DRASTIC CHANGES' AHEAD FOR MICKELSON

Golfer cites higher federal and state taxes as reason for contemplating his options

LA QUINTA — San Diego professional golfer Phil Mickelson said after the final round of the PGA Tour's Humana Challenge that he will have to make "drastic changes" in his life because of the federal and state taxes he is paying, and he confirmed that his decision to not buy an interest in the Padres was directly related to his financial situation.

 

"I'll probably talk more in depth next week (at the Farmers Insurance Open at Torrey Pines). I'm not going to jump the gun," Mickelson said. "There are going to be some drastic changes. I happen to be in the zone that is targeted both federally and by the state, and it doesn't work for me right now."

 

Mickelson, 42, was responding to a question about why, in a conference call last Monday, he referred to "what's gone on the last couple of months, politically," when talking about the semi-retirement of fellow tour pro Steve Stricker.

"I think we're all going to have to find things that work for us," Mickelson said on the call.

The options for Mickelson would seem to be to move to a state with lower taxes or go into some form of retirement.

 

Asked if there was a correlation between his views and his withdrawal from interest in the Padres, Mickelson said, "Yeah, absolutely."

Mickelson made it known on Dec. 18 that he had told the Padres he wouldn't be part of the ownership group after expressing enthusiasm throughout the summer for his possible inclusion. He said on that night, "I've been born and raised here, but at this moment I'm not able to make that kind of long-term commitment to the city and to the team."

Mickelson, who lives in Rancho Santa Fe, is expected to address the media in a press conference on Wednesday at Torrey Pines, and he said on Sunday, "San Diego is where I live. It's where the Padres thing was a possibility, where my family is. It just seems to be a better fit than right here off the 18th (green) in Palm Springs."

In November, California voters approved Proposition 30, which imposed a 13.3 percent tax rate for incomes of more than $1 million — a percentage increase of 29.13 percent over the previous "millionaires" tax of 10.3 percent.

As of June, Forbes Magazine ranked Mickelson as the seventh-highest paid athlete in sports, with on-course earnings and endorsements totaling $47.8 million.

"If you add up all of the federal and you look at disability and unemployment and the social security and the state, my tax rate is 62, 63 percent," Mickelson said Sunday. "So I've got to make some decisions about what I'm going to do."

The San Diego native has won 40 PGA Tour events and four major championships in a 21-year career.

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If you want the best in tax advice please see my blog at

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Supreme Court Decision will change your taxes

A surprising number of conservative commentators have come out cheering the Obama Care Decision  because it ruled that the Commerce clause in the Constitution – Congress's power to regulate commerce across the 50 states – doesn't empower our legislators to force us to buy things (in this case, health insurance).

Of course, Congress can require those who propose to engage in regulated activities to purchase things, as a price of doing business.  But ObamaCare forces us to buy insurance just because we woke up one day and were citizens of the United States (and earning a certain income and not covered by insurance our employers have to buy).

The real decision

SCOTUS has said Congress can do that.  Focusing on SCOTUS's repudiation of the Commerce clause justification is pursuing a gigantic red herring.  Who cares what the Commerce clause allows, if SCOTUS says Congress can make us buy stuff anyway?

The Commerce clause has been made irrelevant by this ruling.  Chief Justice Roberts found another way to justify Congress making us buy stuff.  No one will ever have to invoke the Commerce clause again to propose a law that makes us buy stuff.  Regardless of what stuff we have to buy today, any Congress in the future can make us buy other stuff.  All Congress has to do is impose a monetary penalty if we don't buy the mandated stuff, and SCOTUS will call it a "tax."

The victory for the Commerce clause is the Pyrrhic one here.  Another such victory, and we are lost.

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If you want the best in tax advice please see my blog at

LarryLaveTaxman.blogspot.com or email me

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Deduct the interest on your second home

Deduct the loan interest on your RV, camper, or even your boat.

 You are allowed to deduct mortgage interest on your primary residence and one other residence.

 

The definition of what constitutes a residence is very broad and includes RV's, campers, and boats as long as they have cooking, toilet, and sleeping facilities.

This is a second home deduction.

If you want the best in tax advice please see my blog at

LarryLaveTaxman@blogspot.com or email me

LarryLaveTaxman@gmail.com

Plan your divorce to save Taxes

Timing your divorce can save you taxes.

 

I know this sounds cold, but not every divorce is embittered. Some people actually do it serially to get tax benefits.

 

The formula is the exact opposite of when you get married. If both spouses earn about the same amount of money, getting a divorce before the year ends will save taxes by eliminating the marriage penalty. If one spouse earns a lot more than the other, waiting until January will save taxes by taking advantage of the marriage bonus for one last year.

 

There are many other planning opportunities with a divorce.

If you want the best in tax advice please see my blog at

LarryLaveTaxman@blogspot.com or email me

LarryLaveTaxman@gmail.com

Take your medical expense with your emplloyer

Medical expenses can rarely be taken on Schedule A due to the 7.5% of AGI limitation, but through your company's cafeteria plan, you can fully deduct your medical expenses from your W-2 wages.

 

 The only catch is that if your unreimbursed medical expenses for the year are less than what you set aside from your wages, the difference is forfeited.

 

 The definition of what constitutes qualified medical expenses is very broad so make sure to visit your dentist, optometrist, acupuncturist, chiropractor, etc. in December if you haven't used up all of your current year medical expense contributions.
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If you want the best in tax advice please see my blog at

LarryLaveTaxman@blogspot.com or email me

LarryLaveTaxman@gmail.com

Get the best Benefits your company has to offer

Take advantage of your company's cafeteria plan and other tax-free benefits.

 

 For example, your company's dependent care program is a great deal if you are in the 27% tax bracket or higher. The dependent care credit only gives you a tax credit of 20% of your child-care expenses, but through your company's cafeteria plan you will be getting a tax benefit equal to the tax bracket you are in. So if you are in the 30% tax bracket, you will be getting a tax benefit of 30% as well as a reduction of your state income tax.

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If you want the best in tax advice please see my blog at

LarryLaveTaxman@blogspot.com or email me

LarryLaveTaxman@gmail.com

Arrange your affairs to pay less TAX

 Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.

 

Judge Learned Hand quoted in

Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)

If you want to be Charitable, give money to a Charity, but as the Judge Hand says, keep your taxes down.

 

Use the Moolastreet tips to save yourself bucks.

 

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If you want the best in tax advice please see my blog at

LarryLaveTaxman.blogspot.com or email me

LarryLaveTaxman@gmail.com