Obama’s 2009 Tax Return

As a cap to Complain About Taxes Week, I thought it would be amusing to peruse somebody else’s tax return. There are not very many publicly available ones to choose from, but there is this one from a famous multi-millionaire author.

11 Slightly Interesting Things From the Obamas’ 2009 Tax Return

1. The social security numbers are redacted. The White House provided most of the 1040 and schedules that were filed, but the SSN boxes are blank. I guess there is the potential for political pranks, but seriously, what are the chances of somebody trying to use Barak Obama’s identity to open a new credit card?

2. Both Obamas sent $3 to the presidential election campaign fund. A classy thing to do given that Obama is the only major party candidate in history to turn down money from the fund. Presumably, he won’t use it in 2012 either, so this just helps the other guy.

3. The Obamas didn’t file until April 7, even though they had a refund of $8,287 coming their way. The accountant signed it March 30. That seems a little tardy. Did he have more important clients whose returns had to be done first?

4. Michelle Obama gave her occupation as “US First Lady.” Her husband listed “US President” even though that gig provided only a small slice of his 2009 income. The Bushes listed the same occupations, although they omitted the “US” bit. I guess they assumed the IRS would figure it out. Hillary Clinton called herself an “attorney” on the 2000 Clinton return.

5. The presidential W-2 is from the “DFS-CIVPAY Directorate.” At least I think so. W-2s were not provided. But Mr. Obama got $374,054 from that sinister sounding source in 2009. Mrs. Obama apparently earned $406 from the University of Chicago Hospitals in 2009.

6. For a sitting president, Obama is doing very well. He took in $5,623,284 in 2009, practically all of it from book royalties. I’m waiting for him to slip into a speech that he is the first US president in history to personally pay more than a million dollars into the treasury in a single year. Generally, presidents wait to become ex-presidents before really raking it in. Bill Clinton made $109 million during the Bush years, something that makes even a cynic like me uncomfortable.

7. The Obamas are, apparently, really bad investors. They had investment income of only $25,491 for 2009. Given that they must have several million salted away by now (2008 income was $2.7M) that kind of return sounds like they are in all cash. Is this because any investment they made could be considered a conflict of interest? Or do they know something I don’t?

8. Foreigners paid Obama more than a million dollars last year! Of course, that’s nothing more than royalties from books sold outside the US, but doesn’t it sound like a great line for a less principled politician to use in the fall?

9. Obama paid $59,372 to foreign governments and then reduced what he paid the US Treasury in taxes by that amount! Again, nothing even a little untoward here. If you pay foreign taxes on money you make overseas the IRS gives you a credit for it to use against your US taxes, before it goes ahead and taxes you on the same income again. Fun fact: only Uncle Sam taxes his citizens on what they make everywhere on the planet. Most countries tax only what happens inside their borders.

10. The state of Illinois will tax you on your income if you claim to be from Chicago, even if you use “1600 Pennsylvania Ave., Washington, DC” as your address. Then again, the Obamas deducted $52,195 for home mortgage interest.

11. The Obamas withdrew $48,732 from an IRA in 2009. There is no further detail on this other than line 15b on the 1040. I’m really scratching my head on this one. They couldn’t possibly need the money. Do they expect tax rates to be much higher when they are retired? If so, why not a Roth conversion instead? Of course, see item #7.

Government, Taxes | Frank Curmudgeon | April 16, 2010 12:59 pm

No Comments

By Juan Pablo, April 16, 2010 @ 1:14 pm

First time to comment on your blog. Love your posts.

I think you are wrong on your fun fact in point 9. The US is not the only country to tax on a worldwide income basis. Actually the common denominator is for most countries to tax their residents on a worldwide income. There are few and numbered countries that follow a territorial tax regime and usually it only applies to companies and not individuals.
By Dave, April 16, 2010 @ 1:25 pm

I thought it was interesting that the Obamas did not take the $800 Making Work Pay credit. Since it was his idea, maybe it would be considered a conflict of interest, or at least crass?
By jim, April 16, 2010 @ 1:34 pm

“what are the chances of somebody trying to use Barak Obama’s identity to open a new credit card?”

I’d estimate the chances at around 100%.
By jim, April 16, 2010 @ 1:38 pm

#7 – I would hazard a guess that they are funneling their money into some sort of blind trust. Then the trust’s finances would be separate (right?). I think this is pretty common for high level politicians so they can avoid conflict of interest in their investments.
By Mike Piper, April 16, 2010 @ 1:41 pm

#11 puzzled me too. The most likely thing I could come up with was that it was a failed IRA to IRA transfer in which they didn’t get the money moved into the new IRA within 60 days. (Would seem consistent with the “everything is in cash–we just don’t have time to think about this or even pay somebody to think about this for us” attitude.)
By Andrew Stevens, April 16, 2010 @ 1:48 pm

Dave, Making Work Pay phases out over $150,000 of income for a married couple filing jointly and is zero by $190,000 of income. The Obamas don’t qualify for the credit.

Jim is right. It has to be close to 100%. If Obama’s SSN was known, it would be used everywhere, all the time, for all sorts of ridiculous things.
By jcompton, April 16, 2010 @ 1:50 pm

Lots of long-term zero-coupons?
By Investor Junkie, April 16, 2010 @ 2:35 pm

Frank, Obama is a _great_ investor. After all he stated in March 2009 it was a great time to invest.

http://www.politico.com/news/stories/0309/19567.html

I’ll have to take Obama’s business and investing advice from now on since he’s a proponent of the free market right?
By Investor Junkie, April 16, 2010 @ 2:37 pm

@jim I want me some of those ObamaBucks with his SS. Sounds like Obama should get LifeLock.
By G. Jules, April 16, 2010 @ 2:43 pm

I was assuming that the IRA distribution was from an inherited IRA that they’d decided to take lump sum rather than over time. (Or is there a different way to declare a distribution from an inherited IRA?)
By Kathy F, April 16, 2010 @ 3:35 pm

According to a Washington Post article, Obama has his money in US Treasury bonds so there is no need for a blind trust.
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/16/AR2010041603420.html?hpid=moreheadlines
By jim, April 16, 2010 @ 3:55 pm

Kathy, ah, that would explain the relatively low returns.
By Ron, April 16, 2010 @ 4:31 pm

“what are the chances of somebody trying to use Barak Obama’s identity to open a new credit card?”

If it can happen to Ben Bernanke …
http://www.newsweek.com/id/213696
By Dan, April 16, 2010 @ 5:50 pm

Well shoot. If you’re going to ding him for blanking out his SSN, at least ding him for not publishing his phone number, too.

And who says the rich don’t pay taxes?
By Bill Winterberg, April 16, 2010 @ 6:20 pm

The gift tax exemption increased to $13,000 for 2009, so the Obamas could have added an extra $1,000 to each daughter’s 529 plan without using any of their lifetime exemption.
By Mt, April 16, 2010 @ 7:17 pm

Nice comment Investor Junkie. I had forgotten about that. Who knew that Obama’s “profit and earning ratios” comment would basically nail a multi-year market bottom?
By WhittyMike, April 18, 2010 @ 7:50 pm

@G. Jules, 4/16 @2:43pm – I suspect you’re correct, the IRA distribution may have been from an IRA inherited from his grandmother who passed, IIRC, in late 2008. Too bad his advisors did not recommend a disclaimer in favor of his daughters. They could have split the account and then converted their regular IRAs to Roth IRAs in 2010.

Overall, I’ve got to give credit where credit is due on this full disclosure (except for the SSN and phone#, which I’d redact too if I were disclosing my 1040).
By WhittyMike, April 18, 2010 @ 7:55 pm

Correction to above: the inherited IRA cannot be converted to a Roth. Disclaimer would still have made some sense, though.
By kitty, April 19, 2010 @ 6:36 pm

#7 – if you have more money than you can possibly spend, why risk any of it? To beat inflation? The inflation has to be really huge to reduce what they have to the point that it’s less than they need. To earn more? What for, if you already have more than you can spend?
By Income Tax Calculator, July 9, 2010 @ 3:35 pm

Sounds like the obama’s are pro income tax manipulators to me. kinda makes sense on how bad his ideas are in office.
By ttfitz, July 14, 2010 @ 10:22 pm

Low investment income= bad investors? Since when?

If, for example, you put all your money in non-dividend paying stocks, and didn’t sell any of them, your investment income would be zero, even if the stock doubled in value over the year.
By DC Handgun Info, April 27, 2011 @ 11:48 am

“9. Obama paid $59,372 to foreign governments and then reduced what he paid the US Treasury in taxes by that amount!”

Why is this? Foreign stocks? Or foreign bonds? Could this be considered unethical or a conflict of interest? Just curious.
By Dum Liberal, March 21, 2012 @ 8:35 pm

Here’s where 0bama’s redacted SSN went:

http://www.orlytaitzesq.com/wp-content/uploads/2011/09/Obama-tax-returs-and-e-verify_0001.jpg
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