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DC

Ask the taxgirl: The President and Income Taxes

May 20, 2009 · 2 comments

Five_US_Presidents.jpg

Taxpayer asks:

Does the President have to pay income tax?

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I get that question a lot. And this week, I also received this question:

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Taxpayer asks:

Does the President pay income taxes to every state he visits on official business? This question occurred to me because of the pending Mobile Workforce legislation. Also, is withholding taken out of his paycheck for all of those states?

Taxgirl says:

Absolutely! Presidents report and pay taxes just like you and I do. In fact, you can view a number of presidential federal income tax returns (including the last round of candidates for office) at the Tax Analysts Tax History Project.

The President is paid an annual salary of $400,000. He’s also entitled to live at the White House, complete with staff and facilities. Transportation perks include two airplanes (referred to as “Airforce One”); a Marine Corps helicopter (”Marine One”); and an armored presidential limousine.

The first presidential salary was $25,000 per year, but George Washington refused to accept it. John F. Kennedy is said to have donated his salary to charities.

The presidential salary was $200,000 until 1999 when Congress doubled it – the actual change didn’t go into effect until 2001. The salary had not been changed since 1969, when it increased to $200,000 from $100,000.

As to the second question, the answer is no. Most politicians who work in Washington, DC actually pay tax in their home state; as members of Congress their primary residence remains in their home state, not in DC. This has caused quite a hullaballoo in years past with many politicians claiming residency in their home state but also “enjoying” (illegally, as it turns out) a homestead exemption for residences in DC. Rep Charles Rangel (D-NY) and Karl Rove have both been investigated for claiming the exemption in recent years; in 2005, 22 senators were have said to receive the exemption.

That said, the rule in most states is that you must report and pay taxes associated with either residency or sourced income. Clearly, if the President (or any other politician) is just visiting a state, he (or she) would not meet the residency requirements. And while the President is arguably working when he visits other states, he’s not receiving income sourced from those states – he’s paid by the federal government. If, however, the President stopped in and did a shift at a local McDonald’s for pay, then he would be subject to tax in the state where the McDonald’s is located.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the taxgirl! – Now on Facebook!

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Not a Crack Answer: Barry Pleads Kidneys Kept Him From Filing Taxes

February 20, 2009 · 3 comments

Forget “late filing syndrome” – that’s so 2008. For 2009, try the new and improved “I had too many other things going on” defense… it seems to be working out well for Marion Barry.

Barry is currently facing tax evasion charges for failing to file his federal tax returns for the 2007 tax year (he finally filed them on this past Tuesday). A one time offense would generally not be a big deal except for the fact that Barry was already on probation stemming from misdemeanor charges for failing to file federal tax returns from 1999 to 2004. At the hearing for that tax trial, Barry tested positive for cocaine and marijuana; drug counseling was also part of his sentence.

So many charges might beat down any other man, but Barry takes it all in stride. He has, after all, seemed to rise like a crazy phoenix out of a dead political career in DC, where being a drug addict or tax evader is apparently not a barrier to serving in public office. Barry was mayor of DC from 1979 to 1991, until he was arrested on charges relating to possession of crack cocaine, for which he served prison time. Upon his release from prison, he was elected to City Council in DC, where he served through 1994, at which time he returned to the office of mayor. A little prison time on the ol’ resume doesn’t keep DC voters from pulling that lever… Barry now serves on City Council – again – in DC.

Despite his approximately $100,000 salary for sitting on Council, Barry has apparently been unable to find someone to do his taxes. He claims he has been distracted by dialysis… Apparently, ver-r-r-r-y distracted. It is alleged that Barry has failed to file taxes properly in eight of the last nine years – his dialysis has only last about four months.

Prosecutors have asked a federal judge to send Barry to prison for violating the terms of his probation. In their statement, they claimed:

It is not acceptable for any citizen to shirk a basic civil duty, let alone a former mayor and a current city councilman who has been responsible in the past and continues to be responsible for spending public funds collected from District of Columbia taxpayers.

A past push to put Barry in jail for violating the terms of his probation failed, with the judge claiming that the prosecution didn’t prove that the omission was willful. The current motion has not even been scheduled for a hearing.

If it is in the cards, prison will have to wait, since Barry is scheduled for a kidney transplant later today. While the waiting list for kidney transplants can last for five years, Barry caught another one of his infamous breaks by finding his own donor.

Will he catch another break and avoid more jail time? My guess is that he survives surgery, escapes jail time and gets elected for another term. What’s your guess?

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