Taxes

We just finished up our taxes today, and I have taxes on the brain. It seems everyone else does too.

It’s theft.  Taxation is theft.  God damn the god-damned government, stealing all that money.  Somebody should call the police and report them.

Oh, wait. . .

But then, on the heels of “taxation is theft,” we get this.

What Nicole is talking about (getting money back) is called the earned income credit.  She and Joe not only don’t owe taxes because they have so many dependents, they get a nice fat refund. They don’t actually pay taxes at all. They get tax money.

Here’s why and here’s what it means.

First, they have to file.  Here’s why.

The IRS does not care, for filing guidelines, if you have no dependents or nineteen of them. If you have a gross income of at least that amount, you have to file a return. I am going to assume that regardless of how busy or not busy Nicole is, she had a gross income of $20, 800.

But all that really doesn’t make any difference, because of this.

If you make a net income of $400 from self-employment, you have to file.

So, they’re filing.  And here’s the form.  They get to the part called Exemptions and they first check two boxes for themselves. Then they start listing kids.  Notice that if you have more than four dependents, you’re told to see the instructions and check the little box. All the instructions say is if you check the box, just include a sheet of paper with all the other kids listed on it.

So they fill that in.

And here comes the rub.

One would think that they would fill in ten dependents, right?  That’s what we would think.

So let’s do that.

That means that the total number of dependents (including the two boxes for Joe and Nicole themselves) would total 12.

Well, when you get to the next page, you see this.

Above the highlighted line, there is a line for itemized deductions (or the standard).  I have no way of knowing which one Nicole did.  She has a small business and because it’s an LLC, it’s folded into her personal federal return, so perhaps (almost surely) she itemized.  But I can’t know that, so I am going to assume that she took the standard. It won’t make any difference at all for the point I’m making here.

The standard deduction for her situation (married filing jointly in ordinary circumstances) is $12,700.  So whop, that comes right off her income right out of the gate.

But then comes the kicker.

The number of boxes checked on the front page was 12, remember. She can multiply that 12 by $4050.  That’s $48,600.

Then you add those two together.

You get $61,300.

Nicole and Joe can gross $61,300 without paying a single dime in federal income taxes.

Well, provided that they have 10 qualified dependents.

They have ten minor children, yes. But according to Nicole, most of those kids don’t have social security numbers or birth certificates, and you have to list their SS number on the form.  No SS number, no dependent.

I don’t think those kids have SS numbers. I believe Nicole when she says they don’t.  I don’t think that the state forced SS numbers on them. Here’s why.

Nicole tells us that they owed zero taxes.  Their taxable income was zero.  But then she tells us specifically that they got $3000 “more than she paid in.”  She paid in zero, so she got $3k.

That’s the earned income credit. With most tax credits, you can reduce your tax down to zero and then if there’s any credit left over, you either have to carry it forward to the next tax year or forfeit it.  But the earned income credit actually gives the filer cash.

I checked about this because I’ve never qualified for the EIC and so wasn’t sure, but you can’t not do it.  Most of the time, on your tax return, if you fuck up and make a big error and end up paying in more tax (or getting a smaller refund) than you were due, the IRS is strangely silent. They happily accept the overage. Screw up in the other direction, though, and they aren’t so happy about it.

So I wondered if you could just omit the EIC and the IRS wouldn’t say anything.

Turns out that is not the case.

If you qualify for the EIC and don’t claim it, the IRS fills it in for you and sends you a check. The computers do it by magic.

And Nicole got $3000.

Here’s the chart for the earned income credit.

Nicole got $3K.

Nicole didn’t have very many qualifying children, or she would have gotten a whole lot more money.  I mean, her adjusted gross income couldn’t have been very much, not with all those deductions, certainly not over any of those limits, so she would have qualified for the max, if she’d listed all her kids, if they all had SS numbers.

See, this stuff works in tandem. If she has the qualifying dependents, they have to be listed. To be listed, they have to have SS numbers.  If they’re listed, then she has a boatload of boxes checked and her exemptions get big, and thus, her taxable income shrinks.  She can’t get out of the EIC. The IRS does it for her.  The computer just figures out how many qualifying dependents she has, and does the math and cuts her a check.

So, to get that eensy low EIC amount, she couldn’t have listed very many kids. 

That means that she didn’t have that boatload of exemptions.  That means that to have a taxable income of zero (which is what she claims), she didn’t make very much money.  She didn’t make “six figures.”  Either that, or her shop has so many deductible expenses that she’s either overextended terribly, or a very poor money-manager. If your service business grosses in excess of $100,000 and you are netting about $30,000, you really are doing something wrong.

But hey, she didn’t even do her tax return, did she?

Her accountant did. Her accountant handles stuff like that for her.

Right.

But here’s what is in the screen shot above.

On the left is a receipt from a mail order from the actual Blessed Little Grooming Company LLC for some soap and a tee-shirt. The customer lives in Kentucky. You can see that Deb and Lisa collected Kentucky sales tax, which will be duly sent to the Kentucky Department of Revenue.

On the right is an order from the same person, this time for some bows from the defunct Blessed Little Grooming Company.  No sales tax.

Nicole’s explanation for this is that she embeds the sales tax in the purchase price, that her accountant handles that for her.  Her accountant doesn’t embed the shipping, but embeds the sales tax.

No.

In the first place, I’ll make a big fat donation to the Ranch if Nicole even has an accountant at all. Does she mean one of the kids?

In the second place, no accountant on the face of the earth would do that (embed taxes in a purchase price). There are several reasons. One is that the money needs to be accounted for separately and embedding it is just making double work for whoever does the books.  But there’s a second, more important reason.

The customer, in Kentucky, is responsible for paying to the state any taxes owed on any online purchases made for which no sales tax was collected.  That is Kentucky law. That customer is liable for those taxes. So what is the customer supposed to do here?  No tax is listed, therefore the customer has to assume that none were paid, therefore the customer has to assume that she owes the money.  Does Nicole want her to pay twice?  Is she seriously, actually shitting on her customers like that?

Sometimes online retailers will embed the shipping costs in the purchase price. That’s reasonable, easily accounted for and done frequently. And you can bet, of course, that any place that offers “free shipping” is doing exactly that.

But you don’t embed sales tax. 

Then for no discernible reason Nicole did this, except for “I don’t want a record of how I am not collecting sales tax in Kentucky.”

There is a solution for all of this, though.

I don’t want poor Nicole to be a whore of the state, and that’s exactly what she is at the moment. She got $3K from the federal government. It was not her money.  It was stolen from me, from you, from all of us.

Nicole didn’t want the money. She’s said so a bajillion times. It’s theft. She’s not a whore of the state. She’s so above all that.

I know she has to feel really bad about this. I also do not expect her to give it away to just anyone, because how can she possibly know whose money it was in the first place?

Here you go, Nicole. Give it back. Just sent it back. I promise they’ll accept it with thanks.

 

 

26+

34 thoughts on “Taxes”

  1. If she embeds sales tax into her prices, then every online sale runs the risk of collecting sales tax from someone who doesn’t owe it. If I bought some bows, then I’d be paying Kentucky sales tax, which I do not owe. She would be stealing from me, literally.

    I wouldn’t call, but I bet you the state would be interested in taking a look at the sales tax money they aren’t getting.

    17+

  2. I’m an accountant and that sounds like an auditing nightmare. She’ll be fucked if they audit her for state taxes. Every system I have ever worked with has taxes broken out by state, city, etc because of audits. How does she not throw out a red flag for audit? Ugh.

    20+

  3. Does Nicole not get to deduct shop rent, power, gas, as well as other lesser expenses off her gross shop income in the US? Once she’s done that, she’s definitely no longer at 6 figures, even if just a few of the kids have SSNs. The $3k refund could be what’s left of the EIC once her tax liability is taken out. Here in Canada you end up paying Canada Pension Plan if you’re self employed, even if you have little to no tax liability. Is there nothing like that in the US?

    2+

  4. Does Nicole not get to deduct shop rent, power, gas, as well as other lesser expenses off her gross shop income in the US?

    Yes, of course. I mentioned that when I was talking about itemizing. The standard deduction for her would have been $12,700. If she itemized, it could have been more. She’s claiming six figures for gross income. That is in excess of $100,000. She says quite clearly (and has said more than once) that her tax liability was zero. That’s not “zero after the credit was applied.” That’s zero.

    THEN she gets $3K.

    That is quite clearly the EIC, which you get regardless of your tax liability.

    If that’s not the case, then I misunderstood her, but she’s said repeatedly that they don’t owe any tax, ever.

    And yes, she would have owed self-employment tax (the equivalent of the Canada Pension Plan) regardless of her net income, and yes that could have been deducted from her EIC, BUT she clearly says that her tax liability was zero.

    I’m going entirely by what she said, not by what we’re speculating.

    But back to the $100,000 gross. I cannot imagine a small service business that keeps almost no inventory, and is run on a shoestring, in a low-rent area of town, that has $70,000 in expenses annually. What could they possibly be? Rent? Utilities? How does that add up to $70,000? She has no employees. She has mentioned before that they live on an annual income of about $30K and that would be consistent with a $3K EIC. But you can’t get from $100K to $30K easily.

    My entire point here is that 1) she didn’t list all ten children and their SS numbers, and 2) she didn’t gross $100K or more. On the one hand, she is trying to say that she has this relatively massive gross income, but at the same time, insists that she got $3K in EIC (basically money she didn’t earn, a gimme from the gubmint). Both of those things cannot be true simultaneously based on her own statements. She says that the $3K was “more than she paid in.” If she’d gotten $6K in EIC money, that would have been $6K more than she paid in, but that’s not what she said at all.

    13+

  5. If they made $60,000 net….
    they would owe self-employment tax of $8,478
    $6,871 to Social Security tax and $1,607 to Medicare tax

    Since they are their own employer, they must pay both the employer’s share plus their own share.

    Half of this would be deductible from their federal tax burden, but since that burden is already zero….it wouldn’t help them at all on federal.

    Self employment tax usually must be paid quarterly, with penalties if it isn’t.

    7+

  6. I don’t think Nicole quite understands her own tax obligations (fractions are difficult, remember). Her claims vs reality might be quite different. I suspect pay no taxes = write no cheque in her mind.

    6+

  7. She has an accountant? Her kids? I really hope she does have one. A good one. I want her to succeed. I want her to get as much money back as she can. My hope is that it will uplift her children’s life. Nicole has argued with people on line about the law of consecration in the LDS Church. She really didn’t understand it and would argue with others in her ward and on line about it. She had the idea that more should be given her as she had so many children (a very simplified synopsis of her argument). I think it was one of the major riffs she had with church members, and especially the bishop (and the bishop storehouse). So I am surprised she is not making sure her kids have SS #’s so she can get more. She should look on the tax as a form of consecration. According to your needs Nicole. According to your needs.

    6+

  8. So lemme get this straight… the ebil gubmint is stealing from it’s hardworking citizens to fund Joe and Nicole Naugler since they get more back than they paid in? 😉
    #taxationconfusesme #snowinApril #whichkidistheaccountant #Ineedcoffee

    9+

  9. The self-employed social security tax for 2017 was 15.3%. For the $3,000 she got to be more than her total paid in, her income can’t be more than $19,608, the point where 15.3$ is $3,ooo in taxes owed.

    To earn $100,000 gross, she’d have to earn $48.08 per hour for 40 hours a week. I checked her online scheduling . She has a sadly high number of days that have no appointments happening. She also accepts payment in BitCoin. http://blessedlittlegroomingcompany.com/saloninfoforclients/

    8+

  10. Her buffoonery never ceases to amaze me. NEVER. Isn’t buffoonery such a great word? I think we need a soap with that name!

    9+

  11. That brings up another issue, and that’s how much of her gross receipts are paid in cash and never reported to anyone ever.

    17+

  12. Bitcoin is a strange form of “money”, I still think it’s sketchy….. as to why she accepts it! It’s like Monopoly money in a way…… I mean it’s cryo money with No bank or middle, in reality it’s insecure and unstable…and I’m sure Nikki is too stupid to know you MUST FILE IT ON YOUR TAXES using Schedule D form 8949……

    6+

  13. She gets tips, too, right? Do those have to be accounted for in KY?
    I just paid my taxes. A lot. Which I have never complained about. My money is going to the nicnogs, which I will complain about. Even and especially.

    5+

  14. That brings up another issue, and that’s how much of her gross receipts are paid in cash and never reported to anyone ever.

    This is an excellent point…but as I once brought up…she’s left a hell of a paper trail without realizing it. All those photos of pets she’s groomed can be counted up. He fee schedule is right there on her site. If all those photos of groom jobs add up to a vastly different number than what’s being reported as income….she’ll have some ‘Splainin to do to the IRS:)

    Poor dumb Nick.

    5+

  15. That brings up another issue, and that’s how much of her gross receipts are paid in cash and never reported to anyone ever.

    Which swings back around to getting audited. The family business, one that was entirely family-owned and family-run for 62 years until my grandfather sold it, was one that had high volumes of cash which is to be expected when you do food service. The business was audited many times simply due to the fact that when a lot of cash is changing hands, the state gets interested. It’s simply what happens. Plus regular health inspections and the fire marshal dropping by to make certain that everything was up to code. Let’s just say that Nicole wouldn’t have made it in that state because they take this stuff very seriously, apparently unlike Kentucky.

    I’m surprised Joe and Nicole didn’t choose to live in Kansas where it takes a child getting decapitated for people to wonder why there isn’t a more rigorous inspection system. Homeschoolers in Oklahoma don’t even have to tell anyone they are home schooling.

    https://www.responsiblehomeschooling.org/policy-issues/current-policy/

    5+

  16. Does she have the IRS, Revenue Cabinet and all their employees blocked from her Facebook profiles? Too much information being posted by her whether accurate or not clearly show deceit and or fraud. Nicole don’t bring your accountant, if there truly is one, into your mess. An accountants fiduciary responsibility ends when they’ve explained to you what should or should not be done. If you go against what has been told, you are responsible for what you sign not them. She is so easily impeachable by her online persona it’s actually fun to watch.

    9+

  17. A few errors in the calculation here:

    1. Itemized deductions has nothing to do with schedule C income (which is more than likely how she files her business income). The deductions for the business are reported on the schedule c form, and that net amount is subject to self employment taxes, irregardless of her dependents, exemptions, standard or itemized deductions. The self employment tax rate is 15.3% on net earnings from self employment.

    2. She more than likely got a sizable earned income credit. The nice thing about credits is that they can be applied against tax owed.

    So if, for instance she made $20,000 net from her business (probably a close estimate based on what I’ve seen that groomers actually make). Her self employment taxes would be $3,000. Her earned income tax credit for her family size at $20,000 income would be $6,000 (approx). All of her income would be wiped out by exemptions and deductions, leaving her taxable income at $0 but she still has self employment tax and earned income credit.

    She’s still “paying” taxes of $3,000, which reduces her earned income credit from $6,000, less the $3,000 of self employment taxes, netting her a refund of $3,000.

    Source: I’m a tax accountant wrapping up another tax season today…

    12+

  18. I wonder if CPS needed some sort of official government issued proof of identification like birth certificates, or SSNs for their records when the kids went into foster care and went ahead and got the kids Social Security cards.

    Nicole is plain dumb for putting all that personal information online. I doubt she would end up paying anything anyways if someone turns her in, but her windfall might be a little less. But goody, goody for her. They managed to save up $400 to be able to send out 10 subpoenas. Now they have enough money to send out even more! Maybe they will even piss it away retaining a lawyer since Nicole seems to be having a hard time with Google law school.

    4+

  19. 2. She more than likely got a sizable earned income credit. The nice thing about credits is that they can be applied against tax owed.

    This is all lovely and I know all this stuff. I didn’t get into all the Schedule C stuff because it’s already confusing as hell for people who aren’t familiar with tax forms. I am going by what SHE SAYS. She says that her taxable income was zero. I can’t help it that she says that. She insists that she got $3K more than she paid in. Those are her words, not mine. If she got $6K, then she got $6K more than she paid in and she was being dishonest about the whole thing.

    That would be simply astonishing, of course.

    5+

  20. is money you get from a gofundme taxable?

    Typically, no. Donations are considered personal gifts. If your brother gave you $200, he can’t deduct it nor do you have to claim it.

    6+

  21. With EIC it is based on AGI and that doesn’t include the standard deduction and dependents.

    AGI calculation is relatively straightforward.

    It is equal to the total income you report that’s subject to income tax—such as earnings from your job, self-employment, alimony income and interest from a bank account—minus specific deductions, or “adjustments” that you’re eligible to take.
    Your AGI is calculated before you take exemptions and the standard or itemized deduction—which you report in later sections of the return.
    Adjustments to income

    Adjustments to income are specific deductions that directly reduce your total income to arrive at your AGI. The types of adjustments that you can deduct are subject to change each year, but a number of them consistently show up on tax returns year after year. Some of these adjustments include:

    half of the self-employment taxes you pay
    alimony payments made to a former spouse
    contributions to certain retirement accounts (such as a traditional IRA)

    In addition, both your earned income and Adjusted Gross Income (AGI) may not exceed:

    $15,010 if you’re not claiming a qualifying child ($20,600 if filing jointly);
    $39,617 if you’re claiming 1 qualifying child ($45,207 if filing jointly);
    $45,007 if you’re claiming 2 qualifying children ($50,597 if filing jointly);
    $48,340 if you’re claiming 3+ qualifying children ($53,930 if filing jointly

    So IF she claimed to there is NO way she made 100,000.00

    I think I have some printing and mailing to do to the IRS. :o)

    4+

  22. With the new tax laws taking effect In Kentucky where services will have a sales tax Nicole can no longer “fly under the radar” when it comes to state sales taxes. It seems they intend on hiring new staff to help enforce the new tax plan and I imagine that there will be audits for quite a few small businesses after the first year. Money is tight and what is the sense of making new avenues of tax revenue if no one is going to pay it? Been there done that. I’ve seen it before. There’s going to be a hellstorm, imho. Give it one to two years at most and then the audit, imho.

    6+

  23. With the new tax laws taking effect In Kentucky where services will have a sales tax

    I had to go look. I didn’t realize that legislature had overridden the veto. Well, then, there we are. Sales tax on dog grooming.

    5+

  24. Actually, it’s pretty common for people to include taxes in the full purchase price of what they sell and not shipping. You can back taxes out of total receipts but you can’t do that with shipping because shipping prices vary. If every item you shipped was the exact same cost to ship, and you kept track of the number of items shipped, well then, that would be a different story. There’s a formula for that too. I know math is hard but I think even Nikkers could pull it off.

    I have done it for years and I assure you, the state gets their money and the customer isn’t being robbed in the process. If a customer needs a receipt to show taxes paid- no problem, I write a receipt showing the breakdown. (That’s happened a handful of times in 30 years) Otherwise, I just take my receipts, divides them by 1. (and my tax rate after the dot) and that shows what my actually sales were. The difference between that number and my total receipts is the tax I pay.

    In the 90’s when I kept books, this was a common practice then as well and no more difficult than calculating sales plus tax methods.

    0

  25. Actually, it’s pretty common for people to include taxes in the full purchase price

    In Kentucky and in some other states (I looked), it’s illegal. Against state law.

    2+

  26. Nicole, I know you religiously read Sally’s blog so this is directly for you.

    Let me explain why I pay taxes. I live in a developing country. We are referred to often as “poor” or “third world”. Our government actually and factually steals our taxes. We have had countless cases of fraud, even committed by our previous president. Our government is bad.

    I still pay my taxes. I pay 28% tax on the profit made by my business and 40% of my personal income. I also pay VAT, tax on petrol (gas) and various other forms of tax. Let me assure you that even at the conversion of to Dollars from my inferior currency, that is more money than you will ever pay in taxes. Significantly more.

    We have many people in our country who live like you do, not as a “personal choice” but because shitty circumstances have forced them to live in poverty. These are not people who are afraid of work (*cough* Joe *cough*), but people who received no education under apartheid and simply cannot find work. They are poor by circumstance, not choice, like you. They cannot afford rent so they live in government funded housing. They cannot afford any sort of school fees so their children attend government funded schools. They cannot afford any sort of health care, so their health issues are attended to by government funded hospitals.
    And do you know who pays for those facilities? I do, other tax payers do.

    We have one of the most sophisticated and modern road systems in the world. If I want to travel to the next town, I do so on a five lane highway. If I want to travel the 700kms’ to the coast, I do so on a perfect three lane highway. I like driving on those roads, and my taxes pay to keep them that way.

    And Nicole, there are a few people in my country who think the way you do “why should I have to pay taxes. Down with government, up with anarchy”. Just like you they also have no problem using the facilities that they do not contribute toward when it suits them. If you are so vehemently against government and the facilities they provide, stop using them.

    Stop using public roads. Establish your business on the stead and build a private road that your customers can use (remember about liability on that road in case someone is in an accident – you are responsible for damages done on your private road).

    Self medicate, or use the mighty Joe as your primary health care provider. Or pay your doctors and nurses up front so that the government you hate so much does not have to foot the bill for your health issues.

    Stop calling the cops and using the courts. They are funded by tax payers and are not yours to use.

    Put your money where your mouth is and stop using tax funded facilities. You are the worst kind of hypocrite.

    8+

  27. I found this interesting. I’m not sure how this works for a married couple.

    LLC Tax Filing Rules
    Updated for Tax Year 2017

    OVERVIEW

    If you operate your business using a limited liability company (LLC), then you have more flexibility in choosing how the IRS taxes your business earnings. Your choice will directly influence the tax filing rules you are subject to. There is no set of tax rules that specifically apply to LLCs; the IRS allows the LLC to use partnership, corporate or sole proprietor tax rules.

    IRS default designations
    Immediately after you create the LLC, the IRS automatically treats your business as a partnership, but only for income tax purposes. However, if you are the sole owner of the LLC, then you must pay tax on business profits as if you were a sole proprietor. Both designations have different tax filing rules. If you prefer the tax filing rules of a corporation, then you have the option to elect corporate tax treatment by filing IRS Form 8832. Once you make this election, you cannot change the LLC designation again for five years.

    Partnership filing requirements
    Limited liability companies that are subject to the partnership tax rules are not responsible for actually paying the tax on business earnings, but are responsible for preparing annual partnership tax returns on IRS Form 1065. This return is for informational purposes only; all income, deductions and credits are reported by each individual owner.

    The LLC reports each owner’s share of these amounts on a Schedule K-1 at the end of the year. For example, if you and a friend create an LLC to run a business that earns $100,000 and has $60,000 of deductible business expenses, then each of you will receive a Schedule K-1 with $50,000 of earnings and $30,000 of deductions. Both of you must then report these figures on your personal income tax returns. Essentially, the business will increase your personal taxable income by $20,000.

    Corporate filing requirements
    If you decide to make a corporate tax election for the LLC, the IRS will treat your business as a separate taxpayer in the same way you are a separate taxpayer from your friend. As a result, the business is solely responsible for reporting all income and deductions on Form 1120 each year and paying the appropriate income tax by the deadline.

    If the LLC fails to pay the tax or file a return, you and the other owners are not personally liable. However, a drawback to corporate treatment is that business earnings are taxed twice. The first level of tax occurs when the LLC files a corporate tax return, and the second is imposed on the owners when they receive a dividend. Each owner must report the dividend as taxable income on their personal Form 1040s and pay tax on it.

    Sole proprietor filing requirements
    In a sole proprietorship, the IRS disregards the LLC entity as being separate and distinct from the owner. Essentially, this means that you are personally responsible for all tax payments and filings. When you prepare your personal income tax return, you must now also complete a Schedule C attachment. The Schedule C only reports the income and deductions that relate to your business activities. If you calculate a profit on Schedule C, then the amount is included with the other income your report on Form 1040.

    https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/small-business-taxes/llc-tax-filing-rules/amp/L39E29kPR#ampshare=https://turbotax.intuit.com/tax-tips/small-business-taxes/llc-tax-filing-rules/L39E29kPR

    1+

  28. Gofundme is taxable if it is used for a business. Which would explain where all the money went. Nicole has said online many times that their focus has been on building the business first before the homestead because it is the sole source of income.

    What about back child support? Is that being taken out of their refund? I suppose she could file as single and keep Jo out of her tax problems.

    I really don’t get why Nicole has put so much personal information online…for years and years.

    6+

  29. I really don’t get why Nicole has put so much personal information online…for years and years.

    Anything for a buck. Particularly if you can get it without having to declare it. Let some other chump give you a dollar remaining after they paid their share AND yours.

    0

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