By Andrew Schwartz, CPA

Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public.? You can download a complete copy of these federal tax returns at:

Here is?a continuation of?what I observed upon reviewing his returns (Read Part 1):

  • The total 2011 tax liability reflected on this tax return is $3,226,623 – or just over 15% of his gross income of $20,908,880.? This might seem quite low, but he claimed a substantial deduction of $4,020,572 for donations to charities.? Without his charitable donations, his total federal tax liability would have been approximately $4.6 million, or 22% of his gross income.
  • The total 2010 tax liability reflected on this tax return is $3,009,766 – or just under 14% of his gross income of $21,646,507.? This might also seem very low, but he claimed substantial donations to charities of $2,983,974.? He also saved taxes by taking a $129,697 credit for Foreign Taxes paid during the year.? Without these two tax breaks, his total federal tax liability would have been approximately $4.2 million, or 19.5% of his gross income.
  • The Romneys claimed itemized deductions of $5,688,179 on their 2011 Schedule A and $4,519,140 on their 2010 Schedule A.? For 2011, their itemized deductions include: $4,020,572 of charitable donations, $46,033 in investment interest expense, $226,356 in real estate taxes, and $1,323,094 in state income taxes.? They also claimed $490,000 in Miscellaneous Itemized Deductions that were passed through to him by one of his investment trusts or partnerships, of which only $71,978 was deductible since Miscellaneous Itemized Deductions are only allowable to the extent they exceed 2% of your income.?
  • Finally (and surprisingly), Mitt Romney had a sizeable capital loss carryover reported on 2010 Schedule D.? Take a look at line 14 of that year’s Schedule D and you’ll see that he went into 2010 with a capital loss carryover of $4,844,089.? His returns don’t indicate when or how those losses arose.

Extremely? Complicated Return

These tax? returns are anything but straightforward.? In my office, we don’t prepare? any returns nearly as involved as Mitt Romney’s 2011 and 2010 returns.? I? can only imagine how many hours the staff of PriceWaterhouseCoopers spent on? preparing and reviewing these tax returns.


By Andrew Schwartz, CPA

Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public.? You can download a complete copy of these federal tax returns at:

Here is? what I observed upon reviewing his returns:

  • Mitt Romney reported gross income of just about $21 million for each of these two years.? A little more than 50% of this income was from long-term capital gains and qualified dividends, which are taxed at the maximum rate of 15% for the regular tax calculation.??
  • With respect to his self-employment income, Mitt Romney did not appear to be very concerned about minimizing his tax burden.? Take a look at the Schedule C each year, and while he did not claim any expenses against his Author/Speaking Fees income of $110,500 in 2011, he did claim his agent commission of $39,756 and advertising expenses of $9,000, for a total of $48,756, against his gross self-employment income of $528,871in 2010. Apparently, he decided not to claim any other expenses, including the home office or automobile mileage, that many self-employed individuals claim on their Schedule C each year. Mitt Romney also did not contribute to a retirement plan either year based on his net self-employment income, which would have reduced his taxable income.
  • If you look at line 45 of his tax return for both year, you’ll see that he paid a ton of Alternative Minimum Taxes each year.? Based on these returns, his AMT was $224,425 in 2011 and $232,989 in 2010.? While most taxpayers with income greater than $1 million pay no AMT, people with substantial long-term capital gains and qualified dividends end up paying this tax due to how this tax calculation works.

More tomorrow!


By Andrew Schwartz, CPA

Read?Part I of this series: MONEY – Find Some Money??or Part II: MONEY – Save Some?or Part III: Money – Give some Away

Read About Money:

Check out a list of 37 Must Read Books for Small Business Owners & Entrepreneurs as compiled by Ashley Bodi of BusinessBeware.Biz.? Please make sure to pay careful attention to the deeply insightful recommendation #17 regarding the book, “First, Break All The Rules”.

Listen About Money:

Want to hear the soothing tones of my voice as I am interviewed on the topic of tax-savvy and prudent steps to take with your money?? Check out: Prudent Year End Tax Planning Strategies (on Greater Boston Media) (11 minutes).? The interview was actually about year-end planning issues, but George Knight and I discussed many of the items listed in this article which are relevant to taxpayers year round.

Final Words About Money:

I think Jackie Mason sums up the concept of money quite well by saying, “I have enough money to last me the rest of my life, unless I buy something.”



By Andrew Schwartz, CPA

Read?Part I of this series: MONEY – Find Some Money??or Part II: MONEY – Save Some

Spend Some Money:

Certain itemized deductions are? only allowable to the extent they exceed a percentage of your income. For medical? expenses, the threshold is 7.5% of your Adjusted Gross Income (AGI). For miscellaneous? itemized deductions, which include your professional expenses not claimed? against independent contractor income on a Schedule C, the threshold is? 2% of AGI.

The catch is that you can?t just? put an expense to the year you want. Since you are on the cash basis of? accounting, the expense is deductible in the year the money was spent or the? credit card transaction occurred.

if you think you are on track to? exceed either of these thresholds this year, consider “bunching your allowable expenses”? into 2012.? Beware of the Alternative Minimum Tax, however, which might? cause this strategy to backfire.

Give Away Some Money to? Charities:

People who itemize can deduct? donations made to qualified charitable organizations during the calendar year.? The IRS maintains a list of organizations? they consider to be legitimate. Now is the time to set a goal for your? 2012 contributions, and put yourself on a budget to meet that goal.

For gifts of money, keep track of the amount given.? Expect to receive a written acknoeldgement from the charity for gifts over $250 during the year, and make sure to keep that acknowledgement with that year’s tax forms and receipts.

Please be aware that you always have the option of donating appreciated investments to charities. While you get to claim your donation based on the value of the assets donated, you avoid paying any capital gains taxes on the appreciation.

And don’t forget to clean out your closets and donate your clothing and household items to a charitable organization,????? since “non-cash” contributions are deductible if you itemize.? Make sure to get a receipt.? And you should make a list of each item donated, along with its condition.? Remember, only donations of clothing and household items in “good condition or better” qualify for a deduction.? (To track what you donate, download our Non-Cash Contribution Worksheet – Excel Version? or the PDF? version, or use the App UDoGood.)

Check in tomorrow for the finale?”Money – Part IV”


By Andrew Schwartz, CPA

Miss Part I of this series: MONEY – Find Some Money?

Save Some Money:

As we wrote in ourNovember 2012 Newsletter,? the retirement limits have increased for 2012.? The maximum amount of money you can? contribute into your 401k or 403b account through salary deferrals is now $17k.?? Anyone 50 or older by 12/31/2012 can contribute an additional $5,500.? Are? you on track to max out your 401k or 403b plan this year??

Perhaps you are not in a financial? position to put away the full $17k this year.? If your employer matches your? salary deferrals, do whatever you can to contribute enough money to max out the? matching contribution.? Otherwise, you are leaving some of your employer’s? money on the? table.

Businesses, including self-employed? individuals, can also put away more money on behalf of their owners and staff in? 2012.? The? max that a business can contribute for an employee, or a self-employed person? can contribute into a SEP IRA or Solo 401k, is higher by $1k for 2012 – up to? $50k.

And as the health insurance? industry continues to evolve, consider contributing money to a Health Savings Accounts (HSA) if? you have a qualifying high-deductible plan.? For 2011, single individuals can? contribute $3,050 and families can contribute up to $6,150.? Anyone 55 or? older can contribute an additional $1,000. You have until 4/15/2012 to fully? fund your HSA for 2011.

How great are HSA’s?

  • Money contributed to an HSA is pre-tax.
  • Money within the HSA grows tax-deferred.
  • Money withdrawn from an HSA to pay for your family’s healthcare costs is tax-free.
  • The money in the HSA is your money, and any money remaining in an HSA once you turn 65 can be used to supplement your retirement income.

Put Away Some? Money for College:

If you have children,? grandchildren, or other people who you plan to help pay for college,? contributing money to a 529 Account on behalf of each person is a great way to? earmark that money.?? While you contribute post-tax dollars into a 529 plan, the money grows tax-free as? long as it’s ultimately used for college.? Please note that many states do? offer a tax break for taxpayers who contribute to 529 plans.

Another advantage of these? accounts is that you can take back all the money sitting in a 529 account at any? time down the road.? Expect to owe taxes plus a 10% penalty on the earnings? portion of any money withdrawn that isn’t used for college, however.

Check in tomorrow for “Money – Part III: Spend Some and Give Some Money”

MONEY – Part 1

By Andrew Schwartz, CPA

Wikipedia defines money as follows:

Money is any object or record that is generally accepted as payment for foods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Any kind of object or secure verifiable record that fulfills these functions can serve as money.

Here’s how Vince Vaughn and Jon? Favreau define money in their hit movie Swingers:?? Money: (adj) Top shelf (e.g., “You’re so money.”)

Trent:?? Baby, that was money! Tell me that wasn’t money. Mike:? That was so demeaning. Trent:? She smiled, baby. Mike:? I can’t believe what an a**hole you are. Trent:? Did she, or did she not smile. Mike:? She was smiling at what an a**hole you are. Trent:? She was smiling at how money I am, baby.

Regardless of how you view money, let’s give some thought to some? tax-savvy and prudent steps you can take with? your money during 2012.

Find Some Money:

What better way to start the year? than by uncovering some money sitting? there waiting for you to find?? Start by making sure you submitted sufficient? receipts to get back all the money you set aside last year to fund your employer’s? Flexible Spending Accounts (FSA).? Many people take advantage of FSAs to pay for their family’s healthcare expenses and dependent care expenses? with pre-tax dollars.? Most FSAs give you until 3/15 to submit receipts for? the prior year.

You might also consider checking to? see if there is any of your money sitting in your state’s unclaimed money fund.?? The Massachusetts Abandoned Property Division web site estimates that one person? in every ten has abandoned property.? According to the Massachusetts Abandoned? Property Laws, most financial assets that have been inactive for more than three? years are declared ?abandoned? and turned over to the Commonwealth.

Check in tomorrow for “Money – Part II: Save and Put Away Money”