The Ten Principles of Economics (10th Anniversary Edition)
Republicans Promise $100 Billion in Spending Cuts
Women in Management on the Rise in the Finance Industry
Getting Ready To File Your Tax Returns
Tuesday, February 15, 2011
Latest Good Reads
IRS Can’t Stop Paying Billions in Bogus EITC Claims
According to a from the Treasury Inspector General for Tax Administration the agency made little improvement in reducing improper Earned Income Tax Credit payments. Government estimates suggest that up to 28% of erroneous EITC payments are made each year, costing taxpayers between $11 and $13 billion per year.
This is an outrageously high improper payment rate," said Sen. Chuck Grassley, R-Iowa, in response to the report. "It’s higher than Medicare’s improper payment rate. The taxpayers can’t sustain a failure rate of one-fourth and on the way to one-third. For more than eight years, the IRS hasn’t made a dent in this problem. It’s more than enough time to figure out a way to fix it. The report says the IRS doesn’t have the resources to go after all of the improper payments in this program. This is a good indication of how the IRS is poorly equipped to handle the huge new responsibilities of health care reform. If the IRS can’t handle its existing responsibilities, it won’t be able to handle its new responsibilities under health care reform. Maybe if the White House focused more on what’s already owed, it wouldn’t need to propose tax increases, such as the one on employers to pay for unemployment benefits just disclosed this week.”
Executive Order 13520 requires the IRS to intensify its efforts and set targets to reduce EITC improper payments and to report its activities to the Office of Management and Budget and TIGTA.
The order also requires TIGTA to assess the level of risk associated with the EITC program, determine the extent of oversight warranted and provide the IRS with recommendations to reduce EITC improper payments.
In its June 14, 2010 report to the OMB and TIGTA, the IRS did not provide any quantifiable targets to reduce EITC improper payments. IRS management noted that it did not set reduction targets because of the need to balance its enforcement efforts among different taxpayer income levels.
Monday, February 14, 2011
IRS Facing Steep Budget Cuts Under GOP Proposal
We finally get a peak at where all these spending cuts are coming from. Take a deep breath, this is going to hurt…
From TaxLawHome.com:
Under a new spending plan released this week by congressional Republicans, U.S. scientific research, high-speed rail and the IRS would all face steep budget cuts in the coming year.
In addition, more than 60 federal programs, including birth control funding, public broadcasting and the Americorps volunteer program would be eliminated entirely from federal funding.
The proposal is part of an overarching spending decrease that would cut the domestic budget by 15 percent and eliminate more than $30 billion from the fiscal deficit, Reuters reports. While it is unlikely the plan would pass through the democratically controlled Senate, Congress will need to finalize its spending initiatives by March 4, when current funding expires.
As a result, the proposals are likely to be big topics of debate in the coming month, the news source says. The IRS, which has been facing increased responsibility since the passage of President Obama's healthcare overhaul bill, is likely to be a major point of contention as it would also have its budget drastically reduced.
The agency's funding has increased in recent years, as many experts say a greater tax collection effort is a key aspect of cutting the federal deficit.
Ethics Watchdog Targets Congressional Sleepovers
Citizens for Responsibility and Ethics in Washington, a watchdog group, is asking the Office of Congressional Ethics to investigate members of Congress who sleep in their offices. The group claims these Congress members are violating the law, and receiving a tax-free benefit, by making personal use of a public building.
"House office buildings are not dorms or frat houses," Melanie Sloan, the group's executive director, said Thursday. "If members didn't want to find housing in Washington, they shouldn't have run for Congress in the first place."
For years, at least a few lawmakers have slept on couches and cots in their offices to avoid long commutes or pricey Washington rents. Some see it as a badge of honor, a commitment to frugality and hard work, and a reminder to constituents they don't consider Washington home.
CREW cited media reports that more than 30 lawmakers, all men, are now doing it. Sloan thinks the real total could be as many as 40 or 50 after a wave of budget-conscious, anti-Washington freshmen won seats in November.
Rep. Paul Ryan, the House Budget Committee chairman, has slept in his office for years. Ryan, R-Wis., brushed aside questions about the complaint.
"People have been doing it for decades," he said. "I work until midnight every night. I get up at six every morning."
Questions for the Tax Lady: February 14th, 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: I'm thinking about moving to Pakistan for a new job opportunity, and I've been told that my wages will not be subject to federal taxes. Is that true?
Answer: This is a really common misperception. According to the IRS, “United States citizens and resident aliens are taxed on their worldwide income, whether the person lives inside or outside the United States.”
Now, that being said, some people may qualify for a Foreign Earned Income Exclusion. There are very specific rules to qualify, with all the normal IRS confusion. In order to avoid paying federal income taxes on your foreign earned income, you must:
- Have a foreign earned income (meaning your money must actually be earned and received for working in a foreign country);
- Have a tax home in a foreign country (meaning, the general area of your main place of business, employment or post of duty, regardless of where your family home is); and
- Meet the bona fide residence test or the physical presence test
As you can see, it is not as simple as just moving to a different country. There are a lot of rules and regulations, and you will likely still have to pay taxes in the country you move to. If you are seriously considering moving to a new country, speak with a qualified tax and finance professional, who is well versed in international tax laws. Relocating to a new country can be an exciting and rewarding experience, just don’t do it only for the hope of a tax break.
Question: Roni, I got divorced in October, will we still need to file a joint return since we were married for most of the year?
Answer: The way the IRS sees it, whatever your marital status as on December 31, that’s your marital status for the entire year. Since it sounds like your divorce was finalized in October, you would file single, or head of household if you qualify.
I’d like to add a word of caution: since you may have had some joint expenses and combined finances during 2010, I would highly recommend you work with a qualified tax professional to file your 2010 tax return. Splitting finances equitably after a divorce is difficult, so the guidance of a professional can be incredibly helpful.
Best of luck to you in your new life, and here’s wishing you a stress-free tax season!
Fancy Hotel Renovated with Your Tax Dollars
From CBS News:
The Town Hall Education Arts Recreation Campus, an education and arts center, is an oasis in a needy Washington, DC neighborhood.
Treasury official Don Graves says it's possible only through a government program called "New Markets."
CBS News investigative correspondent Sharyl Attkisson asked Graves, "You think it's helped change the whole character of the neighborhood?"
"Absolutely," Graves replied.
New Markets encourages private companies to invest in low-income communities.
What do the companies get? Hefty tax breaks: for every dollar they commit, they get back 39 cents.
But you might be surprised at just what qualifies as help for the poor. The luxury Blackstone Hotel in downtown Chicago is a favorite of movie stars, royalty and presidents. Believe it or not - the Blackstone's pricy renovations were financed with the help of your tax dollars through the New Markets program - intended for poor communities.
Breast Pump Buyers Gain Tax Advantage in IRS Ruling
Good news for thousands of nursing mothers across the country!
From Bloomberg.com:
Breast pumps and associated supplies will be considered medical equipment eligible for the same tax breaks as contact lens solution, bandages and prescription drugs, the Internal Revenue Service said.
U.S. taxpayers will be able to seek reimbursement for the cost of pumps through pretax flexible spending arrangements and health savings accounts. As with other medical expenses, such costs can be deducted if total medical expenses exceed 7.5 percent of adjusted gross income.
As a result of last year’s health care law, that threshold will increase to 10 percent in 2013.
“Like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman,” the IRS said in an announcement released today.
Breast-feeding advocates, including the American Academy of Pediatrics, had been encouraging the IRS to make this ruling.
Manufacturers
Manufacturers of breast pumps include Amsterdam-based Koninklijke Philips Electronics N.V., which makes the Avent brand. Energizer Holdings Inc. of St. Louis makes breast pumps under its Playtex brand.
Thursday, February 10, 2011
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!
President Barack Obama Says He Didn't Raise Taxes Once, But He Did
In an interview with Bill O'Reilly, President Barack Obama said, "I didn't raise taxes once. I lowered taxes over the last two years." However, fact checkers were quick to point out that the President has in fact raised a few taxes including those levied on cigarettes as well as the tax implications of health care reform. Income taxes? Sure, those have not gone up, but as for other taxes… President Obama seems to have a selective memory.
From PolitiFact.com:
Looking at the whole statement, he's both right and wrong. For clarity's sake, we're going to take Obama's statement in two parts. Here, we'll look at his statement, "I didn't raise taxes once." In a separate report, we'll look at his statement, "I lowered taxes over the last two years."
The idea that Obama did not raise taxes is just plain wrong. He signed legislation raising taxes on cigarettes and other tobacco products soon after taking office; that money goes to pay for children's health insurance programs. The law went into effect in 2009. He also signed the health care law, which includes taxes on indoor tanning that went into effect last year. (Regular PolitiFact readers will remember our fact-check of reality TV star Snooki and her complaint about the new tax last year.)
The new health care law also includes a tax on people who decide not to have health insurance, as an incentive for them to get coverage. The tax phases in gradually, starting in 2014. By 2016, the tax would be $695 per uninsured person up to a maximum of three times that amount, or $2,085. The law includes exemptions for people who can't find affordable insurance, and a few other special circumstances.
More significantly, the health care law includes new taxes on the wealthy, starting in 2013. Individuals who make more than $200,000 and couples that make more than $250,000 will see additional Medicare taxes of 0.9 percent. They will also, for the first time, have to pay Medicare taxes on their investment income at a 3.8 percent rate. (Current law is that all workers and employers split a 2.9 percent Medicare tax; the self-employed pay all of it.)
White House to Cut Energy Assistance for the Poor
With all the self-righteous talk about cutting spending, those cuts have to hit someone. But is energy assistance for low-income households really where we should cut?
From National Journal.com:
President Obama’s proposed 2012 budget will cut several billion dollars from the government’s energy assistance fund for poor people, officials briefed on the subject told National Journal.
It's the biggest domestic spending cut disclosed so far, and one that will likely generate the most heat from the president's traditional political allies. Such complaints might satisfy the White House, which has a vested interest in convincing Americans that it is serious about budget discipline. One White House friend, Sen. Chuck Schumer (D-NY), earlier today said a Republican proposal to cut home heating oil counted as an "extreme idea" that would "set the country backwards." Schumer has not yet reacted to Obama's proposed cut. On Wednesday, Sen. Jeanne Shaheen, D-N.H., declared: “The President’s reported proposal to drastically slash LIHEAP funds by more than half would have a severe impact on many of New Hampshire’s most vulnerable citizens and I strongly oppose it." A spokesman for Rep. Ed Markey, D-Mass., declared similarly: “If these cuts are real, it would be a very disappointing development for millions of families still struggling through a harsh winter.”
The Low Income Home Energy Assistance Program, or LIHEAP, would see funding drop by about $2.5 billion from an authorized 2009 total of $5.1 billion. The proposed cut will not touch the program's emergency reserve fund, about $590 million, which can be used during particularly harsh cold snaps or extended heat spells, three officials told National Journal.
In 2010, Obama signed into law an omnibus budget resolution that released a total of about $5 billion in LIHEAP grants for 2011. Pointing to the increasing number of Americans who made use of the grants last year, advocates say that LIHEAP is already underfunded. The American Gas Association predicts that 3 million Americans eligible for the program won't be able to receive it unless LIHEAP funding stays at its current level.
Second Special Voluntary Disclosure Initiative Opens
The IRS announced another round of special voluntary disclosure for people hiding income outside the US. The initiative is designed to bring offshore money back into country. Taxpayers with undisclosed income in offshore accounts have until August 31 to get current on their taxes. While they will have to pay penalties, I guarantee it is better to rat yourself out than to have the IRS find you…
A special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011.
“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.”
The IRS decision to open a second special disclosure initiative follows continuing interest from taxpayers with foreign accounts. The first special voluntary disclosure program closed with 15,000 voluntary disclosures on Oct. 15, 2009. Since that time, more than 3,000 taxpayers have come forward to the IRS with bank accounts from around the world. These taxpayers will also be eligible to take advantage of the special provisions of the new initiative.
“As I’ve said all along, the goal is to get people back into the U.S. tax system,” Shulman said. “Combating international tax evasion is a top priority for the IRS. We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system.”
The new initiative announced today – called the 2011 Offshore Voluntary Disclosure Initiative (OVDI) -- includes several changes from the 2009 Offshore Voluntary Disclosure Program (OVDP). The overall penalty structure for 2011 is higher, meaning that people who did not come in through the 2009 voluntary disclosure program will not be rewarded for waiting. However, the 2011 initiative does add new features.
2011 Offshore Voluntary Disclosure Initiative FAQs
The IRS put together a list of frequently asked questions about the offshore voluntary disclosure initiative. Check out a few below, or the full list at IRS.gov.
1. Why did the IRS announce a new special offshore voluntary disclosure initiative at this time?
The IRS’s prior Offshore Voluntary Disclosure Program (2009 OVDP), which closed on October 15, 2009, demonstrated the value of a uniform penalty structure for taxpayers who came forward voluntarily and reported their previously undisclosed foreign accounts and assets. Not only did the initiative offer consistency and predictability to taxpayers in determining the amount of tax and penalties they faced, it also enabled the IRS to centralize the civil processing of offshore voluntary disclosures. Therefore, it was determined that a similar initiative should be available to the large number of taxpayers with offshore accounts and assets who applied to IRS Criminal Investigation’s traditional voluntary disclosure practice since the October 15 deadline. This new initiative, the 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI) will be available to those taxpayers and other similarly situated taxpayers who come forward and complete all requirements on or before August 31, 2011.
2. What is the objective of this initiative?
The objective remains the same as the 2009 OVDP – to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws.
3. How does this initiative differ from the IRS’s longstanding voluntary disclosure practice or the 2009 OVDP?
The Voluntary Disclosure Practice is a longstanding practice of IRS Criminal Investigation whereby CI takes timely, accurate, and complete voluntary disclosures into account in deciding whether to recommend to the Department of Justice that a taxpayer be criminally prosecuted. It enables noncompliant taxpayers to resolve their tax liabilities and minimize their chance of criminal prosecution. When a taxpayer truthfully, timely, and completely complies with all provisions of the voluntary disclosure practice, the IRS will not recommend criminal prosecution to the Department of Justice.
This current offshore initiative is a counter-part to Criminal Investigation’s Voluntary Disclosure Practice. Like its predecessor, the 2009 OVDP, which ran from March 23, 2009 through October 15, 2009, it addresses the civil side of a taxpayer’s voluntary disclosure by defining the number of tax years covered and setting the civil penalties that will apply.
US Senate Finance Chief Vows Vigorous Tax Reform Effort this Year
On Tuesday the Senate Finance Committee Chairman said they will attempt to overhaul the US tax code this year. However, Max Baucus also warned that it will not be completed "quickly." I think I could have told you that…
From iMarketNews.com:
"I expect this to take a little time," Baucus said in comments during a Finance Committee hearing on the airport and airway trust fund.
Baucus said his panel will hold a "lot of hearings" on tax reform, examining the AMT, individual and corporate tax policy as well as the international competitive consequences of the U.S. tax code.
He said tax reform efforts must also include the nearly $1 trillion in annual tax expenditures--which some describe as spending through the tax code.
"It's just too complex," Baucus said of the U.S. tax code.
The Senate Finance Committee, under Democratic leadership, began holding hearings on tax reform last year. The House Ways and Means Committee, under Republican leadership, launched tax reform hearings last month.
President Obama in his State of the Union address called for tax reform cooperation between Congress and the administration.
10 Foreclosure Hotspots
Although Las Vegas wins the title for the highest foreclosure rates in the US, CNN Money.com has put together a list of cities with the fastest-growing foreclosure rates in the past year. Check out a snippet of their article below or click here for the full text. Looks like the South is having a hard time…
Spartanburg, S.C.
Population: 287,000
Foreclosure rate: One in 60 homes
Percent increase in 2010: 228%
Spartanburg is found in the upstate portion of South Carolina, the fastest-growing region in the state. But in the last year, it also had the country's fastest-growing foreclosure rate.
The 228% spike in foreclosure filings is the result of two converging trends, according to city manager Ed Memmott: Questionable mortgages used to buy homes -- especially investment homes -- during the boom; and job losses.
Albuquerque, N.M.
Population: 529,000
Foreclosure rate: One in 46 homes
Percent increase in 2010: 60.32%
One of the fastest growing metro areas in the nation, Albuquerque was one of the nation's fastest-growing metro areas over the past decade, drawing the young and retirees alike thanks to a warm climate and plethora of jobs, from tech positions in atomic energy and solar to manufacturing positions at the new Tempur-Pedic mattress plant.
The recession, however, applied the brakes to the area's economy and Albuquerque has been slow to recover. Unemployment is still on the upswing, rising to 8.6% in November from 7.8% a year earlier. Plus, the metro area lost 13% of its construction jobs last year, according to the Associated General Contractors of America.
Wednesday, February 09, 2011
Obama Tries to Woo Business, Slams 'Burdensome' Tax
According to reports, the President increased his efforts to woo US businesses earlier this week in a speech promising to tackle the burdensome corporate tax code.
From MSNBC.com:
Obama, on a drive to win over business and independent voters before the 2012 presidential election, also repeated a promise to advance trade deals with Panama and Colombia that would help U.S. companies, but he did not lay out a timetable for getting the pacts passed.
Obama to Chamber: 'We can and must work together'
"I understand the challenges you face. I understand you are under incredible pressure to cut costs and keep your margins up. I understand the significance of your obligations to your shareholders and the pressures that are created by quarterly reports. I get it," Obama told the powerful U.S. Chamber of Commerce, which has often opposed the president for what it sees as his "big government" agenda.
Members of the Chamber, which the White House has accused of funding ad campaigns against Democrats during last year's congressional elections, listened politely but were mostly noncommittal in response to the president.
Big Money Charity Donations Drop, According to New Survey
2010 was a bad year for charities, especially those looking to land big donations from America's wealthiest taxpayers. According to new reports, the 54 top givers in the country only donated $3.3 billion last year, which is the smallest sum since 2010. Even more interesting, few donations from the 50 who pledged to “ultimately donate half of all wealth.” I guess that starts in 2011?
Not many of those 54 donors are members of the premium tier of net-worth individuals. Of the 400 wealthiest Americans ranked by Forbes magazine, only 17 appeared on this year's list of the most-generous donors.
Noted investor George Soros topped the list with donations of $332 million, followed by media magnate and New York City mayor Michael Bloomberg, with donations of $279.2 million
There are signs the money might not be going to where it's most needed.
According to The Chronicle, nearly half of the 65 gifts of $5-million or more went to colleges or universities, a fact sure to upset those who argue the money would have more utility if applied to other causes.
But not all that money went to the "put my name on a building fund." Some of the gifts were specifically earmarked for student scholarship funds, or clean energy research programs.
Interestingly, no big gifts to colleges came from the under-50 set. Mark Zuckerberg, CEO of Facebook and the world's youngest billionaire, made the top ten list with his donation of $100 million to the Newark, N.J., school system.
The lack of high-dollar gifts is likely to cause pain as charities work to survive a tough economy.
Bomb Threat at Sarasota IRS Office
According to reports, a man was arrested yesterday and charged with making a bomb threat at an IRS office. Thankfully no one was hurt.
According to the Sarasota County Sheriff's Office, the man walked into the IRS office at 5971 Cattleridge Blvd. and said he had a bomb.
Deputies arrived, took the man into custody, and the bomb squad came to evaluate a suspicious package.
Nothing destructive was found.
The man's identity has not been released, but the sheriff's office says it will release more information as it becomes available.
High Taxes? Actually, They're at a 60-Year Low
Although some people think taxes are higher then ever, they are actually at a 60-year low, according to the Congressional Budget Office.
From CBS News.com:
And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.
Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.
The poor economy is largely to blame, with corporate profits down and unemployment up. But so is a tax code that grows each year with new deductions, credits and exemptions. The result is that families making as much as $50,000 can avoid paying federal income taxes, if they have at least two dependent children. Low-income families can actually make a profit from the income tax, and the wealthy can significantly cut their payments.
"The current state of the tax code is simply indefensible," says Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. "It is hemorrhaging revenue."
In the next few years, many can expect to pay more in taxes. Some increases were enacted as part of President Barack Obama's health care overhaul. And many states have raised taxes because — unlike the federal government — they have to balance their budgets each year. State tax receipts are projected to increase in all but seven states this year, according to the National Council of State Legislatures.
But in the third year of Obama's presidency, federal taxes are at historic lows. Tax receipts dropped sharply in 2009 as the economy sank into recession. They have since stabilized and are expected to grow by 3 percent this year. But federal tax revenues won't rebound to pre-recession levels until next year, according to CBO projections.
Taxes: 5 Things to do Now
Check out this video from CBS Money Watch on what you can do now to prepare for tax season.
1. Pay attention & open your mail
2. Gather credit card summaries/review checking account for potential deduction (charitable, job search costs, miscellaneous)
3. Expect revisions from investment or brokerage accounts
4. Review your 2009 return as guide to what’s missing
5. Determine whether you will hire a CPA or do it yourself
Why Global Food Price Inflation Really Matters
From DailyFinance.com:
Perhaps central bankers are like potted plants, able to subsist on little more than water and sunlight. That would help explain Federal Reserve Chairman Ben Bernanke's statement Thursday that -- rising commodity prices notwithstanding -- overall inflation remains "quite low." As for folks who eat food, well, global food prices hit an all-time high last month, in both nominal and inflation-adjusted terms, according to the U.N.
True, wildfires in Russia last year, drought in the U.S. and flooding and a cyclone in Australia have helped cause price spikes for wheat and sugar. But the longer-term trend is still the same. Global food prices have increased for seven straight months, the Food and Agriculture Organization of the U.N. said Thursday, as its closely watched food price index hit its highest level ever in January.
Food Commodities Rising
"Prices of all the commodity groups monitored registered strong gains in January compared to December, except for meat, which remained unchanged," the FAO said in a release. Indeed, the index topped its prior peak set in mid-June 2008, when the global food crisis set off riots around the globe. Sugar, which has reached all-time highs, has been the main culprit this time around, but prices for cereals and oils also have gone nearly vertical since June.
So-called core inflation excludes volatile food and energy prices in an attempt to give a more accurate picture of long-term inflation. That's why Bernanke can say inflation remains muted. Take out food and gas prices, and inflation really is pretty low.
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