Middle Class Tax Cuts: Democrats To Hold Votes On Letting Bush Tax Cuts Expire For Wealthy

Just what we were all hoping for, more deadlock from our leaders in Washington. Now Democrats have stated they are still pushing to extend only the Bush tax cuts that affect middle-income taxpayers, while letting cuts for the wealthy expire. Of course, the Republicans will try to block the moves and we will continue in this fashion on into eternity. At least, that’s how it seems right now.

From Huffington Post.com:

After meeting with President Barack Obama Thursday, Democratic leaders in Congress said they plan to hold a series of politically charged votes to extend middle-class tax cuts while letting tax cuts for the wealthy expire.

Republicans are expected to block the plan, leaving both sides back at square one as they try to negotiate a deal to spare families at every income level from a big tax increase in January.

Democratic officials said Obama did not embrace a particular approach to the tax cuts in his Oval Office meeting with Democratic leaders. He indicated he wanted to wait for a meeting with Democratic and Republican leaders on Nov. 30 before staking out a position.

"I think there's a reality here which is that while it might be best to continue the middle-class tax cuts and raise taxes on higher income people, the votes are not there to do that," said Sen. Joseph Lieberman, a Connecticut independent who caucuses with the Democrats. "I think everybody's got to deal with a stark reality which is, are we going to leave here knowing that we haven't come to an agreement and that everybody's taxes are going to go up Jan. 1?"

Senate Majority Leader Harry Reid, D-Nev., said he would like to schedule competing votes on the Senate floor. One would be on Senate Republican Leader Mitch McConnell's bill to make all the tax cuts permanent; the other would be on a Democratic plan to extend only the middle class tax cuts. Neither is expected to pass.

Nearly 70 Percent of Taxpayers Used IRS e-file in 2010

According to the IRS's newest press release about 99 million taxpayers filed their federal income tax returns electronically last tax season. This represents a 3% increase from the year before.

Of the 141.5 million returns filed so far this year, almost 70 percent were filed electronically.

Each year, more taxpayers chose to e-file their tax returns. Last year, nearly 95 million taxpayers, or 67 percent, used e-file. In the past decade, the number of individual tax returns e-filed has increased by 145 percent. The overall number of individual tax returns increased only by 8 percent. IRS e-file is no longer is the exception; now it is the norm.

Home Computer e-Filers

Taxpayers who prepare their own tax returns using home computers continued to set the pace for e-file. This year, more than 35 percent of e-filers prepared and filed their returns themselves.

Almost 35 million returns were e-filed from home computers, up 8 percent from last year.

Direct Deposit Refunds

More than 74 million refunds were electronically deposited into taxpayers’ accounts, saving taxpayers a trip to the bank. More importantly, these taxpayers received their refunds at least a week faster than those receiving paper checks.

Continued at IRS.gov...

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Questions for the Tax Lady: February 22nd, 2010

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 #1: How long does it take to get a refund from the IRS?

If you e-file and use the direct deposit option then you could receive your refund within three weeks. However, if you went the paper route it could take upwards of eight weeks. If you want to know exactly when to expect your money, you can track your refund on the IRS's Where's My Refund page.

Question #2: What is the statute of limitations on Federal income taxes owed?

Generally speaking, the IRS statute of limitations is 10 years. However, there are a number of ways the IRS can get past this limit. According to IRS.gov “the IRS generally must collect the tax owed within 10 years after the assessment of the tax. Depending on the taxpayer, the assessment of tax may be the date a taxpayer files a tax return with a balance owing or the date the IRS files a tax return on behalf of a non-filer taxpayer. Thus, the statute of limitations will begin once the tax liability has been ‘assessed’ by the IRS.”

“Although the IRS generally has just 10 years to collect on an outstanding tax liability, there are certain events or transactions that may extend or suspend the statute from expiring. Various laws affect the statue of limitations expiration date. For example, if a taxpayer files bankruptcy or files an Offer in Compromise, the statute of limitations is generally suspended during the time the bankruptcy or Offer in Compromise is under review. Also, additional assessments of tax owing may extend the amount of time that the IRS is allowed to collect. Therefore, if the IRS is going to collect taxes owed, they must do so within the time frame permitted by law.”

Money For Life: Forbes.com Publishes their 2010 Tax Guide

Forbes.com recently published their annual tax guide, with dozens of informative articles written by financial experts from across the country. I have listed a few of my favorite guides below, be sure to click on the links to access the full articles.

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Questions for the Tax Lady: August 3rd, 2009

Good morning everyone! Since today is Monday I have looked through questions being asked on Twitter and Avvo and selected a few to answer. As I have mentioned before, I am making a weekly effort to answer tax related questions that I come across. I am also encouraging people 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 #1: Is there a statute of limitations on Federal income taxes owed?

Yes, generally the IRS statute of limitations is 10 years, unless they renew it. Check out article on statutes of limitations from my website.

The Statute of Limitations on Collections is the amount of time that the Internal Revenue Service (IRS) has to collect a tax liability from a taxpayer. The date that taxes expire is referred to as the “Collection Statute Expiration Date” (CSED). According to the Internal Revenue Code, Section 6502, the IRS generally must collect the tax owed “within 10 years after the assessment of the tax.” Depending on the taxpayer, the assessment of tax may be the date a taxpayer files a tax return with a balance owing or the date that the IRS files a tax return on behalf of a non-filer taxpayer. Thus, the statute of limitations will begin once the tax has been “assessed” by the IRS.

Although the IRS generally has just 10 years to collect on an outstanding tax liability, there are certain events or transactions that may extend or suspend the statute from expiring. A variety of laws affect the CSED. For example, if a taxpayer files bankruptcy” or files an Offer in Compromise, the statute of limitations is generally suspended during the time the bankruptcy or Offer in Compromise is under review. Also, additional assessments of tax owing may extend the amount of time that the IRS is allowed to collect. Therefore, if the IRS is going to collect taxes owed, they must do so within the time frame permitted by law.

Question #2: I have a home in foreclosure. I bought it for $172,000 and owe $302,000 how much taxes will I get hit with?

Although the total canceled debt will total around $130,000 you will not need to claim it as income on your tax return. Although canceled credit card debt IS taxable income, this is not the case with mortgage related debt. Your lender may send you a 1099 form next January, but if they do then just file an IRS Form 982.

Question #3: Is there such a thing as a consolidated tax return? Or, at least a return that allows you to combine multiple states?

Although there is something called a “consolidated tax return” it is actually something used for corporate taxes. For your personal income taxes you are going to need to file a return with each state you earned income in. Unfortunately, since every state has their own revenue departments you are going to have to file a specific form for each. However, if you hire a professional tax preparer, then they should easily be able to get you compliant with all states rather easily.