90 AND AT A LOSS
IRS deduction limit miffs senior
Dear John: I was once the owner of a garment factory in Pennsylvania with 120 employees, mostly women. It was housed in a 40,000-square-foot, climate-controlled building outfitted with all of the state-ofthe-art sewing plant equipment.
The US government passed the North American Free Trade Agreement, which put all the sewing plants in Pennsylvania out of business. I ended up with a loss of more than $200,000.
Now, the reason I am writing to you.
Mywife and I are both 90 and have a lot of medical bills. I told my accountant that I would like to draw more money from my retirement account. But he told me that would put me in a higher tax bracket and I would have to pay more taxes.
I asked him why I couldn’t raise the amount of $3,000 that we deduct every year from our business loss. He said that $3,000 was the maximum allowed by law.
I say that’s crazy. This amount has been the law for over 60 years — it has never increased with inflation. It should be closer to $30,000 today!
I sent a letter to the IRS. I was told to write to my congressman, because the IRS can’t change the law. I don’t want the law changed, only the amount, which is long overdue to be changed.
I also sent letters to President
Trump and the chair of the House Ways and Means Committee that oversees the IRS but I have not heard back. At age 90, I hope to get some type of response sooner than later. C.F.
Dear C.F.: President Trump is a little busy. And Congress is a little too lazy to answer letters.
But I got tax lawyer Stephen Werner of Harrisburg, Pa., to look at your letter. And the short answer is that Congress would have to change the law in order for you and others to get a bigger deduction for business losses.
And, yes, it does seem unfair that the deduction hasn’t been changed in a long time.
“I agree that it is time to look at the amount of the deduction limit for capital losses, but I’m not sure it will be in time to help [your reader],” said Werner.
“The capital loss limit was $2,000 in 1941 and has only been raised to $3,000 today. In a political environment, which clamors for favoritism for the so-called ‘middle class’ — whose income is more ordinary in nature and may be foreign to the world of capital gains and losses — it is unlikely [your reader’s] plea will engender much in the way of sympathy,” said Werner.
To make matters worse, the Supreme Court has ruled on the treatment of capital losses. So the current law is written in stone.
But let meadd this: At 90, why are you worried about paying a little more in tax if you take some extra money out of your retirement account? Enjoy your money before your heirs get a chance to!
Dear John: I totally agree with your recent answer that NYC parking permits are too easily obtained.
I, too, have found that most of those I have observed driving with these permits are not handicapped at all.
I live in the Rego Park section of Queens. In a long two-block stretch of Queens Boulevard, I recently counted 11 out of 30 cars having those permits! Something is definitively not right. H.M.
Dear H.M.: Some doctors must have a business on the side giving handicapped paperwork to paying customers.
Someone ought to look into it. But nobody will.