Tuesday, April 05, 2011

In Honor Of Our Income Tax System

I ought to do this every year to raise your awareness to the awful and confusing burden put upon us by our bloated Income Tax System. Below you will find an exact reproduction of instructions I copied from Turbo Tax yesterday as it tried to explain my taxes to me as a part of my annual pilgrimage to April 15th.

This is only a small bit of our Tax Understanding Problem. According to a site called U. S Tax Code On-Line which can be seen at…http://www.fourmilab.ch/uscode/26usc/, there are a lot of other instructions we must contend with every year…
“The complete Internal Revenue Code is more than 24 megabytes in length, and contains more than 3.4 million words; printed 60 lines to the page, it would fill more than 7500 letter-size pages.” Surprised smile

I am not trying to be cute. I did not change a word of the instructions below. I would explain it to you, dear reader, if I knew what the heck the IRS was trying to tell us.

“Material Participation
You materially participate in your business if you are actively involved in the operation of your business.
You materially participated if you pass any of the following tests:
  • You participate in the activity for more than 500 hours during the year.
  • You are the only person who substantially participates in the activity , including nonowners.
  • You participate in the activity more than 100 hours during the year and no one else participates more than you do, including nonowners.
  • You participate more than 100 hours in this and other activities, and the total for all the activities is more than 500 hours.
Also:
  • If you materially participate in a personal service activity for at least three years you are a material participant for life. Personal services include child care, consultant, real estate agent, etc
  • You participated in the activity on a regular, continuous, and substantial basis for more than 100 hours during the year.
  • If married, you can include your spouse's participation toward the 500- and 100-hour tests.
Requirements:
The work you performed must have been:
  • Done at the time you owned an interest in the activity, and must have been the type that an owner customarily does.
Exceptions:
  • Any hours managing the activity do not count toward material participation if:
  • Anyone other than you received compensation for managing the activity, or
  • Anyone spent more hours than you performing services in managing the activity during the year.”
This all started in 1913 when average income was around $15,000 and the original 1040 form (click link below) shows that the Income Tax Rate was 0% up to $20,000 and 1% between $20,000 and not exceeding $50,000...
http://www.ourdocuments.gov/document_data/document_images/doc_057b_big.jpg

This is the part of a Foolishness...Or Is It? where I would normally peck out something cute but I can’t do that today because there are tears in my eyes. (Or did I just peck out something cute? I can’t tell because there are tears in my eyes).

Would I kid u?

1 comment:

Anonymous said...

This is an excellent moment to recommend the FAIR TAX which will fund the government without stint and be fair to all economic levels ..assuredly the poorer amoung us. The IRS is completely out of control and is definitely NON American. Penny