Thursday, March 31, 2011

Reasons to Spend Your Tax Refund

As if anyone needs another excuse to spend their tax refunds! According to financial expert, John Strelecky, using a refund to splurge is a good way to create happiness. Just make sure this falls in line with your life and financial goals…


    He says that after you consider today’s average returns and inflation rates, people are better off using their refund money to enjoy life today, instead of saving it for some vague future purpose. “The point of earning money is to create memories, have amazing experiences, and do interesting things,” he says. “Don’t wait until age 65 to start spending your money to live a rewarding life.”

    He makes a good point. As you weigh potential splurges, recent research suggests that spending on experiences, such as a family vacation, could bring more happiness than material purchases, such as a new washing machine.

    By comparing consumption data from the national Health and Retirement Study, Thomas DeLeire of the University of Wisconsin-Madison and Ariel Kalil of the University of Chicago found that spending money on leisure activities, which include vacations, movie theater tickets, and hobbies, improve happiness levels. (Happiness was measured by asking respondents to describe how they felt about their lives.) Expenditures on durable goods such as refrigerators, clothes, personal items, and housing, on the other hand, did not have an effect on happiness.

    The apparent reason behind the leisure spending—happiness connection is even more intriguing than the finding itself: Spending on leisure activities appears to boost one’s level of social connectedness. That makes sense, since when you go on vacation, engage in a hobby such as tennis or bridge, or go out to the movies, you are almost always doing it with somebody else. So spending on leisure might boost your social connectedness, which in turn improves your happiness level.

Read more here

Electronic Arts Founder Stuck with Huge Tax Bill

A judge recently ruled that Trip Hawkins, founder of Electronic Arts, cannot rely on his personal bankruptcy to erase his tax debts. Trip reportedly owes more than $20 million resulting from “exotic strategies” to offset capital gains.


    There was a time when Trip Hawkins was a very wealthy man. In the mid-90s, he boasted a net worth of roughly $100 million, nearly all of it in EA stock. But in 1994 he started selling it off to fund the 3DO, a videogame console that came out in 1993 but never gained traction with the masses, and that's when his troubles began.

    The sale of EA shares resulted in a serious capital gains tax bill, which accounting firm KPMG told him he could dodge by using "exotic strategies to create the appearance of large capital losses without the real risk of loss," including the use of "offshore corporations, options and investments in offshore companies like UBS AG to artificially generate a high tax basis." I have no idea what that means but from 1996 to 2000, Hawkins claimed $56 million in capital losses.

    The IRS wasn't buying it, though, and in 2001 it challenged the legitimacy of such tax shelters and also began an audit of Hawkins. As if that wasn't bad enough, 3DO finally sputtered to a halt, going bankrupt in 2003. In 2006, Hawkins and his wife filed for personal bankruptcy; their debts were discharged by the court but, thanks to a provision in the law prohibiting the discharge of tax debts in cases where people have "willfully" attempted to evade paying, the IRS and the California Franchise Tax Board both successfully challenged the ruling.

Continue reading here

The Real Reason Gas Prices Are Soaring

According to an oil-trading veteran, a flood of new investors is the real reason behind ever-increasing fuel prices.

MSN Money reports:

Have you ever wondered why when you go to the gas station to fill up the family car, the price of gas at the pump has just jumped 25 cents a gallon over the past three days? Perhaps you thought the oil companies were just being greedy. Or you believed the nightly news pundit who said that gas prices went up because the crisis in Libya was affecting supplies of oil. One professional oil trader says that you'd be wrong on both counts.

Dan Dicker, who has spent nearly three decades in the oil market, has a profoundly disturbing explanation of why the price of oil, and the gasoline that comes from the crude product, has risen so dramatically in recent months. It turns out, Dicker says, that the price has nothing to do with supply and demand for oil. It's the financial market for oil, filled with both professional speculators and amateur investors betting on poorly understood oil exchange-traded funds, who have ratcheted up the price of gas to such sky high levels.

"There is no supply issue going on here -- what you have is the perception of the possibility of a supply issue," Dicker says. "A whole bunch of people are pouring money into an oil market trying to take advantage of what they perceive to be a real risk in supply. It's a marketplace that I argue should not be allowed to be wagered on like a stock or bond."

More here

House Republicans Seek IRS Probe of AARP

AARP lobbied for the new health care reform law, and according to three GOP representatives, the group could make an extra $1 billion over the next decade because of it.

The AP reports:

    Based on the available evidence, substantial questions remain about whether AARP should maintain its tax-exempt status," said the report, released by Reps. Wally Herger of California, Charles Boustany of Louisiana and Dave Reichert of Washington.

    AARP said profit had nothing to do with its support for President Barack Obama's health care overhaul, which expands coverage to nearly all Americans, a goal that the organization has long pursued.

    "Our decision to support health care reform was in no way, shape or form influenced by revenue considerations," said spokesman Jim Dau. Polls show that seniors are more likely to oppose the new law than younger people, partly because the coverage for the uninsured will be financed by slowing the growth of Medicare spending.

    The three Republican lawmakers are members of the influential Ways and Means Committee, which writes tax law. Boustany chairs the oversight subcommittee, and Herger is in charge of the health panel responsible for Medicare.

    "We believe AARP operates in direct opposition to their senior membership," Herger said at a Capitol Hill press conference.

Read more here

Wednesday, March 30, 2011

Death or Taxes, Starring Richard Hatch, Showing at the Litchfield Hills Film Festival

I'm thrilled to announce that my documentary is being shown at another film festival!

Death or Taxes is playing on Saturday, April 9 (12:00 pm) at the Litchfield Hills Film Festival in Connecticut. The festival runs from April 7th through the 10th, and you can download a full schedule here.

Check out the trailer below, or click here to purchase tickets to the festival.

Thanks Litchfield Film Fest, and here’s hoping for a great festival!

Chicago Man Finds $9 Million Winning Lottery Ticket in His Tax Folder

Irvin Przyborski went to do his taxes and discovered a $9 million winning looter ticket he purchased a year ago. If only preparing your tax returns was this awesome for everybody!

Chicago Tribune reports:

    Last year, Przyborski was putting his tax papers into a file. Somehow, he said, one of the Lotto tickets he bought March 24, 2010, which turned out to be a $9 million winner, slipped into the folder. He didn't even miss it.

    It wasn't until he reopened the file this month that he found the ticket, took it to the store and discovered that it was a winner. Przyborski contacted an attorney, who then called the Lottery on March 15 to claim the prize, said Lottery spokesman Tracy Owens.

More here

Gold Replacing Dollar as World’s Reserve Currency?

With food and oil prices on the rise, central banks usually look to the U.S. dollar to secure the value of their savings. However, according to reports, banks are looking to gold.


What are they buying instead?

The yellow metal hit a fresh record high this morning, while the dollar index dropped to a 15-month low. The news had Fast Money’s Brian Kelly looking to add more gold and silver longs to his portfolio Thursday morning.

“What is working is gold, silver and oil,” said Kanundrum Capital’s Kelly. “I wish I had more.”

Gold and silver have become the inflation hedges of choice for some investors. Gold hit an intra day high today of $1,448 per ounce. Silver is trading at 31-year highs, hitting an intra day high of $38 per ounce.

More at

The 10 Best Cities for Home Buyers

CNN Money put together a list on the best cities to buy a home in, and you may be surprised to see which areas made the top 10. You can find a section of their article below, or click here for the full text.

    10. Atlanta

    Rent as % of after tax mortgage payment: 151.2%

    Median home price change, 2006-2010: -33.2%

    Many of the cities on this list now have the most affordable housing simply because their real estate crashes were so much more pronounced than elsewhere in the nation. The farther the prices fall, the sooner it inevitably becomes more affordable to buy than rent.

    Atlanta is no exception. It tops the list with average monthly rent of about 50% more than the average after-tax mortgage payment. The metropolitan area had the dubious distinction of leading the nation in home construction during most of the decade before the bubble burst. Despite the fact that it now has the most affordable homes in the nation, however, prices continue to slide in Atlanta -- down nearly 14% year-over-year in February. When will those Atlanta renters recognize the clearance sale going on all around them?

    9. Orlando

    Rent as % of after tax mortgage payment: 137.2%

    Median home price change, 2006-2010: -51.3%

    Orlando's mayor, Buddy Dyer, has said that the delay of a new rail project that was to connect Orlando and Tampa has been a bigger blow to the already-suffering economy than many realize.

    But there are some bright spots in central Florida. Following the housing market slump in Orlando during the past few years, buyers can now take advantage of bottom-level interest rates and low prices for ownership. According to a Florida Realtors report cited by the Orlando Sentinel, the home of the Magic saw a larger price decline during the past 12 months than any of Florida's other metro areas.

Continue reading here...

IRS Needs to Better Manage Mailing Costs

The IRS stopped mailing out tax forms this year in response to budget cuts,but according to a new government report the agency still needs to work on a long-term strategy for reducing mailing costs.

Accounting Today reports:

    The Treasury Inspector General for Tax Administration noted that that in response to cost savings proposed in its fiscal year 2011 budget request, the IRS formed task forces and recommended several actions to identify ways to achieve cost savings. However, the task force proposal did not include documentation to show the methodology used to make the proposals, how the estimates were calculated or validated, or how the IRS would measure the results or the cost savings of the proposals.

    The task force believed that reducing the mailings of forms instead of eliminating them was a more cautious approach, affecting fewer taxpayers in the short term. Nevertheless, IRS executives decided to eliminate all mailings of tax packages for the U.S. individual income tax return (Form 1040), partnerships, and corporations in fiscal year 2011 in order to meet the cost savings presented in the FY 2011 budget request. But the report noted that this move could increase the IRS’s burden and reduce compliance for those taxpayers who rely on receiving these packages by mail.

    As the IRS moves forward with the proposed cost savings or pursues other methods of saving publishing and mail costs, it needs to implement sufficient controls and procedures to ensure the decisions are documented and that the data used are accurate and complete, the report noted. In addition, these controls should be part of a long-term strategy to continually assess publishing and mail costs and identify opportunities for cost reductions and efficiencies.

More here...

Monday, March 28, 2011

Now Is The Time to Think About Filing a Tax Deadline Extension

The deadline to file your tax return is only three weeks away (April 18 for those who still don’t know). If you have not yet filed your federal return, I highly recommend taking a minute to request an automatic 6 month extension of time to file with the IRS. Why? There’s no penalty for filing early, but there sure is a penalty for filing late. The extension is a “better safe than sorry” move that can save you a lot of cash!

5% Per Month Penalty

If you do not request an extension, and miss the filing deadline, you could be subject to up to a 5% (4.5% for late filing, and 0.5% for late payment) per month penalty on any unpaid balances. Even if you only owe a small amount, an additional 5% per month can add up quickly.

IRS Form 4868

To request your extension, you will need to file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return with the IRS before the April 18th deadline. You can chose to either file a paper form, or e-file from your computer. It is your right as a taxpayer to request an extension, just remember that it MUST be mailed by April 18. If it’s late, the IRS will not accept it.

Not an Extension of Time to Pay

When you file IRS Form 4868 you will have an additional 6 months to file your federal tax return. However, keep in mind that this is not an extension of time to pay any taxes that are due. If you are likely to owe the IRS, you should consider making an estimated payment, or you will be looking at late penalty fees and interest accruing each month your payment is late.

Electronic Payments

If you e-file your automatic extension request, you will also have the option to make an estimated payment using a credit or debit card. You can pay by phone or over the Internet. If you think you’ll owe, make your best guess and pay up.


Once you request your extension, don't just forget about your taxes all together. As I mentioned, the extension is not an extension of time to pay. Therefore, if you aren't making an estimated payment, and you do end up owing the IRS, then you will want to get both your return and payment in as quickly as possible to avoid nasty fees.

Start Preparing for Next Tax Season Now

The best way to make sure you won’t need to file an extension next year is to stay on top of your taxes all year round. For more information, check out this article I posted a while ago on how to avoid needing an extension to file your return.

Questions for the Tax Lady: March 28th, 2011

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question: My ex wife let a friend of hers claim our son as a dependent on their taxes, is this legal?

YIKES! Short answer: no this is not legal. Taxpayers are only allowed to claim dependents on their taxes in very specific circumstances. According to the IRS, to claim someone as a dependent they must meet IRS tests for Qualifying Child (including their age, your relationship, where the child lives, who supports the child financially and more) or a Qualifying Relative. From the sound of it, your ex wife’s friend is not able to claim your son as a dependent.

Kids are not commodities you can lend to someone for tax purposes. To avoid the consequences of an audit and a disallowed dependent exemption, your ex wife’s friend should immediately file an amended tax return and pay the difference in tax bills.

Question: If I owe the IRS do I need to pay by check? Can I use a credit card instead?

You can absolutely pay the IRS by credit card. There are a variety of services you can use to do so (See here). Paying with a credit card can be more convenient and payments are securely completed using trusted online services. Paying with your card lets you avoid costly IRS penalties and interest (of course, on the other hand, if your credit card has a high interest rate, you might end up paying more than you would on an IRS installment agreement).

Remember, there are convenience fees for paying with plastic. Those fees can tack on a pretty penny, up to 2.35% of the total. So, be sure you understand that before you enter your information.

For more information on paying the IRS with a credit card, click here.

The Price of Taxing the Rich

A drastic salary reduction for the top 1% of earners in states like California and New York has led to serious local revenue problems. Economist says the problem is depending upon those taxes for so much of the budget is that high earners have much larger fluctuations in income than lower-earners.


As Brad Williams walked the halls of the California state capitol in Sacramento on a recent afternoon, he spotted a small crowd of protesters battling state spending cuts. They wore shiny white buttons that said "We Love Jobs!" and argued that looming budget reductions will hurt the Golden State's working class.

Mr. Williams shook his head. "They're missing the real problem," he said.

The working class may be taking a beating from spending cuts used to close a cavernous deficit, Mr. Williams said, but the root of California's woes is its reliance on taxing the wealthy.

Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.

Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."

More here

IRS Agent Among 14 Charged with Tax Credit Fraud

According to US Attorney Carmen M. Ortiz, fourteen people were charged with tax fraud for using the first-time homebuyers credit to steal money from the federal government. Is it just me, or will this not do much to help the IRS’s image? reports:

    One of those charged is a long-time IRS agent, Michael Doyle, of New Hampshire. He allegedly falsely claimed that he bought a home in 2008 to qualify for the credit, but actually purchased the property in 2007, Ortiz's office said. Doyle, 44, could not immediately be reached for comment, and an IRS official could not say whether Doyle still works for the federal agency.

    Two other defendants, Junior Lopez of Southbridge, and Christopher Proe of Michigan, allegedly filed more than 50 fraudulent tax returns, receiving about $500,000 in refunds, prosecutors said. Proe and Lopez also could not immediately be reached for comment.

    "It is critically important that taxpayers who play by the rules do not end up paying for refunds to people who commit fraud and blatantly lie on the forms submitted to the IRS,'' Ortiz said in a prepared statement.

    J. Russell George, the Treasury's inspector general for tax administration, said it is "especially troubling" when an IRS agent is implicated in a fraud case. "Congress created and modified the home buyer credit to stimulate and help taxpayers achieve the America Dream, not to line the pockets of wrongdoers,'' George said.

More here

GE Paid No Taxes in 2010

Although the corporation made over $14 billion in profits, $5 billion of which was made in the US, GE paid no taxes last year. Check out what White House correspondent Jake Tapper had to say when ABC News asked him about GE's tax rate.

ABC reports:

    CARNEY: I hope so. But the -- look, I -- Jake, I'll just tell you, I don't know about this specific company's balance sheet or its tax returns.

    TAPPER: Front page of The New York Times.

    CARNEY: But I -- but I can -- I've read the story. I'm saying I don't have my own assessment to make of it.

    But what I will tell you is that the president has said that he is committed to corporate tax reform, and he wants to do that because it will improve our competitiveness. And he believes that one of the ways to do that -- the way to do it is to -- you can lower the rate if you and still bring in the necessary revenue if you remove a lot of the loopholes and other aspects of it that make it complicated, that give companies fits and also make us less competitive in the process. So he's committed to corporate tax reform because it's right for growth, it's right for job creation. And, you know, he will have that conversation going forward.

    TAPPER: Does it bother him?

    CARNEY: I haven't spoken to the president about this, but he is bothered by what I think you're getting at, which is that Americans, I'm sure, who read that story or heard about it are wondering, you know -- you know, how this could be.

    And one of the reasons why it could be -- again, not addressing a specific company, because I don't know independently about that, but it is part of the problem of the corporate tax structure that companies hire, you know, armies of tax lawyers to understand how it works and to take advantage of the various loopholes that exist, that are legal, in order to reduce their tax burden. And he thinks that in the name -- for the purpose of greater competitiveness and job creation, we have to address our corporate tax structure.

Continue reading at ABC…

Saturday, March 26, 2011

Man Accused of Killing Wife After IRS Visit

This is so sad. One more story of how the stress of IRS debts can lead to violence.

Hat tip: TaxProf Blog

Foreclosure Vote Could Rock the Banks

Several major financial institutions (including Bank of America, Citygroup, and Well Fargo) are facing new scrutiny of their handling of the mortgage mess. Shareholders at the banks are likely to vote shortly to investigate mortgage and foreclosure practices.

From Fortune:

The votes will come despite much eye-rolling from the banks, which have tended to be less than forthcoming on the subject. Bank of America and Citi petitioned regulators to keep shareholders from voting on the proposal, which is sponsored by the New York City pension funds led by city comptroller John C. Liu. But the Securities and Exchange Commission ruled this month that the votes must go on.

"An independent examination of bank foreclosure practices is needed to reassure shareholders and protect pensioners and taxpayers," said Liu, a Democrat who has been pushing since last fall for bank boards to wake up and investigate. "Regrettably, the banks have failed us on this and even went so far as to try and kick us off the ballot, but the shareholders have prevailed."

The New York funds say they own $1.7 billion worth of stock in BofA, Citi, Wells and JPMorgan Chase (JPM). Its shareholders won't vote on the New York proposal but will vote on a similar one. Wells initially opposed the New York proposal as similar to one its shareholders were already voting on, but took up the New York measure after the other one was dropped.

More here…

Judge: No Day Trading When You Owe The IRS

A tax court judge ruled that the IRS could refuse to settle the back tax liability of a man who was hoping to day-trade his way out of debt. The lost investment was seen as a dissipated asset, causing the IRS to deny his offer in compromise. reports:

    Larry E. Tucker owed nearly $15,000 in back taxes for 1999, 2000, 2001 and knew he would have a balance due for 2002 when he received an advance in January 2003, for freelance web design work he would be doing later that year. So he decided (he told the IRS and the court), that he’d try to pay off both the IRS and his other creditors by day-trading his way to profits.

    He deposited $23,700 in an E*Trade account and later, in response to margin calls, put in another $21,000. By the time Tucker threw in the towel on day trading in April 2003, he had lost $22,645 of his stake. He used what was left mostly for basic living expenses that year.

    Later, when Tucker tried to settle his growing tax debt through what is known as an offer-in-compromise (OIC), the IRS turned him down on the grounds that he had “dissipated” through day trading assets he could have used to pay his tax bill in full. In his opinion here, Tax Court Judge David Gustafson concluded that Tucker’s “foray into day trading was purely speculative” and that the IRS was within its rights to deny the OIC.

    Carlton M. Smith, Tucker’s attorney, said Wednesday morning that he and Tucker plan to appeal both this week’s decision and an earlier July 2010 Gustafson decision in the case which rejected a constitutional challenge to the way the IRS collections appeals officers who heard Tucker’s case were appointed.

More here

Applications for Unemployment Aid Drop Slightly

Although the housing market continues to struggle, it looks like the job market is finally showing signs of improvement! According to reports, the number of people seeking unemployment dropped by 5,000 last week.

From the Associated Press:

    Applications at about 375,000 or below indicate a sustained increase in hiring. Applications peaked during the recession at 651,000. Weekly applications for unemployment benefits are considered a gauge of the pace of layoffs.

    "The economy is getting better, demand is growing," said Dan Greenhaus, chief economic strategist at Miller Tabak. "There is only so much companies can do with their existing payrolls. At some point they have to expand."

    Private-sector employers could add as many as 200,000 net new employees in March, Greenhaus said. That's similar to February's gain, which was the most in almost a year.

    Separately, companies ordered fewer long-lasting manufactured goods last month, purchasing fewer computers, machines and primary metals. The Commerce Department said Thursday that orders for durable goods dropped 0.9 percent in February, the fourth decline in the past five months. A key category that measures business investment fell for the second straight month.

    The number of people receiving unemployment benefits fell for the fifth straight week to 3.7 million. But that doesn't include 4.3 million people who are receiving extended benefits under emergency federal programs enacted during the recession.

    As applications have fallen, hiring has started to pick up. The economy added a net total of 192,000 jobs in February, the most in nearly a year. Many economists are expecting similar gains in March.

Continued here…

Thursday, March 24, 2011

IRS Holds Saturday Open House on March 26 to Help Taxpayers

In their newest press release the IRS announced that almost 100 offices will be open this Saturday to provide free help to taxpayers. If you haven’t filed yet, or received an IRS notice, take advantage of these events!


"We are opening our doors this Saturday to help taxpayers who may not have a chance to seek assistance during the work week," said IRS Commissioner Doug Shulman." We are very focused on providing services to taxpayers when they want it, where they want it."

On Saturday, March 26, the IRS offices will be open from 9 a.m. to 2 p.m. local time. IRS staff will be on site to help taxpayers. More than 35,000 taxpayers attended similar events last year resolving more than 95 percent of their issues.

During the open-house hours, IRS personnel will be available to provide services such as tax return preparation, assist with account questions and help with a variety of other issues.

In addition to IRS help, community organizations partner with the IRS. Volunteer Income Tax Assistance (VITA) programs assist people who earned $49,000 or less, and Tax Counseling for the Elderly (TCE) programs assist individuals age 60 and over with their 2010 income tax return preparation and electronic filing. Many of these sites have Saturday hours

Tax Policy Center Releases Guide to the Tax Provisions of Obama's 2012 Budget

You can check out the summary of their report below, or click here to download the complete analysis in PDF format.

    The Tax Policy Center has examined the key tax proposals in President Obama’s 2012 budget. Separate discussions below describe each of the proposals including current law, proposed changes, and, when appropriate, the distributional effects. The budget as presented by the president lacks complete details on many of the tax proposals. Some provisions had virtually no detail, and our discussion of them is necessarily limited.

    The budget assumes a baseline in which the 2001–03 tax cuts are permanently extended for single people with income under $200,000 and couples with income under $250,000, the estate tax permanently reverts to its 2009 level, and parameters for the alternative minimum tax (AMT) are permanently indexed for inflation from their 2011 levels.

Continue reading at…

Google Questioned by SEC Over Earnings in Low-Tax Countries

According to, Google has been questioned by the U.S. Securities and Exchange Commission in regards to their overseas tax strategy that saved the company a reported $3.1 billion. The “Double Irish” and the “Dutch Sandwich” strategies were both used by the internet giant.


SEC officials asked Google for “disclosures to explain in greater detail the impact on your effective income tax rates and obligations of having proportionally higher earnings in countries where you have lower statutory tax rates,” according to a Dec. 2 letter.

The company responded to the requests for information, the filings show. The SEC said in a Feb. 3 letter that it had completed its review of Google’s filings, and has “no further comments at this time on the specific issues raised.”

Google, owner of the world’s most-popular search engine, has used a strategy that has gained favor among some U.S. companies to reduce taxes. Google cut its income taxes by $3.1 billion over three years by shifting the bulk of foreign profits to Ireland, then the Netherlands and eventually to no-tax Bermuda, according to regulatory filings in the U.S. and abroad.

The tax-cutting strategy, involving a pair of techniques known as the “Double Irish” and the “Dutch Sandwich,” helped cut the company’s income-tax rate to 2.4 percent on the profits it attributed to its foreign subsidiaries during the three-year period, filings show. The statutory corporate income tax rate in the U.S. is 35 percent.

Read more here

New Home Sales Dive to Record Low

Yesterday the Commerce Department reported that new home sales fell 16.9% from January, which was a shock to analysts who had predicted a gain. More bad news to the real estate industry.

National reports:

    The seasonally adjusted annual rate of 250,000 homes sold marks the slowest pace recorded since the data series began in the 1960s.

    Median sale prices fell 13.9 percent, which represents the sharpest one-month drop on record.

    Wednesday's numbers for February were coupled with an upward revision in January's pace from 284,000 to 301,000 homes sold.

    Overall, though, the bitter news seems only cement a fast darkening picture of the housing market, and it follows closely on the heels of a disappointing 9.6 percent drop in existing home sales reported earlier this week.

Continued here

Wednesday, March 23, 2011

Save $50,000: Bundle Small Savings

If you follow these tips, you could save up to $50,000 over the next two to ten years. Some are more widely applicable than others, but I’m betting everyone can find somewhere to save.


    1. Groceries. Buy store brands when possible; many private labels offer quality without the premium price, research shows. Upload virtual coupons from the store website to your smartphone for discounts at the register. Estimated savings: 25%.

    2. Dining out. Snag discounts online (check out and, which often runs sales offering $25 coupons at local restaurants for $2 to $3). And turn your freezer into a takeout alternative by cooking double batches of stir-fries and stews to thaw as needed, says Gary Foreman of the Dollar Stretcher. Savings: 45% of your monthly prepared food and restaurant bills.

    3. Insurance. Kick up the deductible on your homeowners policy to $1,000 for a 25% savings; ditto for auto, and mention your clean driving record and good credit to lower car premiums by about 30%, says the Insurance Information Institute. Bundling auto and home coverage may save you up to 15%.

More here...

IRS Mobile App Gains 245,000 Users in Two Months

After launching their official IRS2Go mobile application less than two months ago, IRS officials have announced that over 245,000 people have already downloaded the app. Wow, nice job IRS!

FCW reports:

    The IRS developed the mobile application to be proactive in increasing service to taxpayers and in taking advantage of new media platforms, said Terry Lemons, communications director for the IRS.

    IRS2Go launched on Jan. 15 and has signed up 110,000 iPhone users and 135,000 Android users, he said.

    “We have gotten a very good response,” Lemons said at the General Services Administration’s Government Web and New Media Conference on March 17. “The reviews have been very positive.”

    The tax agency decided to develop a mobile application to provide additional service to people who want to know the status of their tax refund, specifically whether or not the tax form was accepted and the approximate refund issuing date. About 75 percent of the people who file taxes receive refunds and the majority who use the IRS website and phone services are calling to ask "Where is my refund?" Lemons said.

Read more here

6 Financial Mistakes to Avoid in Divorce

If anyone is facing a potential split, the whole thing sounds daunting. Here’s a quick list of financial pitfalls to avoid. Hopefully, a little more information helps empower you during the trauma involved in divorce proceedings.

From FOX

Divorce takes an emotional toll, and if you are not careful, it can often take an economic one as well. Protect your credit and come through divorce under the best possible financial circumstances by avoiding these common mistakes.

1. Trying to get even

Think twice about trying to exact financial revenge for wrongs committed against you in the marriage -- it could cost you in the long run. The more you argue over the division of assets, the more you'll end up paying legal and other professional fees, says Jeff Ivory, a partner with Stonebridge Financial Partners. Those fees could cripple you financially as you start your new life and affect your ability to get credit.

Instead, keep "the personal stuff" out of the equation, approaching the division of assets in as civil a manner as possible, he advises. Consider working with a financial professional or mediator instead of opposing attorneys.

2. Maintaining joint credit

Maybe you forgot that jointly held credit card, or maybe you agreed to keep the card open and accessible to both of you, for whatever reason. Either way, big mistake. "If everyone is cooperating, it works, but when someone doesn't pay or runs up debt, the other spouse remains liable," says Jerry Cohen, a certified public account specializing in financial forensics.

Before divorcing, pull your credit report from all three major credit bureaus -- Experian, Equifax and TransUnion -- and pay off jointly held cards, if possible. Otherwise, transfer any balances to one person's name and then close the joint accounts. If you're concerned that your spouse might open a joint account during the divorce proceedings, consider placing either a fraud alert or security freeze on your credit by contacting the credit bureaus.

Continue reading here

The Three Worst Things to Say When Asking for a Personal Loan

If you are applying for a personal line of credit, make sure to avoiding saying any of these things to the banker interviewing you. They seem fairly harmless, but could result in a rejection!


1. "I Have a Job, But I Hate It."

What gives? At least you have a job. So what's so wrong about admitting you're not crazy about it?

"Your loan officer is looking for stability, says Dr. Mary Ann Campbell, a spokesperson for, a credit card comparison site. And if you're hinting around that maybe you plan on leaving that job sometime soon -- maybe even before you get another job to replace your lost income -- well, you're not exactly giving the lender a vote of confidence in your ability to pay back the loan.

About the only worse thing you could say -- but we're sure you wouldn't say this -- is, "I don't have a job, but I hope to have one soon," says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling.

"A lender likes stability," says Cunningham, echoing Campbell's reasoning, "and not having a steady source of income doesn't make them feel secure about loaning you money."

2. "You're the Fourth Bank I've Come To."

"Going from bank to bank and being turned down for a loan doesn't exactly give a lender any confidence in you," says Cunningham, adding that while it's true "the lender is going to see the previous inquiries on your credit report, there's no use underscoring the situation by seeming desperate. If everyone's turning you down, there's probably a good reason."

Continue reading at…

Tuesday, March 22, 2011

Investor Activism – How Investors Can Make a Difference for Women

Last week one of my favorite blogs, The Glass Hammer, posted this thoughtful article by Melissa J. Anderson on the value of female executives at today's corporations and how investors can help promote gender equality in the workplace.

From The Glass Hammer:

    Pax World just released a paper written by Keefe, Gender Equality as an Investment Concept, drawing together a decade of research on the strategic value of women in leadership roles at today’s corporations. “I was trying to really call attention to the fact that investors can make a difference,” Keefe said.

    He explained, “I thought that if we better publicize that research, it will underscore the point that companies that do a better job retaining and advancing women are better companies. Investing in these companies is a smarter way to invest.”

    Changing the Game and Investing Smarter

    “There are not nearly enough women in the boards of Fortune 500 companies. People have been wringing their hands, saying ‘isn’t this terrible.’ But we can actually do something about this,” Keefe explained. “Corporations have to listen to their shareholders,” he said.

    Investors can change the game for women in leadership, and as the research paper revealed, investors should do work to change the game.

    Keefe says there are three things individual shareholders can do to to influence companies to improve gender balance. “A very promising strategy is that investors can say no to all-male public boards. Withhold support when you receive your proxies. Instruct your individual advisor or other representative to vote on proxies in a way that is consistent with your values.”

Read more here

$5 ATM Fees Coming?

Next time you go to the ATM you could be paying $5 or more just to withdrawal cash. This is completely ridiculous, but I’m not surprised banks are trying to squeeze more cash from not-yet-recovered Americans.

CNN reports:

    Chase, for example, is testing out $5 fees for non-customers. That means if you stumble upon a Chase on your way to dinner and decide to take out 20 bucks, you'll pay a 25% fee. And that doesn't even include what your own bank charges you for going out of network, which is typically around $3.

    JP Morgan Chase (JPM, Fortune 500) is currently testing the $5 ATM fee in Illinois and a $4 ATM fee in Texas -- both for non-customers who use its ATMs -- to see if they bring in enough revenue to introduce nationwide, according to sources familiar with the tests. A Chase spokesman declined to comment.

    Out of the bank's network of 16,000 ATMs, more than 20% -- or about 3,600 -- are located in these two states. Chase spent an estimated $400 million to build the entire network and pays $200 million a year to run it. So the bank is making non-customers pay a significant amount for the convenience of using this large network.

    Meanwhile, HSBC Bank USA (HBC) this month started charging all non-customers a $3 fee for using its ATMs, saying that this pricing is more competitive. Previously, about 60% of its ATMs charged a $3 fee for non-customers, while the remaining 40% charged either $1.75 or $2.50.

Continue reading at…

7 Tax Reasons Not to Get Married

For some unmarried couples living together, it may be in your best interest to wait on saying "I do." Uncle Sam may be giving you incentive NOT to get married. Of course, taxes should never be the primary factor in relationship decisions, but if you’re on the fence anyway…


Bracket Breakdown

Say two single individuals live together, each with taxable incomes of $83,600. They each pay federal income tax of $17,025, for a total of $34,050. If they got married, their total taxable income would be $167,200, with a tax of $34,886, an increase of $836.

This "marriage penalty" is the result of our progressive tax system. As your income increases, additional dollars are taxed at increasingly higher rates. When two people get married and file jointly, the income of the second spouse is taxed at the highest rate of the first spouse. In the example above, the first dollar earned by the second spouse would be taxed at a marginal rate of 25%. The second spouse has no income taxed at the lower 10% and 15% rates.

The hit gets more painful as your income increases. Two single individuals, each with taxable incomes of $379,150, each pay a tax of $110,016.50, for a total of $220,033. If they marry, the tax cost becomes $235,277, a marriage penalty slam of $15,244 -- each year!

Medical Meltdown

Your medial expense deduction must be reduced by 7.5% of your income (adjusted gross income). If your potential spouse earns $100,000, filing jointly would cut your medical expense deduction by $7,500. In the 28% bracket, that would suck an additional $2,800 out of your pockets each year.

Read more here

Monday, March 21, 2011

Tax Plan Aims for 25% Cap

The Republican head of the House Ways and Means committee would like to implement a 25% tax rate maximum, while also trimming away many popular deductions:

WJS reports:

    The odds of quick action appear slender. But the move, from Rep. Dave Camp (R., Mich.), is significant as a marker in what will likely be a multiyear debate over revamping the tax code. The plan also provides Republicans with a position to pitch in the 2012 election, a campaign that promises to focus heavily on the economy and jobs.

    Mr. Camp told The Wall Street Journal an overhaul of the unwieldy tax code is an essential element in stimulating both economic growth and job formation.

    "America needs a tax code that promotes, not prevents, job creation," he said. "Today's code is simply too complex, too costly and too burdensome for families and employers of all sizes to comply with.…We need to set ambitious goals and work toward those, because if we don't try that will be the biggest failure of all."

    Mr. Camp's tax overhaul isn't designed to specifically cut the U.S. budget deficit. Overall tax revenues would remain at recent average levels, or about 18% to 19% of gross domestic product, committee aides said.

More here

Renew Your Lease - Rents Could Rise 10%

According to CNN Money, double digit rent increases could be coming soon. Decidedly not good news for any renters; especially bad news for lower income renters.


"The demand for rental housing has already started to increase," said Peggy Alford, president of "Young people are starting to get rid of their roommates and move out of their parent's basements."

By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode.

Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years -- to a national average that will top $800 per month.

In the hottest rental markets, the increases will likely top the 10% mark annually for the next couple of years, according to Lesley Deutch of John Burns Real Estate Consulting. In San Diego, she anticipates rents will rise more than 31% by 2015. In Seattle rents will climb 29% over that period; and in Boston, they may jump between 25% and 30%.

Read more here

A Few Tax Tips for the Elderly

There are plenty of tax incentives for senior Americans, but the details are often confusing. If you are an elderly taxpayer, here are a few tips courtesy of

    Medical Expenses

    Deducting one’s medical expenses isn’t technically difficult. But younger taxpayers rarely get the deduction because allowable expenses must exceed 7.5 percent of adjusted gross income before any benefit kicks in. Seniors, though, typically live on lower fixed incomes while incurring far greater medical costs.

    In addition to insurance premiums and prescription drug bills, elderly taxpayers may also be able to deduct the costs of wheelchairs, dentures, long-term care premiums and many other items. The Internal Revenue Service spells out the details at its Web site.

    “Especially if someone’s paying for a nursing home themselves, [medical care] can be ridiculously expensive,” said Joy Child, a tax partner with Alexander, Aronson, Finning and Co., in Westborough, Mass. The bright side? “Those costs can completely wipe out a person’s income tax liability.” Senior housing facilities often report the medical portion of a resident’s total bill for tax purposes, she noted.

    Hiring In-Home Care

    A tax reporting challenge may arise when families hire home care for an elderly parent. Many families find assistance through an agency, but some choose to deal directly with an aide. In such a situation, the home care aide might legally be an employee, not just an independent contractor.

    How to tell the difference? “If they only work for you, and you control what hours they come in, they’re really your employee,” said Ms. Child.

Continue reading here

You Still Have Time to Reduce Your 2010 Tax Liability

Although the 2010 tax year ended December 31st, and the IRS deadline is just a few weeks away, there are still things you can do to reduce your 2010 tax liability. This could mean a larger refund or a smaller balance due!

IRA Contributions

Contributions to a traditional IRA (not a Roth IRA) can be made all the way until Tax Filing Day, and deducted from your 2010 taxes. So, if you have not yet contributed the maximum $5,000 allowed per year ($6,000 for taxpayers over 50), consider making another contribution before April 18. It is beneficial to your future financial security, and can have a big impact on your taxes now! Just remember not to “double dip” and try to claim the contributions you make on your 2011 taxes as well.


Independent contractors and small business owners may be eligible for a SEP-IRA, essentially a retirement account designed especially for the self-employed. Contributions can be made until April 18, 2011 and claimed on your 2010 tax return. The maximum annual contributions for SEP-IRAs are $5,000 for taxpayers 49 years old and below and $6,000 for taxpayers over 50. The same rule about double dipping applies to SEP-IRAs too. If you claimed the contribution in 2010, you cannot claim it in 2011 as well.

Health Savings Account

If your health plan is of the high-deductible variety, a health savings account might be a great move for you. Any contributions can be deducted from your taxable income. You can claim deductions made whether you itemize deductions or not. Any earnings or interest are tax free, the account is portable, and contributions from your employer may be excluded you’re your income. Contributions can be made, and spent, up until the tax deadline.

Double Check Deductions and Credits

One of the biggest reasons people over-pay their taxes is that they miss deductions and credits for which they are eligible. It is your right as at taxpayer to pay exactly what you owe, no more, no less. Take the time to review your tax return to see if you might have missed any deductions (like these: commonly overlooked deductions) or credits. Go line by line, and see if anything jogs your memory. This extra step can go a long way in reducing your tax liability and saving you money.

Worried About Time?

If you have not filed your tax return yet, you might consider filing a request for extension – Form 4868 – right now. Best case scenario, you file on time, no harm no foul. Filing one extra form is a much better alternative than missing the deadline, and being subject to penalties! The IRS does not mess around when it comes to failure to file. Better safe than sorry! Of course, please remember that this is a filing extension, not an extension of time to pay. If you owe more on your taxes, you must pay your liability by April 18. If you don’t, the IRS will slap you with some pretty nasty penalties and interest.

Of course, make sure you work with your tax or financial professional to ensure you are eligible for these tax breaks. There are rules and limitations to everything in the tax world, so do your research.

Saturday, March 19, 2011

No Plans to Bail Out Japan - IMF

On Thursday the International Monetary Fund said that Japan does not need financial help, and that the country has the means to get through this disaster and recover. Of course, until the full extent of the damage is known, perhaps we shouldn’t be so final.

    "We do believe that what the Japanese government has been doing on the monetary side to ensure stability of their financial system and doing what is necessary to meet the needs of the people of this crisis is the appropriate policy," she said.

    On Monday, the Bank of Japan injected $180 billion into its financial system to shore up the economy to weather the lasting effects of the earthquake, tsunami and possible nuclear disaster.

    In the short term, Japan needs to focus on search and rescue, humanitarian and infrastructure demands, the IMF spokesman said. And the IMF considers Japan on strong footing to handle that without financial help.

    "It's a strong and wealthy society, and the government has the full financial resources to address those needs," Atkinson said.

Continue reading here…

Law School Applications Drop 11.5 Percent

According the Law School Admission Council, applications to start law school in the U.S. have dropped 11.5% since least year. This is lowest level of application in over a decade. Turns out, a J.D. is no longer a guarantee of a good job.

From ABA

After widespread publicity about the hard-hit legal economy, it appears many prospective applicants have gotten the message that a law degree isn't necessarily a ticket to well-paid employment or even a legal job, the Wall Street Journal reported.

"When the economy first went down, students saw law school as a way to dodge the workforce," says pre-law adviser Ryan Heitkamp of Ohio State University. "The news has gotten out that law school is not necessarily a safe backup plan."

More here

Debt Ceiling: Danger ahead

With the passage of yet another temporary spending measure last week, lawmakers are increasing the likelihood of a federal financial meltdown. Just what we needed.

CNN reports:

    The latest funding bill will expire April 8. Between now and then Democrats and Republicans will have to find some compromise on funding levels for the rest of this fiscal year or risk a government shutdown.

    The Treasury Department, meanwhile, now estimates that the debt ceiling could be hit between April 15 and May 31. If it's not raised, Treasury will not be allowed to borrow and therefore will not be able to pay the country's bills in full without taking drastic measures to cut spending or raise taxes.

    Not insignificantly Congress will be out of session next week and the last two weeks in April.

    In the past, Congress has always ended up raising the cap, if sometimes at the last minute. And some policy experts think they will do so again, but there's no guarantee precedent will hold.

    How did we get to this ridiculous crossroads? Simple. Lawmakers failed to do their jobs.

More here

Friday, March 18, 2011

Death or Taxes Contest!

My film, Death or Taxes, will be featured at the LA Film + Music Weekend, on March 26, and I want you to join me! The screening will take place at 3:35 pm, at Laemmle Theaters in Beverly Hills, CA.

The documentary explores the horrifying realities faced by the millions of taxpayers who owe back taxes. Facing awful situations, the IRS can push some people to the limit. The star of the documentary, Richard Hatch, has been in the media lately because of his ongoing tax problems. So, now I want to hear your tax horror story. Go to and Share Your Story. You can upload a video to Youtube and submit the clip via the Death Or Taxes website, or you can send your written entries here.

I will select my five favorite stories, and each winner will be given two general admission tickets to the March 26 Death or Taxes showing. Unfortunately, no transportation will be provided, you must be able to arrange your own accommodations.

Contest Rules:

The winners of the contest will be selected by Roni Deutch and her marketing team.

By participating, you agree that should you be declared one of the prize winners, Roni Deutch may announce your name, city, and state on her or her companies’ websites/blog(s). Roni Deutch will also notify the winner by either an email message, or by a YouTube message. All information provided or exchanged is strictly confidential and will not be shared with any third party for marketing purposes.

Only one entry per person allowed. No purchase necessary. Must be 18 or older to enter and be a legal resident of the U.S. Void where prohibited. Roni Deutch reserves the right to disqualify any entrant and his or her entry when she believes a law has been violated in the jurisdiction where the entrant resides. All federal, state, provincial, and local laws and regulations apply. Employees, officers, directors, agents, representatives, and immediate family and household members of her companies (Roni Deutch, A Professional Tax Corporation, RDTC Inc., Niko & Inu, LLC, and Benigirl, LLC), any Roni Deutch Tax Center® franchise, or any sponsoring business are not eligible.

The Contest is governed in all respects, including validity, interpretation and effect, by the laws of the State of California (without giving effect to its choice of law principles). All disputes arising out of the Contest shall be subject to the exclusive jurisdiction and venue of the California state courts in the County of Sacramento (or, in the case of exclusive federal jurisdiction, the United States District Court for the Eastern District of California (Sacramento)). Notwithstanding the above, any dispute arising out of or relating to the Contest shall be settled by arbitration in Sacramento, California through the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

You are solely responsible for all applicable federal, state, provincial and local taxes on any prize awarded to you. Neither Roni Deutch nor her companies and their employees, officers, directors, agents, or representatives shall be liable for: (i) telephone, electronic, hardware or software program, network, Internet or computer malfunctions, failures or difficulties; (ii) errors in transmission; and (iii) any condition caused by events beyond their control that may cause the Contest to be disrupted or corrupted.

By participating in the Contest, you agree to release and hold Roni Deutch and her companies harmless from any and all losses, damages, rights, claims, and actions of any kind in connection with, related to, or as a result of the Contest or resulting from acceptance, possession or use of any prize, including without limitation, based on publicity rights, defamation, or invasion of privacy. We may terminate the Contest at any time without prior notice or liability to the entrants.

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