Palin tax returns, financial disclosure (Updated)

Posted by Alaska_Politics

Posted: October 3, 2008 - 1:58 pm

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2006 tax return

2007 tax return

Executive Branch financial disclosure form

Among the coverage:

> Palin Is Lowest Earner of the Candidates (Wall Street Journal)

Sarah Palin is the breadwinner of the family, the documents show. Last year as Alaska governor she earned $122,000 in the "Medicare wages" field of her W-2 form, while Todd Palin earned $46,600 as an employee of BP Exploration Alaska Inc.

Todd Palin also reported a net profit of $15,500 from a commercial fishing business. But the champion snow-machine racer reported a loss of nearly $10,000 from his racing venture.

> Palin's taxes (ABC News)

...Of particular interest: roughly $17,000 in state-issued per diems for evenings spent in her own home in Wasilla. The Washington Post recently reported that the per diems and associated travel costs from the state capital in Juneau for Palin’s family could mean a tax liability of more than $60,000 for Palin’s first year and a half as governor.

The address listed on the 1040’s is Palin's family home in Wasilla, which would seem to suggest Palin considers that, not the governor’s mansion in Juneau, her "tax home." However the McCain-Palin campaign maintains that her “tax home” is technically the governor's mansion in Juneau.

The point is potentially significant because any per diems and travel reimbursements received in connection with someone’s “tax home” would likely be taxable as income. According to IRS regulations: "If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. You also cannot deduct the cost of meals and lodging while at your tax home."

> Palin Reports Six-Figure Income in '06 and '07 (Washington Post blog)

The Palins' joint income last year came from her salary as governor of Alaska and money he earned as an oil worker, fisherman and snow machine racer. Tax returns released by the McCain-Palin presidential campaign indicated that Sarah Palin paid no taxes on $16,951 in state payments she received as meal and incidental expenses when she stayed at her home in Wasilla instead of at the governor's mansion in Juneau.

Alaska's director of finance has already declared that the state does not consider these $60-a-day payments taxable. Accounting experts and some tax courts have differed on whether such compensation is tax-exempt.

And this from the AP:

Palin tax returns for 2006 and 2007 released

By RICHARD T. PIENCIAK
The Associated Press

ANCHORAGE, Alaska (AP) — Sarah and Todd Palin underpaid their estimated taxes with an April extension and could owe interest, according to an Associated Press analysis of the couple's 2007 federal tax returns released Friday by the McCain campaign.

On an undated extension form filed with a $2,000 check dated April 11, the Palins claimed an estimated tax liability of $22,721 and total withholding payments of $20,721. The attached check meant the couple believed they had paid all of their taxes for 2007, as required.

However, when they filed their taxes last month, dated Sept. 3, their tax liability turned out to be $24,738 — meaning they owed an additional $2,017.

IRS rules require that when a taxpayer files for an extension in April, all outstanding taxes must be paid at that time.

When asked if the Palins had paid any interest or penalties, and if so, how much, Maria Comella, McCain-Palin spokeswoman said the couple had paid "at least $2,017," and that the campaign was researching if an additional payment had been made.

"In April, they made a reasonable estimate of what they would owe, and they underpaid," she added.

The documents released Friday by the McCain campaign contained a copy of the $2,000 check sent with the April extension, but there was no copy of any check that might have been sent when the tax return was ultimately filed on Sept. 3.

"They're going to be billed the interest," said Sheldon Cohen, former IRS commissioner under the Johnson administration. He said the Palins would likely avoid any penalties because their tax payments as of April for last year were higher than all payments made the prior year. "If they constantly underpaid, that would be another story."

Overall, the 2007 return shows that last year the couple had a gross adjusted income of $166,080 and paid $24,738 in taxes — about a 15 percent rate after deductions. In 2006, the records show, the Palins earned $127,869 as adjusted gross income, with taxes paid listed at $11,944 — less than a 10 percent rate.

On federal financial disclosure forms, also released Friday, Palin and her husband listed assets worth from $960,000 to $2.3 million. Because the values of assets are reported in broad ranges, it's not possible to calculate an exact value for their holdings.

Like many Americans, their most valuable asset is their home in Wasilla, valued at between $500,000 and $1 million. According to the Matanuska-Susitna Borough, the land and structure at the Wasilla property is appraised at $552,100.

Their next most valuable asset is a fishing leasehold on the Nushagak River, worth between $100,000 and $250,000. Todd Palin's fishing business was valued at between $50,000 and $100,000, and his snowmobile racing enterprise was put at $15,000 to $50,000.

Todd Palin also has a retirement account worth between $50,000 and $100,000, and he owns a variety of mutual funds in a 401(k) retirement plan through his employer, the oil company BP. Sara Palin also has retirement accounts from the state of Alaska and the town of Wasilla, where she was once mayor, valued at a total of $115,000 to $250,000.

The Palins also own shares of two land parcels worth a combined $51,000 to $115,000.

On their tax returns, the Palins said they donated $8,105 to charity over the two years. The bulk of the donations came in "gifts by cash or check" — $4,250 in 2006 and $2,500 last year. For each year, the cash donations were identified only as "various."

Comella said the Palins gave the money to "local churches." She would not elaborate.

The Palins made noncash charitable contributions, claiming "thrift store value" of $825 for a Dec. 31, 2007, donation to the Salvation Army of Wasilla.

The column used to describe the donated items states only "Wasilla Alaska." When asked to explain, Comella said, "I believe this is actual things that were part of their property — furniture, clothing and so forth. That was generally what they donated."

For the 2006 tax year, the couple listed two noncash donations to the Salvation Army of Wasilla, "CRIB HHG CLOTHING," with a fair market value of $1,000, and "HHG CLOTHING," with a fair market value of $230. While the value of the two donations total $1,230, the tax return only claims $630.

Asked to explain what "HHG" meant, Comella said she believed the Palins had donated a crib and children's clothing.

Asked to explain the missing $600 on the actual return, Comella said that figures in two columns had been reversed — that the $1,000 was actually the donor's cost and the $400 listed under that category was actually the fair market value. That would make the total donation the same $630 listed elsewhere on the Palin return.

"It was a typographical error that didn't change any of the main numbers," said Comella.

More recently, the IRS has tightened documentation rules for all charitable contributions.

The Palins did not report as income the per diem payments she has claimed since becoming governor whenever she works out of her home in Wasilla rather than at the state capital in Juneau.

According to Comella, Juneau is the governor's home base and therefore whenever she works elsewhere, she is entitled to charge the state per diem. Comella contended that the per diem payments, which total nearly $17,000 since Palin took office in December 2006, are not taxable.

The couple's income jumped from 2006 to 2007 because of the salary increase when Sarah Palin became Alaska's governor.

The McCain-Palin campaign had said the tax returns would be released Monday, but it suddenly put them out Friday afternoon — a time long used by government to reveal embarrassing news because few people watch TV or read newspapers Friday evening and Saturday.

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