Mishpacha: Keeping a White Collar Clean

I am very thankful to those who are the eyes and ears of this blog and a special thank you to reader rosie. Mishpacha has run an article in the recent edition titled Keeping a White Collar Clean. I need to get my hands on a copy of the magazine and plan to buy a copy later this week so I can write some though. Rosie summed up some of the reasons below (underlined) and I am very grateful for the summary as the information is enhancing from a professional standpoint. Below the summarized reasons, I've put some of my own notes and hopefully this post will serve as a reminder to me to get on the ball and take some time to write about some tax and personal finances topics that I've wanted to write about but need to clarify my thoughts in order to share valuable information.

1. Foreign bank accounts and not paying taxes on them.

Foreign bank accounts are a hot tax topic lately. In the past, such accounts were often ignored and in 2004 the government enacted a penalty for those who did not report foreign accounts--owned or signature authority--totaling $10,000 or more during the calendar year. More requirements on the FBAR are available at the IRS website. I'm not an expert on FBAR reporting requirements, nor do I have any foreign accounts of my own or intentions of opening foreign accounts.

The bottom line is that all income, no matter where it is sourced, must be claimed on the 1040 (in converted American dollars). Failure to claim the income can open the door to taking credits that the taxpayer is not eligible for. Foreign income can be excluded under certain circumstances (form 2555 or 2555EZ) or a tax credit can be claimed for foreign tax paid.

2. Business that often commit fraud such as the mortgage business.

3. Due to parental support, people with homes and cars get IRS attention because they claim no income.

It is important to understand that audits are mostly triggered based on ratios. When the "numbers don't add up" it arouses suspicion. People can't be spending all their money on mortgages, business expenses, medical expenses, etc. They still need to eat and wear clothing.

Excessive itemized deductions in comparison to income is a red flag, especially for years on end. I found a reference to the ratios through a firm: for itemized deductions 45% is the ratio and for Schedule C (business income or loss), expenses exceeding 60% of income is the trigger. Mortgage interest, taxes (real estate and state income taxes), and charitable donations are the big three itemized deductions. I checked our ratios and was please to be well under the audit trigger for both schedules.

I once had a Shabbat lunch with someone whose ratios had triggered an audit and the IRS examiner asked him "what do you live on?" I don't think "G-d provides" is the answer the auditor wants to hear. So if your ratios are excessive, it makes sense to have an answer. When my parent's tax return was flagged for audit, they were able to sufficiently explain to the examiner the market trend and never had to undergo the arduous process of a full blown audit as the explanation was reasonable and easily verifiable.

4. Larger than average charitable contribution deductions getting IRS attention.

I believe the IRS tracks average charitable deductions by taxpayer income. I recall reading somewhere that the average American donations between 3 and 5% of AGI (adjusted gross income). Exceeding the average is fine, but donations need to be well documented. In recent years documentation requirements have tightened. All cash donations need a receipt. A letter stating no goods or services received is required should a donation be $250 or greater. Cancelled checks or credit card receipts will suffice for donations under $250.

5. Money borrowed from gemachs that allows people to live with more than they make but attracting the attention of the IRS.

This clearly plays into the discussion of ratios above. I'd like to learn more about all of these money gemachs I keep hearing about. Out of town, we tend towards lending gemachs: simcha wear, children's clothing, baby equipment, and the like. An issue I can see arising should an auditor be presented with a bank register and out of wack numbers would be if the loans are really income, rather than loans and/or tzedakah (see the domino effect, #8 below).

6. Large checks over $10,000 hitting the banks or smaller checks that follow a pattern, alerting the government.

7. Jews incriminating other Jews during plea bargains or because they are involved in business or divorce disputes.

8. The domino effect when one fraudulent businessman is investigated and those who did business with him are investigated as well.

Tzedek, Tzedek Tirdof: Yes You Should Take Action

Some injustices simply can't be ignored and I'd say this is one of them (see post at imamother, no responses have come in but I think the responses will be interesting). While I tend to let certain things slide when it is my own cheshbon, I feel strongly that when it comes to our children, certain injustices cannot stand and non-payment (or re-negotiated, after the fact partial payment) is one such thing.

As adults, many of us will have to deal with people that are less than yashar and we might choose to certain things slide, oftentimes because we make a calculation that it will cost us more (emotionally, financially, politically, etc) to pursue action. But I believe that as a general rule, I'd say our children need to see that their parents are willing to do whatever it takes to pursue what is right so that 1) our children understand that certain (unfortunately fairly common things) are simply wrong and 2) for the sake of our children's relationship to Torah and Am Yisrael as all of the mi kamocha-lectures cannot undo the damage.

My long time readers might remember a post I wrote based on the chinuch column in the Yated regarding a teacher's accusation that a student asking for payment for babysitting (the next day!) was a form of chutzpah. I find it shameful that children are being brought into shameful cat-and-mouse games of non-payment/late payment that too many adults play. But children? While leadership worries about the internet eroding chinuch (and they have a point!), I'm afraid the initial erosion is in an ethic that is mostly ignored.

I'm certain that pursuing that extra $500 (assuming the first $500 is delivered) is probably a losing proposal should another simple phone call not do the trick. Going to a din Torah over $500 is likely to end up putting the family in the red vis a vis this transaction in the aggregate, although I'm not certain what din Torah fees run (. . . . just basing my assumption on what it cost my friend to have a beit din sit for 1/2 an hour for a get). I hope that if such a thing were to happen to my own children, I would fight tooth and nail to pursue what is owed to them although monetarily it is likely a losing proposal.

Goodluck to the parents and I hope that those that they may have to call as witnesses will understand that this is no time to "turn the other cheek" (a Chrisitian concept that I believe is the opposite of tzedek, tzedek tirdof).

I Will Let Others Do the Laughing

I'm not LOL about this Pesach story because I find it outrageous, although I do believe that Hashem has a sense of humor, hopefully stopping an unnecessary "hiddur" before it takes off:

(From JPost) As reported by haredi media outlets, members of the Mishkenot Yaakov community in the capital’s Ramat Shlomo neighborhood were encouraged by their Rabbi Simcha Rabinowitz to take the tradition one step further, and rather than selling the hametz, actually give it to the non-Jew, who would presumably return it after the holiday.

Many people chose to put their products – including expensive alcoholic beverages – in the room destined for the hametz, believing that such an act would be a higher degree of observing the holiday’s prohibition of not owning leavened products.

I see nothing particularly humorous about a Rav of a community, a community that is presumably short on money, encouraging his kehillah to give away (!) their hametz as an enhancement of long standing way of fulfilling the mitzvah to rid oneself of hametz. As per a Mother In Israel's reporting, the non-Jew even took off with some one's (uncleaned) baby carriage that was left in the room. Hopefully a clean stroller can be recovered, but if the contract was to give away whatever was in the room, it sounds unlikely.

We can argue about if/when one should sell their hametz, but to encourage a new method because one sides with those who don't care for the sale of hametz? I will file this under treating other people's assets without requisite care. Once you give something away (especially a consumable), how can one presume it will be returned?

Guest Post: Grow a Garden, Eat Healthy, Save Money

by Zach

Whether or not you believe in global warming, and how the current production of produce worsens the problem, I'm sure we can all agree that tomatoes and other vegetables do not naturally grow in plastic wrap. I'm sure most of you are also tired of buying tomatoes, peppers, or other vegetables weeks in advance of when you may actually need them while they slowly ripen. Lastly, I'm sure all of you do not want to continue to ingest the pesticides that other fruits and vegetables are doused in every day. Its debatable of the actual dangers of these chemicals, but even if they're ok, (which I doubt) I'd rather not have them anywhere near my food.

So how do we solve these problems. Well, a home vegetable garden is something that I started last year and really enjoyed throughout the summer. Its a slow process, it takes about 2 ½ – 3 months for the first fruits, but a very rewarding one. I guess I'll just give a brief summary of my experience last summer and if anyone has any questions about specifics, they can email me.

After I read Al Gore's “An Inconvenient Truth”, I felt inspired to single handedly save the world. But I'm only in college and couldn't afford a hybrid car, so I thought that a vegetable garden would help. I had a patch of soil 4 feet wide and 30 feet long, so I chose 5 crops and gave them 6 feet a piece: Corn, Butternut Squash, Tomatoes, Peppers, and Strawberries. You can buy seeds at Home Depot, Christmas Tree Shop, or your local guy (Herolds Farm here in Fair Lawn). You may need to add some nutrient rich soil, but I didn't and everything worked out pretty well. I started planting after Passover last year in mid-April, and within about 3 weeks there was already some signs of life.

After that initial joy of the first seedlings, things get kinda boring for the next 6-8 weeks as the plants continue to slowly grow a little every day. The corn was the most fun to watch though; I left for shul in the morning one Shabbos and they must have grown 4 inches by the time I got back a few hours later. But for the most part, if you water a couple times of week, the plants will continue to grow and strengthen as they prepare to bloom.

In late June/early July (depending on when you start), you'll finally be able to enjoy the first fruits. From here on out its really just about watering every other day and harvesting your fruits whenever they are ripe. I usually waited to do this until friday afternoon (when I had some free time) and we had enough tomatoes to last the entire week.

Here is a breakdown of how each plant grew last year. My numbers are a little rusty as I'm doing it from memory.

Corn: Worked great, the stalks grew about 6 feet tall and produced two ears per stalk. We harvested maybe a couple but then I came home one afternoon to find that squirrels had devoured the rest of them. It was fun while it lasted. Hopefully you'll have better luck.

Strawberries: Didn't grow at all. I hear they are very hard to grow from seeds, but you might be able to buy the plants themselves.

Butternut Squash: Grew very well, we got maybe a dozen or so squashes (squashi?) from just one plant. It grows all over the place though so you might want to trellice it on a fence. All squash grow similar (zuchini, yellow squash, acorn, pumpkins...) so I'm assuming that they'll all grow wonderfully in this area.

Peppers: Came in very late and only produced a couple peppers. I have a feeling we didn't do something right so maybe they'll work better this year. There are so many varieties to choose from so plant all different varieties of colors and spiciness.

Tomatoes: This was the best by far. I think we got on average a Quart of the little yellow plum tomatoes every week. I was even able to give quite a bit to some friends. They can get very tall depending on what type you buy, so you may need to stake them, or cage them, or they'll just flop over. Thats not so bad (it happened to me) but it doesn't look so nice and can get kind of messy. This year, I'm going to try and do 3 different types of tomatoes so I'll have much more variety.

Anyways, thats pretty much it from last year. I had a great time doing it, and the harvesting was the most fun of all. Its a great way to get the kids involved as well, and they can definitely help out. For the most part, you can keep your prices very low (I only bought seeds for like 3$ a pack) but if you want to keep things neat, you may need to spend some money on cages/stakes/fertilizer/ or gardening tools if you don't have them already. I was lucky and already had them.

I'll just mention the economic benefits as well, because I know this blog tries to help out in that department. I can't say that it saved my family that much money but we probably got like 30$ or something out of the process. Then again, I had no idea what I was doing last year and was so thankful it actually worked. If you do thing right, I've read that you can grow as much as $2000 worth of produce in a 20 by 20 foot area. That seems like a ton of money from just a garden, but I guess it depends on how big your weekly grocery budget is. I think in reality, if you do things correct, you can probably grow about $500 worth of food, but even if that doesn't happen I guarantee it is one of the most fun and rewarding experiences.

This year, we are going a little crazy and are growing lettuce, carrots, onions, hot peppers, cucumbers, eggplant, 3 types of tomatoes, corn, and maybe more. If anyone is interested I can keep them updated on how it goes, so post some comments!! I don't think this will pay for your school tuition (unless you go to a CUNY school) but it could help.

Again, if you need any specific help or advice on how to grow specific plants feel free to email me at countzacky@yahoo.com I'm not an expert, but I've done a ton of research so I'd be glad to help.

Best of luck to all.

Guest Post: 10 Tips for Saving Money, Time, Nerves, and Health on Pesach

by Rosie (Thank you!)

1)Keep a log of what is spent each year and how much of each item was used up. If new items are to be purchased for the following Pesach, such as fry pans, tablecloths, knives, etc, put that on the log and put the log in a place where it is accessible all year. Keep Pesach in mind when buying furniture and baby gear as to how easy the items will be to clean. Throughout the year, buy needed items on sale such as aluminum foil, food storage bags, etc.

2)Pay income taxes prior to Purim rather that wait until Pesach. The government gets your money one month sooner but you avoid the headaches. It is truly sad to see people trying to work on taxes when they could be cooking for Pesach.

3) Have your plumbing lines snaked prior to Pesach and make sure that all toilet tissue is good for plumbing. Do not allow anyone to flush tissues or wipes and find a nice way of telling people to flush once for #1 and twice for #2 to avoid clogging toilets. Emergency plumbing work costs more. Be sure to have plungers handy and apparently dawn dishwashing liquid can help some drain clogs.

4) Old refrigerators that are rarely used, tend to die on Pesach when lots of food is put in at once and the refrigerator must work hard to cool it down. Frequently check to see that the refrigerators are working and that the food is cold.

5) Make all routine auto maintenance and health care visits prior to Purim or after Pesach. The exception will be for children returning from yeshiva, seminary, or college and need to see the dentist. This will save on time spent on oil changes or dental hygiene appointments that can be scheduled for after Pesach.

6)Purchase clothing prior to Purim to avoid running out erev Pesach to buy items that could have been planned long before.

7)Plan only one activity for chol ha moed that costs such as a trip to the zoo and the rest should be kite flying in the park or other free activities such as a public library that has toys and activities. Give the kids a choice of the activity that costs.

8) Expect the unexpected. Don’t let your car run out of gas like we did one erev Pesach. Chicken pox tends to come out on Pesach and one year 5 of our children came down with it the day of bedikas Chometz. Keep on hand fever reducers for epidemics and remember to have either laxatives or prune juice on hand for stomach aches due to change in diet. Pesach cleaning can trigger asthma attacks. Keep a few windows open if a gas stove is kept running on a yomtov.

9) Plan some type of treat for after bedikas chometz such as Passover chocolates. Everyone should be congratulated on a job well done.

10) Make cleaning products from kosher for Passover vinegar or baking soda. Use spray bottles and don’t fill buckets of water if there are babies in the house that toddle or crawl, unless they are sleeping.

Even More Revolting. . . and divorced from the mesorah I know

Even more revolting than the Japan Song video that was posted on VIN amongst other places, is Matzav publicizing the thoughts of a Rebbe that would be better left unspoken and unpublished.

Sometimes I wonder if I'm just wasting virtual ink in cyberspace. But there needs to be dissenting voices. A quick Google search reveals that this story has been picked up by all sorts of websites outside the tribe. And, to make matters worse, these irresponsible rantings and ravings are reported (via Ynet) in a mainstream Jewish-Orthodox publication, the 5 Towns Jewish Times, without culture comment (!), and a note" The Rachmastrivka Hasidic dynasty is one of the biggest and most famous Hasidisms, with thousands of followers and many affiliates. It has two centers - one in Jerusalem and one in Borough Park, New York."

The thought process expressed is so completely divorced from the mesorah that I have learned. Going into Nissan, I think of another loss of human life, one which we know with complete certainty was brought directly from Hashem himself and yet we are told not to rejoice, but rather spill out from our glasses of wine.

And in other tasteless items, Matzav is publicizing that there are a few days left in the "Rubashkin Purim Contest." I'm thinking that the US Federal Bureau of Prison must have some laws on the books about prisoners communicating with unrelated minors, as well as running competitions out of your cell, but do note that the entries are not being submitted to Otsville, but rather to an address in Monsey. Whatever your feelings are about the case aside, I don't think it is good practice to publicize a competition for children run by a community member convicted of a crime. One can only predict who will run the next competition from their cell? File allowing a child to participate in such a competition as lacking sechel.