WHERE WE LIVE, THERE ARE RAINBOWS

THERE ARE ANGELS IN THIS WORLD ALL AROUND US


As most of you know, I volunteer to do tax returns every year about this time. Yesterday was my first day for the season. One of the taxpayers that came in had a way about him that I couldn't figure out.

During the interview process, I found that he was paying for his parents' entire mortgage payment and, taking care of them. His mother had some health issues which limited her mobility. His father was also frail and wasn't able to lift her when she needed help. He also bought their medicine and paid for their hospital bills.

Yet, he was filing a simple return as a single person. I asked if his parents filed a return and he indicated in the affirmative. That means that the taxpayer had to file as a single person rather than as "Head of Household" with much more favorable rates. I suggested that he bring his receipts in for the medicine, the hospital bills and the mortgage statement (he indicated that he was on the mortgage with his parents) and his parents' social security numbers and dates of birth. Perhaps if his parents don't need to file a tax return, he would be able to claim them as dependents and gain "Head of Household" status.

He further would obtain tax credits like earned income credit and dependent care credits. I explained all of this to him and suggested that he come back after gathering these records. He was abrupt and said that he didn't have any of the paperwork. So he was O.K. with filing as a single person even though he could get back thousands of dollars by filing as a "Head of household". He wasn't upset with me (I don't think) but he appeared to be distraught. This happens when a person is stressed out.

He prepares everything for his parents every morning, including meals and whatever they need and then goes to work. When he comes home, he needs to clean them up, prepare their meal and do the household chores. He has no respite other than going to work every day. There are many in our society who do these things, quietly and without fanfare.

Since he insisted that we prepare his tax return as a single person, I did so. He didn't want to come back and felt that getting the documentation was a hassle. I gave him a list of things he needs to keep as records and proof of support he gives his parents so that he may be able to files his tax returns properly next year. The thousands he would get as a refund could be used to help pay for medication and perhaps hire someone to come in to give him a day off from caregiving.

I went to the grocery store early this morning to buy refreshments for the work crew who would be finishing up the installation of my new kitchen. The taxpayer was behind me at the checkout counter and told the cashier that I do tax returns as a volunteer. He appeared to be less stressed and let me know he truly appreciated the guidance I gave him.

Made my day.

KEEPING OUR KUPUNAS ACTIVE

GIVING KUPUNAS RESPONSIBILITIES HELPS TO KEEP THEM SHARP


Many times, we tend to do everything for the elderly because they're too slow, make mistakes, or don't do things correctly. Yes, we can get things done faster if we do things ourselves, but are we hurting the elderly because they no longer engage themselves physically or mentally in everyday tasks? Do they lose their self-esteem because they no longer feel they're contributing to their ever shrinking community? Yes, many believe so.

We must be as patient with them as we are with children. The only difference is that children will build upon each success pattern and the elderly will eventually deteriorate with memory loss and physical frailties.

When my dad passed away in 1994, he made me promise to watch over my mother. So I moved her in with me and she remained with me until her passing in 2002. I was busy with two teenagers at the time and ran my business from my home so I didn't have much patience with her. I had her do the laundry and dusting around the house and gave her limited duties around the stove. I did the cooking and she heated her meal in the microwave oven most of the time because I also coached baseball and was very active in PTSA activities.

In early 1995, I got a puppy to keep her company. It was one of the best decisions I made. She was named Koge (Ko-gay) and my mom had someone to scold and discipline. Koge slept in my mom's room at night to keep a watch over her.

My mom was also a Buddhist and that required frequent visits to the family gravesites. So, I grew torch ginger, orchids and anthuriums. She would go out into the yard a couple of times a day and watch as each plant grew and flowered. Every few days, she would cut flowers and place them on the family alter in her room.

Another thing that the elderly enjoy is growing food. One can do this even if one doesn't have a yard. If you live in a condo where you have a lanai, you can plant vegetables in those storage bins made by Rubbermaid. If you have a yard and have the energy, you can plant a hydroponic garden that could make you self-sustaining in the event our government goes broke and the streets get chaotic.

Some of these gardens use tilapia in tanks to  fertilize the vegetables and the vegetables in turn, recycle and cleanse the water for the tilapia. In one system, one can have protein from the fish and vegetables for vitamins, minerals and fiber. You will find that the elderly in your care will spend more time outside watching the recycling of life.

The elderly also enjoy doing crafts or making things. I encouraged my mom to continue her crocheting where she made potholders, doilies, clothing and decorative items. It keeps them busy and focused on completing something and they have something to look forward to every day. I've noticed that at the care homes I visit, the people who come in with arts and crafts are more popular than those who run Bingo games. They bring in pre-drawn pictures where they can color by the numbers, make crafts and other items that they can show off to their friends.

If we don't give them something to be responsible for, then they're just waiting to die.

GIVE BACK TO THE COMMUNITY BY DOING TAX RETURNS

VOLUNTEER AS A TAX PREPARER


Every year for the past couple of years, I've volunteered in the VITA (Volunteer Income Tax Assistance/Tax Counseling for the Elderly) sponsored by the Internal Revenue Service. The program is sponsored by a number of groups under the guidance and sponsorship of the Family and Individual Self-sufficiency Program.

http://www.hawaiitaxhelp.org/about/

To volunteer, one must pass a test set by the IRS. For geezers like me, I need all the help I can get so I attend a free seminar at Leeward Community College for two Saturdays. The class is conducted by Professor Roy Kamida, who is also a CPA. The first session is this Saturday, January 22. You can make inquiries about attending the session by emailing him at KAMIDA@HAWAII.EDU.

http://malamakupuna.blogspot.com/2010/03/professor-roy-kamida-tax-sage.html

Also assisting at Leeward is Shelley Ota who is a Professor of Accounting and is the division Chairperson for LCC Business Division. She is a 2009 recipient of the UH Regents Medal of Excellence in Teaching. Professor Sharon Cox is an Assistant Professor of Accounting in UH West Oahu's Division of Professional Studies. They are both credentialed academically.

In the above photo, both professors are brainstorming on ways to attract more people in to utilize the tax assistance program. Some of their ideas made me blush. But you can see that they're not typical of the professors I had when I struggled through college. My professors all had beards, walked and talked slowly and were hard of hearing. As you can see, neither of them have beards.

They are always on hand to provide assistance when the volunteer has questions. And, I can attest that they will not giggle or snort when you ask a question that a simpleton should know. At least, they've never laughed while I was still in their presence.

One of the things most volunteers look forward to is the food cooked by volunteer chef, Vic Punua, Jr. His sweet/sour spare ribs are of the broke-the-mouth quality.

http://malamakupuna.blogspot.com/2010/03/victor-punua-jr.html

Then, there are the volunteers who keep coming back year after year. You get to renew old friendships while helping the people with their tax returns.

http://malamakupuna.blogspot.com/2010/03/toni-tsusaki-community-resource.html

http://malamakupuna.blogspot.com/2010/03/jack-hewitt-computer-guru.html
Of course, the main benefit you will get as a volunteer is the satisfaction in helping people to navigate through the complex process when preparing a tax return. You will also acquire a better knowledge of our tax system. At Leeward, where I volunteer, there are many accounting students who are part of the program to obtain class credits and hands-on knowledge of the tax preparation process. They obtain real life experiences in dealing with "clients" which will serve them well in their future endeavors. As a geezer volunteer, interacting with the young keeps me young and on my toes.

Our Government Stuck it To Us Again

EXTENDING THE TAX RATES FOR EVERYONE


Our government likes to pull the wool over our eyes. We have what they call a "lame duck" Congress and they went ahead anyway to pass legislation that the incoming Congress would likely not agree with. Arrogance is the best word to describe those who are in charge of our government.

The country is divided into two groups. One group believes in Old English Law. They believe that everything came from the Crown and everything therefore is owned by the Crown except for that which the Crown decides to allow the subjects to keep. We derived much of our laws based on this concept.

The other group, as expected, believes in the exact opposite, mainly those things that are guaranteed to the citizens of the United States by the Constitution. For those of you who attended private school, let me lay out the two relevant provisions: Amendment IV and Amendment X.

Amendment IV (of the Bill of Rights) assured that we are all secured in our "persons, houses, papers, and effects, against unreasonable searches and seizures...." by the government.  Amendment X reserves all powers "not delegated to the United States by the Constitution... for the States and the people". In other words, the people have all powers and only those powers granted to the Federal Government by the Constitution can be exercised by the Federal Government.

Over the years, Congress slowly changed things by passing legislation granting them powers over the people which are not authorized by the Constitution. The EPA (Environmental Protection Agency) needs to give approval for everything anyone does and can make things so prohibitively expensive that projects cannot be economically viable. A good example is the Superferry. The ADA (Americans with Disabilities Act) can also be used by activists to shut down projects by making things so expensive that projects cannot turn a profit.

I could go on and on, but other than those who went to private school, most of you get the picture.

Before we examine the legislation extending the current tax rates, let's lay some facts on the table.

1. The top 1% of wage earners pay 41% of the income taxes.

2. The bottom 50% of wage earners pay 3% of the nation's income taxes and many don't pay anything at all.

3. The top 1% of wage earners make only 19% of the nation's income.

4. Many who pay no income tax actually get back money from the State and Federal Governments in what is called "refundable credits".

Let me further elaborate on #4 above. A single person with two young toddlers makes $20,000 in income. With various tax credits, low income rental credits, child care tax credits, etc., this person gets $4,500 from the State of Hawaii and another whopping $4,000 from the Federal Government. In addition, this person can qualify for Section 8 rental assistance, food stamps and other welfare programs costing thousands of additional dollars. This could be the equivalence of a $40,000 salary.

Let me state it another way. The tax credits are in addition to welfare benefits and is a direct payment to the recipient through their tax returns, bypassing the Social Services agencies. So the taxpayer pays for Social Services with higher taxes and for the direct tax credits through the person's tax returns. No wonder our governments are in a state of insolvency. We give a vote to those who not only pay no income tax, but get whopping refunds called "tax credits".

Thomas Jefferson once said, "Democracy will cease to exist when you take away from people who are willing to work and give to those who do not".

Now, let's look at the major provisions of the recently passed law that was signed by our President.

Dumb thing # 1. The tax rates were extended for only two years. It should've been made permanent. This is because most businesses plan for things in five and ten year projected increments. Two years will not motivate businesses and investors to expand if the rug is pulled from under them in two years.

Dumb thing #2. A credit was given to employees that is equal to 2% of their payroll. This is a reduction of the FICA (Social Security tax). Now, unless you went to private school, you would know that Social Security will soon be insolvent and there won't be money to pay future benefits. When they cut the "deposits" that were to fund Social Security, how will that increase the funds required to pay benefits? They have to make up for that shortage somewhere and I suspect it'll come from future tax increases, reduction in Social Security benefits or they will again print more money. Either way, our kupunas fall further behind.

Dumb thing # 3. The law also extended unemployment benefits for another 13 months. Stated another way, they are going to reward more people for not working. The cost of the benefits are passed on to the various states who in turn will pass that on to the various businesses in the form of unemployment taxes. Businesses are already faced with increased health care premiums for future employees and now they face even higher unemployment taxes. I don't see it as an incentive for businesses to hire more people. Better to buy goods produced by foreign workers and distribute those goods in the United States.

Dumb thing # 4. The Federal Estate tax was raised. Essentially, you get the first $5 million free in the form of a Unified Credit. But all assets over $5 million is taxed at 35%. This is a tax on your right to pass on assets (acquire with previously taxed dollars) to your heirs.

Let me assume that a business is worth $7 million. The owner suddenly dies. The IRS declares that the business is worth $10 million using the "capitalization of earnings method". The owner is not around to argue otherwise. Further, the value is based upon what the business was worth as a "going concern" with the owner still available to guide the company through profitability. The tax needs to be paid with cash within 9 months from the date of death.

The estate must sell assets in order to pay the IRS. The tax bill is $1.75 million. To raise that cash immediately, a forced sale of $3 million in assets is made. In all likelihood, the business would need to be liquidated and perhaps $5 million in assets needs to be sold at liquidation prices to acquire the $1.75 million in cash to pay the tax. Every employee is left without a job.

Note that I did not differentiate between Democrats and Republicans. Both Parties have members who believe that they're the elites of society and want a bigger government in order to use taxpayers' money to wield power. Essentially, it is the government against the people. I fear my government.