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!

Overlooked Deductions: 2011 Edition

2010 was a whiplash year for tax changes, from sweeping legislation to the will-they-won’t-they buzzer-beater debate on the Bush Tax Cuts extension. All those changes mean more confusion than ever. So, enjoy the updated overlooked tax deductions for the 2011 filing season.

1. Mortgage Insurance Premiums

Although most people remember to deduct mortgage interest they paid, many forget that mortgage insurance premiums are also deductible. In order to qualify, the policy must be for a debt used to purchase a first or second home. This deduction was due to expire at the end of last year, but was extended through 2011 as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

2. Out-of-Pocket Educator Expenses

Another tax benefit that was extended at the last minute is the deduction available to teachers and educators who make out-of-pocket expenses, up to $250. You can read more about this deduction in this blog entry I posted earlier in the year.

3. Unreimbursed Job Expenses

If you have to make a purchase for work, you may qualify to deduct those expenses on your tax return. However, the IRS considers only specific expenses allowable, and they must be considered ordinary and necessary. To find out more about this deduction read this article on the RDTC Tax Help Blog.

4. Student Loan Interest

If you paid interest on a student loan for your own, your spouse’s or your dependent’s education, you may be able to deduct up to $2,500 worth of interest. This deduction is considered above-the-line, so you can claim it even if you do not itemize. Just keep in mind that there are strict income limits for this deduction in 2011.If you make more than $75,000 for single filers or $150,000 for married couples filing jointly, you may not be able to claim it.

5. State Tax Deduction

Remember that you can deduct your state income or sales taxes on your federal return. The deduction has been extended through 2011, so be sure to keep track of all state and local taxes you pay. To determine if you should claim your income or sales taxes paid you can use this calculator at IRS.gov.

6. Qualifying Legal Fees

Most fees paid to an attorney are not considered deductible. However, there are a few exceptions such as fees paid to an attorney related to a class action suit, estate tax advice, and alimony collection expenses paid to a lawyer. However, the deduction is subject to the 2% miscellaneous deduction limit.

7. Alimony Payments

Speaking of alimony, if you are required to make alimony payments, you may be able to deduct them on your tax return. You will need to file an itemized return, and must meet a few IRS qualifications. For more information, you can find details about the deduction in this article on the RDTC Tax Help Blog.

8. Business Tax Deductions

If you run a business, there are plenty of deductions you should look out for to reduce your tax liability. Including but not limited to: advertising and promotion costs, license and registration fees, legal and professional fees, Internet-related expenses, wining and dining clients, etc. For more information check out this article I wrote for WomenEntrepreneur.com on 10 tax deductions you can't afford to miss!

The Tax Lady Roni Deutch Reviews 2010 Accomplishments

Every New Year I like to take some time to reflect on last year’s successes.

Check out this new press release from my law firm:

The Tax Lady Roni Deutch welcomes the New Year by reviewing the milestones reached by her law firm in 2010.

“My law firm reached some incredible goals in 2010. The one I’m most proud of is helping a record number of clients successfully resolve their IRS tax debts. During these difficult times, more people than ever are looking for help with their tax debts; I’m proud that my law firm was able to help so many taxpayers get the help they so desperately needed,” states Roni Deutch.

2010 also marked Roni Deutch, A Professional Tax Corporation’s entrée into the world of bankruptcy representation. The law firm is now accepting new clients considering Chapter 7 or Chapter 13 bankruptcy in the Eastern District of California. To learn more about the law firm’s bankruptcy practice visit RoniDeutch.com.

“Rolling out bankruptcy services has been a goal for our firm for a long time,” explains Deutch. “So many of our clients are struggling with more than tax debt, and I’m thrilled to be able to offer bankruptcy services to Northern Californians.”

Roni Deutch released a new book in October. "Surviving the Coming Tax Disaster shows taxpayers exactly how we got into this economic mess, what they can expect the IRS and our government to do, and how to protect their wallets from aggressive tax collections. This topic is so important to American taxpayers, who are struggling to rebuild their finances in the face of overwhelming economic uncertainty,” explains Deutch.

Read more at PRweb.com...

Questions for the Tax Lady: January 5th, 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: When is the earliest that I can file my tax return with the IRS?

I love that you want to get a jump on filing your taxes. In theory, you can file your taxes as soon as you receive all your W-2s, 1099s, or other tax-related documents. However, this filing season you might have to wait until mid-February to file. Congress waited until the very last minute to pass the “tax compromise” which means the IRS is still scrambling to update the tax forms and processing systems. So, who will have to wait?

1. Taxpayers who itemize deductions on Schedule A.
2. Taxpayers who claim the Higher Education Tuition and Fees Deduction.
3. Taxpayers claiming the Educator Expenses Deduction.

In addition to the delays, the IRS is urging anyone who falls into any of the three categories above to file electronically. With all the changes to the forms, filing electronically will ensure you file the updated versions of the forms and help you detect any mistakes before you file. No specific date has been given yet, but the IRS should announce it shortly.

So, if you claim the standard deduction and do not plan to claim the tuition and fees deduction, or the educator expenses deduction, you are free to file as soon as you receive all your tax information. Otherwise, you can spend the next month and a half getting organized so filing will be a snap!

Question: I am currently on a payment plan with the IRS, but my income has been reduced significantly over the past few months. Is it possible for me to renegotiate with the IRS to lower my monthly payment?

I commend you for getting out ahead of your financial issues, instead of waiting until you default on your installment agreement with the IRS.

Most IRS tax debt programs are based on your financial situation right now. So, when you income declines or you lose a job, you may be able to negotiate a lower payment. Your first step is to call the IRS (800-829-1040) as soon as you think you have a problem.

You will probably have to provide documentation for your decreased income, such as your W-2s or an updated profit and loss statement for your business. So, gather your documents and call the IRS. And good luck on getting a little relief in this still-shaky economy.

Tax and Finance Savvy New Years Resolutions

The New Year has begun and it is a time when people all over the world set goals or resolutions for themselves. Lots of people join gyms or decide to start a new diet, but in addition to resolutions that are good for your health, I think it is a good idea go with a few that are good for your wallet. Here are my favorite tax and finance savvy New Years resolutions.

Don't Wait until April to Think About Taxes

Most Americans wait until March or April to start worrying about their taxes. However, I recommend making a short term goal to start working on your tax return this month, and try to get it filed some time in February. That way you can get your refund nice and early, and also avoid crowded tax preparation offices if you are going to seek professional help for your return.

Stay on Top of your Tax Planning

You shouldn't let the whole year go by without thinking about taxes again. By staying on top of your tax planning throughout the year then you can help keep your liability as low as possible. Also, you can prevent being faced with an unexpected tax bill next April.

Give More of your Time to Charity

In addition to donating your unwanted household items, which all will result in a tax deduction, why not give more of your time to charity this year? Since the recession began many nonprofit organizations have been struggling, and by spending a few hours volunteering won't cost you anything out of pocket. Additionally, if you do have to purchase supplies, or drive while volunteering then you can deduct these expenses.

Don't Rely on Credit

Cutting back on credit cards is always a good New Years resolution. In fact, in 2010 fewer Americans used credit then in years prior. Now is a great time to jump in on the trend. Instead of relying on credit try to make a strict budget and use your ATM card instead of your Visa or MasterCard.

Live a Greener Year

These days there are plenty of incentives to living a greener life. In addition to helping the planet you may also be able to qualify for a federal tax credit. For more information on which purchases qualify, check out EnergyStar.gov.

Start Planning for your Retirement

It is never too early to start planning for your retirement. If you do not already have an account, then make it a resolution to start an IRA or 401(k) in 2010. If you already do have a retirement account, then you could make it a goal to max out on your contributions.

Save for a Rainy Day

These days many Americans are struggling to pay their bills. However, if you can afford to do it, then try to begin setting aside money from each of your paychecks. You never know when a rainy day will hit, and you will be better equipped to deal with it if you have a little extra money set aside.

10 Tax Friendly Cities for Small Business Owners

Although some experts suggest that the economy is improving, many small business owners are still struggling, while also nervous about the possibility of an across the board tax increase next year. Fortunately, there are some places in this country that offer significant incentives to small businesses. To help all of the entrepreneurs reading my blog, I have put together the following list of tax friendly cities for small business owners.

Anchorage, AK

Although Alaska may not be the ideal climate for everyone, it can be a great place to do business. Both the income and sales tax rates are zero, and property taxes are normal compared to other cities in the country. Another benefit of living in Anchorage is the dividend payments each resident receives from oil-drilling taxes.

Seattle, WA

Seattle may be one of the wettest cities in the country, but it is also one of the best to do business in. Seattle is also the home of some of the most innovative companies in the world, including Boeing, Microsoft, and Amazon. The state has no income tax, and Seattle is even planning to revise their already business-friendly tax code to encourage more small business owners to move to the city.

Cheyenne, WY

Cheyenne is known for how windy it is, but for business owners a little wind is worth the great tax laws. Cheyenne has one of the lowest property taxes in the country, no income tax, and a low local tax burden.

Eugene, OR

Oregon is infamous for their nonexistent sales tax, and low home prices. Additionally, there is also no retail business license fee in Eugene. Portland is just a couple of hours away, with plenty of great entertainment and dinning options.

Las Vegas, NV

The state of Nevada has the lowest overall tax rate in the country, with no income, estate, franchise corporate, or gift taxes. The city of Las Vegas has an even more favorable tax climate, with low property and sales tax rates. Although the city has been plagued by high foreclosure rates, businesses continue to thrive as tourists continue to pour in from around the world despite the economic downturn.

Des Moines, IA

The city of Des Moines, Iowa has been rated one of the most affordable places to do business in the country. Household incomes are on the rise, as well as employment rates. The cost of doing business in Des Moines is about 15% below the national average, making it the perfect place for a new business owner to set up shop.

Raleigh, NC

North Carolina has a few cities that have been rebounding well through the recession, but Raleigh outshines all of the other nearby cities. Business friendly tax rates, combined with a low cost of living, make the recovering city very appealing to business owners.

Sioux Falls, SD

Like many of the cities on my list Sioux Falls, South Dakota has continued to develop through the recession, attracting new residents and higher business revenue. The city strongly appeals to business owners because of the lack of a state income tax, and other local corporate tax incentives.

Fort Worth, TX

The city of Fort Worth, may be smaller than Dallas, but in many ways it is much better for business owners. They do not charge a license fee for businesses, and property taxes are extremely low. Forth Worth is also the birthplace of American Airlines, and boasts an unemployment rate that is 14 percent below the national average.

Manchester, NH

Manchester offers a very favorable tax structure for business owners and residents alike. Close enough to reap the tourism from Boston, but more affordable to live and run a business in, Manchester is the last tax friendly city on my list. With no income tax, no sales tax, and low property and auto taxes, Manchester is definitely a great city to open a small business in.

5 Common Questions About Bankruptcy and Tax Debts

It is not uncommon for those calling my law firm about their IRS tax debt to ask about Bankruptcy.

My law firm recently began offering bankruptcy services to residents of Northern California, this blog discusses the most common questions we receive about bankruptcy and tax debts—and their answers of course.

1. Will my tax debts be resolved by filing for bankruptcy?

Unfortunately, there is no straightforward answer to this first question, as it will depend on your unique financial situation. There are some basic parameters, but there are many exceptions to the general rule. You should always consult with a bankruptcy attorney to determine if your tax debs will be settled by filing bankruptcy.

If your IRS liabilities meet a strict set of conditions then they may qualify to be discharged through Chapter 7 bankruptcy. On the other hand, if you file for Chapter 7 and you have assets that are not exempt, they may be liquidated and the proceeds distributed to creditors. Since the IRS is considered a creditor, a court appointed trustee would examine any claim they might file and determine if it should be paid. If the tax debt is not dischargeable, you may still owe the balance of the tax debt even if they were paid in part.

If you file a Chapter 13 bankruptcy and you have tax debts that cannot be discharged in Chapter 7, you will be required to pay the taxes in full over a period of time up to 60 months, along with certain distributions to other creditors.

2. What are the qualifications to have my debts discharged?

In order to have unpaid tax debts discharged through Chapter 7 bankruptcy all of the following conditions must be met. If even one is not met, then the debts will remain after the proceedings have concluded.

1. The debts must be related to a return that was last due at least three years prior to the bankruptcy filing. The limit also takes extensions into account; therefore if you requested a six-month extension on any of your returns it will add another six months to your wait time.
2. The IRS assessed your tax debt at least 240 days before you begin proceedings.
3. The tax debts must have resulted from unpaid income taxes. Other debts such as unpaid employer payroll taxes and trust fund recovery penalties cannot be discharged.
4. The income tax debt cannot be the result of having filed a fraudulent return or from willfully attempting to evade or defeat the tax.

3. If my tax debts are discharged will it remove an IRS lien?

Again, this is going to depend on your unique financial situation. Generally having debts discharged through a Chapter 7 filing will prevent the IRS from pursuing any additional collection activities against you. However, it will not remove any previously recorded IRS tax liens on your property. You will need to pay the value of the lien in order to have it removed.

On the other hand, if your tax debts are settled through a Chapter 13 filing, then you can have the lien removed once you finish making payments to the IRS.

4. Is it true I need to have filed my tax returns in order to have IRS debts discharged?

Yes, as I mentioned above your tax returns need to be filed with the IRS in order to have the debt discharged by filing for Chapter 7 bankruptcy. If you never filed your own return, and the IRS filed a Substitute for Return on your behalf to assess the debt, then it will not be discharged. Then, after your proceedings conclude you will still have to find a solution to your tax debt problems.

5. If my tax debts are not discharged in bankruptcy, what other options do I have?

If your tax debts do not qualify to be discharged through Chapter 7 bankruptcy then you have a handful of additional options for settling the liabilities. The IRS offers tax settlement programs such as Installment Agreements, Offers in Compromise, or placement on the IRS’ Currently Not Collectible status. For more information on any of these programs you can read about them on my law firm’s website.

If you have any question about bankruptcy you would like to get answered then send them to me via Twitter, or this Questions for The Tax Lady contact form.

Roni Deutch, A Professional Tax Corporation Launches End-Of-Year Donation Drive

‘Tis the season for giving; what are you and your company doing to help your community? The incredible employees of my law firm put together an end-of-year food and clothing drive to benefit Sacramento Food Bank & Family Services. You can read more about it below.

The community action committee at Roni Deutch, A Professional Tax Corporation is ending the year with yet another charitable donation drive.

"This is the season of giving," explains The Tax Lady Roni Deutch, "and I am asking my employees to help bring holiday cheer to those less fortunate by participating in our end-of-year donation drive."

"Times are tough, and according to the California Employment Development Department the unemployment rate here in Sacramento is around 13%," explains Deutch. "There are so many families that depend on Sacramento Food Bank & Family Services, and I am proud to assist in the efforts of the Sacramento Food Bank & Family Services."

On November 30th, Sacramento Food Bank & Family Services dropped off two collection barrels at Deutch's North Highlands, CA office. One barrel will be used to collect non-perishable food donations, the other for clothing donations. The donation drive will last through January 4th. 2011.

Read more at PRweb.com...

The Tax Lady’s Tips

Last Friday, the new issue of my law firm’s newsletter was sent out. You can download a JPG of the letter here, or sign up to have it sent to your mailbox each month at RoniDeutch.com.

Questions for the Tax Lady: November 1st, 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: Tax-Related Question: Can I claim my daughter who is 34 and has had no income for 3 years, I have been supporting her and not claimed her before. I was wondering if I could use her for a tax deduction .

Answer: You might be surprised how many people are asking this question these days. With the economy still stalled out and new jobs tough to find, more families are turning toward multi-generational living. Of course, there are tax consequences for every life choice, and helping to support financially your adult daughter is certainly no exception.

Let’s get down to brass tacks. Of course, like all tax questions, before you make a move you are not sure about, you need to speak with a tax professional who is familiar with your specific situation. That being said, you should be able to claim a dependent exemption for your adult daughter under the “Qualifying Relative” rules.

The requirements are:

• The person you are claiming as a dependent cannot be your qualifying child or the qualifying child of any other taxpayer. (Since your daughter is over the age of 24, she is not your qualifying child for tax purposes. Instead she is a qualifying relative see the IRS Publication 501 http://www.irs.gov/publications/p501/ar02.html#en_US_publink1000220868 for more information.)
• The person either (a) must be related to you, or (b) must live with you all year as a member of your household² (and your relationship must not violate local law).
• The person's gross income for the year must be less than $3,650.
• You must provide more than half of the person's total support for the year.

From the information you provided, looks like you will be able to claim a dependent exemption for your daughter, valued at $3,650 of exempted income for 2010. This means you may also be able to claim deductions for certain expenses incurred in supporting her. Check with a tax professional to see what you may claim.

Question: Isn't paying taxes voluntary?. I haven't files a tax return since 2004. I've done research on the Internet on how many cases the IRS has lost because that cant prove in writing or any law that says the government can tax someones labor. Nor can the IRS prove in writing the law that says one MUST file a tax return. I'm thinking of filing a law suit against them and use the precedent regarding the FEDX pilot and others I've seen on the Internet. Can you help me. The IRS levied my bank account on 10/27 and my kids are hungry.

Answer: I’m glad you asked this question.

Every so often I run into someone who is under the misconception that they do not have to pay taxes. Here’s the bottom line: we all have to pay taxes.

But let me clear up some essential facts:

The word "voluntary," as used in IRS publications, refers to our system of allowing taxpayers to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them. According to the IRS:

The requirement to pay taxes is not voluntary and is clearly set forth in section 1 of the Internal Revenue Code, which imposes a tax on the taxable income of individuals, estates, and trusts as determined by the tables set forth in that section. (Section 11 imposes a tax on the taxable income of corporations.)

Furthermore, the obligation to pay tax is described in section 6151, which requires taxpayers to submit payment with their tax returns. Failure to pay taxes could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.

As to fighting in court, regardless of what information you are finding on the internet, let me tell you that IRS Criminal prosecutions boast a conviction rate over 80%. For a prime example of how tax protesters fare in court, look at Irwin Schiff. Mr. Schiff is currently serving 13 years in prison on a number of tax charges resulting from his protesting the legality of income taxes.

While there is nothing stopping you from filing a lawsuit against the government, assuming you can afford to hire an attorney, or even find an attorney willing to take your case, please think again. Honestly, it is highly unlikely that you would win. People with far more resources have tried and failed repeatedly.

Your best course of action is to work with the IRS to find a workable resolution to your tax debts. To file a tax return every year, pay what you owe, and get compliant as soon as possible. As you have stated, the IRS has already levied your bank account, and they have the power to do more, like garnish your wages, or seize your personal property. You write that your “kids are hungry”, so it appears your family is already suffering. I would advise you not to gamble with their well being by pursuing this further..

For more information on tax protester arguments and the legality of income tax, please review the IRS’s positions on each one found here: http://www.irs.gov/taxpros/article/0,,id=159853,00.html

Questions for the Tax Lady: October 11th, 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. I will do my best to get an answer for you!

Question #1: Is it better, tax-wise, for married couples to divorce and cohabit, or is this an urban legend?

Answer: Ah, the marriage penalty, this myth continues to circulate even though it’s largely untrue. Years ago, if both spouses worked, it may have been more beneficial to be divorced and filing taxes separately.

However, years of tax adjustments have removed the marriage penalty from all but the most unique tax circumstances. By and large, the tax code allows married couples equal benefits to single people. For example, the standard deduction for filing single is $5,700. For a married couple filing jointly, the standard deduction is $11,400. Exactly double the amount for single.

Don’t go rushing to a divorce lawyer to save money on your taxes. If you really feel like filing jointly is costing you more money, talk to a tax professional and see if you would do any better by filing separately.

Question #2: I filed an automatic six month extension last April, but have not finished preparing my return yet. Is it possible to request another extension?

Answer: Unfortunately for you, the six-month extension is the end of the line, tax-wise. (Unless of course you are living out of the country). October 15 is the very last deadline before the IRS will start slapping you with failure to file penalties. If you are struggling with preparing your tax return, you may want to enlist the aid of a qualified tax professional.

My recommendation would be to do whatever it takes to get that return mailed or electronically submitted by midnight, October 15. Then immediately start getting ready for the next filing season so you can avoid this problem next year.

Labels Matter to the IRS

Last week, I drafted a new article for WomenEntrepreneur.com on how to decide whether you should label your new employee as an independent contractor or a standard wage earning employee. You can find a snippet of the article below, or visit WomenEntrepreneur.com for the full text.

When business owners start looking into hiring employees, many are overwhelmed at how expensive it can be. Of course, you must pay this person a decent wage, but there are even more expensive costs: taxes.

And there are a lot of them to think about: unemployment taxes, payroll taxes (7.65 percent of the employee's total salary) and other taxes.

Some business owners try to sidestep these tax issues by hiring workers as "independent contractors." Sounds like a good idea, right? Independent contractors do the work but save you the hassle of payroll taxes, tax withholding and unemployment taxes. Hold on! Before you jump aboard the independent contractor bandwagon, you need to understand that the IRS has a say in the matter.

The IRS has very strict rules for determining who is an independent contractor and who is an employee. How you classify your workers revolves around three basic characteristics:

Behavioral control: Do you as the business owner have the right to determine how the work is done via training or instructions, for example?

Financial control: Do you as the business owner have the right to determine or control the financial or business aspects of the work?

Type of relationship: Do you or your workers perceive an employer-employee relationship?

Tax Hikes to Expect in 2011

As we wait for Congress to take up a handful of tax and financial issues, taxpayers across the country are wondering what tax laws will change in 2011. A handful of tax cuts and incentives are scheduled to expire at the end of the year, and unless Congress takes action Americans are going to pay more taxes in 2011. These hikes are going to affect more than just taxpayers making over $200,000 per year. There are dozens of tax changes on the horizon that could hit families of all kinds of different income levels. To help readers of my blog prepare for the potential changes, I have put together the following list of tax hikes to expect in the coming year.

Income Tax Rates

Depending on what action Congress takes on the Bush tax cuts, income tax rates could increase significantly in 2011. President Obama has urged congress to only allow the cuts to expire for taxpayers making over $200,000. However, Congress must decide the fate of these tax rates and unless they pass legislation in the next few months, tax rates will increase for all taxpayers. For more information on the impact of the Bush tax cuts check out this blog entry I posted a few weeks ago.

Estate Tax

As many of you already know, the estate tax expired at the end of last year and was not extended. Therefore taxpayers who inherited a sizeable amount of money this year did not have to pay the standard estate tax. Next year the tax is scheduled to be reinstated at a higher rate (55%). It will also target taxpayers receiving smaller estates. Additionally, if Congress does take up the issue they might instate a retroactive tax that could affect Americans who thought they were able to avoid the estate tax.

Dividends

Qualified dividends are currently taxed at 15% because of the Bush tax cuts. However, if the cuts are allowed to expire, that rate will increase to nearly 40% for some taxpayers. This could represent a significant increase to taxpayers who rely on income from dividends.

Capital Gains

Another area the Bush tax cuts would impact is the capital gains rates. Depending on how Congress acts, the rates could rise to 20% in 2011. The increase is likely to only hit high-income taxpayers, and if you are worried about the hike then you might want to consider selling off some of your gains in 2010. However, you should always speak with a financial advisor to determine the most advantageous strategy.

Sin Taxes

Lots of taxpayers have seen drastic increases on cigarette taxes over the past year as local government agencies seek sources of additional revenue. However, these are not the only sin taxes that have increased. As part of the health care reform bill an indoor tanning tax was instituted, and going in to 2011 you can expect to see many more sin tax increases, especially at state and local levels.

Marriage Penalty

Married taxpayers should be concerned about another looming tax hike in 2011. Unless Congress addresses the issue, the "marriage penalty" will return next year, which has significant implications on couples that have significantly different income levels. Luckily, some of these taxpayers might be able to avoid the penalty by filing separately.

Deduction Caps

Although not a direct tax hike, the new deduction caps looming in 2011 will force many high-income taxpayers to pay more to Uncle Sam. President Obama has expressed interest in limiting the value of deductions at 28%, but has faced significant opposition. Many charitable groups have spoken out against this tax change, with fear that it will result in fewer donations from Americans.

Business Taxes

Small and large businesses should also expect tax increases in the next year. There are going to be higher SECA taxes for owners of S firms and partnerships, restrictions on worker classifications, and an elimination of the deduction for domestic production.

Audits

The last thing that any taxpayer wants to hear is that the likelihood of an IRS audit will increase in the next year. However, the White House has been pushing the IRS to crackdown on both small businesses and individuals. Earlier in the year Treasury Secretary Timothy F. Geithner even asked Congress for additional funds to support the increased collection efforts.

The New Overdraft and Debit Laws Explained

According to reports, in the year 2006 overdraft fees accounted for approximately 6% of banking revenue in this country. Fortunately, on August 15^th a handful of new laws went into affect to protect consumers in this country from excessive banking fees. However, in addition to targeting overdraft fees and debit cards, the new rules also have a significant impact on gift card practices in this country. To help all of my readers understand the full affect of the new laws, I have put together the following article explaining the most important new overdraft and gift card rules.

I. Overdraft Protection Laws

What is overdraft protection?

Before the new law was passed, banks could automatically enroll customers in overdraft protection, which would allow you to charge more than you had in your checking account. Instead of declining the transaction, the bank would approve it, and then charge you with a $20-40 overdraft fee.

Opt in or out

Starting August 15th, banks were forced to discontinue overdraft protection services unless customers sign up for it. This means you can decide whether or not you want your card to get approved when you have insufficient funds.

Disclosure mailers

As part of the new laws, financial institutions have been required to notify customers of how overdraft protection will affect their bank account. This is because of new disclosure laws that aim to increase consumer transparency in the banking industry, and also explains why you have probably received extra mail from your bank over the past few weeks.

Checks and bills

According to the new law, banks can still charge overdraft fees for checks or automatic withdrawals from your account that are higher than your available balance. The overdraft fee rules only apply to ATM debit and check card transactions. You bank may have an option to turn off all overdraft options, but you should ask your financial institution for more information.

Alternative overdraft protection

There are other ways to protect yourself from having your debit card declined than enrolling in overdraft protection. If your bank offers online banking then you could make a habit of checking your balance every day to make sure you do not overspend. Some financial institutions also offer cell phone alerts when your balance is low.

II. Gift Card Laws

Fees

Until now, the gift card industry has gone relatively unregulated. However, the new overdraft and debit laws also have implications on gift cards. As of August 15^th, companies that issue gift cards cannot charge excessive fees that lower the card’s available balance. The new law limits the number of fees that can be charged to a one-time fee when the card is purchased, and only one additional charge per month. Additionally, inactivity fees cannot be charged at all unless the card has not been used for over a year.

Expiration

The new law states that gift cards cannot expire for at least five years. Prior to this new rule, some gift cards would expire in as little as a year.

Disclosure

Much like the new bank laws, companies who offer gift cards must now disclose fees and expiration dates to customers. For gift cards, the disclosure must be on the card itself, along with a toll-free number or website to find more information if need be.

Prepaid debit and phone cards

Unfortunately the new gift card laws do not apply to prepaid debit cards or prepaid phone cards; the rules only apply to gift cards.

Talk with Your Partner about Taxes

Last week my team put together another great tax advice video. This time hosts Edward Lester and James Owen sat down together to discuss the importance of talking with your partner about taxes and financial issues. You can watch the embedded video below or visit my YouTube channel for more great tax videos.

The Tax Lady’s Tips

Last Friday, the September issue of my law firm’s newsletter was released. For those of you who did not get it sent to your inbox, you can view a JPG of the letter here. However, be sure to signup to receive my newsletter at RoniDeutch.com.

Questions for the Tax Lady: August 30th, 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: My wife and I make around $75,000 per year, and file a joint return. If Congress does not extend the Bush tax cuts will our federal income tax rate increase?

That is the big question being asked all over this country. The answer is, probably. Even if your official tax rate does not change, you might be facing a bigger tax bill. The Bush tax cuts involved a lot more than just marginal tax rates. Also included were a number of deductions and credits that reduced tax liabilities for people in every tax bracket.

There are a number of plans for the Bush tax cuts being circulated in Congress. Some groups want them all extended. Some want them all to expire. Some Congress members propose letting some of the cuts expire. To see how each plan may impact your tax bill, check out the Tax Foundation’s calculators here: (http://www.mytaxburden.org/).

Question #2: Can I make my quarterly tax payments electronically?

Yes. You can either make a one-time payment or recurring monthly payments using the IRS’ Electronic Federal Tax Payment System (EFTPS). For more information, check out Eftps.gov.

10 Tips for Finding a Job in Today’s Economy

It seems like whenever you turn on the news, or look through a newspaper, there are stories about the ongoing unemployment problem in this country. In fact, just a few weeks ago it was reported that the number of Americans who are receiving food stamps rose to a record 40.8 million in May. To assist taxpayers across the country looking for employment, I have put together the following list of tips for finding a job in today’s economy.

1. Make Goals

One of the hardest parts of job hunting is the amount of perseverance it requires. In order to keep motivated, set goals to strive for on a daily, weekly, and monthly basis. For example, your daily goal might be to send out 5 resumes, or your weekly goal might be to go to at least one interview. By keeping yourself motivated you can stay focused, and encouraged to keep working towards your goal.

2. Get Aggressive

The job market is competitive right now, and if you want to stand out you have to work hard. Be aggressive in your job search by calling back potential employers and making sure they know you want the position. Then, always send thank you notes after every interview. Above all, stay positive, a good attitude will keep your mind sharp and impress potential employers.

3. Online Resources

The Internet can be used as one of the most powerful tools in your job search. Create profiles on online job search sites, and look for jobs in your area. You should also check the job section on classified sites such as CraigsList.org on a daily basis.

4. Resume Tips

Having a resume that is too general will give the impression to potential employers that you are not really that interested in the specific position they are offering. You should always modify your resume before sending it in for consideration, so that it is relevant to the open position. You do not want recruiters to think that you send the exact same resume to every listing you see. It also helps to write a new cover letter for each application.

5. Work on your Skills

There are some skills that need to be learned on the job, however while you are looking for employment you should consider building up some of your relevant skills. If you are unfamiliar with Microsoft Office then check out an online tutorial or pick up a book from Amazon.com. Any extra skills you can add to your resume will help set you aside from other job candidates.

6. Phone a Friend

According to the U.S. Bureau of Labor Statistics, 70% of jobs are found through networking. If you are serious about job hunting then you should call and email your friends and family members to see if anyone knows of a vacant position.

7. Use Social Media

Another great way to get the word out that you are looking for a new job is by participating in social media communities like FaceBook or LinkedIn. Just be sure that you do not post any questionable materials to your profile, as recruiters often Google the names of candidates, and you do not want your online presence to reflect an unprofessional image of yourself.

8. New strategies

Regularly checking the same job sites or the same newspaper could get you stuck in a rut. Therefore, you should try looking for job openings in new places whenever you have a chance. Maybe pick up a less popular newspaper or start a profile on a different job site.

9. Enlist Some Help

If you have been on the hunt for a while, you might want to enlist the help of a job placement agency. Run a search on Google for job placement help, and you should be able to find a few local agencies. However, you should always be cautious and avoid scams that make you pay excess fees for equipment, or invest in a pyramid scheme.

10. Nail the Interview

In the past you may have come to an interview expecting to answer a few questions, and leaving it at that. Not in this economy. Before you go in for an interview you should always research the company, and prepare a list of questions to ask the person conducting the interview. Preparation is the key, and if you look well prepared it will help you stand out from the list of applicants.

Questions for the Tax Lady: August 16th, 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 should I keep my business receipts?

Generally speaking, you should keep all business receipts for at least three years. However, you should try to keep other financial documents – such as your business tax returns – for at least five years.

Question #2: Is it possible to get copies of my old tax returns?

Yes. You can request an official copy of your old tax returns using IRS Form 4506. However, there is a $57 fee for each tax return you request. Alternatively, you could request a tax return transcript or tax account transcript from the IRS free of charge by filling IRS Form 4506T-EZ.

The Enunciation of DEUTCH

People always make fun of how I stress “Deutch” when saying my name. I thought I'd join in on the fun, check this hilarious new video my team created: The Enunciation of DEUTCH

How do you pronounce your name? Send me a message on Twitter or FaceBook!