Corduroy Frog

I'm not going to respond to this. One might review the thread and detect which party is insulted.

Probably doesn't add to the discussion, but one of my govt contractors had a contract with the Navy at Newport, RI for three years. During that time, I had occasion to speak with an assortment of different RI people. I was surprised to hear them volunteer how they detested Massachusetts, calling them "Taxachusetts" and other names which were really unmentionable. I have a friend in Boston who reported that the taxation in RI is even worse. All this to say that it appears these two neighbors don't really like each other.

Would I say someone could withdraw from a 401k and receive SS benefits? Absolutely, and do so without incurring the penalty. But my client is telling me he has talked to SS and they told him he could work all he wanted to and avoid the penalty. I don't know how that can be true, since he has had SS taxable earnings on his W-2 for at least 25 years or so.

Thank you Kathy. He has had SS taxable earnings all his career, so this is not the case. I simply believe he is misinforming me, and would be misinformed himself. From what I know, he could tap into his huge 457(b) for any amount of $$, and it would not incur a SS penalty because it is not earned income. I congratulate you for your knowledge of various types of employment not subject to SS tax.

Due the reversal of the Supreme Court decision on interstate taxation, Amazon finally gave up and had to begin charging sales tax. Since then, states have made every ridiculous effort to waste getting consumers to report sales tax due. Alabama, for example, requires a sworn statement from taxpayers before a practitioner can electronically file. And still, very much like Sara, the vast majority of taxable incidents is not reported. It seems to me that the states would do much, much better going after E-bay, PayPal, and other electronic commerce making it taxable in similar fashion to Amazon. They wouldn't be able to collect from all online sellers, but they could get the vast majority of it with E-bay, PayPal, and Facebook whatever. Much more effective than trying to beat up on their residents and getting practitioners to twist their arms.

Sounds like a good deal if the earned income is on a W-2. Not a whole lot of effort if it is SE income unless the taxpayer wants to pay in more to the SS System.

I was told at a recent seminar that the EITC for taxpayers with no children has been increased to $1300 (at optimum level). This could result in people not filing to consider filing this year. I suppose that there must be some earned income to qualify. And with earned income comes SE tax. Will the "optional" SE tax calculation result in more SE tax than the credit will absorb? I'm sure after the optimum EITC level has reached, the calculation reaches a point of diminishing return such that income/SE tax is so high that filing requirements are met. A lot of babbling above, but there is a question imbedded thither. Will the "optional" SE tax calculation result in more SE tax than the credit will absorb? I'm sure the answer is contingent on some sort of "sliding scale."

One of my customers is turning 62 in 2022 and chomping at the bit to retire. He is working for a public job, as a manager for a city dump/recycling center. He has a ton of money in a 457(b), but I'm not sure whether that is relevant. He is asking me about Social Security benefits, and customarily I just refuse to go there. Whatever he is told by the Social Security office is going to prevail anyway. He has already talked to them, and they (supposedly) told him that if he were a public employee, he could earn unlimited amounts of earned income annually without having to pay back 1/2 of the excess as a social security "penalty." I'm not going to answer such questions, and if this is true, then so be it. But I am curious. Has anyone else on the forum heard anything like this?

Thank you Lion, and a Merry Christmas to all.

Lion, thank you for your sincere attempt to help. If one were prepare a Cash Flow statement, by accounting for Depreciation, changes in Accts Receivable, Accts Payable, Accrued Payroll, and other balance sheet accounts, in conjunction with profit, would not Cash be increased by an increase in Loans Payable? This perspective may not change the answer to my question, but it may reflect that the question wasn't nearly as stupid as it appears to others.

Lion, borrowing money has no effect for a company reporting on conventional accrual basis. Even I am aware of that. The question revolves around cash basis reporting. If a loan is considered "cash and equivalent" then there would be no effect. Cash? Profits plus/minus changes in all balance sheet accounts affect cash accounts. That is the reason for the question.

I will be happy to do so, but I need a name and address. If you don't wish to post it on the forum, please send me a message.

It is a serious question CBS. What appears to be an idiotic strategy which results in higher taxation is actually a compliance effort promulgated by SBA requirements for a govt contractor. The effect is that compliance with SBA is worth the extra tax money. Falling out of favor with SBA can be disastrous compared to the payment of extra taxes.

Customers for 20 years - I know more about the decedent and beneficiaries than anyone else. Danrvan - you are extremely knowledgeable and I appreciate you taking the time to respond. You are one of the better sources on this forum, and I can deal with your candor. Asking questions without basic research - probably a bad habit, especially in the situation described above. The basic research, however, often results in extensive interpretation of code and regs. Links usually help, if they are succinct and address the topic. Bringing a topic to this forum can often save half a day in reading and interpreting stilted language. I believe others who post find this to be true as well.

A cash basis company wishes to increase its taxation for 2021. If they borrow $100,000 from a line-of-credit on December 30th, and don't spend it, will this result in higher taxation?