Wednesday, January 30, 2008

5 Tax Saving Valentines Day Gifts

Valentines Day is known across the country as a day to give gifts to your loved ones (that is 2 weeks from this Thursday, for all you “Forgetful Freds” out there). But this date just so happens to fall in the middle of tax season, when taxpayers across the country have taxes in the mind. But do not be worried, there are a few gifts you can give that might also help you lower your tax liability. So if you had to write a big check to the IRS last year you may want to try one of the following tax saving valentines day gifts.

1. Give Money to a Spouse

If you and your spouse are both American citizens, then you can transfer money directly to your spouse. You will not have to pay any taxes on the transfer and it will actually lower your overall tax liability. However, it will have an adverse effect and raise your spouse’s liability.

2. Setup a Retirement Account

What better way to celebrate Valentines Day than by planning for your future? If you are married you can setup a retirement account for you and your spouse. You can transfer additional funds into this account which will help lower your tax liability.

3. Make a Charitable Contribution

Making a charitable donation in you’re the name of your loved one can be an excellent Valentine’s day gift. It will not only show them you care about charitable causes, but you can also deduct the expense as a charitable contribution. Just be sure keep proof of your contribution!

4. Pay College or Medical Bills

By offering to pay for a loved ones college or medical bills you can help them out while also getting a tax deduction. The IRS allows you to deduct these expenses as long as you mail in the bill yourself so that you have proof.

5. Give a Business Branded Gift

If you own a business you can always purchase some type of product that bears your company logo and write it off as a business expense. This may not seem like the most romantic of gifts, but now days you can have your logo printed on just about anything. Try considering a bathrobe with a small logo on the front, or custom chocolates.

AARP Upset Over Stimulus Package

According to Yahoo News, the AARP is speaking out against Congress’ plans for an economic stimulus package. The plan could give individual taxpayers as much as $600 in rebates, and an additional $300 per qualifying child. The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000.

However, the package would exclude any one who earns less than $3,000 from earned income. Therefore about 20 million senior citizens living off Social Security would not be eligible. "Less than half of all Americans 65 and older would get it," claims AARP spokesman Jim Dau.

President Bush would like to push the plan through ASAP. "I strongly believe it would be a mistake to delay or derail this bill," Bush said. "I understand the desire to add provisions from both the right and the left," he noted. President Bush added that doing so would be in error and would delay the purchasing power boost the stimulus package is designed to create to confront a feared impending recession.

Tax Rebates to Complicate Tax Filing in 2009

As Congress works to iron out the details of an economic stimulus package, many people are already predicting complications for tax day on April 15, 2009. If approved, the stimulus proposal would take the form of checks to be sent out this spring. However, they are expected to be advances on a one-year tax cut in 2008. The IRS is going to use data from the 2007 tax year to calculate each households check. Adult taxpayers are expected to receive between $500 and $600 and there is also going to be a $300 per child credit. Therefore households with two parents and two children could get as much as $1,800 from the federal government.

Unfortunately, since the IRS is using 2007’s data there are going to be some problems for individuals passing the age of being a qualified child in 2008. In these situations the parents will be mailed a check this Spring that they will have to repay come next year’s tax filing season. Additionally, if a taxpayer's child passes away during the year they would also have to return the money.

Wednesday, January 23, 2008

Tax Rebates are Coming Soon!

The Tax Policy Blog posted this interesting article reminding everyone that tax rebates are coming soon. Over the past few days there has been a lot of talk about the country’s economy and emergency stimulus plans designed to increase American spending. However, as the Tax Policy Blog reminds us, billions of dollars in tax rebates are already scheduled to be sent out over the next few months. Last year "over $140 billion in individual income tax refunds were sent out from January 2007 through March 2007. Plus, another $78 billion was sent out from April through June."

Next Big Thing for Major League Baseball: China

According to this article, Major League Baseball has billions of reasons to play ball with China, and its international business chief says the sport's owners are ready to pitch. MLB is hoping to increase efforts to expand Chinese interest in Baseball, similarly to how the NBA courted the Chinese market nearly 20 years ago. Nowadays, the NBA Chinese affiliate accounts for over $2.3 billion of revenue.
"Whether you're a sport, consumer product or any other business, everyone is now interested in China to grow," claims MLB's international senior vice president Paul Archey, who is set to visit Beijing on Wednesday.

Tuesday, January 22, 2008

7 Green Cars of the Future

With rising fossil fuel costs and global warming getting more attention in the media, environmentally friendly cars were all the rage at the Detroit Auto Show last week. At these auto shows, car manufactures usually present out-of-this world concept cars. This year, nearly every company showed off new environmentally-friendly cars.

The biggest trend at the show was new range-extended electric vehicle (REEV) concepts that run on an electric motor that powers the car 100% of the time. The vehicles plug into power outlets that charge the batteries for a 20 – 60 mile driving range. After they pass that range, a generator kicks in which recharges the batteries using any popular fuel. This includes gasoline, ethanol, or even hydrogen.

However, there were dozens of other energy efficient concept cars introduced besides REEVs. Enjoy the following list of 7 green cars of the future.

New Toyota Prius

At the Detroit auto show, Toyota's President, Katsuaki Watanabe announced that he would unveil two new hybrid models at next year’s show. One is suspected to be a Lexus hybrid, while the other is known to be the replacement for the Toyota Prius. Not much is known about what the new Prius will feature, but it is predicted to be more energy efficient with a lower price tag. Some speculate the new version could feature new plug in hybrid technology.

Volvo ReCharge

Volvo’s ReCharge concept car truly takes the phrase "green car" to the next level. Why? Because the vehicle even features green wheels. The car is a plug-in series hybrid with a battery with sufficient capacity for 62 miles of electric driving. After that, the car’s battery begins to recharge the battery. It is expected to average 124 mpg.

Chrysler ecoVoyager

Chrysler’s ecoVoyager takes the idea of plug-in hybrids to the next level. It relies on a fuel cell rather then gasoline or diesel. The vehicle features the modern "skateboard" design, which allows for a roomy cabin and low center of gravity. It weighs less than 3,000 pounds and Chrysler claims it gets a 12.9-second quarter mile. The car looks futuristic with its smooth design and vertical skylights.

Do not expect to see them on the road any time soon. Chrysler has not yet confirmed they are working on electric hybrid technology, but it certainly did not stop them from putting together an attractive concept car.

ASF Trinity Vehicles

ASF Trinity Vehicles
AFS Trinity vehicles are actually not a new brand of car, but rather a working plug-in hybrid system. The company modified a regular Saturn Vue Hybrid by adding a powerful battery capable of running 40 miles on only electric power. Trinity is one of the first companies to successfully produce a REEV and is years ahead of the major automakers.

However, the technology is still going to need improvement before it will be ready to hit the market. The system likely requires large areas of storage space for the huge batteries required to run the car. Trinity has not yet released specific pricing information.

Chevy Volt

The Volt is Chevrolet’s concept of their future REEVs. General Motors has made great strides in environmentally friendly vehicles over the past few years and plans to have the first street-ready editions on sale by late 2010. The car is expected to be able to go 40 miles on 120-kW electric motor. GM hopes to have upwards of 60,000 of the vehicles ready for its first year on the market and plans for a base price of between $30,000 and $40,000.

Opel Flextreme

Volvo Car PicturesThe Opel Flextreme is essentially a European version of the Chevy Volt. It features many of the same features as the Volt with a slightly different looking exterior. However, one major difference is that the Flextreme comes with a rear storage space specifically designed to fit a pair of Segways that can charge off the car’s batteries. Unfortunately, this extra storage space means less room for fuel, which reduces the car’s range from 640 to 444 miles.

Fisker Karma

Karma pictureThe Fisker Karma represents the future of luxury sports cars. The vehicle has a sporty and attractive design but maintains maximum fuel efficiency. It features a lithium ion battery pack that can power the car for 50 miles before needing fuel. According to Fisker it can go from zero to sixty in 5.8 seconds and reach a top speed of 125 mph.

Images curtosy of

Friday, January 18, 2008

New Years Resolutions For The IRS

Saturday afternoon my Internet marketing specialist submitted a press release regarding my latest open letter to the Department of Treasury and Internal Revenue Service. In the letter I identified 8 new years resolutions the IRS should consider. If the IRS were to implement these changes it would greatly help taxpayers seeking to settle their debts to the IRS. You can download a PDF of the letter by clicking here.

My law firm, Roni Lynn Deutch, A Professional Tax Corporation, represents thousands of taxpayers across the country. Given my experience and perspective as a representative, I am confident that the IRS can better improve their service by taking my suggestions to hear.

My 8 suggested New Years resolutions include:

1. Lump Sum Payment Discounts
2. Accelerated Payment Plan for Release of a Federal Tax Lien
3. "Reminder to Save" Letter to Those Who Owed Taxes the Previous Year
4. Publicize Current Compliance Years and Collection Statute Expiration Dates
5. Past Commitment to Compliance Makes You Eligible for Tax Debt Waiver
6. Double the Amount of a Tax Refund if Applied to an IRS Back Tax Debt
7. Stop Levying Social Security for Individuals over the Age of 75
8. Create Online IRS Tax Debt Accounts

For more information check out Tax Lady Roni Deutch Sends Open Letter to the Treasury and Congress With 8 New Years Resolutions in 2008 Concerning the IRS on

Which States Tax Groceries?

The Tax Foundation has posted this interesting entry on which states tax groceries. According to the entry, “states that tax groceries (rate if not fully taxed): Alabama, Arkansas (3%), Hawaii, Idaho, Illinois (1%), Kansas, Mississippi, Missouri (1.225%), Oklahoma, South Dakota, Tennessee (5.5%), Utah (1.75%), Virginia (1.5% + 1% local option tax), and West Virginia (5%).”

However, it is important to note that “Idaho's income tax provides a $20 credit per person that is designed to partially offset the impact of taxing groceries. Also, our source for this data, CCH, cites a Kansas law that allows for a ‘limited tax refund available to disabled, elderly, and low-income households.’”

Clinton Unveils $70 Billion Emergency Spending Plan

As we get closer and closer to the general election, economic issues are beginning to get attention. Earlier today presidential hopeful Hilary Clinton unveiled a new $70 billion emergency spending package designed to help those affected by the U.S. housing crisis and to help counteract an upcoming recession.

“Economists and politicians are finally waking up to what many of America's families already know: that we might be sliding into a recession," claims Clinton. "We need an immediate strategy to get our economy back on track. I would work with leaders from both parties to pass an aggressive, fast-acting stimulus package to create good new jobs and revitalize our economy."

According to Reuters, “Clinton's plan would provide $30 billion for an emergency housing crisis fund for states to help low-income families unable to make mortgage payments; $25 billion to help low-income families pay their heating bills; $10 billion to extend unemployment insurance for people unable to find jobs; and $5 billion for alternative energy programs.”

IRS E-Filing Now Open For Most Taxpayers

As of last Friday, the IRS officially opened e-filing for the tax season. All taxpayers that are not affected by the last minute AMT patches are now eligible to e-file their federal tax returns. To find out if these changes will delay when you can file your return, check out “How Will Congress’ Last Minute AMT Fixes Affect My Tax Return” on the RDTC Tax Help Blog.

Last year over 80 million taxpayers e-filed their income tax returns. Almost 57 percent of all returns were filed electronically.

“IRS e-file is the fastest, easiest and most accurate way to file a tax return,” claims IRS Acting Commissioner Linda E. Stiff. "We strongly encourage taxpayers to take advantage of the benefits that electronic filing offers."

Tuesday, January 08, 2008

Open Request to Presidential Candidates

The upcoming presidential election is one of the most talked about in recent history. However, tax and economic views are a major topic that nearly none of the candidates seem to be addressing. As we move into the general election, the economy will likely get more attention. However, I think it is important to talk taxes now!

As such, I have posted numerous blog entries on the candidate’s tax views on both my personal blog, and the RDTC Tax Help blog. Some of the entries include: Tax Views of Top 10 Presidential Candidates, Where the Candidates Stand On the Issues, and Huckabee’s Tax Plan: The Achilles Heel of his Campaign.

In continuing with my effort to bring attention to the candidate’s tax views, I am putting out an open request to all the presidential hopefuls to talk more about taxes. Additionally, I would love the opportunity to speak with any of the candidates about their views. Either through e-mail, telephone, or even in person. I encourage any of the candidates to contact me as soon as possible to give more detailed information to the readers of my blog.

IRS Announces Rules for Seeking Help from Tax Preparers

A few days ago, the IRS and Department of Treasury announced new rules designed to give taxpayers greater protection and control over tax return information held by professional tax return preparers. The new rules are the first in more then 30 years and bring an update to the disclosure and privacy laws related to tax return preparers. The IRS hopes the update will bring taxpayer consent requirements up to date with the electronic age. Preparers will have until January 1, 2009 to implement the new consent requirements, allowing for a full year to make any necessary changes.

According to the IRS, the new rules are as follows:

  • Generally, preparers must obtain taxpayer consent, either by paper or electronically depending on how the return is being filed, before tax return information can be disclosed to any third party or used for any purpose other than filing the return.
  • If the taxpayer consents to the disclosure and use of his information, the consent must identify the intended purpose of the disclosure, identify the recipients and describe the particular authorized disclosure or use of the information.
  • Mandatory language informs individual taxpayers that they are not required to sign the consent; that if they sign the consent, federal law may not protect their information from further disclosure; and that if they sign the consent, they can set a time period for the duration of that consent. If taxpayers fail to set a time period, the consent is valid for a maximum of one year.
  • To prevent consent requests from individual taxpayers from being buried in fine print, the rules require the paper consent documents to be in 12-point type on 81/2 by 11 inch paper and require electronic consent requests to be in the same type as the Web site’s standard text, all to prevent consent requests from being too difficult to read for individual taxpayers.
  • If a taxpayer declines to provide consent for an unrelated tax preparation disclosure or use request, the preparer cannot make a similar consent request. The intent is to protect taxpayers from being pressured with repeated consent requests regarding the same issue.
  • Mandatory consent from taxpayers also is required if the tax information is going to be disclosed to a tax preparer located outside the United States. This provision is intended to ensure taxpayers are informed if their tax information is being sent offshore for return preparation. The individual taxpayer’s Social Security Number also must be redacted.

Additionally, the IRS and Treasury Department also addressed the topic of Refund Anticipation Loans (RALs). They are concerned that may give preparers a financial incentive to take improper credits or deductions in order to inflate refund claims. The IRS issued an Advance Notice of Proposed Rulemaking announcing that they are considering a proposal to prohibit preparers from disclosing or using taxpayer return information for the purpose of selling RALs and similar products. The IRS has given itself a 90-day written comment period after which they will consider what steps, if any, they will take to modify rules related to RALs.

Paige Hareb Makes Surfing History

Teenage surfer Paige Hareb created surfing history by taking second place at the Junior Women's World Championship event in Sydney. She entered the event as wildcard and surprised everyone by making it to the finals. Hareb beat South African champion Nikita Robb in the quarterfinals before beating former champion Courtney Conlogue in the semi-finals. Hareb then lost to Sally Fitzgibbon who took the championship title. However, Hareb's performance earned a $3,400 prize making her the first New Zealand female surfer in the history of the junior world championships.

Saturday, January 05, 2008

Huckabee’s Tax Plan: The Achilles Heel of his Campaign

On January 3, Iowa voters spoke out and voted for Mike Huckabee, the former Republican Governor from Arkansas. Over the past few week’s Huckabee has garnered a lot of media attention due to his far right religious views and his support for a national sales tax. These views appealed to the people in Iowa as 35% of Republican voters selected him to represent their party in the general elections. Although the Iowa voters supported Huckabee, his “fair tax” views are likely to become the Achilles heel of his campaign, and could cost him the election.

The fair tax policy is an idea that was actually thought-up in the mid-1990s by the Texas based Americans for Fair Taxation. The basic premise is simple. Instead of charging a federal income tax all of the federal revenue would be generated from a 23% flat tax on purchases. According to the plan, states would collect the funds and forward them to the federal government. Huckabee claims this system ensures a fair, progressive, sustainable tax system that encourages economic growth. He claims it allows working individuals to take home 100% of their paychecks and it would encourage saving and responsible spending.

This plan may look good at a glance, but upon further inspection it’s full of holes. Tax experts across the country, both Republican and Democratic, agree this plan will not work. Bruce Bartlett, a conservative economist and former official from the Department of Treasury even goes as far as saying, “anyone who supports it {the fair tax} should not be taken seriously.”

Supporters of the fair tax claim a 23% sales tax would need to be levied on all purchases Americans make. But how they came up with this number is a mystery. Independent research continues to show that the tax would need to be far higher to support the government at current levels. One bipartisan group, the Advisory Panel on Tax Reform, conducted a study that showed the tax rate would need to be at least 34%. Additional studies put the tax rate as high as 50%.

Huckabee’s plan also predicts that American spending habits will stay the same as they are now. However, with a massively higher sales tax many predict a strong black market would surge, thus providing a way for many to avoid the tax on larger purchases. Not paying the sales tax would be as easy as driving across the border to make a purchase in Canada or Mexico.

One major selling point of the fair tax is that people can keep 100% of their wages. People seem to respond well to this idea of not having to hand over a portion of their wages. This logic has problems. What about retirees who have paid an income tax their entire lives? Would they not be – in effect – taxed twice? So far, Huckabee’s plan fails to account for these individuals.

Huckabee also claim’s his fair tax is progressive. “All of us will get a monthly rebate that will reimburse us for taxes on purchases up to the poverty line, so that we're not taxed on necessities,” Huckabee explains. “This means people below the poverty line will not be taxed at all. We will be taxed on what we decide to buy, not what we happen to earn.” However, these rebates would cost the federal government an estimated $600 billion per year.

Consider this: a 2006 Department of Labor study shows that households at every income level spend more than the poverty line. The average family making under $70,000 per year spends more then it earns. While the average family making more then $150,000 per year spends less then half of what it makes. Therefore middle-class families would get hit the hardest from a national sales tax. This plan is not progressive whatsoever it’s regressive.

Huckabee’s plan also calls for the abolishment of the Internal Revenue Services (IRS). This has many people wondering - if there is no IRS, then who will collect and monitor the new sales tax? Additionally, who is to monitor the distribution of the tax rebates? The government certainly cannot rely on the “honor system.” The American public disdains the IRS and any plan to get rid of it sounds good to most Americans. However, in order for the government to function and collect the sales tax a new institution with many of the same responsibilities as the IRS would need to be setup. It would just have a different name.

Granted, the fair tax plan is not completely bad. Economists do generally agree that a fair tax has the potential to cause economic growth. Without income taxes there will be no need for corporate tax shelters. With no corporate taxes, corporations would be more likely to do business in the country. However, it is unlikely these small benefits will outweigh all the other holes and discrepancies in the fair tax plan.

It is also interesting to note that Huckabee is the strongest supporter of the fair tax plan, when his history as Governor of Arkansas gives a drastically different impression of his tax views. While he was in office, he cut taxes 90 times but more than made up the difference with 21 tax increases. Between 1998 and 2006 Arkansas’s state budget increase by over $5.2 billion.

Huckabee may have won over Iowans with his empty promises of a fair tax, but he will have a much harder time as this election year continues. So much attention has been placed on his moral and religious beliefs that voters probably have not given any real though to his radical tax plans. If Huckabee wants to stand a chance in the general election, then he will slowly begin to distance himself from the fair tax plan. However, he may have dug himself into a hole as going back on his fair tax plays would get him labeled as a flip-flopper.

Wednesday, January 02, 2008

How the AMT Will Affect 08 Tax Filing

With Congress passing last minute changes to the Alternative Minimum Tax (AMT), expect the upcoming tax season to get quite confusing. The IRS expects tax season to begin as usual this January, except for the taxpayers affected by last minute AMT "patches." They estimate over 13.5 million taxpayers will use IRS forms related to the AMT. These taxpayers will have to wait to file their income tax returns until the IRS can reprogram its system.

The IRS hopes they will be able to begin accepting these tax returns by no later than February 11, 2008. They claims this date allows enough time to properly update and test their systems without disturbing other tax season related operations.

Therefore, federal tax returns that include the following forms cannot be filed until February 11th, 2008:

  • Form 8863, Education Credits
  • Form 5695, Residential Energy Credits
  • Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
  • Form 8396, Mortgage Interest Credit
  • Form 8859, District of Columbia First-Time Homebuyer Credit

The AMT became part of the U.S. tax code with the Tax Reform Act of 1969. Originally, Congress designed the AMT to target a small number of high-income taxpayers that could claim so many deductions they owed little or no income tax. However, the AMT gained a lot of negative attention as an increasing number of middle-income taxpayers became subject to the AMT.

Q&A About Ford’s Energy Efficient F450

AutoBlogGreen has an interesting Q&A session with Beau Boeckmann, the president of Galpin Auto Sports about the Ford F-450 Super Duty that runs on biodiesel and hydrogen. You can read the transcript of the interview by checking out AutoBlogGreen.

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