Just for Fun, Sales & Use Taxes

Why I Dislike State Sales and Use Taxation

On a few occasions, a handful of my clients have wondered out loud to me why I don’t know everything about all states’ and their localities’ sales and use taxation laws.  To start with, that knowledge is comparable to knowing the tax laws of 46 countries written in about 46 different languages.  (Five states don’t have state sales and use taxes.  The District of Columbia does.)  Then there are local sales and use taxes, even in states that don’t have a statewide sales and use tax.  Of course, there is also nauseous noxious nexus.

Thomson Reuters, a financial publisher, issues a list of each year’s new “Quirky Sales and Use Tax Laws.”  Here are a few from the 2012 list.

  • In Illinois, candies that contain flour are exempt from the state’s candy tax, which applies to all other candies.  Fans of Whoppers malted milk balls, Nestle’s Crunch, Wonka Bars, and Kit Kat Bars are in luck.
  • While food and food products are typically tax exempt, New York has deemed vegan edible gummy drinking glasses taxable. Under the current ruling, the glasses are deemed a confection and therefore taxable under current sales and use tax law.  Darn, I was planning to buy my wife a set of twelve of those gummy glasses.
  • Residents of Sitka, Alaska, are now exempt from sales tax for the purchase of goods, services and rentals after reaching the tender age of 65.  Nice place.  The herring fishery is underway at this time.
  • In Alabama, playing card decks that contain less than 54 cards are charged an additional $0.10 excise tax.  To ensure compliance, each taxable deck must have “revenue stamps” affixed to the individual package. The stamps must be affixed in such a manner that their removal will require continued application of water or steam.  All taxable playing cards found in the possession of any person, firm, corporation, club or association without having stamps affixed in this manner are subject to confiscation.  Wouldn’t it be a bummer to be caught by the law illegally gambling and have your cards confiscated, too?

I rest my case.


Social Security

Your Social Security

Yesterday, we at HM&M had a very interesting and informative presentation by Chad Dziedzic from Black Rock on Social Security, courtesy of Kavon Moradi of AXA Advisors.  I’m summarizing here a few key points for our clients and friends, particularly those age 55 to age 70.

It seems that most people don’t get annual paper statements anymore.  (I do. I may be an exception because of my advancing age and the government’s worry that I can’t work a computer.)  You can get your statement and a lot of good information at the www.ssa.gov.  Take a few minutes to register and you can get your personal information instantly.  Why?

Did you know that you only have 3 years, 3 months, and 15 days to correct a year’s social security reporting error?  That’s why.  Check your statement every year.  Print and keep a copy. (Or save it in the cloud like me – a tech savvy old man.)

Did you know that you must have at least 40 credits (about 10 years) to participate in social security?

Did you know that that your benefits are computed using your best 35 years of employment (money-wise not fulfillment-wise)?  If you did not work and pay into social security for 35 years, you get zeros until you have 35 years total.

Did you know that 74% of people start collecting their social security benefits early at age 62, reducing their benefits by up to 25% compared to benefits at full retirement age (66 for me)?

Did you know that if you delay collecting your social security until age 70 and, thus, earn delayed retirement credits, your monthly benefits will be about 32% greater than your monthly full retirement age benefits?

Have you ever heard of “file and suspend”?  If you are at least full retirement age, you can elect to file for benefits and suspend collection of those benefits until a later date (say 70).  This would enable your spouse to collect spousal benefits while your own benefits earn delayed retirement credits.  Then, if your wife is eligible for her own benefits, she can collect them at a later date (say 70) and take advantage of her own delayed retirement benefits.

If you are married, have you thought about social security planning as part of your retirement planning?  By considering both spouses, their ages, their health, and their family histories of longevity, among other factors, a good social security plan can yield hundreds of thousands of dollars of extra benefits.

Did you know that a healthy female, age 65, has a 50% chance of living until age 88 years?  Reread the prior paragraph.

So, hopefully, you know more social security than you did a few minutes ago.  I certainly know more than I did yesterday at 8:00 a.m.