Etrade brokerage charges $25/quarter for balances lower than $5000. So after the dotcom bust, many people's stuff are worth much lower than they had expected, and then Etrade surreptitiously eat away at $100/year. I am getting out. 04-06-18:3892

Expensive to buy. At Oss Library: Ref 343.9747N

Having studied the iPen bidding and participated in one winning bid, I learned a few strategies for bidding on eBay:

• add items to your watch-list. you will continue to see the item, the details of the bidding prices and their respective bidders. This will allow you to know about the details of other bidders and their strategies.
• unlike UBid, Ebay's auction time is exact. So if you dont bid a sufficient amount, or not in time, you will not win the item.
• bidders live in different time zones. So the time at which Auction ends is critical.
• Most people dont bid until the last minute, to keep the cost down. An item on Friday afternoon when everyone will be going home for the weekend, may led to fewer opponents. For example, my iPen on Wednesday for $48 got sold for $38 on Friday 4:30PM.
• If you bid early, and raise the price, fewer people will bother with that item, and bid on another one that is ready the next day. This way, you will know early enough if there are opponents around near the end of the bidding. You will also find out early enough whether you should bother to be around near the end of the bidding.
• The first few weeks of the same item will led to the fanatics getting what they want, then the price should plummet. Let us see if that is the case by watching the iPen.

At first I thought deductions such as charities and mortgage loan interest are down the drain as well, but thankfully Fei corrected me (see end of article). Details of what counts as deductions are in the article The Advocate - Don't let alternative minimum tax sneak up on you (http://www.stamfordadvocate.com/business/taxes/sns-taxes-amt,0,3574789.story?coll=sns-taxes-headlines).

During lunch, Cheng pointed out that the increase in local and property tax (the recent jump a result of the Iraq War - as seen in costofwar.com) is the major culprit for incurring the AMT. Xiaoqiang pointed out that, since mortgage interest and charitable donations are ways to lower the AMT income and get us out of AMT, there is now effectively an extra tax incentive for giving to churches and chinese schools, despite the discounted nature of such donations in the regular tax system (by discount I mean the phasing out that makes our charitable donations tax deductible at around 80% the actual amount).

For the record, Fei writes:
Two comments:

• (1) I could be mistaken, but I am pretty sure  that donation is deductible from AMT income.
•  So AMT income in your  formula is roughly equal to
  AGI in regular tax  (i.e., your W2 income, etc.)  - AMT allowed deduction (mortgage interest, donation, etc)
•  Note: property tax, state tax, etc. are not deductible w.r.t. AMT, but mortage interest and donation are.
• (2)  Let AMT taxable income  = AMT income - AMT exemption.
• If part of your AMT taxable income is long-term capital gain or dividend, that portion is taxed at lower rate (e.g., 15%) as like in regular tax system, instead of AMT rate (26%, 28%, .... )
• This means rich people whose income are mainly from stocks or dividends are not paying AMT rates, they are paying 15%.
•  So the lesson is: turn your wage into capital gain or dividends. How?  open your own business :-)
•  There has been some debates about AMT in congress, and several bills pending. The reason that nothing happens is because rich people do not care (they pay 15% anyway), low-income people do not care. Only people like us are suffering :-)
• How to change that?  start the 3rd party since the existing two parties do not care about this issue at all.

For people who rely on various tax deductions to lower their tremendous taxes, the AMT forms a limit on how much of the deductions that people can effectively use. The AMT is affecting particularly people like us - wage earners raising a family with compassion in charity work. So a clear understanding is essential. The lack of insightful descriptions online prompts me to share my thoughts here. Smartmoney.com: Tax Guide: The Alternative Minimum Tax (www.smartmoney.com/tax/filing/index.cfm?story=amt) provided one of the better explanations that I had used.

To visualize the AMT, I first reformulate the AMT rules, using numbers associated with Joint Filers, but one can easily modify them for other situation. The insights would remain the same.

AMT Rules:

• Phase-out exemption for Income in [$150K, $382K]
• Taxable amount = Income - Exemption
• AMT: First 175K of the Taxable amount is taxed at 26%, excess is at 28%.

I simplify the AMT calculations for various income ranges, and also provide the assoicated range of the effective rate, defined as AMT/Income.

1. Income < $58K, AMT = 0.
2. Income in [$58K, $150K], AMT = 26% (Income - $58K). Effective rate range: [0, 16%]
3. Income > $382K, Exemption = 0, AMT = 28% (Income - $175K) + 26% ($175K) = 28% (Income - $12.5K). Effective rate goes from 27.1% to 28% asymptotically.
4. For $150K < Income < $382K, with a phase-out exemption:
   • Exemption = $58K - ( Income - $150K)/4 = $95.5K - Income/4
   • Taxable amount = 1.25 x Income - $95.5K
   • AMT = 26% (Taxable amount) + 2%(Taxable amount - $175K) (if TaxAmt exceed 175K)
     = 26% ( 1.25 x Income - $95.5K ) + 2% (1.25 x Income - 95.5K -175K) (if Income> 270.5K/1.25)
     = (32.5% Income - $24,830) + (2.5% Income - $5,410) (if Income >216.4K)
5. Hence for Income in [$150K, $216.4K], AMT = 32.5% Income - $24,830 = 32.5% (Income - $76.4K). Effective Rate for this range is [16%, 21%].
6. For Income in [$216.4, $382K], AMT = 35% Income - $30,240 = 35% (Income - $86.4K). Effective Rate goes from [21%, 27.1%].

Two quick examples:

• For $200,000 income, AMT = $40,170, effectively 20% of income.
• For $250,000 income, AMT = $57,260. This is 22.9% income.

BTW, learning the above, I find that an online AMT Tax Calculator at Mcalculator.com (http://mcalculator.com/mortgage_ira_tax_effects_calculators/amt_tax.html) incorrectly calculates the AMT (Scrutiny reveals that it uses outdated exemption constants, e.g. $46K rather than $58K for joint filers, as shown in its javascript source code.)

Implications: The AMT forms a lower limit to our regular taxes. In other words, for regular taxes we often rely on deductions, which for wage earners raising a family are primarily, in the order of increasing flexibility

• federal, state, local taxes
• personal and dependent exemptions
• property taxes
• church and charity donations

As we use the top few deductions to lower our regular taxes, we will quickly find ourselves reaching the AMT limit quickly. (This is especially so since the govt taxes correlates with our salary income, as do our property taxes since we tend to buy houses that correlate with our income as well.) That means the deductions lower on the list will not be useable at all to lower the regular taxes that we have to pay.

The most significant implication is that we will lose all the tax incentives for giving to churches, Chinese schools, and charities, which are the major cornerstones of our social communities. Given that we raise our families in these communities, we will definitely continue to contribute to these institutions. That means the AMT simply eliminated our tax benefits for these donations.

Given that tax laws will not change rapidly, can we brainstorm for ways to protect the communities around us?

Those people who find their regular taxes well above the AMT now have effectively extra "tax benefits" that should no longer be taken for granted. Definitely not let such go to waste.

Is it better to form private enterprises that can better channel resources to these communities, rather than rely on the old channel of charity donations?

I am one of those people who pays monthly bills mindlessly, never thinking twice about the meaning of the numbers that I type into my epay program, let alone noticing the gradual or sudden increases. So the news of tax rise in Westchester County that circulated several months ago only sink in recently, while doing my income tax in detail. I suddenly realize : living in Westchester has become much harder for many people, as county (and soon school) taxes have risen about 20%. And that may be only the beginning.

Surfing to find an explanation, I encountered an article in wbai.org that some of you may find useful, despite possible political bias within:
http://www.wbai.org/artman/publish/article_670.php
titled: Westchester's share of Iraq war to date: $440,503,321.00 - and counting...
(that figure is now up to $560M at costofwar.com).
The bottom line: The cost of Iraq war is trickling down to the local government, and so for counties to continue to operate, they will have to get the money from somewhere, and usually not from the lobbying friends of the legislature.
See related article at: http://www.wbai.org/artman/publish/article_685.php

Does this call for smarter living? strengthen the influence of our community within the county? look out for further trappings?

Kiteboarding and Kitesurfing Gear...Kite-Line.Com

google for "Tax Extension" leads to : Information for Tax Extensions

Basically, for individuals: Form 4868 for initial extension. Form 2688 for additional extension.

http://www.wwwebtax.com/miscellaneous/extentions_forms.htm


Reference:
IRS Tax Extension Forms, IRS and Tax

gift idea center has a link to UncommonGoods: KARIM RASHID CHESS SET and to gold violin