As we approach our nation's birthday, barbeque, swimming, and fireworks tend to dominate our thoughts. Hopefully we can make time for another thought, even if it's brief and in between hot dogs, about the men and women who helped make our country and how they weren't very different from us.
Take Paul Revere, Revere was more than one of the United States' greatest patriots; he was a father, a homeowner, a businessman, and a dentist. He was not that different than most of us, he was juggling a lot and though he didn't want his tea taxed it certainly makes you wonder -- well, at least it makes me wonder, if Revere were alive today, what would his tax return look like?
Revere was married at 23 and after his first wife died he remarried in the same year, which means his filing status would have stayed Married Filing Jointly for most of his life. He fathered 16 children, 11 of whom lived until adulthood. Likely, in addition to quite a few exemptions, he could claim the child tax credit of $1,000 per child under 17.
Using a Schedule A, he would have been able to claim any mortgage interest he paid as well as the real estate taxes on his home in the heart of Boston. And as scary as it might sound to us, dentistry could have been considered a hobby, and not a job, for Revere. Therefore, expenses including materials, supplies, and tools could have been claimed as miscellaneous deductions -- as long as he put any income earned by his hobby on Form 1040 under "Other Income." And, since it would be likely he would be better served using itemized deductions; if he was as generous as some of his friends, his charitable contributions to local churches and recognized charitable organizations also would have been deductible. Now, let's talk earned income. As the owner of many small businesses, Revere would have had a separate Schedule C for each business. And each business would entitle him to different deductions. For example, a craftsman such as Revere probably would have had a lot of tools. An artist and silversmith would have different tools and supplies from the copper foundry. The specific tools of each trade would be deducted over a period of years under each business and for the most part, the supplies used in each business would be immediately deductible.
Revere hired apprentices in his early businesses as an artisan, silversmith and merchant. Apprentices' wages generally consisted of the fair market value of any room and board provided by the Master Craftsman teaching them; so, the only real deduction for the apprentices would be the value of any room and board and any small stipend paid. The amount representing pay for the apprentice would be reported as subcontract labor not as wages.
In the foundry, Revere had employees and would have been responsible for wages, the cost of employee benefits such as health insurance and retirement and the employer share of Medicare and Social Security taxes (payroll taxes). However, payroll taxes and employee wages would have been deductible expenses.
Revere, like many early patriots probably paid many of his own expenses such as printing costs for flyers, paper, pens, ink, and many other expenses necessary to help better the future of our fledgling country were deductible. His travel expenses as both a soldier and a spy would have been deductible since the government was unable to reimburse expenses during this period.
Finally, did the ride go down the way we think it did? Not quite. Revere didn't ride alone, many volunteers helped spread the word. And since we are talking tax here, these patriotic volunteers would be able to claim 14 cents a mile or the actual expenses of the horse.
Happy Birthday, America. Now, get back to that barbeque.