Do US Citizens Have to Legally Pay Taxes?

We all work hard for our money and we all want life to be fair, so of course, when buzz begins to circulate about the possibility of US citizens not having to pay income tax… we jump right on it. But trust me, when something sounds a little too good to be true, it’s usually because it is.

Unconstitutional you say?

According to believers of this idea the 16th Amendment was never ratified, and therefore we shouldn’t have to pay taxes.

However, the amendment states that the government will collect taxes from its citizens.  This seems pretty cut and dry, however a man named Bill Benson, author of The Law that Never Was, argued that the amendment should not be included in the constitution because it was not properly ratified by the thirty-six states needed at the time to pass. Benson claims that none of the states properly legally went through the process of ratification and even found “evidence” proving that at least four of the states that were documented as ratified actually had paperwork stating their opposition or non-support of the amendment.

There were some spelling and capitalization errors on copies of the documents returned to the Secretary of State. However, Secretary Knox, aware of these small mistakes, adopted the amendment, seeing no need to throw it out based on such trivial and superficial errors.

Neiner Neiner Neiner

What many of the believers also think is that if you do not pay your taxes, even if accused and convicted of this, you will still avoid jail time, just… because.

Benson was indicted in 1980 and in 1981 for tax evasion After attempting to use hi research as his defense strategy, he was promptly found by a jury to be guilty on all counts. Anyone who has attempted to use his “evidence” in their defense or to support their negligence to pay income tax, has suffered the same consequences as he did. He is now infamous for tax evasion.

In addition to jail time, Benson also got a hefty law suit from the Department of Justice for manufacturing and selling tax scheme documents and interfering with the IRS. Benson was charging $3,500 for his “Defense Packages” and was ordered in the suit to stop, post a copy of the citation on his website and handover to the government all the personal information of his customers including social security numbers.

I believe the lesson learned here is that if you want something to be true, somehow, somewhere, especially in the internet era, you can dredge up “information” to support your fact or theory. But tread lightly, if you follow in Benson’s footsteps, there is nothing but trouble ahead.

TaxAlmanac offers up a discussion of tax evasion jam packed with tax urban legends containing a mixture of desperation and hope to downright humor and everything in between.

George Gallagher writes for a handful of personal finance and economic blogs. When not writing he works with young people to sort out their private student loan consolidation questions.

Five Money Saving Methods of Working From Home

Finding new ways to save money is never easy, but working from home can make it easier to build up that savings account. It is necessary to spend money to have even a slight chance of making money and this is even true when it comes to getting a regular job. A regular job will cost much more than working from home through a few basic measures.

Reduced Transportation Cost:

Going to a regular job requires driving, taking a bus, riding a train or taking a subway. Regardless of the mode of transportation, most jobs away from home will require spending some money to reach the office space.

Working from home has a key benefit in saving cash via transportation. It is not necessary to spend a single penny getting from one room to the other. That benefit of reduced transportation can add up quickly by the end of the year.

Depending on the distance to the office and the mode of transportation, it can save as much as $100 or more per month in transportation costs. Even jobs close by that take 5 minutes to drive to, will cost you roughly $30 or more per month.

Lower Food Costs:

Going to a regular job opens a number of doors to the temptation to spend. While it is possible to pack a lunch and avoid coffee, it is always tempting to buy lunch at least once or twice a week. In some cases, running out the door might require buying lunch rather than packing lunch.

Staying at home has the benefit of saving on the cost of buying food outside. Not only it is less costly to make a meal and a pot of coffee at home, it is also much healthier than most restaurants and cafeterias available around a regular job.

Lower Clothing Costs:

Working at home offers the benefit of wearing comfortable clothes and avoiding expensive suits or work attire. Since the job will not entail face to face conversations with clients, going out to an office or making an impression with the outfit, the expense of clothing becomes much less.

The uniform of choice for working in the home is anything that feels comfortable and does not reduce motivation. That can range from casual outfits to semi-nice clothes, based on personal preferences.

It is not necessary to hide away from the world, but the freedom of wardrobe choice while working at home is a key reduction in necessary expenditures.

Tax Deductions:

As an individual who works from home, tax benefits are available. Self-employed individuals can cut taxes by making use of deductions. The home office space, gas used while working, any equipment necessary to perform job tasks, office supplies and even utilities will all provide a discount.

It is not possible to claim tax deductions on your return when working at a regular w2 job that relate to home expenses such as mortgage interest. Only those who work at home can add the expense of personal computers and a percentage of utilities to the tax deductions.

Making More Money:

Working from home wastes much less time. Even a half hour commute to work will result in five hours or more per week in just transportation. Working from home clears up those five hours so that more time is spent making money.

Working from home has clear benefits when it comes to saving more cash. Instead of wasting a few hundred dollars in transportation, clothing and other expenses necessary to work in a regular job, it is possible to save that cash by working at home. Saving money at home starts with determining the cost of going to a regular job.

Jeff is an Internet marketing consultant and content distributor for NY divorce lawyers, and He is also a passionate blogger who often writes about money saving, sharing his knowledge and experience in that field.

Talking About Capital Gains

Some Things To Be Aware Of Regarding Capital Gains And Losses

Many people are not aware of the fact that their capital assets are all the things they own and use for either investment or personal use purposes. This may include bonds and stocks held in a personal account, as well as household furnishings and their home itself. The difference between what one paid for a capital asset and what they sold it for is recognized as either a capital loss or a capital gain for them.

Let’s look at some facts about how a person’s income tax return might be affected by losses or by gains according to the IRS.

1. Basically, a capital asset is everything a person uses for their investment, pleasure or personal issues.

2. The difference between what a person sells their capital asset as opposed to what they paid for it is either a capital loss or a capital gain for them.

3. All capital gains absolutely must be reported.

4. Capital losses may not be deducted on personal use property, but only on investment property losses.

5. It is either short term or long term that capital gains are classified as.

6. If long term losses are exceeded by long term gains, the difference is then a net capital gain.

7. Usually lower than the tax rates applied to other income are those applied to net capital gains.

8. If exceeding any capital gains are in fact capital losses, it can and should be deducted from other income.

9. Capital loss deductions can be carried over from one year to the next if in fact they exceed the yearly limit.

10. It is important this year that all involved with these issues refer to and use Form 8949.

Taxes, And A Look At Obama’s And Romney’s Budgets

Budgets are wonderful, and I love them. I love all of the charts, the graphs, the tables and appendixes. Budgets are so fantastic because they make us take a hard, serious look at numbers. We are forced to make priorities, and we are challenged to make tradeoffs on what we can do without, and what we truly need. The budget is the proof in the pudding, and it is what forces the government to be brutally honest with itself, and the American people. With people preparing their 2012 taxes, a short look at some of the differences between President Obama’s budget proposals, and those of Mitt Romney are in order.

Comparing the fiscal plans between Obama and Romney is almost like comparing apples to oranges. The reason is that while Obama is on the hot seat and needs to make his numbers add up, Romney is just running a campaign in the primaries. He can make budget promises without having his feet held to the fire over them, whereas Obama is not afforded that luxury.

However you slice it, though, taxes under both the Romney and Obama plans are lower than they would be if we simply allowed the tax cuts put in place by George Bush to expire and tax rates returned to the rates of the Clinton era.  If that happened, tax rates would be almost 20.4% of the GDP. This, despite the reverence that Democrats have for Bill Clinton‘s former economic policies, and the panic that Republicans are in over Obama’s tax ideas. I suppose that is why I just love budgets. They help everybody keep an eye on everybody else.

Top 10 Reasons for a Tax Audit

turbotax

A tax audit can occur for several different reasons that most people are not aware of.  You will have to comply with at least two of these factors before you have anything to worry about.

The most popular reason for a tax audit is unreported income.  Here, there is a lot of paperwork that must be filled out and completed.  When the paperwork contains errors or does not get turned it at all, issues can start to occur.  This type of paperwork is also time sensitive and should be received in order to file by January 31st.

Improperly prepared tax returns are the second most common reason for a tax audit.  In the event that your tax forms are filled out or filed incorrectly, this will definitely have the IRS breathing down your neck.  In this case, many people decide to round numbers or estimate amounts when it comes to their deductions.  When information is repeatedly misrepresented and estimated, the IRS may view this type of activity as a red flag.

A drastic increase or decrease reported income can raise a few eyebrows within the IRS.  When income amounts fluctuate a great deal, whether it is an increase or decrease, this could insinuate that somewhere along the line, income was not reported.  Taxpayers may also be tempted to hide assets such as bank accounts but in many cases, the IRS can find out.

Income that is not enough to support the individual’s current lifestyle can also become an interest of the IRS.  If you report things, such as a mortgage or other type of tax on property but do not show income that can represent proof of these allegations, this may pose additional issues.

Claiming charitable contributions can also get you into trouble with the IRS.  Some may claim to have given a specific amount but the IRS may look for documentation to prove your contribution.  The IRS provides information on how to properly report charitable contributions.  A safe percentage in this case would be anywhere from 2% to 5%.

If you are claiming business expenses, make sure expenses are business-related.  Many taxpayers have reported expenses that have turned out to be personally related.  Also, keep in mind of purchases made with business funds but have been used for personal reasons.  Be sure to document expenses such as travel and equipment purchases correctly in order to obtain the proper credit.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to how to setup an umbrella company.

Inheritance Loans and Interest

When you get in a bind after a relative passes away it can be extremely tempting to go to the bank and get an inheritance loan. You might think that this is a good way to get the money that you need to get you through this rough time, but don’t you think that an inheritance advance might be a little easier for you? If you are unsure about the difference between the two, you need to sit up and pay attention, because you might learn something that can help you avoid a lot of financial hardship in your immediate future.

Inheritance Loans come with Big Interest

The difficult thing about inheritance loans is that they come with a bunch of interest, and they can mess up your credit and your entire life if you miss a payment or two. And with banks making loans with terms that are so bad that you can’t pay them back, you are going to run into this problem. But an inheritance advance is completely different. You show your advance officer the amount of inheritance loan that you are expecting. He or she then gives you an advance on this money; you get it in one lump sum, so if the terms of your inheritance say that you get a monthly or yearly payment until the funds are exhausted, this is a great way to get your money now. And after you get your money from the inheritance advance company, they get the money when it becomes available.

This is a very quick way to get your needed money after a loved one passes away. A bank will have mountains of paperwork for you to sign before you get a dime. If you want to waste your time feel free, but for the rest of us, we’ll take inheritance advances for our money.