Paul L. Caron

Thursday, July 26, 2012

Did Barack Obama Underreport His Income to IRS?

American Thinker:  Did Barack Obama Underreport His Income to IRS?:

President Barack Obama released his recent personal finance records in 2008, which included his 2004 U.S. Individual Income Tax Return and Senate Annual Finance Report. President Obama's records for 2004 do not reconcile with the State of Illinois Comptroller's Office. There are inconsistencies in the total compensation received as an Illinois State Senator. The largest error likely is President Obama's omission of a "Leadership Stipend" of over $8,000. This stipend should have been recorded as income.

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Bwahahaha. Paul, did Woody put you up to this? I love the citations to the tax fraud statutes near the end of the article.

He did make up for his underreporting of wages though by paying more than 1.45% medicare tax on that same earnings somehow. If only maybe there was a way for someone to take earned income and maybe put it into some sort of account permitted by the IRC that would reduce your current year earnings, grow tax-free, and be available in your retirement years but, however, would not be deductible for Medicare tax purposes. If only...

Posted by: the real anon | Jul 26, 2012 11:51:37 AM

My guess is that the difference between the taxable amount on his W-2 and the total amount paid is the before-tax contributions to the General Assembly Retirement System. Its website states:

You contribute a percentage of your salary by payroll deduction for benefits. The table below shows current contribution rates.

Retirement Annuity 8.5%
Automatic Annuity Increase 1.0%
Survivors’ Annuity 2.0%
TOTAL 11.5%

Contributions made after January 1, 1982, have been excluded from your gross income for federal and state income tax purposes. You pay no tax on your contributions until you receive them.

Posted by: Bob | Jul 26, 2012 11:59:31 AM

I always knew that Paul could be "fair and balanced!"

Let's not be too hard on Pres. Obama. After all, Tim Geithner might have prepared his tax returns. And, it's possible that Obama offset that $8,000 stipend with job related expenses -- like paying Bill Ayers to write "Dreams From My Father," private investigators to dig up dirt on opponents, and lawyers to cover up his real birth certificate and college records.

Posted by: Woody | Jul 26, 2012 2:37:31 PM

As the first comment points out, state senator Obama paid Medicare tax on $60,857 in state salary, because that is how much he earned that year. Anyone who sees many W-2 forms in the course of preparing tax returns, knows what law professors and law students do not: The Box 1 compensation, reported on Line 7 of Form 1040, usually does not match the Box 3 and Box 5, Social Security and Medicare wages, because the latter include pre-tax retirement-plan contributions and the first does not.

However, Douglas A. Thompson is probably still on the short list for instant analysis at Fox News.

The only question I have about the 2004 Obama return is why they had two household employees (daycare providers) and paid Social Security and Medicare taxes on their salaries -- but only federal unemployment tax (FUTA) on wages paid to one of them. There may be a $43 scandal lurking here.

Posted by: Bob | Jul 26, 2012 6:51:43 PM

Wouldn't the mileage reimbursement of $2,400 be taxable income as an unaccountable plan because it appears to be a flat $200/month. Of course, it's possible he submitted reimbursements for exactly $2,400, but that seems unlikely.

Posted by: Elmer Stoup | Jul 27, 2012 12:27:08 PM

For students of how Obamacareless misinformation spreads, it should be noted that conservative website picked up the story, the dropped it with an apology:

Readers who tuned in earlier and commented on a column purporting to expose tax improprieties on Obama’s 2004 return may wonder what happened to it. The answer is that it has been pulled at my behest. The source from which I drew my information at American Thinker was wrong or at least incomplete. Several plausible explanations for the seeming discrepancy are raised here (with a link to TaxProf Blog) for those who care to pursue it. My apologies to all and my promise to endeavor to do better.

Meanwhile, a Google News search for "obama tax 2004" leads with a link to an page -- which apparently also has been pulled.

* * *

Response to Elmer Stoup concerning mileage: Or, it could be a maximum of $200 a month even if vouchers are submitted for a higher amount. General Assembly compensation information online indicates that a per-mile rate applied during 2004, but I did not find whether there was a maximum, or what documentation was required.

Posted by: Bob | Jul 28, 2012 3:38:15 PM