What the Republican Victory in the House Means for American Taxpayers

Leading up to the election last week, Republican candidates promised serious tax law changes in the next two years. However, since Democrats retained control of the Senate, many are wondering which, if any, of these promises will actually come to fruition.

Government Gridlock

Although Republicans took over the House of Representatives, they do not have the power to override a presidential veto. In order to pass a serious tax reform package in spite of a veto Republican leaders will need to come up with a 2/3-majority vote in both chambers of Congress. This has many worried that we will see serious government gridlock over the next two years. However, the change in power could finally push legislators to work together, and compromise on legislation that will actually help this country.

Health Care Revisions

Exit polls indicated that many voters were dissatisfied with the President's health bill, and the newly elected Republican leaders plan to listen to the dissatisfaction. Congressman John A. Boehner told reporters “the American people are concerned about the government takeover of health care. I think it’s important for us to lay the groundwork before we begin to repeal this monstrosity.”

Court Led Overhaul

Although Congress has limited options when it comes to overturning the health care reform law, the U.S. courts could take action. Currently there are 21 states that are challenging the law's requirement that all taxpayers have a qualifying health care plan. If the courts overturn part of the legislation, then it will be easy to build up public support for reforming the bill. Additionally, other experts are warning that members of Congress could add complications to the legislation and build up unpopularity of the law, which could be used as leverage to get Obama out of the White House next election. They could argue that the only way to repeal the law would be to elect a new Republican president.

1099 Changes and Manufacturer Taxes

In addition to concerns over the mandate, Republicans also plan to address two specific parts of the reform package: the new employer 1099 requirements, and the manufacture taxes. James P. Gelfand, Director of Health Policy at the United States Chamber of Commerce, has said he doesn't think "we’ll see a repeal of the health care law tomorrow." But that "Congress got the message that we need serious changes.” Gelfand claimed that he expects the new House to attempt to eliminate the provision that would require many employers to contribute to the cost of coverage for employees. Many experts claim that this provision would hurt job creation, as well as the tax on manufacturers of medical devices.

Energy and Climate Legislation

Although energy and climate reform has been a big issue for the President, it is unlikely that any major law changes will pass the new House. Last week, President Obama said he would like to move the country towards cleaner energy by focusing on smaller issues, which likely won't result in major tax law changes. "When it comes to something like energy,” the President asserted, “what we're probably going to have to do is say here are some areas where there's just too much disagreement between Democrats and Republicans. We can't get this done right now. But let's not wait. Let's go ahead and start making some progress on the things that we do agree on."

Bush Tax Cuts

Although next year there will be a Republican majority in the House, Democrats still have enough votes to extend or repeal the Bush tax cuts during the lame duck session. Obama has called for an extension of all the tax cuts, except for those that benefit highest earning taxpayers. Senate Majority Leader Harry Reid said that the Republicans' proposed extension of all tax cuts "won't happen." However, if Congress does follow the President's suggestion then there is no promise that the new Congress won't pass a retroactive extension of the cuts for wealthier taxpayers.

AMT Patch

Currently the Alternative Minimum Tax (AMT) is scheduled to affect 25 million families next year unless Congress passes a patch to the law. If Congress does not take action next year then all of these taxpayers will be faced with a huge and unexpected tax increase.

Estate Tax Compromise

Congress must address the estate tax. In 2011, this tax is scheduled to return at a rate of 55% on estates valued at over $1 million. This is a significant increase from the 2009 tax of 45% levied on estates worth more than $3.5 million. Republicans would like to completely get rid of the estate tax, but experts predict that we will see some sort of compromise that could affect estates valued at over $5 million.

New York Court Sends "Amazon Tax" Case Back for More Information

Earlier in the week a New York court handed down its decision in the state's case against Amazon.com. New York requires businesses without property in the state to collect taxes if they receive revenue from affiliates located in the state. Essentially the court is asking for more information and did not strike down the law or dismiss challenges against it.

The Tax Foundation reports

In Quill Corp. v. North Dakota and other cases, the U.S. Supreme Court has held that states can tax interstate commerce only if the target company has a "nexus" with the state - property or employees in the state. Otherwise, the Court has held, there is a serious threat to interstate commerce as states try to impose thousands of sales taxes, each with different rules.

The New York court's opinion was 13 months in coming, and it neither dismisses all challenges against the statute as the trial judge had, nor does it strike the statute down as unconstitutional. Indeed, the specific ruling by the majority is to send the case back to the trial court to further develop the record. The majority says the key unresolved question is how significant the affiliates are for Amazon's operations in New York and whether they actively solicit.

Amazon argued that affiliate referrals represent just 1.5% of their sales in the state. The court acknowledges this but says they need more information to determine significance. In a footnote, they suggest that a high dollar figure could be significant regardless of proportion. This is a mistake - significance to operations should be a judgment based on the proportion of the whole operation, not just a dollar threshold.

The Court rightly emphasizes that advertising does not create nexus. However, the opinion ominously notes that the challenged law would be valid if "a New York representative uses some form of proactive solicitation which results in a sale by Amazon, and a commission to the representative; and the representative has an in-state presence sufficient to satisfy the substantial nexus test." What they forget is the significance to operations test, which they emphasize elsewhere. Solicitation plus sales creates nexus for the affiliates, but it shouldn't create nexus for Amazon.

Read more here

Extending The Bush Tax Cuts Forever: Fiscal Insanity

The Congressional Research Service posted a report examining what affect the looming expiration of the Bush tax cuts would have on the economy. According to The Daily Dish, extending these breaks forever would be fiscally insane.

The Atlantic.com reports

A recent study by Alan Auerbach and William Gale projects that tax revenue would have to be permanently increased by 4.6% of GDP just to keep the debt-to-GDP ratio at the current level over the next 75 years under the current law scenario (i.e., allow the Bush tax cuts to expire). They refer to this as a fiscal gap of 4.6%.

If the Bush tax cuts were permanently extended the estimated fiscal gap rises to 7.2%. They project that by 2085, debt as a percentage of GDP would approach 600% under the current law scenario and 900% if the Bush tax cuts are extended—extraordinary levels that are unprecedented for the U.S.

Read more here

Black Friday App Watch: Use Your iPhone to Shop And Save

Next month is one of the biggest shopping days of the year: Black Friday. Years ago retailers focused mostly on newspaper advertisements or mailers, however, in today’s interactive consumers regularly seek out deals online. Therefore it seems only natural that retailers are going to use iPhone Apps to help connect with customers.

Wallet Pop.com put together some of the best Black Friday apps. You can find a section of their article below, or check out the full list here.

Find the lowest prices in the shortest amount of time with the Red Laser app. Simply scan a barcode and Red Laser will find you the best deal by searching both online and in stores near your location. When scanning food products, the free application even provides nutritional information. The quick scanner will help users shop efficiently on Black Friday. Plus, the no-touch scan works perfectly for customers already juggling armfuls of deals.

Rather than searching by barcode, the 99-cent application Save Benjis hunts bargains using key words and categories. This search approach helps customers find low prices before they hit the stores. When you find the best price, purchase items right from the app. Save Benjis even features specials and coupons on many products.

Groupon enthusiasts: Download the Groupon app to save on printer ink, paper and time. The free application allows users to purchase the deals right from their iPhones. It also lets customers to find ones nearby using the iPhones' map and locator. The best part is that users can redeem Groupons directly from an iPhone, eliminating the hassle of printing the deals, or forgetting the proof at home.

For last minute buyers, find local savings nearby by using BeThere Deals. The app finds deals on everything from entertainment to apparel. The discovered deals often save customers up to 50% off original prices. BeThere Deals also finds the cheapest happy hour and restaurant prices for when shoppers work up an appetite. Currently, the free app is only available in a few cities including New York, Chicago, San Francisco, Los Angeles and San Diego, but BeThere Deals promises to add more cities soon.

Continue reading at Wallet Pop.com…

Do Unemployment Checks Keep the Jobless at Home?

From CNNMoney.com:

Does allowing the jobless to get nearly two-years of unemployment checks give them an incentive to not work?

When Congress debated whether to extend unemployment to a record 99 weeks, some Republicans said that the unemployed are staying home collecting benefits when they could otherwise be working.

"[An unemployment extension] doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," Jon Kyl, R-Ariz., argued during Senate debate in March.

And with the current extended benefits due to expire soon after November's mid-term elections, that argument seem to be gaining some traction.

The extension of benefits "is almost surely the culprit" behind sky-high unemployment, argued Robert Barro, Harvard University economics professor, in a recent Wall Street Journal column.

Retail Sales Rise a Modest 2.9% at Major Chains

From LA Times.com:

The crucial back-to-school season got off to a slow start last month as retailers hoping for brisk sales of clothes, backpacks and school supplies saw tepid business and continued consumer frugality.

"The days of buying merchandise well before school starts are gone now. Kids would rather wait to see what the cool brands and styles are … and parents would rather put off spending until their kids will actually wear what they buy," said Marshal Cohen, chief industry analyst at market research firm NPD Group.

"Don't mark the back-to-school shopping season absent this year — it will just be a little tardy."

Major chain stores reported that sales rose a modest 2.9% in July compared with a year earlier, according to Thomson Reuters' tally of 28 retailers.

That was lower than the 3.1% increase analysts had predicted, and marked the fourth straight month that results either missed or came in at the low end of expectations, said Michael Niemira, chief economist at the International Council of Shopping Centers.

Americans Who Swap Passports

Many American taxpayers are giving up their passports in an effort to avoid excess taxes. However, as this article from FinancialTimes.com explains, giving up your passport can result in a lot of other unintended sacrifices.

At the US Embassy in London, there is a waiting list that none of the officials likes to discuss. On the list are Americans hoping to give up their citizenship, as they seek shelter from the Internal Revenue Service.

One lawyer fighting for her clients’ right to do so is Suzanne Reisman, a former civil rights lawyer, who is now a private-client lawyer in Mayfair, central London.

“You make a lot of sacrifices when you have to pay US taxes and live outside the country for a long time. But you also make a lot of sacrifices when you give up your passport,” she says.

Having lived in London since 1998, Ms Reisman herself has considered giving up her US passport. But she probably won’t. “I don’t think I want to die in the UK,” she says.

With many executives living away from their countries of origin, the reasons to change citizenship range from clarifying tax status, making it easier to cross borders, particularly in the case of passport holders from emerging markets who find themselves working in countries such as the US for a prolonged period of time, or discovering that over time their allegiances have changed.

Continue reading at FinancialTimes.com…

More Americans' Credit Scores Sink to New Lows

From ABCNews.com:

The credit scores of millions more Americans are sinking to new lows.

Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.

Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery.

"I don't get paid for loan applications, I get paid for closings," said Ritch Workman, a Melbourne, Fla., mortgage broker. "I have plenty of business, but I'm struggling to stay open."

FICO's latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO's 300-to-850 scale weren't as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis. Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.

Dad Won't Pay For College, So Daughter Sues

When you read a headline saying a daughter is suing their parent for not paying their tuition, your first instinct is probably to laugh out loud. However, one Connecticut woman not only sued her Father for not paying her college tuition for her senior year, she also won! Read all the details in the NPR.org story below.

A woman in Connecticut sued her father for failing to pay her tuition for her senior year of college. She won.

Her dad had to pay $47,000, according to the Connecticut Law Tribune.

In a 2004 divorce, the father agreed to pay for the education of his three children. The daughter persuaded to him to sign a contract agreeing to pay for tuition as well as expenses such as books and car insurance.

The father paid for the first few years of the daughter's education at Southern Connecticut State University. But he refused to pay for her senior year, according to the article.

So the daughter took out a loan for $20,000 to pay for school, and sued her father for breach of contract.

The case went to trial. The father argued that the daughter failed to attend classes full time and didn't give him receipts for tuition other expenses. And, he argued, she dropped classes and kept the refunds for herself.

The judge didn't buy it. He ruled that the daughter "performed all of her obligations as set forth" in the contract, and that the father failed to prove his arguments.

The $47,000 payment includes the loan, interest, attorney fees and missed car insurance payments, the daughter's attorney told the Law Tribune.

The Tax Implications of the Gulf Oil Spill Catastrophe

Oil has been spewing into the Gulf since April 20^th and although the media is reportedly limited in their ability to report on the spill, many of us are well aware of the severe environmental implications. With oil washing up onto the American coast, and reports of massive underwater plumes, it is hard to imagine things could get any worse. However, the oil spill will have a long-term financial affect on the oil industry, businesses and millions of taxpayers.

Obama and Oil Taxes

President Obama has attempted to increase taxes on oil companies several times without success. In Obama’s first budget proposal he recommended a $31 billion tax on oil and gas companies, but Congress never enacted any legislation with the tax. Last year, the House of Representatives did pass cap and trade legislation designed to limit pollutant emissions and auction allowances to polluters, but the bill has stalled in the Senate for months. However, due to the strong public reaction to the BP oil leak Obama may finally make it happen.

Barrel Tax

Congress has been reluctant to pass any legislation to increase taxes on oil companies, but last week the House of Representatives passed a bill that would increase the current per barrel tax on oil from 8 cents to 34 cents. The Senate is now considering similar legislation, and there are rumors that the tax could be as high as 41 cents per barrel. These new taxes could potentially raise more than $12 billion in federal revenue over the next decade.

Drilling, a “Short-Term Bridge” to Clean Energy

Although he proposed tax increases on oil and gas companies, President Obama also supported continued offshore drilling during an address in March. Since the Gulf explosion the President has pulled back on some of those plans; clarify that drilling should only be used as a “short-term bridge” to clean energy.

Fisher Frustrations

When BP announced they would help reimburse Louisiana fishers for lost income due to the oil spill, taxpayers were glad to see the multinational corporation helping out smaller businesses. However, many fishers are becoming frustrated by the hoops they must jump through to collect payments from BP, while their own bills pile up. In order to receive assistance, each fisher must turn over three years of tax records, which is presenting a problem for some. In small town communities, it is fairly common for temporary workers to get paid in cash, moving from one fishing boat to the next when work is available, and some of the local small businesses are struggling to get the records needed for relief from BP.

Cleanup Efforts and Job Creation

Many fishing jobs were lost due to the oil spill, but the cleanup efforts have resulted in a significant number of new jobs in related industries. BP reportedly has over 25,000 workers and independent contractors working on the Gulf cleanup project. In addition to this direct job creation, many local businesses are also seeing related economic boosts. Hotels that are usually only half full during this season are hanging up “No Vacancy” signs, and other businesses such as restaurants are also seeing sizable customer increases from all the cleanup personnel.

State Oil Taxes

Plenty of states – including Alaska – already tax oil companies; and those states that do not are working to enact taxes on oil companies while public opinion is still strong. My home state of California is a prime example. The state Assembly has already put together a proposal to raise an estimated $1.2 billion per year in new oil company taxes. However, this is a very controversial issue as many assert doing business in California is already difficult because of all the additional taxes levied on businesses and corporations.

Short and Long Term Effect on Consumers

If taxes are indeed raised on oil companies, many experts assume this tax will be passed on to consumers. Several politicians are adamantly denying this prediction, but large oil and gas companies will undoubtedly find a way to pay these additional taxes without affecting their profit margins. Additionally, the oil leak will likely have an impact on the long-term supply of available usable oil, which could lead to even higher prices on consumers.

Long Term Financial Predictions

There is no way to predict the exact implications the Gulf oil catastrophe will have on American taxpayers, as no one knows how long it will take BP to stop the leak. On one hand, the temporary increase in cleanup-related jobs is helping many people financially. On the other hand, the environmental devastation will likely hurt the Gulf for years, if not decades, to come. With a pivotal midterm election in November, the future of any oil company tax increases could be in question. Oil taxes are very controversial, and public opinion will play a major role in how Congress decides.

Using an iPad to Manage Your Finances

Yesterday, I announced the launch of my contest aimed at helping taxpayers stay up-to-date on tax and financial news by following me on Twitter or FaceBook. I will be giving away copies of my books, iTunes gift cards, and an Apple iPad grand prize. In addition to some of the standard features of the iPad, there are dozens of applications that have been developed to help users with their finances. Take a look at the ways an Apple iPad can help taxpayers manage their money:

1. iCal Bill Reminders

All iPads come with iCal preinstalled. If you have a MobileMe, account you can even sync your iCal between your computer, smart phone, and iPad. In addition to keeping track of your schedule, you can set monthly alarms to remind you about important bills and other important dates, such as paydays.

2. Expense Tablet

Expense Tablet was one of the first financial apps to arrive for the iPad, and remains one of the most useful. It helps users manage their expenses by linking up with their accounts. Expense Tablet will then provide you an easy-to-use expense report. It is available at the iTunes store for only $1.99.

3. Financial Advice eBooks

Now that Apple has launched a book store to complement the iPad’s eBook reader features, you can easily download a wide selection of financial advice and self-help books. Since you can store hundreds of books on your iPad, you can purchase a variety of financial topics, like financial organization and tax planning, and have them at your fingertips at all times.

4. Square

Square is a handy app that was created to help people easily accept and make payments through most Apple devices, including the iPad. Square also organizes your receipts, calculates tip options for customers, and allows business owners to set up virtual shelves of their products. With of all these great features you might think this app would be expensive, but it is actually a free download!

5. Mobile Access to Financial News

There are plenty of ways to use your iPad to stay in the know on tax and financial news. You can access news websites using Safari or subscribe to a financial podcast. Even some magazines are beginning to create iPad optimized versions of their content. For daily tax news and advice, you can even follow me at Twitter.com/RoniDeutch.

6. Box.net

Box.net is a free app helping users keep track of important financial documents by digitally storing them all in one place. Essentially, it acts like a virtual filing cabinet, storing all your documents, videos, images, and spreadsheets.

7. Emailed Bank Receipts and Statements

The iPad mail application comes preinstalled. Most banks allow customers to have their monthly statements and even ATM receipts emailed instead of arriving via snail mail. If your bank offers these services, you can have all of your banking documents sent to your iPad.

8. Market Scan

For stockholders, keeping track of the market can be very time consuming. Fortunately, Market Scan developer Michael Foster developed an iPad app that allows you to complete all your stock-related research quickly and easily. Market Scan lets you set up custom searches that can be updated instantly. For stockholders on the go, the application’s $3.99 price tag is very reasonable.

9. Bread and Milk

The simple, yet incredibly useful, Bread and Milk app helps users create grocery lists, and even estimates the costs of your groceries. You can email grocery lists to friends or family, and save money on food by only purchasing items on your list. The Bread and Milk app costs 99 cents, but will likely save you plenty of money in the long run.

10. E*Trade Mobile Pro

Thousands of Americans use E*Trade to create and handle their stock profiles, but not everyone has 24/7 access to a computer with Internet. Therefore E*Trade created a free iPad app offering financial news in addition to investment evaluation and quotes.

Don’t forget to check out the blog entry I posted yesterday to learn about my contest and enter—Good Luck!

Spring Cleaning for your Finances

Tax season has come and gone and spring is here in full force. During these transitional weeks many people take on extra spring-cleaning duties. However, in addition to cleaning out your garage, or spending hours getting your yard ready for a huge pool party, I recommend taking a few minutes to clean up your finances.

Clean out your Filing Cabinet

The IRS recommends you keep copies of all tax returns, however additional tax related documents – such as W-2s, 1099s, and receipts – do not need to be kept more then a few years. You can clear up some room in your filing cabinet by shredding any documents that do not need to be kept. You should also think about getting rid of any documents that can be replaced such as credit card and bank statements you still have from previous years.

Review your Credit Report

All taxpayers are allowed one free credit report per year. While doing your spring cleaning it is a good idea to request a copy of your credit report to make sure there are no mistakes or unfamiliar activity. It is better to address these issues sooner then later and if you have not reviewed your credit report recently, I highly recommend doing so as soon as possible.

Create a Plan for your Debts

Debt is a serious problem for millions of Americans, but it does not have to be. By taking the time to establish a plan to deal with your debt, you will see that it does not have to ruin your life. Start paying off credit cards with the highest interest rates, and if your debt is seriously out of control you might want to consider a debt settlement program.

Consolidate Accounts

If you have more than one banking account then you might want to spend some time consolidating your accounts. Unless you have a banking account for your business you probably do not need multiple checking and savings accounts. It can be very difficult to manage your money, and plan a path to get out of debt when you have dozens of bank statements to review. However, by consolidating your accounts you can keep better track of your finances, and depending on where you do your banking you can take advantage of additional features such as online bill payments.

Track your Spending and Start a Money Calendar

If you find yourself scratching your head at the end of every month wondering where all of your money went then you might want to track your spending a little better. Keep a receipt from every purchase you make, and after a few weeks you should have a pretty good idea of where your money is going. It can also be helpful to create a money calendar listing days that you get paid, and due dates for important bills.

Automatic Savings

Most banks will allow you to setup automatic transfers to your savings account, and this can be a great way to help build up an emergency savings. Even if it is only a $10 or $20 reoccurring transfer it can still help you get in the habit of saving money for a rainy day. Just make sure that your savings account is not charging a high monthly fee.

Prepare for Next Tax Season

It is never too early to begin preparing for next tax season. By keeping a close eye on your tax liability, credits, and deductions, you can avoid having to owe the IRS next April. It is also a good idea to create a new folder in your filing cabinet so that you can keep all of your tax related documents in one safe place. Finally, you might want to adjust your withholdings if you substantially over or underpaid on your taxes last year.

Happy Earth Day!

Earth Day is a great reminder to go green and reduce our carbon footprints. As I have explained before, there are plenty of tax incentives to live a more energy efficient lifestyle. A few weeks ago, the RDTC Tax Help Blog posted a blog entry explaining some of the tax advantages of going green in 2010. Check out the article, and think about what you can do to help the planet today in honor of Earth Day! I give thanks to Sacramento Scoop.com for the above graphic.

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6 Biggest Mistakes Homebuyers Make

Buying a home is usually the largest purchase an American taxpayer will ever make, but it can also be one of the most confusing. As any one who has ever owner property can attest, there are many decisions to be made and what seems like hundreds of documents that must be signed. To help potential homebuyers rushing to purchase a house before the federal tax credit deadline, CNN Money has composed a helpful article explaining the 6 biggest mistakes to avoid.

1. Not knowing your credit score

If you're even toying with the idea of buying a home, you must know your exact FICO score. If you find it is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.

Once you've pored over your credit history and corrected any errors, your next step is to pay down revolving debt balances to no more than 30% usage. That will help raise your score significantly.

Why does it matter?

The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740.

For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing.

Continue reading at Money.CNN.com…

Is Your Spouse Overspending?

Managing your own finances can be hard enough, without having to worry about whether your spouse or partner is overspending. Liz Pulliam Weston of MSN Money.com put together a helpful article with advice on what to do if you are married to a “financial basket case”. You can find a segment of her article below.

Can this financial marriage be saved?

Few couples are on exactly the same page when it comes to money, as I wrote in "9 ways to rein in a spendthrift spouse." Smoothing out the conflicts takes work but usually can be done with communication, compassion and commitment.

Some partners are so far over the edge, however, that their destructive habits can sabotage the family finances.

How can you tell whether your partner just needs a little persuading or is a total financial basket case? You're facing an uphill battle if:

There's an underlying addiction. If your partner has problems with alcohol, drugs or gambling, he or she literally can't think straight. Financial progress takes a back seat to feeding the addiction. Recovery is always possible, of course, but you'd be smart to get counseling (even if your partner won't go) and attend a support group such as Al-Anon, Nar-Anon or Gam-Anon.

There's a mental disorder. Overspending can be a symptom of a number of mental illnesses, including depression, bipolar disorder and attention-deficit disorder, as I wrote in "How the brain busts the budget." Again, progress is possible, but the underlying disorder must first be properly diagnosed and treated.

There's no acknowledgment of the problem. This may be the hardest nut to crack. Your partner either doesn't see what you're worried about or blames the problem on you. Counseling and sessions with a financial planner may help, but if your partner takes no responsibility and instead blames others, prospects for improvement may be dim.

Continue reading at MSN Money.com…

Which Travel Expenses Are Safe To Deduct on Your Taxes?

There are a lot of expenses that business owners can deduct from their taxable income but it is difficult trying to stay on top of all the IRS’ rules for self employed taxpayers. One of the most confusing expenses are travel expenses. If you own a small business chances are you've got enough to think about. That’s why I’m here! I recently read an article in USA Today. USA Today did a good job putting together a helpful article explaining which travel expenses are safe to deduct and which are not.

The deadline to file taxes is just around the corner and knowing what business travel and entertainment expenses you can and can't deduct is critical so you don't pay the IRS more than you should or lose a legitimate write-off because you can't document it or risk an audit because your expenses went overboard.

"I always tell people, for taxes, it's the difference between what you earn and what you keep," says Barbara Weltman, a tax expert who advises small businesses. "You could earn a significant amount of money, but if you don't take legitimate deductions, then you're paying more taxes then you need to."

The truth is, you can write off everything from that suit you had dry cleaned on a business trip to the fax you sent from the hotel, as long as you have the records to back it up.

"Record keeping is so crucial," says Frank Degen, an agent licensed by the IRS to work with taxpayers and who is based in Setauket, N.Y. "You need to have records of the four 'P's' and a 'D,' and the four 'P's' are the person, the place, the purpose and the price, and the 'D' is the date. That's an easy way for business owners or self-employed people to remember what they need to do."

Continue reading at USA Today.com…

AT&T Plans $1 Billion Charge For Health Care

According to the Huffington Post, AT&T inc. plans to take a $1 billion non-cash accounting charge during the first quarter due to the new health care reform package. The company has also warned it may cut benefits currently being offered to employees and retired workers.

The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed on Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.

All five are smaller than AT&T, and their combined charges are less than half of the $1 billion that AT&T is planning. The $1 billion is a third of AT&T's most recent quarterly earnings. In the fourth quarter of 2009, the company earned $3 billion on revenue of $30.9 billion.

AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.

White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits – including the subsidies – from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.

Family Finance: Credit Cards Part of College Plans

Credit cards are often essential for college students struggling to pay for food and lodging, in addition to huge tuition fees. However, a new law is going to make it harder for students to get credit cards, and many families are being forced to reevaluate their finances to provide for students in college. The New York Times posted a new article explaining the new law and how it will affect students across the country. You can find a section of the post below, or read the full text at NY Times.com.

Choosing what kind of plastic a college-bound student should carry may seem like an easy decision to make after all the work it takes to pick a school. But a new law making it harder for students to get their own credit cards means most parents now have to choose whether to help their kids get one, or send them off with less flexible choices like debit or prepaid cards.

The right choice could help a graduate enter the working world with a strong understanding of how credit works and a solid credit rating. The wrong choice could be costly, not only in terms of how much debt gets charged up, but also in the potential damage to the credit histories of both parents and student.

One part of the new credit card law says applicants under 21 must prove they can pay the bill, or have a co-signer to open an account. But most parents want their kids to have some card available, at least for emergencies.

That leaves parents to debate whether they should co-sign, or get their child a card linked to their own account? They might also ask if a debit card or prepaid card would be a better option.

The answers depend upon several factors, including the student's spending habits, whether they have any income, and the strength of the parent's own credit history.

''This whole situation with college students and credit is starting to turn into a thorny issue,'' said Bruce McClary of Clearpoint Credit Counseling Solutions. ''A parent really has to gauge their comfort level, in how they observe their child as someone who manages money responsibly.''

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Finance Reform Bill May Exempt Payday Lenders

There has been a lot of debate in the Senate lately on whether or not to include a provision in a finance reform bill that would crack down on payday lenders and other finance companies that are not directly associated with banks. The New York Times posted a great article explaining the legislation. You can find a snippet of their post below or read the full text here.

Senator Bob Corker, the Tennessee Republican who is playing a crucial role in bipartisan negotiations over financial regulation, pressed to remove a provision from draft legislation that would have empowered federal authorities to crack down on payday lenders, people involved in the talks said. The industry is politically influential in his home state and a significant contributor to his campaigns, records show.

The Senate Banking Committee’s chairman, Christopher J. Dodd, Democrat of Connecticut, proposed legislation in November that would give a new consumer protection agency the power to write and enforce rules governing payday lenders, debt collectors and other financial companies that are not part of banks, Sewell Chan reports in The New York Times.

Late last month, Mr. Corker pressed Mr. Dodd to scale back substantially the power that the consumer protection agency would have over such companies, according to three people involved in the talks.

Mr. Dodd went along, these people said, in an effort to reach a bipartisan deal with Mr. Corker after talks had broken down between Democrats and the committee’s top Republican, Senator Richard C. Shelby of Alabama. The individuals, both Democrats and Republicans, spoke on condition of anonymity because they were not authorized to discuss the negotiations.

Continue reading at NY Times.com…