A Date With the IRS
The internet has transformed so much of how we live our lives. We find our news online, find books and music online, and find travel bargains online. The internet has even transformed how many of us find romance, with a dizzying range of sites for suitors of all interests. Match.com advertises that one out of five relationships now begins on an online dating site. EHarmony ads feature smiling couples, married after meeting online. And let's not forget the raft of specialized dating sites like dateHarvardSquare.com (free for Harvard students and alumni), VeggieConnection.com (for those who won't be ordering steak on their date), and WeWaited.com (for those who won't be getting lucky on their date). What would Yente, the village matchmaker from Fiddler on the Roof, think of JDate.com for Jewish singles?
Now there's a new site called WhatsYourPrice.com that offers a decidedly commercial twist on the age-old quest for true love. Their romantic slogan: "Buy a First Date With Anyone." Generous daters (mostly men, of course), post what they're willing to pay for a date. Attractive daters (mostly women), post what they want to get for a date. As one woman from the site said, "If it's going to be a big, huge waste of time, at least I'm going to get paid for it . . . . A lot of these guys are wealthy gentlemen, and I think my time is as valuable as their time."
Guys, your friends might snicker if they find you paying for dates. Ladies, you probably wouldn't want to tell your mother. But forget what your friends and family think. What does the IRS think of getting paid to date?
Let's say a generous gentleman pays $100 for a date. That $100, given in exchange for his date's time, company, and conversation, is clearly taxable income to her, reportable as "Other income" on Line 21 of her Form 1040. (Taken to its logical extreme, generous gentlemen ought to be issuing 1099s for dating over $600!)
Now, what about the value of dinner? Is it additional compensation for the date? Presumably, a generous gentleman wants to impress his date with more than just coffee at Starbucks. Internal Revenue Code Section 83 states that property transferred in connection with services is taxable at its fair market value. Fortunately, daters can pay the actual tax in cash — otherwise, they might have to bring doggie bags for the IRS. (What sounds like the right tax for dinner at a nice steakhouse, anyway? Three bites of filet and half of a baked potato?)
And what about the generous gentlemen? Are there any deductions available for them? Maybe, if they take their date to a business function. Otherwise, no dice — and the gifts aren't "charitable contributions," either, unless the date is a "registered nonprofit."
At first glance, taxing daters might not seem like a "10" on the IRS's priority list. But WhatsYourPrice.com boasts 50,000 members and says the average bid for a date is $138! That suggests there's a fair amount of tax revenue worth chasing. Of course, there would be certain challenges collecting that revenue. It's bad enough when gossipy co-workers and nosy family members poke their nose in your love life. Who needs an IRS auditor tagging along on a date?
In all seriousness, the internet really is changing how taxes work. Take sales taxes, for example — state governments would love to collect sales taxes from online retailers, and several have taken aim at Amazon.com. But online daters, you're still safe — at least for now — and we'll be sure to let you know if that changes!
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-Grow profitable sales
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-Pay less taxes
We have a Weiner!
Just a few short weeks ago, Anthony Weiner was a rising star in the Democratic party. The seven-term Congressman from New York's Ninth District, straddling Brooklyn and Queens, was a well-respected liberal voice, with frequent appearances on cable news networks and a legitimate shot at becoming Gotham's next mayor. Now, he joins fellow New Yorkers Elliot Spitzer, Chris Lee, and Eric Massa in the Disgraced Politicians Hall of Shame. (Must be something in that New York water.) Weiner's already enough of a national laughingstock that we can just skip all the wisecracks you expected when you saw the subject line of this email and get on with it!
Weiner may be on his way out for now, but he's not likely to be gone forever. Former Governor Elliot Spitzer, who left office after being uncovered as a high-end escort service's "Client 9," hosts his own talk show on CNN. New York native and former mayor of Cincinnati Jerry Springer, who was caught paying for similar services with a check, overcame that disgrace to become a wildly successful national television personality. And of Weiner, even President Obama told ABC news that "he'll refocus, and he'll end up being able to bounce back."
But will there be any tax breaks to help ease the shame that he must feel, as he and wife Huma Abedin prepare to welcome a little Weiner into their family? Weiner starts out with some pretty sweet perks as a former Congressman — perks which are already tax-advantaged. His Congressional pension will grow tax-deferred until he reaches age 62. He'll also get access to the house floor during regular business or joint sessions, free parking for life on the House side of the Capitol building, and even access to the House gym where he took some of the photos that ultimately brought him down — all tax-free.
But of course, Weiner will have to find work to replace his $174,000 congressional salary. Fortunately, job-hunting expenses are deductible too, as a miscellaneous itemized deduction, subject to a 2% floor on adjusted gross income. This holds true whether he parlays his cable-news appearances into a full-time broadcast career, or starts lobbying former colleagues at $500 per hour. (Good news: porn mogul Larry Flynt has already offered Weiner a job with a 20% raise, medical benefits, and even relocation costs!)
Speaking of medical benefits, Weiner has announced plans to enter a "treatment center." While he hasn't revealed exactly where he's going, it makes sense to assume he'll seek counseling for online sex addiction. That sort of psychological treatment — which generally runs $500-1,000 per day for 30-45 days — is a deductible medical expense, subject to a 7.5% floor on adjusted gross income (or 10%, if he's subject to Alternative Minimum Tax, which hits New Yorkers especially hard). Weiner was an early and enthusiastic supporter of last year's health reform package, but he originally threatened not to support it without a "public option." We'll be intrigued to see if he's happy with his own "public option" once he gets the bill!
In the end, it's easy to make fun of high-profile names like Weiner when they stumble and fall. But we all make mistakes. The real challenge is learning from those mistakes and moving on to greater success. When it comes to taxes, your mistakes won't cost you your reputation. But they can cost you a fortune. So if you don't already have a plan, let us create one for you! And remember, we're here for your family, friends, and colleagues too.
Weiner may be on his way out for now, but he's not likely to be gone forever. Former Governor Elliot Spitzer, who left office after being uncovered as a high-end escort service's "Client 9," hosts his own talk show on CNN. New York native and former mayor of Cincinnati Jerry Springer, who was caught paying for similar services with a check, overcame that disgrace to become a wildly successful national television personality. And of Weiner, even President Obama told ABC news that "he'll refocus, and he'll end up being able to bounce back."
But will there be any tax breaks to help ease the shame that he must feel, as he and wife Huma Abedin prepare to welcome a little Weiner into their family? Weiner starts out with some pretty sweet perks as a former Congressman — perks which are already tax-advantaged. His Congressional pension will grow tax-deferred until he reaches age 62. He'll also get access to the house floor during regular business or joint sessions, free parking for life on the House side of the Capitol building, and even access to the House gym where he took some of the photos that ultimately brought him down — all tax-free.
But of course, Weiner will have to find work to replace his $174,000 congressional salary. Fortunately, job-hunting expenses are deductible too, as a miscellaneous itemized deduction, subject to a 2% floor on adjusted gross income. This holds true whether he parlays his cable-news appearances into a full-time broadcast career, or starts lobbying former colleagues at $500 per hour. (Good news: porn mogul Larry Flynt has already offered Weiner a job with a 20% raise, medical benefits, and even relocation costs!)
Speaking of medical benefits, Weiner has announced plans to enter a "treatment center." While he hasn't revealed exactly where he's going, it makes sense to assume he'll seek counseling for online sex addiction. That sort of psychological treatment — which generally runs $500-1,000 per day for 30-45 days — is a deductible medical expense, subject to a 7.5% floor on adjusted gross income (or 10%, if he's subject to Alternative Minimum Tax, which hits New Yorkers especially hard). Weiner was an early and enthusiastic supporter of last year's health reform package, but he originally threatened not to support it without a "public option." We'll be intrigued to see if he's happy with his own "public option" once he gets the bill!
In the end, it's easy to make fun of high-profile names like Weiner when they stumble and fall. But we all make mistakes. The real challenge is learning from those mistakes and moving on to greater success. When it comes to taxes, your mistakes won't cost you your reputation. But they can cost you a fortune. So if you don't already have a plan, let us create one for you! And remember, we're here for your family, friends, and colleagues too.
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