Hello...Daytona...You Paying Attention?

This post has nothing to do with taxes or accounting. But given my past, I had to express my opinion on the state of online viewing options in sports.

NASCAR really needs to pay attention to what the NCAA & their partners are doing with live video streaming, stats, etc. NCAA is again offering free streaming for any tournament game. There are stats galore. I love it and apparently so do lots of other fans. But the curious thing to me is that TV ratings for March Madness are at 20-year highs.

Twenty-year highs! Even with these other viewing options, TV ratings are through the roof!

Meanwhile, NASCAR TV ratings continue to be flat or down over the last 4-5 years. They offer no streaming and there are no apparent plans to offer any online options in the near or distant future. The NASCAR partners cannot seem to come to grips with how to share the playing field in the best interest of the fans and sport. They are still using excuses like they do not want streaming to hurt their local affiliates. Accordingly, they have been left behind and remain lost with respect to online options and I think they are losing fans at least partially because of it. 

Did I mention March Madness ratings are at twenty-year highs?

Let's face it, if I have an option to watch NCAA/NASCAR via cable/DirecTV, I will. Streaming is still inferior to those options. I bet most fans feel this way. As the Applebee’s online commercial that runs during the NCAA games jokes about, I am watching on a small screen with bad speakers.

I certainly prefer my big flat screen. But, as I sit here in the office in the middle of tax season, I have two options. 1) Stream my sports or 2) not watch sports. I want to watch sports, so I stream. Pretty simple.

I am a viewer the local affiliate would not have had anyway, so how does the streaming negatively impact them?

From a loyalty standpoint, because I can stream and watch the NCAA tournament, I stay in touch with the sport. I stay connected with the sport. I also stay connected with my friends as we chat about games and brackets. I cannot wait for the next game to begin. I am planning my workload over the next couple of days so I can watch my Bulldogs in the Elite Eight for the second straight year...but via TV, not streaming.

On the NASCAR side of my life, I have lost that connection. It is tax season. I dvr'd Daytona and watched the last 10-15 laps. I was very happy for Trevor Bayne. But I have not watched a lap since. Sorry MRN, I am a visual guy. I have to see it.

Come on, I used to make my living in NASCAR. I used to live, breathe, eat and sleep NASCAR. I have not watched a lap in over a month.NASCAR, if you can lose me, how do you expect to keep all those casual fans you attracted interested?

I know NASCAR is headed out west this weekend. However, that is because I have friends/clients involved in the sport. It is not because I am really paying attention to the sport. I will probably check on Jayski to see who won. I might even check to see how qualifying went. But, I will not watch a lap and I will only do those things if it does not interfere with watching the tournament.

Did I mention March Madness ratings are at twenty-year highs?

But I Paid the Tax!

Q: I just had my taxes done and I owe a lot of money. My CPA says it is because an early IRA distribution I took. I don’t understand because I paid the tax when I got the money. What is he talking about?

A: Well, this is a common misconception. I think the confusion is that you had tax withheld. But you did not actually pay the total tax due.

Just like the taxes withheld from your normal paycheck, you made payments towards your year-end tax bill. But you did not actually pay the total tax due. The total tax on April 15th may be more or less than what was withheld from your check.

If you paid in less via these withholdings than the total tax, you are going to owe at April 15th. If you paid in more than the total tax, you get a refund.

Obviously this is too late for you and your transaction, but taking funds out of your 401(k)/IRA is one of the last places you should go to get cash. That is especially true if you are younger than 59½ because then you will likely have the 10% federal penalty. You also have the ordinary federal income tax and your state income tax.

In North Carolina, where I live, those taxes and penalty can easily eat up more than 40% of the distribution. If you only had 15-20% withheld, you still have 20-25% due.

So next time, talk to your CPA before you take a distribution like this. Maybe your CPA can help you find better financing options. If not, you will at least know how much tax this is going to cost you.

Should I File My Taxes Separately?

Q:        My neighbor says he and his wife file their taxes separately and it saves them a bunch of money. What is that? And should we do it?

A:         Let’s first discuss what filing separately is. The IRS allows you and your spouse to file your taxes combining all of your income and deductions on one tax return. It does not matter who earned the money or who spent the money. It also means you are both equally responsible for the taxes.

Or, you can elect to file separately. You claim your income and deductions. Your spouse claims his/her income and deductions. Your tax is your tax. Your spouse’s tax is his/her tax.    

There are two main reasons to file separately.  First, there may be legal & liability issues with your spouse. This is the main reason I see people file separately. Second, if it is going to save you tax.

Regarding the legal & liability issues…if you are filing jointly and your spouse is doing unscrupulous things on your tax return, you are (most likely) equally responsible for those unscrupulous doings as your spouse.  If you file separately, you are not responsible for those doings and the related taxes and penalties….or jail time.

Another time it may make sense to file separately for liability reasons is if you are separated from your spouse. Similar to above, if you file jointly, you are both equally responsible for the taxes on that joint return. If you do not want to be responsible for their taxes…or let them have any of your refund…file separately.

So, will it save you taxes? Doubtful. Yes, there are some situations where filing separately makes sense. But given the current rate structure, those situations are rare. I see 1-2 couples each year that filing separately saves taxes.

So, when can it happen? An example is if you have a large capital gain and little other income and your spouse has lots of income, filing separately may help lower your capital gain tax and overall taxes.

Some credits (like the first time homebuyer credit) and deductions are limited by income levels. If one of you makes substantially more than the other and your combined income exceeds those limits, you would lose the credit/deduction. It may be possible for you to file separately and the spouse with the lower income could still qualify for the credit.

So, go be nosy and find out what unusual situation your neighbor has that filing separately saves them taxes.