Paul L. Caron

Saturday, October 16, 2004

Teresa Heinz Kerry Releases Part of Her 2003 Tax Return


Teresa Heinz Kerry on Friday released a portion of her 2003 federal tax return, reporting that she paid $627k in federal income taxes on $2.3 million of AGI, primarily from dividends and interest. She received $5.1 million of gross income, $2.8 million of it tax exempt interest income. Ms. Heinz Kerry, who filed separately from Senator Kerry, thus paid federal income tax at the rate of 12.3% of her gross income and 27.4% of her AGI. She refers to herself as "Teresa Heinz" on the tax return and lists her occupation as "philanthropist." For the Kerry campaign's accompanying press release, see here.

Unlike President & Laura Bush, Vice President Dick & Lynne Cheney, and Sen. Kerry (here and here), who have released their entire 2003 returns (but not all accompanying statements), Ms. Heinz Kerry released just the front two pages of Form 1040, as did Senator John & Elizabeth Edwards.

David Cay Johnston reports in the New York Times on some of the missing information on the forms released by Ms. Heinz Kerry:

One line in the Form 1040 that was released indicated she had a job for which $2,230 in taxes were withheld from her paycheck, but gave no details. A spokesman for the Kerry campaign said this income was related to an investment she had with a limited liability corporation, although he would not provide any more information.

Tax documents that would indicate if Ms. Heinz Kerry has offshore accounts were withheld, as were the schedules detailing her charitable deductions, interest expenses and the nature of the $14,412 in capital gains she reported. But Paul Bschorr, a lawyer for Ms. Heinz Kerry, said Friday that none of her personal investment accounts or accounts controlled by her family trust are deposited outside the United States, a step some wealthy American use to defer or escape taxes.

No information was provided about how much income was earned by trusts of which she is the beneficiary. If the trusts are as large as reported - and the Kerry campaign has not challenged the billion dollar estimate - then even a modest 5 percent return would have generated $50 million of income, 10 times what was on the two pages released by Ms. Heinz Kerry. A statement released by the Kerry campaign noted that income taxes are paid directly by the Heinz family trust, in addition to taxes that Ms. Heinz Kerry pays.

For other press reports, see the Washington Post and the Associated Press. For prior TaxProf Blog coverage, see here, here, here, and here.

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Wouldn't 90% of the $628,401 be $565,560.90? I wonder how she got around an underpayment penalty?

Posted by: curiousfellow | Oct 22, 2004 1:00:01 PM

she looks like a tax cheat. her income is 10% of estimates. also there is no way she could afford her lifestyle all those houses planes and boats really add up she can not afford the basic up keep of these on 5 million

Posted by: tax cheat | Oct 16, 2004 12:43:03 PM