Teresa Heinz Kerry Releases 2003 Tax Info; Paid Over $798,000 in Federal, State Income Taxes

Druge Report ^ | November 15, 2004 | Druge

[The Great Yazoo]

Teresa Heinz Kerry Releases 2003 Tax Info; Paid Over $798,000 in Federal, State Income Taxes Fri Oct 15 2004 17:44:41 ET

Mrs. Teresa Heinz Kerry announced today that she has filed her final 2003 federal tax forms and as she said promised last spring, has released the top two pages of her 1040 tax filings.

Mrs. Heinz Kerry paid $798,820 in state and federal income taxes in 2003, approximately 35 percent of her gross taxable income, according to figures and federal tax forms she released today.

Mrs. Heinz Kerry paid $627,150 in federal income taxes on gross taxable income of $2,291,137, primarily from dividends and interest she receives from Heinz family trusts. In addition, she paid an additional $171,670 in state income taxes and had $2,781,791 of tax exempt interest income from state, municipal and public entity bonds. These taxes are separate from and in addition to the income taxes paid directly by the Heinz family trusts and by other beneficiaries who receive income from those trusts.

In 2003, Mrs. Heinz Kerry was responsible for more than $4.6 million distributed as charitable contributions, primarily through charitable grants by the Heinz Family Foundation, a 501(c)(3) corporation Mrs. Heinz Kerry established with her late husband, Senator John Heinz and later significantly expanded after his death in 1991 through her creation of the Teresa and H. John Heinz III Fund within that Foundation. The Heinz Family Foundation is principally funded by a charitable lead trust, the Teresa & H. John Heinz III Charitable Trust, established as a result of estate planning decisions made by Senator Heinz and Mrs. Heinz Kerry before his death.

The Heinz Family Foundation is separate from the Howard Heinz Endowment, of which Mrs. Heinz Kerry is Chairman, and the Vira I. Heinz Endowment, of which she is a board member, both of which were established by earlier generations of the Heinz family and make significant annual charitable grants. Both the Heinz Family Foundation and the Endowments file publicly available Forms 990 PF on an annual basis, forms which set forth the charitable grants as well as investments made by each entity.

In 2000, then-candidate George Bush filed an extension for his 1999 taxes, released some information in the Spring and then released his 1040 Form after he filed his taxes in October 2000. Mrs. Heinz Kerry files a separate tax return from her husband, Senator John Kerry, and received an extension for filing her 2003 returns until October 15, 2004.

While she is not a candidate for any public office and the release of this tax information is not required by law, it fulfills the commitment Mrs. Heinz Kerry made last May. The release of this information is in addition to the financial information Sen. Kerry and Mrs. Heinz Kerry already had disclosed through the forms required by the Senate Financial Disclosure Report and the Executive Branch Personnel Public Financial Disclosure Report, both of which are publicly available on Senator Kerry's campaign website, johnkerry.com.

"This tax information goes beyond any legal requirement, but John and I believe it strikes a proper balance between my family's privacy and the media's requests for additional information," Mrs. Heinz Kerry said.

[Gaffrig]

This is BS. You mean to tell me that somebody who is worth an estimated 750+ million dollars made 6 million ?????? Thats less than 1% return. Who this ladys finacial adviser ????? the same person that invests SS dollars ?????

You don't fly around on a Gulstream V and own 5 or 6 houses in this country, and others overseas on 6 million dollars a year.

[southernnorthcarolina]

...K-1 income, capital gains, interest, dividend income, and others appear on the first page of the 2003 1040.

True, the bottom line figures of the K-1s, capital gains/losses, interest income, dividend income, rental income, etc. are carried forward to the 1040. But the devil's in the details. These numbers by themselves are nearly meaningless.

As others have noted, Teresa's complete returns would be interesting, especially for those years before her kept man took the Presidential plunge.

With respect to her 2003 returns, it's no coincidence that she took the automatic extension to August 15, and then sought and was granted the 60-day ("for good cause") extension to October 15. If there are any "problems" with the return, they won't surface until well after Election Day. I predict she'll file an amended return, claiming more deductions, exclusions, shelters, and deferrals, at a later date -- particularly if hubby finishes second next month.

[The Great Yazoo]

No. Wealthy people don't need income. In fact, the richer you are, the less income you need. Kerry, himself, as well as the entire Kennedy clan, are prime examples of this principle.

That's the underlying flaw in the income tax system.

[Dante3]

The Kerrys' complete tax forms for the past few years should be made public for several reasons, including the fac that Kerry himself made taxes an issue.

[NonValueAdded]

So where are the forms? I came in through another post, since locked, that pointed us to US Newswire Newsphotos and could only find page 1. That in itself had a few surprises. First, she filed as Teresa Heinz - NO HYPHEN, NO KERRY. She did give $3 to the presidential election fund - how sweet. She did pay $626 of self employment tax but claimed no line 7 wages, salary, or tips. Mildly interesting. With such an uncomplicated page 1, why on earth wouldn't she file a joint return with John? Why pay Married Filing Separately rates? Is it for the privacy - kinda moot since the return is released - or is it to avoid liability for anything John might claim? Hmmm? Her net capital gains is a measly $14K but that is a net figure. Schedule D would tell us whether or not she traded any timber, oil futures, etc., but we won;t see that. Besides, all the big money is locked up in the trusts and that is where the serious ownership stakes are held. Where is page 2?

[NonValueAdded]

Oh, maybe the MFS is because she's claiming a different residence state than the hubby. Alas, the address was redacted. That should be challenged. Is it a tax dodge? If she claims PA residency for tax purposes, what does that say about her voter registration? We don't need the street address, maybe not even the city unless there is a city tax involved, but the state is important information.

[The Great Yazoo]

The unrealized capital gains is probably where the real dough is.

[conservative in nyc]

Page 1 of her 2003 tax return is here.

Page 2 of her 2003 tax return is here.

Because she earned a little over $2.2 million in qualified dividend income, Ms. Kerry benefited significantly from the reduction on the tax rate on dividends to 15%. Thus, she only paid $300,699 in regular income taxes in 2003. However, she also owed $326,451 in alternative minimum taxes and $1,251 in self-employment tax in 2003, bringing her total federal tax bill to $628,401.

It's a bit strange that she's paying more in AMT than in regular income taxes. The Bushes, Cheneys and Edwards and her husband didn't. My guess is this reflects taxes owed on her oil and gas and timber interests. I doubt it's from her simple dividend income (which is the bulk of her taxable income).

The other strange thing is that she didn't claim a single tax credit, including foreign tax credits.

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[Texas Songwriter]

Taxes are to be paid by us plebians.

[Southack]

"Southack, IIRC, K-1 income, capital gains, interest, dividend income, and others appear on the first page of the 2003 1040. My copies are at the office, but I was under the impression that the first two pages were a pretty good snapshot of all monies making up total income."

The net figures for most "income" do go onto page 1 as you note, but those figures are *adjusted* based upon previous "losses," depreciation, and a host of factors. Moreover, your foreign earnings are specifically excluded from those two pages (though any foreign tax credit is included there). Mineral earnings aren't there, either.

You can't even begin to determine which tax loopholes she's been using...if you only look at the first two pages.

[Southack]

"It's a bit strange that she's paying more in AMT than in regular income taxes. The Bushes, Cheneys and Edwards and her husband didn't. My guess is this reflects taxes owed on her oil and gas and timber interests. I doubt it's from her simple dividend income (which is the bulk of her taxable income). The other strange thing is that she didn't claim a single tax credit, including foreign tax credits."

Yes, her AMT hit is a clue that she's gaming the system. I doubt that it reflects oil and gas from her own property, as she'll get a "depletion allowance" for a lot of that income that offsets the real profits.

Not claiming any foreign tax credit, however, is a big clue that she is filing foreign tax returns and paying taxes overseas on her income (i.e. owing taxes over there rather than being due a refund) where she no doubt has a better deal negotiated than here. Thus, her two currently released pages subtley suggest that she's using Benedict Arnold loopholes.

The kicker here, however, is that this is all play money. Whatever taxes she pays right now while she's in the public eye (at least partially), she can get back by filing an amended return in the next 3 years.

In the meantime, she simply loans Uncle Sam the amount of her AMT hit. If she wants it back, there are no doubt accountants who cant get it back for her.

Also, the bigger picture may be that her wealth is almost entirely sheltered in trusts. Either Mrs. Heinz-Kerry or her trusts took a bath when Enron went bankrupt, for instance. No doubt they have losses that still "carry forward" to reduce their current tax burden. Her accountants can pick and choose when they want to apply those losses, as political or financial matters dictate.

We've got CPA's here on FR. They need to itemize the potential back-dealings that could be in play here.

[conservative in nyc]

I was looking at the Instructions to the alternative minimum tax Form 6251 and scratching my head over what the differences could be caused by. Line 9 requires a different computation of depletion for AMT purposes. There are also potential differences in amortization for otherwise deductible mining costs (Line 22), research and development (Line 23), and intangible drilling costs (Line 25). I don't know whether these were her included AMT items, though, since there are many others, including different ways of computing depreciation (Line 17), passive activity losses (Line 18) and inclusions for interest on certain otherwise tax-exempt private activity bonds (Line 11).

We'll never know unless she releases her full 1040 with all schedules and attachments. I doubt that will happen.

[Southack]

She also needs to release the tax returns for her Trusts. Her trusts are *paying* her "income" taxes, for crying out loud!

[maryz]

Couldn't be because PA has a 3.07% rate and MA has a 5.3% rate.

MA actually has two rates, taxpayer's choice: those liberals who prefer high taxes are at liberty to figure their taxes at the 5.85% rate. Kerry, along with over 99% of the MA population, pays at the 5.3% rate.

[ProudVet77]

You are absolutley right, I live in MA. What irritates me is that they don't seem to want to report that. Most people in MA think she "lives" here. Most people in the US think she "lives" here". What a joke. That she lives in a different state then her husband is very revealing about tax laws for the rich and famous. How can two people who are married not live in the same state?

[PeoplesRepublicOfWashington]

Fine, but it is accurate to say that she paid only about 17% tax on her gross income. Not bad for a billionaire.

[Quilla]

The net figures for most "income" do go onto page 1 as you note, but those figures are *adjusted* based upon previous "losses," depreciation, and a host of factors. Moreover, your foreign earnings are specifically excluded from those two pages (though any foreign tax credit is included there). Mineral earnings aren't there, either.

Very true, I stand corrected.

[igoramus987]

Personally I think the tax returns of anyone, including political opponents, shouldn't be anybody else's business. If there's a problem, it's between them and the IRS.

No one is saying that what Kerry and Theresa are doing is illegal. But they are clearly using Tax Loopholes such as trusts to avoid paying their fair share of taxes. Yet at the same time, Kerry wants to raise taxes on people that earn more than $200,000. That is hypocritical.

Assuming Theresa and Kerry (since they are married) has $1 Billion (which is a fairly conservative estimate because Theresa inherited $750 million when her first husband died) at 4% interest, they would be earning $40 million a year.

35% of $40 million = $14 million

So each year, they are short changing the IRS $13 million by using tax loopholes. ... and since they have been married, you could say that they have short changed everyone else who pays their fair share of taxes at least $100 million dollars.

[stockstrader]

Great point, GREAT DISTINCTION! Taking income--and taxing the wealthy are TWO DIFFERENT THINGS!!

Taxing income at a high enough rates can PRECLUDE you from ever getting wealthy. What ever happened to 'Five Year Income Averaging' for someone who just happens (i.e. a big stock winner for one year, or a big one year bonus) to have a big year income-wise?

I have an idea--how about a special tax for those 'wealthy' who own TWO or more MANSIONS! (sarcasm--off)