Gov. Brown signed the Internet Sales tax law and Amazon promptly dropped tens of thousands of Associates in a heartbeat. The state still doesn’t get their sales tax and now are missing out on the combined loss of income taxes from affiliates and their reduced spending. The state loses and so do we. We knew this was coming and I had briefly looked into creating an LLC in another state, but it would be a hassle and there was a question of California charging a $800 out of state business fee. Jumping through hoops wasn’t really my idea of fun so I looked around for another solution. My first thought was auctioning off my affiliate links to the highest bidder. I could probably get a little buzz going about that, but didn’t want to mess with that arrangement with some stranger. I did a little more research and found some discussion about VigLink.

VigLink essentially rewrites your links with JavaScript to be routed through their system. Any earnings are tracked back to your ID and then they pay you after taking a commission. For those of us in states that are now locked out of Amazon Associates this is better than nothing. I signed up the other day and will have to see how things go. The commission takes a little bit off the top, but since VigLink funnels clicks through their own accounts they get to the higher tiers which could help make up for it. If your Amazon links are producing $0 then try VigLink at least until you can get something else going.

An additional minus point is that users of AdBlock Plus will probably not have their click-throughs converted. One more plus though is that you aren’t stuck just with Amazon. If you wanted to post to other sites or do a price comparison between different sites then you can still participate in other programs easily. I think VigLink has over 12,000 sites they cover.

Lock in $11.90 price for TaxAct Premium Online

I’ve used TurboTax Deluxe Online (need Schedule C) in the past because I got it for free through State Farm, but it’s only offered to their banking customers now. Problem is TurboTax is really starting to jack up prices for State e-filing. TurboTax Deluxe with State is about $55 at Amazon and H&R Block’s At Home (formerly TaxCut) is a little cheaper. The problem is they charge you $30 and $20 respectively for a State e-file on top of the purchase price. Even if they go on sale for $35-40 you’re still looking at $60-70 to do both e-files.

I’ll give TaxAct a try this year and maybe test my return in TurboTax as a direct comparison. Nice thing about the online versions is you can plug in your numbers and see the results without having to pay for anything.

• 1A – Extend tax increases for 2 more years with $16 billion coming out of tax payer pockets
• 1B – Takes money from 1A and gives it to schools
• 1C – Borrows $5 billion from future lottery “profits”
• 1D – Takes $600 million in tobacco revenues from some kids and gives it to other kids
• 1E – Takes $200 million of mental health money from some mental health programs and gives it to other mental health programs
• 1F – Politicians can’t give themselves pay increases when there’s a budget deficit

1F is the only one that even remotely looks like a good idea on the surface, but what the hell does it actually accomplish? Politicians aren’t going to be more motivated to pass a balanced budget knowing they’ll get a little bump in their salary when lots of them are already rich bastards. Funny how none of the propositions propose reducing the burden of government, the only option we have is to increase the burden or shift around who receives our money. If you missed it, here’s my little quote I call The Encumbrance of Government.

So yeah, NO on all the propositions.

“Contrary to popular perception, California not only taxes and regulates  its economy more than most other states, it also aggressively interferes in the personal lives of its citizens. California ranks #48 on economic freedom and #37 on personal freedom. California simply needs to cut government spending. The budgetary categories most out of line with the rest of the country are public safety, natural resources and environment, and administration. The state actually does not spend more than average on education and social services. For a large state, it is also fairly centralized, with local governments receiving about half of their revenue in state grants, and almost two-thirds of all state and local tax revenues controlled by Sacramento. Labor laws are of course extremely strict; for instance, California is one of only five states to mandate short-term disability insurance. Health insurance mandates add about 60 percent to the cost of premiums in the state. Eminent domain reform has been cosmetic, and the state’s liability system almost reaches the abysmal quality of the Deep South. On personal freedoms, California does well of course on same-sex partnerships and marijuana, but it also has the most restrictive gun laws in the country, a highly restrictive policy regime for motorists, and smoking bans. Arrests for victimless crimes are surprisingly high, with 21.6 percent of all arrests being for victimless crimes, the fifth highest in the country. Effective homeschooling regulations are about average, but the state has no statute explicitly permitting homeschooling. Fortunately, the state has a reasonable asset forfeiture regime (burden of proof on government, owner knowledge of criminal activity required).”

We can’t ignore the fact that we carry a tax burden well above that of other states. Prop 1A on the May ballot seeks to extend this year’s $16 billion tax increases for up to 4 years instead of 2. Are we really going to let Sacramento take more of our hard earned money out of our pockets?

And so it begins. If you work in any position funded by tax payers I wish you luck.

The answer to the “should I itemize?” question is actually pretty simple: if you don’t have enough deductions to surpass the standard deduction then you don’t itemize. You take the larger of the two and be done with it because that’s what benefits you the most. Note for the married folks, if you file separately and one of you itemizes then the other has to too.

The standard deduction is great for people with very little to deduct and itemizing is great for people with lots to deduct. Once you get in the situation where your total itemized deductions are close to your standard deduction then things like the mortgage interest deduction aren’t really that valuable. The mortgage interest deduction is touted as one of the benefits of home ownership, but people like me wouldn’t benefit at all from it.

In our situation, if we owned a home we’d have to hand the bank around $6,000 in interest every year and pay $3,000 in property tax to simply break even with the standard deduction. It’s only after the $10,700 threshold that each additional $1 deduction would benefit from itemizing. Even then I’d only be getting about 20% of that back, so what is the benefit of giving away $9,000 a year and then spending $1 to get back $0.20 after that. In the future, the standard deduction will increase with inflation and we’d gradually pay less interest over the life of a mortgage making it less likely that we’d be over the standard deduction. So whenever I hear someone talk about the tax benefits of owning a home, I take it with a big grain of salt.

Most Americans Don’t Itemize on Their Tax Returns gives a pretty good break down of who itemizes. Those individuals with higher incomes have a greater incentive to itemize because the deductions are more valuable as you move up the tax bracket ladder and this is certainly reflected in the itemizing rates.

I did hear about a proposal to add an additional $1,000 to the standard deduction for people with mortgage interest that don’t itemize. Can’t find anything through Google right now so post a link if you know what I’m talking about.

There was some uproar from TurboTax customers this year when Intuit tried to introduce a $10 fee to just print more than one return. You got the first federal e-file free, you could print a state return or pay to e-file it, but then any other return you wanted to do would cost $10 to simply print. People were just absolutely hammering on them in reviews. They saw their error and now you get 5 free federal e-files and you can print as many other returns as you want. If I was paying for it I might have considered switching to TaxCut.

If I can get into H&R Block’s TaxCut to do a test return I might post some of my impressions and compare the two packages.

My returns have been fairly simple since I started working and have never had to amend a return. The process is fairly simple once you understand the forms involved. The 1040X is used to explain the differences between your original return and your amended numbers. Since the increased credit only changed a few lines it was easy enough to fill out by hand. I filled out an updated 1040 and 8880 with the correct numbers and double checked everything. Just need to send it in and I should have my $90 in a month or so.

Amending a return isn’t a horrible experience, but it is a little time consuming. It took me almost 3 hours to figure everything out and get the forms reprinted. I almost didn’t bother with the amended return thinking it wouldn’t be worth the effort. If the difference was lower then I might not of, but $90 isn’t an insignificant amount of money. For 2008 I’ll be a little more careful and double check the actual forms before e-filing to avoid amending another return. TurboTax does a pretty darn good job of filling all the forms out, but I know my tax situation best and what strategies to use.