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I felt sorry for Mitt Romney when, during Tuesday night’s debate, he said he would eliminate federal income tax on interest, dividends, and capital gains for people making under a certain dollar amount, then beamed as if middle-income Americans would suddenly jump for joy and shout “Hallelujah!”

Maybe Romney hasn’t been made aware of a giant tax loophole already taken advantage of by millions of Americans. I myself have used it the last few years. Here it is: If you earn less than $10.00 in interest in a year, you don’t have to report it on your federal income tax form.*  (See update below)

It's so simple but it works every time. I only wish I had learned about it earlier, like during the Clinton administration. Don't spread it around too widely, just in case someone in Congress gets wind of it and decides to close our little loophole.

Seriously, does this guy have a clue? Even one, tiny, miserable eff’ing hint about what life is like in ”real America”?

I don’t have the exact number handy, but I know my wife and I earned about $3.50 in interest last year. We are a two-income family with some money socked away for retirement, not nearly enough money tucked away for our kids’ college expenses, a house that lost another 10% in value since last year, and a small, slowly dwindling supply of cash on hand for emergencies like car repairs. In today’s America, that makes us one of the haves, but I still wake up often in the middle of the night with a gut-ache.

I just checked my credit union’s web page for current interest rates. They pay .03% interest on savings accounts and .01% for checking accounts. That’s not 3 percent and 1 percent, that’s three-one-hundredths-of-one-percent and one-one-hundredth-of-one-percent.

So far this year we have earned $1.21 in interest. We are right on track for paying no taxes on our interest.

Dividends? Capital gains? Shocking as it may seem, we own no stock outright, just whatever our shares are in our tax-deferred employer retirement plans. No tax relief for us under Romney, but hey, we don’t need it. We have already outsmarted the IRS by keeping our money out of our savings account and spending it on things like mortgage payments, utility bills, gasoline, and clothing.

Oh, and dog food. Every time I feed my dogs I am laughing all the way to the bank, where I don’t deposit any money and don’t earn any interest.

10:54 AM PT:* NC Yankee points out in the comments that the $10.00 threshold determines whether the financial institution is required to issue a 1099-INT form to the customer and report the interest to the IRS. Taxpayer is  supposed to report it even if no 1099-INT is received.

Apparently I am a real tax cheat. Cool!


Originally posted to Giles Goat Boy on Wed Oct 17, 2012 at 10:19 AM PDT.

Also republished by J Town.

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