don't know about this statute and how it operates, DO NOT claim to be an expert or authority on tax law!!! These cases hold 26 USC 83 applicable to all compensation paid for personal services -

Accorting to the Code with respects to the District of Columbia and those States of the union subject to Income from the territorial United States therefrom; NRA (8233), or pursuant confession (w8-ben) of a schedule anciliary to taxable 104NR activity (1041sk1) of Personal Services are ellected (8821) of the person

Regardless of the prior forms of entrance to the tax code, Section 83 has to do with liability to file for which personal services rendered as labor are property that is exempt from taxation. Have a nice day, without willful failure to file given this disclosure.

If you don't know about this statute and how it operates, DO NOT claim to be an expert or authority on tax law!!! These cases hold 26 USC 83 applicable to all compensation paid for personal services -

Accorting to the Code with respects to the District of Columbia and those States of the union subject to Income from the territorial United States therefrom; NRA (8233), or pursuant confession (w8-ben) of a schedule anciliary to taxable 104NR activity (1041sk1) of Personal Services are ellected (8821) of the person

Regardless of the prior forms of entrance to the tax code, Section 83 has to do with liability to file for which personal services rendered as labor are property that is exempt from taxation. Have a nice day, without willful failure to file given this disclosure.

Although Daschle may (or may not) have known that he violated tax rules and regulations, deliberatly violating rules by public officials (or former officials in a quid-pro-quo) in a way that might be considered corruption can result in severe enforcement actions. Non-reporting of income that could be considered lobbying payments by a former senator is certainly suspicious behavior. This isn't like peons like us forgetting to list a 1099 (or not delcaring a $250K of complementary car services as income).

Anyhow...

PS. Oh, yeah, and by the way I'm an enrolled agent (EA)...

I don't believe that's correct, at least for US federal taxes. All of your examples would be taxable gifts (unless she's your spouse). The recipient is obligated to report gifts.

http://www.irs.gov/businesses/small/article/0,,id=108139,00.html#2

If you have a relationship with a girl and she takes her clothes off and you give her thousands of dollars a year, it's not taxable. Even if you were in a multiple spouse household, it would still be true (multiple guys supporting her).

Without the "relationship" (one date? you don't have to be living together in the same house), it's taxable.

Depends on how many thousands of dollars we're talking about here. FAQ on Gift Taxes is a nice summary from the IRS on tax laws pertaining to monetary gifts. According to the FAQ, anything over $13,000 for 2009 for one person would not be taxed as it does not exceed the annual exclusion. So if you gave your strip...err...lady friend under 13k, then yes, you are right. More than that, and you'd have to pay taxes on it (according to the IRS website, gift taxes are generally paid by the donor, not the donee).

One example is the Saver's Credit: http://www.irs.gov/pub/irs-pdf/f8880.pdf

It's got a discrete phase out rather than continuous and it's really steep. Married filing jointly $31999 you get a 50% credit on up to $2000 you saved for retirement (so $1000). $32001 you get a 20% credit so $400.

My girlfriend actually ran into this (for the single's bracket obviously). After graduating she only worked a few months in that tax year and missed the cutoff for 50% by like $200. It sucked.

There are other examples I'm sure, check the Earned Income Tax Credit, that may have something similar.

Is there precedent for prosecuting for failing to pay sales tax on stolen physical goods?

It's right there in black and white and never been repealed.

(From the 2008 US IRS guidelines http://www.irs.gov/publications/p17/ch12.html )

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

wrong

you do get a nice big expat standard deduction though

Government programs are there to accomplish what the private sector fails to accomplish.

And right there is another problem I have. If it isn't in the Constitution then it's not a job of Government. Liberals expand the Government every single chance they get and then are the first ones to whine when they turn around and discover that their civil liberties (except gun ownership of course, cuz those are dangerous) are being eroded. Just remember that a Government big enough to give you everything that you need is big enough to take away everything that you have.

Then you have a fundamental problem with the existence of a government, because all government spending is "wealth redistribution". It's still about taking a dollar from you and giving it to someone else, whether that person is a single mom or a police officer. In both cases, you're not guaranteed to get a dollar's worth of benefit, but you can expect to receive some amount of indirect benefit.

The police officer is providing a service and working a job. Lumping him in with the single mom who gets back my money from the EITC is disingenuous. She didn't work a job or provide any service to get that money. Somebody decided to take it away from me at gunpoint (what happens if you don't pay your taxes?) and give it to her. You might not have a problem with that but I have a fundamental disagreement with the whole concept. If anybody besides the Government was doing it, it would rightfully be called "stealing" and I'd really like to know what my "indirect benefit" is in this case.

Let's say you did that, and productivity dropped so much -- due to, let's say, increased crime and illness -- that you were still paying 2/5 of your (lower) income in taxes. Would you be happy paying 40% of your income in that case?

Again, mentioning crime is irrelevant. Fighting crime is one job that even die-hard libertarians acknowledge is a proper role for Government, so I really don't see why you keep bringing it up. It doesn't take the current bloated Federal bureaucracy to fight crime. And far as health care goes, if we were to get Government out of the way I'd wager that you would watch prices drop like a stone. Ever notice how spending on health care keeps going up yet life expectancies don't? Ever consider the possibility that just throwing more money at our problems isn't the best way to address them?

How much to "regulate Commerce with foreign Nations, and among the several States"?

Ah, the commerce clause. Used to justify everything from product regulation to the War on Drugs. Apparently if I grow a pot plant in my basement for my own personal consumption that's interstate commerce and the DEA can bust my front door down. Here you see the unintended consequences of your expansion of Government.

Interesting that you skipped over military spending

Providing for the defense of the several states is a proper role for the Federal Government.

We spend more on the Department of Defense

Again, you fail.

and the "Global War on Terror"

I'm no fan of Bush calling it the "GWOT" (how do you declare war on a tactic?) but there's a big hole in lower Manhattan that suggests to me that our mission in Afghanistan is justified. We were attacked. It's the job of the Federal Government to disrupt the network that attacked us so they can't do so again in the future and to arrest/kill those who were responsible. Interesting that you can quote the commerce and welfare clauses to justify your nanny state but can't remember this one: The United States shall guarantee to every state in this union a republican form of government, and shall protect each of them against invasion

Citation

Not to actually carry it, but to do anything with it. It is the responsibility of the receiving party to file this form which requires your social security number or some other tax identifier.

No, to carry more than $10k in cash you have to file an IRS form. I work for a car auction company and we routinely have people trying to buy cars with cash to hide their money. It never works as we're legally required to report it which is easy since there are police officers literally 50 feet from our office at all times during our event.

Here is my citation IRS 8300

This form requires that you submit your social security number along with cash so that you may be identified.

The child tax credit, like most other credits and deductions phase out as your income gets higher, so you shouldn't ever actually lose money. The way they phase out can get complicated, if your interested, IRS Publication 972 details how the phase-out happens.

IRA contribution limits also phase out in a similar way

In most cases you only need 3 years. If you've gotten in trouble with them before they can make you keep it longer. Business fall under different rules. You can also look here:
Individual and Businesses

In most cases you only need 3 years. If you've gotten in trouble with them before they can make you keep it longer. Business fall under different rules. You can also look here:
Individual and Businesses

Full of shit, perhaps.

Gasoline taxes pay for road maintenance genius.

That type of tax is known as an Excise Tax also known as luxury tax. You don't have to pay that tax if you don't buy gasoline.

I will be driving anywhere I want on any chunk of road I choose, because I pay for gas and as a result I pay the excise tax used for roads. Thank you very much for illustrating your lack of knowledge of this subject.

These projects will be paid for with money collected from Direct Tax

Now, lets tackle your statement regarding why I should pay taxes.

Of course, I should pay taxes to pay for two wars that I'm opposed to. I should also pay taxes to fund bail-outs and bonuses for bankers and auto-makers. You would argue that I should pay taxes that are sent to foreign countries.

Do you realize that we (The USA) fought against British taxation and won independence as a result? Perhaps you should move to the jungle where you can build the socialist utopia of your dreams. I'll stay in the USA, the last known address of freedom.

Did you even read the link I presented?

If someone has a trust in any country and they control or own it, they have to pay US taxes on it if they are a US citizen. If they have given up control over it, then they no longer own it. So why would someone have to pay taxes on something they don't own. However, if whoever set them up contributed to them and is a beneficiary of them, then they pay taxes on it. It's really that simple.

The only exception would be if I set up a trust, gave it something, money or assets or whatever, and then direct the trust to benefit charity of some sort. In that case, the charitable trust follows a different set of rules. But I would have that money either, I essentially gave it away. This would be no different then Giveing the money to a charity or someone else.

What you call control is actually the trustee. This can be a law firm, and individual, a beneficiary, a Judiciary appointee or even any of the fiduciary. But it doesn't mean any of those are the trustee. If you begin or end a fiduciary relationship with a trust, you must inform the IRS of it regardless of the country the trust is in if your a US citizen. This means even with the panama rules, you are breaking the laws if you don't report the trust and follow your tax obligations. Anyways, control is anyone with a fiduciary relationship with the trust, if they benefit, contributed to it, manage it, or have any say or benefit of it at all. If you create a corporation that creates the trust, it still gets reported and taxed. If your actions associated with the panama trust is to avoid US taxes, you are breaking the law. That was the point of the link I gave about them two posts ago.

Go back to the IRS form instructions and look at the section on abusive trust arrangements. Then look at this. People can do a lot of things, it doesn't make it legal. You can kill your neighbor, but it doesn't make it legal. If someone is using foreign trusts to evade their tax obligations, they are breaking the laws. They will eventually be caught and prosecuted. It doesn't matter if it is in panama or Switzerland. Whoever convinced you that they could flat out lied to you. If they are participating in a scheme, they will join the ranks of the page I just linked to.

The reason Buffet, and the other super-rich use trusts is simple.

Yes, any money that the trust pays these people is taxed.

BUT, when you GROW your wealth, you want to be able to move money around, buying and selling stocks and reinvesting dividends without paying taxes on the intermediates.

That is GIGANTIC. Remember, investments are like an exponential function. If you own a million dollars in investments, and you can buy and sell without paying taxes, you will get a MUCH higher 10 or 30 year rate of return than if you have to pay taxes.

I think you have a serious misconception here. A trust is an entity of it's own that can be owned. When it does something that creates income, it pays it's own taxes. It's like a corporation, it must file a tax return and pay taxes every year. The advantage of a trust in a tax sense is that it pay's it's own taxes so if you were to have $125k in taxable income, you don't have to worry about how much you spend to cover the taxes surrounding what is in the trust. So supposing that you spend all but 25% of your 125K income, if the trust made another 40k and reinvested it, the taxes on the 40K wouldn't be coming from your income meaning you would have saved enough for your tax obligation. The trust however, it must pay the taxes on the 40K and a creditable executor would have already set funds aside for it.

It doesn't even pay to have more then one trust to juggle taxes. They are treated as one single trust no matter if you have 20 of them. Well, there are a few exceptions and willful ignorance will get you jail time but according to the IRS,

Two or more trusts are treated as one trust if such trusts have substantially the same grantor(s), substantially the same primary beneficiary(ies) and a principal purpose of such trusts is avoidance of tax.

The only time you can buy and sell without worry of taxes is in certain IRA or retirement accounts. But those accounts are taxed either when the money is originally put in or when the money is removed and the amounts and activities are highly regulated.

Say some of those investments pay dividends. Normally, those count as income, taxed to 35% for a super-rich man. So, you can only reinvest 65% of the money. But, if the dividends are payed to a self-owned trust in Panama, the taxes are maybe 1%. You reinvest 99% of the money, which in turn buys more shares which in turn pays more dividends...you see where this is going. Long term, it's a gigantic advantage, and I'm sure everyone with any real money must do this, or they would never have become as wealthy as they are in the first place.

Before we go much further, I think you need to read the instructions for the IRS 1041 tax form. If you own or control the trust in panama, you have to file US taxes on it. You simply cannot legally offshore your money and avoide paying taxes on it. You would have to denounce your citizen ship and live as a citizen in another country. Technically, if you remain a US resident, move to Europe or Asia or some island nation, you are supposed to file a return and pay taxes on your earnings. Of course in that situation, they give a partial credit for taxes paid to the foreign government. There are a few specific exceptions there but for the most part, this is accurate.

As for the taxes question : you are confusing short term action by employers with long term, net actions. The fact is, any company has to keep the TOTAL cost of an employee on their balance sheets, and use that as a basis for making decisions. No rational actor would work otherwise.

Any company has to keep their total costs period on their balance sheets. Just because it is associated with an employee doesn't mean anything. You simply cannot show that an employer would pay the difference in salary

Well, first of all, you have a couple misconceptions. Warren Buffet cannot offshore anything and escape US taxes. If he retains any control of the offshore investments, he must report and claim them as income and subject them to taxation. Doing otherwise is illegal and something that the IRS pursues with a vengeance.

Now, there are some tax breaks for certain off shore investments where the government wants you to do something and they reward you but not taxing your as much as normal if you do it. The main benefit of shelters is avoidance or protection from lawsuits, privacy and regulation advantages. In 2006, the US cracked down on a lot of that an companies claiming to being able to enable it have gone bust with their operative going to jail. The senator Charlie Reingold, recently found out about it when the IRS realized that he avoided taxes for the last ten years on rental property he owns in the Bahamas.

You also have two types of capitol gains, long term and short term. Short term is less then 1 year of holding while long term is longer then one year. The short term rate matched your income bracket so if you purchase stock and made 5 million from it in the same year when you sold it and your normal income is $500k, your paying 35% on that 5 million not the 15%.

Finally, his wealth isn't his income. I know i sounds odd to say he had billions of dollars but he didn't make them all in one year. Furthermore, of those capitol gains, he only pays if he cashed out, on the other hand, he only collects if he cashes out too. Suppose you purchased stock in my company at $10 a share and receive 10 shares. You would have an investment of $1000. I grow the company and the shares are now worth $100k each. Well, that's 1 million you now hold with a capitol gain of 9.9 hundred thousand dollars. Unless you sell the stock, you don't pay taxes. So his worth verses his income is a little different story.

OK, now, the social security and medicare taxes, You can't really claim the employer portion of the tax as an employee expense unless your self employed. It is a cost of them doing business and there is no indication that the employee is retarded in their wages because of it. Especially when there is a minimum wage. Anyways back to the single mother of two, I think we left of with her paying 8.6% of her income in fees and use taxes. If we add the 7.65% we are at 16.25%. So I guess the question now is, does 35% of the normal income plus the capitol gains mean more or less then the 16.25%. We would have to look at everything specifically. Suppose the rich person had 2 million in long term capitol gains and %500,000 in income. They are going to be in the 35% bracket for the 500k, plus the 15% for the 2 million. Unfortunately, the progressive nature of the tax system makes this a little difficult to name a strict rate because you won't pay 35% on the entire amount, just the amount over the the 31% bracket. What you end up with is what is called an effective tax rate. According to this calculatorthe effective rate on 500k would be 29% if it was a single mother of two. Ok so we know the total income was 2.5 million and the 29% was only on 1 fifth of that, the rest was 15%. Now we need to average them out and divide it into the total earnings. If we divide into 5 which would be five 500,000 segments, do the tax rats on them, we come out with 4 times $75,000 plus $145,000. This brings us to, $445,000 in taxes being paid. Divide that by the 2.5 million income total and we are paying 17.8% taxes. That's a little more then the 16.25% that the single mother of two making $22,500. The interesting thing here is that the total taxes paid was $445,000 verses the 3656 the other would be paying. And this isn't even figuring the FICA and Medicare-cade portions for the rich guy. That would be another 1.45% on the 500K and a 6.2% on $97,500 of the %500k. But ignoring that, the rich version pai

Intuit is dead to me. I use Moneydance. It's cross-platform (try the demo) and works great. Imports wonderfully from Quicken. Aside from that, there are many many many many options for mac. And quite a number of good ones for Linux too. There's even GPL'd GnuCash for more sophisticated accounting.

And because I don't like Intuit, here's an offtopic tip-- did you know that thanks to a certain pre-Bush president, any company who wants to sell tax efiling software also has to provide free tax filing to the general public? Because if you think about it, why the hell are IRS tax filing servers (paid for by the public) not made available to the public? Rather, only certain corporations who then SELL their services to the public to use them? Seems a little unfairly tilted towards big business, doesn't it? Wouldn't you think the government would provide software to the public directly?

Well the Clinton administration thought so too, but negotiated with Intuit and others to let them keep their oily grip on the tax filing software in exchange for this "free filing software" deal. Never heard of it? Well, they certainly don't advertise it widely. And I've noticed that in years past they've lowered the maximum income to qualify. Currently it's an adjusted gross income of $54,000.

According to the web site, more info for this year becomes available January 16th.

Pass it on. The more you know...

Intuit is dead to me. I use Moneydance. It's cross-platform (try the demo) and works great. Imports wonderfully from Quicken. Aside from that, there are many many many many options for mac. And quite a number of good ones for Linux too. There's even GPL'd GnuCash for more sophisticated accounting.

And because I don't like Intuit, here's an offtopic tip-- did you know that thanks to a certain pre-Bush president, any company who wants to sell tax efiling software also has to provide free tax filing to the general public? Because if you think about it, why the hell are IRS tax filing servers (paid for by the public) not made available to the public? Rather, only certain corporations who then SELL their services to the public to use them? Seems a little unfairly tilted towards big business, doesn't it? Wouldn't you think the government would provide software to the public directly?

Well the Clinton administration thought so too, but negotiated with Intuit and others to let them keep their oily grip on the tax filing software in exchange for this "free filing software" deal. Never heard of it? Well, they certainly don't advertise it widely. And I've noticed that in years past they've lowered the maximum income to qualify. Currently it's an adjusted gross income of $54,000.

According to the web site, more info for this year becomes available January 16th.

Pass it on. The more you know...

I'm guessing that if the IRS determines that the Mozilla foundation is being operated so that there is significant self-dealing with their substantial-contributors (e.g., google), the mozilla foundation will likely get penalized for this. This would be like if microsoft contributed to a charity and that charity turned around and bought and excessive amount of microsoft software. Here's the IRS page on this subject.

http://www.irs.gov/charities/charitable/article/0,,id=96114,00.html

In addition, there are several restrictions and requirements on private foundations, including:

1. restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons;
2. requirements that the foundation annually distribute income for charitable purposes;
3. limits on their holdings in private businesses;
4. provisions that investments must not jeopardize the carrying out of exempt purposes; and
5. provisions to assure that expenditures further exempt purposes.

No, there is no taxation without representation.

Except for FICA, which funds social security and medicare, both of which are available to people in those areas. No income tax though.

Citation required.

Here
Here
Here
Just a start.

Since this is the federal government, you must mean the interstate highway system? Having recently driven all the way across the country at 60 mph without hitting a single pothole, what are you smoking?

Ok. I was joking there, but never the less. Touche.

Yes, you can walk into the emergency room, where treating you will cost me (a taxpayer) ten times as much as if I just paid for your health insurance so you could make an appointment at a primary care office.

Ok. So since our government has proved to be so smart handling medicaid at a reasonable cost, you'd like to have them handle all health care?

Well, I'm going to go ahead and discount your theories as long as you keep discounting the rest of the industrialized worlds actual experience, okay

Why is it fair to compare the way that the rest of the world does health care in a vacuum. Germany has good health care, sure, but they also pay around 50% tax.

I did see the full answer, and to most Americans, Obama's answer goes against their core beliefs and reeks of Socialism. Most people associate paying taxes with keeping the government operating, providing services which everyone can use. They do not agree with government entitlement programs which keep key identity groups dependent on handouts, eager to vote for the politicians who give them the most free stuff.

I agree on one point: our current tax system is certainly redistributive. And regarding "detailed and thorough" answers, I have never seen Obama admit that the bottom 50% of taxpayers only pay about 6.5% of the income tax burden, despite receiving a majority of the entitlement payments which comprise around 55% of the federal budget. That would be honest.

If someone is paying 15k in taxes (using 2007 tax rate schedules), they make around 75k/yr. Check it out.

Almost everyone pays income tax if they have any income at all. Seriously, check the tax tables for 2007. 10% on income less than 7500 or so for the '07 tax year, so even J. Random Burgerflipper is paying into the system (it should be noted that many types of federal aid are also taxable income). The real question is how much of that payment into the system you get back at the end of the year (or conversely how much additional you owe). Earned income credit is one of the factors affecting that calculation, sure, but don't confuse somebody getting a bit back with not having contributed at all.

Whether someone should get a bit back more than the total sum they contributed seems to be your objection. Consider that the implicit purpose of this is to give a bit of a boost to struggling families with children, that boost might be enough that they eat a bit better and have better clothes or supplies for school or more generally live in a more stable fiscal environment, which is a really cheap investment in their future and indirectly all of our futures (that a country ultimately depends on a solid workforce would be one interpretation, which might be why a Republican (Ford) enacted EIC and two others (Reagan, Bush Sr.) expanded it).

I guess if you artificially define "hard work" to be "using your muscles" this is true enough.

No. That was one of Marx's greatest bloopers, to disregard intellectual labor.

Define "one's own" and define "hard work". And define them meaningfully.

"One's own hard work" in this context means physical or intellectual labor performed by one in support of the production of goods or services. Even the IRS recognizes the distinction between "material involvement" in a business and "passive activity".

If your only involvement with a business is to put money in and get a dividend statement every so often, you're not engaged in "hard work", you're an absentee owner. If your only involvement with a business is to buy and sell its stock, you're not engaged in hard work, you're engaged in speculation, in gambling. If your only involvement with a business is that you have a piece of paper from the state, a land deed, that forces that business to pay you for occupying that piece of the Earth's surface, you're not engaged in hard work. In each case, you're skimming off the value created by labor of others.

What is your alternative?

My alternative is policies that favor earned income over passive investments, rents, and inheritances, resulting in a flatter distribution of wealth.

Do you think there exists a system where the top 10% of the population only owns 10% of the wealth?

Neither necessary nor desirable. We don't need a completely flat distribution to have something much, much better than the L curve we have now.

The fact is that poor people breed like vermin, then they don't take care of their kids, then those kids go on to do the same.

Ah, I see. Poor people are "vermin".

Your own words indite you more than anything I could say.

The effective rates are jumpy (that is, after deductions and credits and so on, the rates go all over the place). The base rates for given levels of income are not X% on all income, they are for dollars from y to z. If you look at this pdf and calculate the percent tax for $5,000, $10,000 and $20,000, you will see that I am correct:

http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

Thank you for confirming my point though.

You would be paying "self-employment tax" even if you were not self-employed. When employed you pay it as "Social Security/Medicare". The bookkeeping says that the employer pays half of the tax, but that is a technicality. If the employee paid it all then supply and demand would raise wages by the amount the employer pays. If the employer paid it all then supply/demand would lower wages by the amount the employee pays. Your tax rate is higher by around 7.5% but you should have a higher income than an employee doing the same job (by around 7.5%).

From the IRS website:

Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.

Okay, I'll bite. I'm self-employed, and have been for almost a decade. I became this way because I got tired of busting my ass to put money in someone else's pocket. I now but my ass for my own benefit. I have no delusions of grandeur, but I do enjoy my freedom.

The IRS levies a penalty against the self-employed - the Self Employment Tax. I'll wager that my tax bracket is substantially higher than a "wage earner" with the same gross income. Why? Because I get to pay the extra 15.3% tax for being self-employed.

I suggest you read:

http://www.irs.gov/taxpros/article/0,,id=159932,00.html

It shows numerous "I don't have to pay tax" arguments as well as case law and reasoning.

But if your business loses money more than X years out of Y, the IRS says it's not a business, it's a hobby, and you can't deduct the costs.

This is debatable. The IRS specified:

An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).

On the other hand, I've spoken to several to CPAs who have said there is no limit on how long you can take losses as a business, as long as you're trying to make a profit. You're going to need to prove to the IRS that you're trying to make a profit in good faith though.

http://www.irs.gov/newsroom/article/0,,id=172833,00.html

The GP is correct, a self employed individual (contractor, home based business, etc) does have to show a good faith attempt at making a profit. Writing off loses in three consecutive years is one of the good faith tests, though that alone doesn't prove you're not making an attempt. Corporations have entirely different tax rules.
A FOSS project that's considered a hobby and one that's considered a charity differ by the tax status of the organization running it. Out of pocket costs for a legally recognized non-profit are potentially tax deductible. Otherwise it's probably just a hobby in the eyes of the IRS.

Expenses that you pay out of pocket as part of volunteer activities to a not profit organization are generally deductible. The actual time is not.

www.irs.gov/pub/irs-pdf/p535.pdf

http://www.irs.gov/publications/p526/ar02.html#d0e867

IRS Withholding Calculator

Purpose of This Computer Program The purpose of this application is to help employees to ensure that they do not have too much or too little income tax withheld from their pay. It is not a replacement for Form W-4, but most people will find it more accurate and easier to use than the worksheets that accompany Form W-4. You may use the results of this program to help you complete a new Form W-4, which you will submit to your employer

Use it at the beginning and middle of the year (for double checking) and for whenever you have a life change, such as getting married, gaining dependents, new job, etc.

You'll need your most current paystub and other basic information regarding your finances (interest earned, rental income, etc).

I've been involved in rentals for a long time and I've never had to submit any paperwork when I rent out one of my units. Maybe it's different in your city but that's an issue for local and maybe state government to fret about -- not the Feds.

It doesn't really matter as local, state and federal governments cross-pollinate the same "terror" databases these days.

Citation? I do consulting work on the side and get paid in cash for a few of my jobs. I've routinely made bank deposits and withdrawals in the four digit range. Nobody has ever questioned it or even looked at me strange.

The published by the IRS regulations vary between $5,000-10,000, although I am certain that I read somewhere about the new limit in some transactions being $1000 due to the Bad Guys Under Every Bed, but I have no time to go find it for you at the moment.

Isn't that the definition of a government?

Not really. Where I work, any laptop connected to the network is checked at every connection for the presence of active full disk encryption software. If it isn't found (which can happen when computers are being built and the encryption installation hasn't been completed) then an immediate alert is sent to the support staff nearest the machine. In response to that alert, the machine must be encrypted or seized immediately. We're talking same-day action, here, with the consequence of inaction being that someone gets fired.

The result is that when we lose (usually through theft but the method is unimportant in this context) a laptop, we can immediately report that said laptop was fully encrypted and no data was lost or is at risk.

If we need to let a contractor on our network, we set up one of our laptops to meet all security requirements and lend that hardware to the contractor. No contractor is allowed to put their machine on our network.

Finally, when data is written to removable media, it's encrypted. We run a software package (Guardian Edge) that forces all writes to removable media to be encrypted. It's a pain sometimes, but it's the least we can do to keep the publics private data safe.

Frankly, I'm shocked that the MOD would accept less stringent practices on the part of contractors. I know we don't.

This is explained in IRS Publication 557, which defines a church as an organization such

1. That the particular religious beliefs of the organization are truly and sincerely held.
2. That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy.

I think that Scientology fails point (2) above, but believing it and proving it are two quite different things.

I bought a 2008 Camry Hybrid in January of this year. My car is eligible for $0 tax credit.

Since the 2008 Camry Hybrid only came out late last year, the maximum possible credit you are eligible for is $650... Not $2000.

http://www.irs.gov/newsroom/article/0,,id=157557,00.html

I also doubt you get 55 MPG in that thing, I get 43 on occasion, 36 most of the time in city driving. On the highway it gets 35 MPG. 2000/250 = 8 MPG.

Unless there were state tax credits involved, there is FUD at work here and this is NOT an informative post.

However, if you purchased a qualified hybrid or advanced lean burn technology vehicle from a manufacturer who previously sold at least 60,000 of these vehicles, the amount of your credit may be reduced.

Here is the breakdown of tax credits. As of October 1, 2007 Prius buyers no longer receive any credit.

I wonder how this will work for the Insight. Will they count the vechicles from the original Insight, or will they start the count from zero?

However, if you purchased a qualified hybrid or advanced lean burn technology vehicle from a manufacturer who previously sold at least 60,000 of these vehicles, the amount of your credit may be reduced.

Here is the breakdown of tax credits. As of October 1, 2007 Prius buyers no longer receive any credit.

I wonder how this will work for the Insight. Will they count the vechicles from the original Insight, or will they start the count from zero?

Okay, quick question, what will stop the rich from doing most of their spending outside of the US? Or heck, even living outside the US? Is there going to be some new rule that says when you buy a new jet in Europe, you have to pay the Fair Tax back in the US? I doubt it.

By the way, currently US citizens have to pay US income tax even if they live abroad (source), with an exclusion of $85,700. That's how the issue is avoided with the current scheme.

With the price of gas these days, and the fact that the device must weigh something, are they not costing you a little money in gas for you to haul that thing around?

They can argue it's minimal, but then again... If you say it cost you $3 in a week to transport this around, how are they going to dispute that?

And wait, since you are now transporting police property, are you not entitled to be reimbursed at the current mileage reimbursement rate?

Which, by the way, is 50.5 cents per mile, according to the IRS

Snce you are carrying public property, does this affect your insurance? What if device causes damage (for example coming detached and damaging another vehicle's windshield)? Is that covered by your insurance? Does it make your insurance rate go up? Can you invoice the police department for that?

What if the device is used by a third party against you?

What is the device battery fails and leaks battery fluid and damages your vehicle's paint?

I could go on...

I've wondered about this. Why not just start hiring all people as independent contractors?

Ah, grasshopper, you think you're the first one to think of this? Certainly would solve a lot of problems if companies could classify employees as contractors at will....

...except the IRS is wise to that game and will nail your ass to the wall. ;)

Here's the IRS's Form that contains questions that serve as a method of determining whether a given relationship between employer/worker can be that of a contractor or not. And here is a more readable version.

Basically, there's a list of 20 characteristics that distinguish actual contractors from employees that a shady company is trying to pass off as contractors. Things like who sets the hours, who provides the tools, where is the work done, how are they paid, who pays for business expenses, and so on.

And no, I'm not a lawyer, but a company tried to hire me as a 'contractor' scientist one time, which was a nice way of telling me they wanted to hire me but provide no benefits and no security. My guess is that it wouldn't have stood up in court since they would have basically failed every step of that test linked to.

I am a little less concerned with your idiotic view of US tax law, and a little more concerned with what will and will not put me in prison. Don't pay US taxes the IRS says you owe, and your ass will end up in prison. I'd say that makes those laws pretty damned enforceable.

Like when you're $10k over some limit that then causes you to pay an extra $20k in taxes.

Um, no.

Income Taxes in the US are a tiered system. If you're $10k over a limit, you pay a % of that $10k, not your overall income. And unless somewhere in our tax code there's a 200% tax bracket, you will not pay $20k taxes on a $10k overage.

See here:
2007 Federal Tax Rate Schedules.

Note especially the second bracket; you pay 10% exactly on the highest amount in the first bracket, then 15% on the amount in the second bracket. You do not pay 15% on your entire income. Thus, being $1 over the 10% range does not make you pay $15% on $7826 taxable income. Otherwise, that $1 would cost you $390.40 more than you would have paid*. (Also note that this is taxable income, not gross income. If you only make $7825 it's likely you won't pay a dime of federal income tax.)

The only way you'd end up paying $20k on $10k is if you owed the IRS that $10k and managed to accrue $10k in fines/interest on it. (Which isn't hard, I'd imagine -- but I make a habit of not getting on the bad side of the IRS, so I'm not sure.)

* Just so no one calls me on my math: 10% of 7825 is 782.50, 15% of 7826 is 1173.90. 1173.90 - 782.50 = 391.40, minus the dollar to get you to 7826 = 390.40.

None of that crap would pan out where I work.

Need help getting through a door? Sure, people will let you through a door if you're lugging a load. Then they'll see you don't have your badge on, offer to help you find the office and person you're looking for, and if you don't know what name or location to give, they'll stick right with you until you figure it out or security comes along to help.

Selling copiers? "Oh, man, dude, nobody on this floor has the authority to buy anything! Lemme walk you over to the facilities guy that you *must* have an appointment with. He'll get you a temp badge or an escort if you need to look around."

New hire? "Gee, ya know, I hate to be a pain about this but you really do have to keep your badge on in the building. Lemme hold your box while you find it."

Lost your badge? "Gee, ya know, you're gonna get hassled a bunch without it. Do you know where Kathy's office is? Let me show you; she can issue you a temp badge for the day."

Lugging in a server or anything that looks remotely computer-like? The security guard will have you sign in and call down someone from IT to escort you.

Visiting executive? Unless you're the commish, in which case you'll be covered by a phalanx of security, even the lowliest of the low in this place will give you a friendly wave, say hi, and offer you a lanyard for your badge while you're in the building. "Oh, that's OK, I can wait till you find your badge. Do you want me to show you where you're going/where to get a temp badge/to security?" In fact, this is one of the few times a data input operator can pull rank on the highest executive in the organization and you'd better believe that no office lacks for people who would relish the opportunity.

Bluff your way past security and take an elevator ride to an upper floor, looking for something? Big deal. All the doors are on card keys and if you knock, the person who answers is going to lead you right back through the "Gee, I hate to be a pain about this but you really have to wear your badge in the building" routine.

Walking around in the hall looking semi-lost because you got in but realize you can't get through any of the doors? You'll be directly challenged by someone who will walk you directly to your manager (if you can provide a name and location) or directly to security.

If by some total breakdown (say, you've got a decent fake badge and you piggyback on someone to get through a door) you get into the work area and plop down in a conference room, you're gonna get caught in short order. Plug in your laptop? If you haven't pre-reserved the room, you'll trip port security, that port on the router will shut down, the telecomm lady will get an automatic page and head up to that conference room to see who's screwing around by plugging in an unregistered MAC. Just turning on a laptop with wireless enabled chances setting off the scanner that's sometimes running in every building; in that case, you get a quick visit from scary men with badges and guns. You're a contractor on site and you plug in a wireless access point? See the sentences immediately previous, plus you get tossed out, fired if you're a sub, lose your individual security clearance, and the overall contract holder gets in seriously hot water. Just sit there and try to look important? The conference room reservations are controlled by the nearest secretary. As soon as s/he sees you in the room, you'll get asked to do a formal reservation. "If the room is free, you can have it, but I need your name and badge number for the log book. By the way, where's your badge?" In offices where the conference rooms aren't tightly controlled, people get used to dropping in so if you're sitting there without a badge, you're going to get questioned. If you don't know the right jargon, the right person to say you're working with, the right organizational attributes to assign to yourself, you're going to be questioned. Even the most tim

The EFF and ACLU have no political influence per se. They're 501(c)(3) charitable organizations just like, say, Focus on the Family, and it's already illegal for them to participate in partisan political campaigning. Here's the IRS pub.

There's still the loophole of "issue advocacy". Here's another story about that. The IRS is cracking down on issues advocacy ads that attempt to influence an election, but aside from that, charities can advocate all they want on partisan issues, say abortion or media decency.