A little bit on how easy it is to manipulate you…

I’ve been busy lately, and haven’t posted anything for a while, but there is something that keeps bugging me. So I decided to come back and write about it.

How easy it is to manipulate you. Yes you, the average consumer of the average news. So very easy. Public opinion can be swayed very easily by a strategically placed dead (or not very dead) child, or a touching story shown in prime time, or a not factually correct allegation that plays on your deepest fears… And then – torches, forks, witches burning – the usual stuff.

Let’s see what we had…

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God wants to love gays in Kentucky, but needs more help in doing so!

We’ve all heard about the Kentucky county clerk adopting the Sharia law instead of the United States Constitution and claiming that doing so is the governments’ god-sent right.

Well, God apparently disagrees. In his/her recent post, God said that he/she would like to post a billboard in Kentucky to spread his/her message of love, however was unable to find a billboard provider to allow him/her doing so. Because in Kentucky they don’t want to hear God’s message coming from God, only from a multiple-divorcee and adulteress.

So if you want to help God in spreading his/her message of Love, and help the people of Kentucky freeing themselves from the oppression of the religious fanatics, please donate here for a mobile billboard.

Your Little Agnostic Advisor

PS: I truly believe Kim Davis should be able to practice her religion as she wishes. Kentucky County Clerk, however, has no such privilege. Government is not allowed to prefer one religion over the other in the United States, and if Ms Davis cannot work as a government official without violating her beliefs – she should quit her job. Just as MLK would probably not hold a position as a janitor at the KKK offices, now would he?

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Do you have foreign accounts? Then the Highway Bill affects you.

That’s right. You’re not a truck driver, nor a construction worker. You merely drive on highways, and even that not every day. But if you have any foreign accounts, this bill that has just been passed in the Congress – affects you.

If you immigrated to the US or a US citizen living or investing abroad, you’re probably aware of the FBAR requirement – the requirement to report foreign bank accounts (including investment accounts, pensions, and what not).

Until now the deadline for FBAR filing was June 30th.

Not any more.

According to the report published yesterday in the Journal of Accountancy, the Highway Bill had some tax provisions, one of which changed the FBAR filing due date from June 30th to April 15th. It’s right there, section 2006.

That’s right, two and a half months earlier than before.

It’s a good thing and a bad thing.

It’s a good thing because now the FBAR should be filed at the same time as the regular tax return, so people won’t need to remember three months later that they need to file another piece of paper.

However, in many countries year-end reports only start flowing towards the end of the first quarter, which doesn’t leave a lot of time to gather all the needed information.

Fortunately, the provision also adds a new thing: extension. Now, FinCEN form 114 form due date can be extended for 6 months, like the regular tax return. That helps with the bad thing a bit.

So for all of you US citizens living abroad, L1/H1B/Green Card holders living in the US, and just visitors who happen to end up US tax residents for whatever reason – one more change to be aware of in the already convoluted US tax system.

Your Little Advisor

This is not a tax advice, and I’m not a tax adviser. For any specific tax issues please talk to a EA or CPA licensed in your State.

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The new “Chip-and-Signature” cards aren’t really that safe!

Like probably most of you, I’ve got the new credit cards from most of my credit card issuers. Those with a large square chip on the left side. The new “Chip-and-Signature” cards.

The US banks are going out of their way to explain why these cards are safer than the old magnetic-stripe-only versions. But they don’t really tell you exactly why they are in fact safer. Let me tell you why: because they’re much harder to be forged. Magnetic stripe cards were so easy to forge, literally anyone could duplicate a credit card. With the chip – its much harder.

However, this doesn’t make the card safe. This makes the account safe, since the cards accessing the account cannot be forged. It can only be accessed with the card you have.

But what if you no longer have it? Forgery is not the only security problem with credit cards. Lost/stolen cards are quite a concern for many.

If your chip card is lost or stolen, and being used without your knowledge – there’s nothing really you can do. It is no safer than the good old magnetic stripe card. Anyone can use it. They’ll sign, the merchants won’t check (or check, but it will look similar), and that’s it. In automatic machines – the thieves won’t even need to sign.

No added safety or security at all. The only thing the chip promises is that the card used was indeed the same physical card issued. That’s it.

It doesn’t have to be that way.

In the rest of the world, there’s an additional layer of protection on top of the actual chip: a PIN. A Personal Identifying Number, that only you would know. If such a card is stolen – the thief cannot use it, since they wouldn’t know the PIN. It would just be a piece of plastic for them, completely useless. The vendors don’t need to worry about signatures, and the automated machines won’t charge these cards – because the thief won’t be able to authenticate. This is similar to the way we all use ATM/debit cards. Except that your account is not charged right away, the charge goes the same way the credit card charges had always gone.

So why don’t the US banks allow the standard Chip-And-Pin mode of operation for these cards?

Probably because they think the American consumers are stupid. Look at all the related advertisements and publications: the banks are emphasizing exactly the point of lack of security. The fact that you still need to sign, instead of using the PIN – is actually the main selling point. The main disadvantage of these cards – is what they’re advertising the most. Why? Because in their twisted minds, you using your card the same way as you used to is more important than keeping you and your account safe. They’d rather pay more on fraud and chargebacks, than try to explain to you, the consumer, why you need to use a PIN with your credit card. And who do you think will end up paying for these chargebacks and fraud transactions? You, of course, the consumer. Because the banks think you’re stupid.

Tell your bank you’re not an idiot. Insist on a Chip-and-Pin card.

There are some banks that do provide chip-and-pin cards in the US. Do your homework and shop around.

Your Little Advisor.

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Happy V-Day!

It’s been 70 years since the allied forces were victorious in their fight against the Nazi Germany and their allies in Europe, and most of the people who participated in that great war are long gone.

Yet we owe a lot to them and it is never too late to remember and reflect, and show are gratitude to those still with us.

70 years after the end of one war, and almost 101 years after the beginning of another, it is a good time to remember how these things start. Hatred, intolerance and complete lack of comprehension that some people are not the same as the others – those are the things that start world wars.

Some people take pride in their fanaticism, and even in this country we see people who think that religious intolerance, racism or xenophobia are virtues that should be cherished.

Do not let these people gain more power, do not let religious fanatics dominate the conversation, and most definitely do not vote for someone who thinks that being religious is something to be proud of to any public office.

Remember the hatred that lead to the Holocaust, and don’t let that happen again. We need more tolerance in this world, more education, more science and more cooperation and consolidation, not confrontation, not conservatism, not religious oppression, and not hatred of any kind.

Treat others the way you would want to be treated by them.

Happy May 9th,

Your Little Advisor.

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Obama is no Romney.

So we’ve read that Obamas paid 19.8% tax last year on their almost $478K income (the full return here). During the 2012 election cycle, we’ve heard Romney paying about 13%. Some claim that because most of the money Romney got was taxed before, he actually paid 30%, but that’s obviously false. He didn’t.

Let’s take a look at the differences:

Romney reduced his tax bill by donating about $3M (out of the total $22M income) to charities. That’s about 13.6%. Obamas donated about $71K out of $478K, which makes it about 14.8% of total income. Obama donated more than Romney to charity.

Romney got $3.3M in interest and $4.9M in ordinary dividends, that’s $8.2M out of $22 of income that is taxed at marginal rates – 37%. Obamas had $16K in interest and $88K in royalties which are also taxed at ordinary income rates. The rest is attributed to the President’s salary (which grosses to $400K, taxable about $395K). Which is also taxable as ordinary income. Total 100% ordinary tax rate. Obama didn’t have any special capital gains treatment for his income. Romney had 85.2% of his income having preferential tax treatment.

In fact, Barack and Michelle Obama weren’t as good as Romney with their investments and are carrying forward more than $100K capital losses that they cannot deduct (only $3K of that can be deducted each year).

So what the conclusion?
Obamas have vast majority of their income (~80%) coming from salary. Romney? Capital gains.

Obamas, despite being salaried employees, donated more of their income to charity than Romney.

Obamas, earning almost all of their income by their own work, paid higher marginal and effective tax rate than Romney, whose income mostly came from investments.Obamas are, in fact, a very good example of upper middle class. They’re not really rich (although with $7M net worth they’re definitely not poor), they work for their living and most of their income comes from wages. Yet, they pay higher tax rates, having less deductions (almost $5K of the itemized deductions Obamas reported were disallowed due to phase out).Obama is no Romney, and his tax return is just another proof.

Your Little Advisor

PS: As to Forbes’ claims re Romney paying 30% in reality… That’s not true. Double taxation of dividends exists, but that’s not Romney who’s paying the first tax. It’s the corporation. Which, as Romney himself pointed out, is a person. Separate and distinct from its shareholder. That person, the corporation, decides when to give out dividends and how much to give out. Only when it decides that does Romney get any money that is then becomes his, and is taxed on it.

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9,000 Photographs from 1800’s Palestine / Israel – with no trace of ‘Palestinians’

That’s interesting… Especially the argument that the Jews in the pictures are “Palestinians”, raised in the comments by the Neo-Nazis. Joke is on them though since even the Israeli PM Golda Meir once said that she’s a Palestinian and even had a passport (British Mandate Passport) to show for it. Yet, she was Jewish and Israeli.

The claim that there has never been a Palestinian (Arab) state is correct though, as the fact that vast majority of the current Arab population in the area are Syrian, Saudi and Egyptian immigrants’ descendants. These immigrants came following the Jewish immigration of the 19th and 20th century which transformed the deserted and fruitless land into an agricultural super power and provided jobs to all of them.

Palestine-Israel Conflict

Where ARE all those Palestinians, the proclaimed one million of them who lived in Israel before they were ‘displaced’? Nowhere.

Nowhere, because they never existed. And where are all the mosques for those “over 1 million Palestinians” who are suppose to have lived there already in the early 1800’s like “Palestinians” claim? If they had been 1 million at the turn of the Century, or even in 1920 after they began immigrating to fight the British, with their rapid population growth Palestine would consist of over 40 million people today and not 4 million. That alone proves the jihad lies. Their population is small because they are new invaders and occupiers who arrived late with an aim to commit jihad. They never lost land that was never theirs to begin with!

The British army permitted merely a few Ottomans to remain due to religious observations, the rest was Jewish. In…

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What should we do about the backward people?

There’s seem to be some “swan-song”-like effort from various groups of retarded people to remove themselves from the civilized society.

I’m talking about the “religious” bigots and haters who adopt laws that allow them to continue hating and hurting other people in the name of their “religion”.

Obviously, religion has nothing to do with that. That’s the basic fear of the unknown and different that drives them.

Lets take the latest attempt of the Indiana lawmakers and their governor to justify allowing people to pick and chose who they’re going to serve in their businesses which are supposedly open to general public:

They created a law that allows businesses to refuse service to everyone who “burdens” their ability to practice their religion.Obviously, that group is empty. Since they can practice their religion regardless of whom and how they serve. Bringing flowers to a gay wedding in no way “burdens their ability to practice”, since they can go and practice whatever they want whenever they want to practice it whether they brought the flowers or not.

So they will continue being sued for refusing serving gay people, and will continue losing their court battles and pay fines and penalties.

What did Indiana gain then? Other than bad publicity – nothing.

What did Indiana lose? Millions of dollars in business from people who will not go there.

Who will pay the price? Ordinary citizens of Indiana.

And they deserve it, for electing such idiots to represent them.

People who are in business of serving general public should not be allowed to discriminate. Not black people, not gay people, not Jewish people, not people wearing burkas, not women, not men – not anyone. You want to only serve a specific group? Open a club, with admission process and club dues. You want to open a store on main street? You serve everyone. Whatever you want to believe and practice in the privacy of your own home – your own business. Leave it there.

Your Little Advisor.

Advising you strongly to avoid doing business or spending money in Indiana, Arkansas, Texas, Alabama, and any other State that claims that legally discriminating people just because they don’t like them is OK. It works both way, lets show them how.

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Happy Pi Day!

Today is 3.1415 and at 9:26:53 this would be a once in a century Pi swcond! Well, twice if you consider 9:26 am and 9:26 pm.

So have a lot of pies and encourage your kids to learn math and sciences. People couldn’t build pyramids without pi thousands of years ago, and we can’t still manufacture anything other than bullsh*t without having a good grasp on science and engineering topics.

Your Little Advisor

An engineering geek, occasionally

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Do you know what the IRS Form 3115 is? No? Good. Now you don’t have to.

Guess what, the IRS made a boo-boo again.

What about, this time? Trying to force almost anyone with a business or rental income to file form 3115 with their 2014 tax returns.

What’s that, you say? Never heard of that form? It is only for corporations, you’ve heard? Only for big business?

Well, guess what – until last Friday anyone with a rental or a business was required to file this form for the tax year 2014. Yes, that tax year for which we all have started preparing our tax returns.

The form is for changing methods of accounting, not something any of you individual tax payers ever heard of or thought you’d need to deal with. And the reason it was required is because the IRS had issued new and revised regulations regarding handling maintenance, repairs and capital assets on your tax return.

As of 2014, the new rules are in place, and the IRS required, in the original regulations, everyone to file a formal change of accounting methods to adopt the new rules. Not just adopt them from now on – but adopt them retroactively, calculating the difference in your income between your original treatment of the covered issues and the new regulations. Basically, this means going over your depreciation schedule and repair and maintenance expenses, and checking which of the capitalized expenditures should have been expensed per the new regulations, and which of the expenditures that were expensed should have been capitalized. For how long? Technically – since the beginning of your business/rental activity. That could be decades! That’s what the form 3115 is for, in this case. The resulting difference goes on that form, and from there to your tax returns in form of sec. 481(a) adjustment (positive or negative).

Learning how to fill this form and filling it is estimated by the OMB at about 60 hours. Imagine paying your accountant for 60 hours of work for doing that. Having a heart attack yet?

Obviously, accountants don’t charge every client for the 60 hours, but still – each client would add $100 (at least, per my CPA) to his tax preparation expenses. Those of us who would rather prepare themselves were forced to pay to a professional, since this is not a form you can do by yourself and is not supported by the major tax preparation software providers anyway.

So what happened last Friday?

The IRS backpedaled on the requirement and issued a new guidance exempting those with less than $10M of assets and $10M of revenue from the requirement to file the form 3115 and adopt the regulations retroactively. Those “small taxpayers” (mom-and-pop businesses and people with rental income) can now adopt the regulations going forward (without the need to audit/fix prior capitalization/expense decisions).

While the decision is good for taxpayers in general, it is a tad too late for those who had already hired accountants to deal with this mess, and those who wanted to file early (after all, the season started a month ago) and already filed their paperwork. These people have already paid thousands of dollars to tax preparers for a service they no longer need. Same goes for the tax preparers themselves, who spend the entire year preparing for this mess (widely anticipated, and warned about by the AICPA and NTPA) and paying hundreds and thousands of dollars for training which many of them no longer need.

Who is going to compensate the tax payers and tax preparers for all this mess the IRS got us into? Well, I hope my CPA won’t charge me extra for this…

Your Little Advisor.

PS: It may be worth your while to do the whole form 3115 thing, if the sec. 481 adjustment for you will be negative (i.e.: you can get a current tax break instead of continuing depreciating small assets). Talk to your tax adviser.

NOTE: This is not a tax advice and please don’t rely on this blog for any tax-related matters. In case of doubt talk to a licensed tax adviser – EA/CPA licensed in your State.

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