IRS Has Answers to Stimulus Package Questions

Yesterday the IRS put out this press release announcing that they had put together a list of answers to the most common questions about the economic stimulus package. Below are some of the questions and answers, but to see the full page check out Economic Stimulus Payments: Most Frequently Asked Questions on IRS.gov.

Q. When will I get my payment?
A. Payments are going out now for those returns processed by April 15 and will continue on a weekly schedule through mid-July. See the payment schedule for both direct deposit and paper checks for further information. Payments will continue through 2008 for returns filed after April 15.

Q. I filed after April 15 and the payment date for my Social Security number has passed. How long will it take for me to get my stimulus payment?
A. It will generally take a minimum of six weeks after you file your return to get your stimulus payment.

Q. Will the IRS allow me to provide it with direct deposit information, if I did not include that information on my original tax return?
A. You cannot correct direct deposit information or request a direct deposit after a return has been filed.

Q. Is there something I can do to prevent my stimulus payment from being automatically deposited into the account that I identified for the direct deposit of my regular refund?
A. Generally, if you designated direct deposit on a tax return, the stimulus payment will go to the account number you designated. If the account number is no longer active, the IRS will send you a paper check. This process may take several weeks.

Facts About the Gas Tax Holiday

After discussing the Gas Tax Holiday in my deeper look at Hilary Clinton’s tax views, I wanted to learn more about the proposal. Therefore, earlier today the tax experts of the Roni Deutch Tax Center™ posted an entry to the RDTC Tax Help Blog titled The Facts About A Gas Tax Holiday. Enjoy the snippet below, or check out the full article.

Over the past week, the phrase "gas tax holiday" went from something no one knew about to a phrase being blasted through all media outlets. But what exactly is a gas tax holiday? Is it a new federal holiday that will give us all another three-day weekend? And will a gas tax holiday do anything for our downward spiraling economy?

The phrase "gas tax holiday" refers to a proposal from presidential hopefuls Sen. Hillary Clinton and Sen. John McCain to suspend the federal excise tax on gasoline from Memorial Day to Labor Day. It is a direct result of the eve-rising fuel prices that are expected to surpass $4 per gallon later this summer.

Sen. Hillary Clinton: a Deeper Look at her Tax Views

With only a few primaries left many people are pointing to Sen. Barack Obama as the victor of the Democratic nomination. However, Sen. Hillary Clinton is still committed to finishing the race on the claim that she is more likely to beat Sen. John McCain in the general election, and she does have statistics from national polls to back up her claims. The only hope for Clinton is if the delegates decide to give her the nomination since neither candidate will get the required number of delegates through the election cycle. Nevertheless, since Hillary is still considered one of the candidates for the Democratic nomination, I included her in my in-depth look at the candidate’s tax plans.

Gas Tax Holiday
Clinton’s support of a gas tax holiday has become a key component of her campaign in the remaining primary elections, however it has caused her more negative criticism than positive. At first the idea of a gas tax holiday seems like a good one. People across the nation are complaining about increases in the cost of fueling their vehicles and they want to get relief. By endorsing the gas tax holiday, it seemed like Clinton was making a good campaign move by showing Americans that she understood their hardships and wanted to do something about it.

However, soon it was clear to many that a gas tax holiday was little more then just a good campaign talking point. If enacted, experts agree that the holiday would do little to help the American consumers. Federal excise taxes on gasoline are under 20 cents per gallon, and eliminating the tax would do little to counterbalance the ever-increasing price on fuel. Additionally, by eliminating the tax it would cost the federal government upwards of $125 million that would usually go to federal road repairs and infrastructure improvements.

Finally, there is the problem of supply and demand, which I personally think has been slightly over-exaggerated. The argument is that with lower prices the demand would increase and there would be little benefit to consumers. However, its important to remember that the tax holiday would only apply to American taxpayers, and that the effects on the world market would be negligible.

Let Bush Tax Cuts Expire
Clinton and Obama are on the same page when it comes to President Bush’s 2001 and 2003 tax cuts – let them expire. In a democratic debate Clinton took a firm stand on this issue claiming, "I will make it clear that the Bush tax cuts on the upper income, those making more than $250,000 a year, will be allowed to expire."

"I will let the taxes on people making more than $250,000 a year go back to the rates that they were paying in the 1990s," she continued. Hillary has gone to great efforts to promote the fact that she wants to increase taxes on only the wealthiest Americans, not the middle class. However, conservative and "Reagan Democrat" voters often react negatively to any type of tax increase, regardless if it will directly affect their paychecks. If Hillary does win the nomination, she will need to really drive home the fact that the increase will not affect middle to higher middle income Americans.

Extend Low Income Tax Credits
Although Clinton does not favor as much lower income credits as Obama, she still does support extending additional credits targeting people living on low wages. One of the tax credits Clinton supports is extending the Child Tax Credit to cover the first year of a child’s life. Clinton aims to make it easier for parents to stay home and care for newborn children. "Our tax policies do not reflect the cost of raising children," claims Clinton. "We should expand the child tax credit for the first year of a child's life to help parents stay home and give lower-income parents who receive government support for child care the option to sue the subsidies to cover the costs of staying home and caring for their own children." Clinton’s plan to increase low income tax credits may sound nice, but without reducing their overall tax burdens, small credits can only do so much to help someone get out of poverty.

Strengthening the Middle Class
The biggest part of Hillary’s tax proposal is to help strengthen the middle class. "I am absolutely committed to not raising a single tax on middle class Americans," claimed Clinton. "In fact, I have a very specific plan of $100 billion in tax cuts. My priorities are middle-class tax cuts and support for the middle class, to make college affordable, retirement security possible, health insurance affordable."

The phrase "strengthen the middle class" is a great campaign move on Clinton’s behalf as studies show that people like to consider themselves middle class regardless of their actual income. Both the phrases lower class, and upper class have negative connotations so targeting the "middle class" has helped Hillary appeal to the general public. However, the government needs to make money somehow, and Clinton cannot expect to only raise taxes on the highest income individuals. The public does not generally favor unbalanced tax increases, and it will be difficult for Clinton to drastically increase taxes on the wealthiest while lowering taxes for everyone else.

Revise AMT & Index to Inflation
Although Clinton previously voted against reducing the AMT (alternative minimum tax) in the Senate, she now appears to support some revisions to the highly unpopular tax. "I'll tell you something that we are going to have to deal with, the alternative minimum tax, which falls heavily on a lot of you and your families," claimed Clinton at the 2007 IAFF Presidential Forum. "You know, for six years I've been saying, with all due respect, do the billionaires in America need more tax cuts? Don't you think we ought to cut the taxes of middle income people, in particular those who are going to be hit by the alternative minimum tax?"

As the AMT impacts more and more families the tax is being considered widely unpopular, and is something that all the candidates are striving to fix. However, along with Clinton’s overall plan to strengthen the middle class, you have to wonder where all this extra money is coming from? All the tax cuts and credits would cost the government billions of dollars in lost revenue, and I am doubtful it could all be made up for with taxes on the rich.

Affordable College Education
At the heart of her plan to strengthen the middle class is Hillary’s tax cuts designed to make college more affordable for everyone. "When it comes to higher education – we shouldn’t be playing catch-up with the world – we should be leading it," claimed Clinton in a press release about her plan. "I believe that college shouldn’t just be a privilege for the wealthy – but an opportunity for anyone with the talent, determination and ambition to learn. And I believe that every American should have access to lifelong learning opportunities – from apprenticeships, to community college, to the most select four-year institutions."

Hillary’s college plan would basically boil down to a $3,500 credit which she claims is enough to cover more than 50% of the cost of tuition at the average public institution. But with rising community college prices, and ten thousand dollar per semester bills at many universities, I wonder how big of an impact this credit will actually have?

Small Capital Gain Increase
Although Clinton has not gave an official yes or no on increasing the Capital Gain tax rate, she has noted that if she did increase the rate it wouldn’t be by much. "I wouldn't raise it above the 20% if I raised it at all," notes Clinton. Although a small increase would not generate as much revenue as Obama’s plan to nearly double the tax rate, it seems much more "doable." The increase would still generate billions of dollars in new revenue but would not have a massive impact on Americans who invest.

Economic Military Changes
Although her military and security plans do not have a direct impact on the taxes paid by Americans, it will have an impact on the country’s budget that will trickle down to taxpayers. Included in Clinton’s proposal are a few costly measures, including: redeployment of troops in Iraq, increased commitment to Afghanistan and Pakistan, increased military research budgets, and a pay raise for wartime troops.

Sen. Barack Obama: a Deeper Look at his Tax Views

As we get closer to the general election, the candidates’ tax views are becoming major components of their respective campaigns. In the beginning of the primary election, no one was talking taxes. But because of my love of taxes, I frequently blogged about the candidates’ tax positions. Now, with the current economic state (i.e. mortgage crisis, ever-increasing gas prices, etc.), people are thinking about taxes.

With only three major candidates left in the election cycle, I figured it would be timely to take a more detailed look at each candidate’s individual tax views. In this first entry, I review Senator Barack Obama's tax plan, as well as some of his other proposals that will likely have tax consequences or an economic impact on the country.

Higher Taxes on Top Earning Americans
Senator Obama is a big believer in our progressive tax system – and he is not afraid to hide that. So one of the first things Obama is set to do is letting President Bush’s 2001 and 2003 tax cuts to selectively expire. "There's no doubt that the tax system has been skewed. And the Bush tax cuts – people didn't need them, they weren't even asking for them," claimed Senator Obama during a debate. By "selectively expire", Obama endorses extending those tax cuts on the rates for all but the top two income tax brackets.

In addition to letting the Bush tax cuts expire, Obama also advocates increasing the income cap on payroll taxes. This would essentially be a huge tax increase for taxpayers earning between $97,000.00 and $250,000.00, which goes against Obama’s prior commitment to not raise taxes on individuals making less than $250,000.00. Although higher taxes on the rich is a popular thought for many liberals, you cannot expect to only tax the rich and cut taxes for the poor. The American public is not likely to support unbalanced tax increases and this could harm his chances in the general election.

Close Corporate Loop-Holes
Another major component of Obama’s tax plan is to close hundreds of corporate "loop-holes" that allow massive corporations to questionably reduce their tax liability. "Instead of having all of us pay our fair share, we've got over $1 trillion worth of loopholes in the corporate tax code," he claimed. "This isn't the invisible hand of the market at work. It's the successful work of special interests." This plan would be highly efficient at creating new revenue for the federal government, but at what cost? Huge corporations are already moving factories and offices to countries with cheaper labor and more favorable corporate taxes. If the tax rates increase too much, then more corporations would likely move out of the country and it could result in thousands of lost jobs.

Senior Citizen Tax Breaks
Although it seems like an attempt to get the attention of the "senior voters" and the AARP, Obama is hoping to provide relief to millions of seniors struggling to make ends meet. His plan would eliminate federal taxes on seniors making less then $50,000.00 per year, which would account for $7 million dollars in total relief. It seems quite unlikely that the country would get behind this tax plan. I also have my own reservations – what about single mothers making less than $50,000 per year – that I expressed in a previous entry.

Make Work Pay Tax Credit
With his Make Work Pay tax credit, Obama is hoping to encourage Americans to take control of their lives, while providing tax relief to both low and middle income taxes. "I'd reward work by providing an income tax cut of up to $500 per person – or $1,000 for each working family – to offset the payroll tax that they're already paying," claimed Obama. "Because this credit would be greater than their income tax bill, my proposal would effectively eliminate all income taxes for 10 million working Americans."

Capital Gain Tax Increase
Obama’s desire to increase the Capital Gains rate is probably the biggest actual increase of his tax plan. The current tax rate on Capital Gains is 15%, and Obama hopes to raise it to 28%
"At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we're taxing gains for investors," Obama said. "We've lost the balance between work and wealth."

Although the Capital Gains tax rate is much lower today than it was a decade ago, it is being levied on a lot more people. Investing is not only for the rich, as there are millions of middle income Americans investing in stocks, retirement accounts, and mutual funds. In a time of a looming economic recession, we should be encouraging sound investment and savings strategies. Raising the capital gains rate is not going to do that.

Mortgage Relief for Homeowners
"Ten of the country's largest mortgage lenders spent $185 million lobbying Washington so they could keep engaging in destructive practices," claimed Obama. "And they got what they paid for. To help fix this problem Obama wants to create more accountability in the mortgage industry. In addition, he intends to pursue more tax breaks for current homeowners. Specifically, Obama announced intentions to "create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief."

Because it is a credit, individuals claiming the standard deduction would have access to it. Currently, mortgage interest is a deduction that can only be claimed by itemizing your deductions on your tax return. The credit would provide about $500 to 10 million homeowners in this country, mainly for individuals making less than $50,000 per year.

IRS & Tax Return Reform
One of the most interesting things about Obama’s tax proposal is his idea of reforming the IRS and the way American’s file their tax returns. The good thing about his suggestion is that it is a smaller form of revamping the IRS – unlike other candidates who want to dissolve the IRS completely. Obama claims that his simplified tax code would allow anyone with a bank account to complete their taxes in minutes – as long as they take the standard deduction. Part of his plan includes using pre-filled tax forms. "There's no reason the IRS can't send Americans pre-filled tax forms to verify," Obama said. "This means no more worry. No more wasted time. No more extra expenses for a tax preparer."

Although more realistic than completely dissolving the IRS, Obama’s plan is still fraught with problems. While in a perfect world, the IRS could send pre-filled tax returns and people could easily file their returns. However, we do not live in a perfect world. Implementing a plan to simplify tax returns could create large problems for the IRS. They already have enough trouble tracking down taxpayers, let alone sending them accurate pre-filled income tax returns. Additionally, this program would open the floodgates for large-scale identity theft problems. The information contained in a taxpayers return is highly sensitive and everyone knows that standard mail is not exactly 100% secure.

Revamp the AMT
Although Obama voted "nay" on repealing the Alternative Minimum Tax (AMT), he does support a revamp of the tax. The specific details of his plan are a bit hazy, but Obama has claimed he would like to index the tax according to inflation so that it does not affect middle-income Americans. However, with dozens of social plans that cost billions of dollars to operate, the idea of reducing a tax that generates so much revenue for the government seems unlikely.

American Opportunity Tax Credit
One of Obama’s more popular tax views is to help make higher education more affordable for Americans by creating a credit to reimburse taxpayers for the costs of obtaining a college education. According to his plan, the credit would reimburse taxpayers on the first $4,000.00 they spend on a college education, and will cover two-thirds of the cost of attending a public college or university.

Immigration Reform and Undocumented Immigrant Taxes
Obama wants to reform the way the federal government deals with undocumented immigrants. Obama’s plan does have tax consequences, as it would not only require illegal aliens to file tax returns and pay income taxes, but would also require them to pay back taxes and the associated penalties and interest. If this idea became reality, it could account for millions of dollars in additional federal revenue. And, by not including tax amnesty in his immigration reform, Obama preemptively "plucks" a feather from the anti-immigration reform movement. It also preemptively stops American citizens from lobbying for similar treatment for their own unfiled tax returns and IRS back taxes.

Increased Foreign Aid
Although not included in his tax plan, Obama does support a healthy increase for money the federal government provides in foreign relief. He has proposed a comprehensive African HIV / AIDS strategy that will provide $50 billion in relief by 2013, and a global poverty fighting strategy that will provide between $25 and $50 billion in relief by 2012. The source of these funds is still unclear, however we can assume the money will come from some of Obama’s tax increases on the wealthy.

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Another Tax Case in the Media

Lynda J. Mead, of Washington, pleaded not guilty in her initial appearance before the U.S. District Court in Seattle this morning. She is facing a total of eight counts of willful failure to pay her federal income taxes.

Ms. Mead has been accused of failing to pay the IRS over $357,000 that she withheld from employee’s paychecks. Her trial is scheduled on July 14 before Judge Ricardo S. Martinez.
Although payroll taxes can be confusing they are very important. My law firm gets dozens of calls per day from small business owners who are confused by payroll taxes and now find themselves in debt to the IRS.

While my firm can help, it is better to ensure that you never find yourself with IRS payroll tax liability in the first place. The best way is to ensure that someone who understands payroll taxes is administering your payroll. If you do not have a competent payroll administrator on staff and / or cannot figure out how to handle payroll taxes on your own, then seek-out a third-party payroll administrator.

Another Celebrity Tax Issue: Britney Spears

Wesley Snipes isn’t the only celebrity dealing with tax problems. Everyone’s favorite fallen pop star has also gotten into some tax trouble, but with the state of California. According to Access Hollywood, the state tax board has put a lien on one of Ms. Spears’ businesses, Britney On Line Inc. According to reports the company owes almost $24,000 in back taxes from the 2004 tax year.

Wesley Snipes Gets Maximum Sentence

As many of you have probably already heard, yesterday actor Wesley Snipes was sentenced to serve three years behind bards for not paying his federal tax liabilities. The case against Snipes has gained a lot of media attention in this country, and when he was acquitted of the felony charges facing him many people assumed he was receiving the “celebrity treatment” from the courts. However, this strict sentence sends out a clear message: you must pay your taxes or face jail time.

"We think it sends a real message," claimed U.S. Attorney Robert O'Neill. "Again, you have to pay your taxes. If you dispute the taxes you owe, contact the IRS and go through the formal process. To continually just say, 'I don't owe taxes, you must show me why I owe taxes,' it seemed his position was ludicrous."

I agree with Mr. O’Neill’s statement 100%. All Americans must be compliant with the IRS, or you can face serious penalties including incarceration. Just sitting around pretending the IRS does not exist is a crime. If you cannot afford to pay your taxes you can negotiate a settlement with the IRS, but you cannot ignore them. Fortunately, it seems Mr. Snipes learned his lesson.

"I asked this court to show me mercy and the opportunity to set things right," Snipes said after the trial. "This will never happen again. I am very sorry for my mistakes or my errors."

Top 10 Things to do in Hawaii

As some of you may already know, I “heart” Hawaii. However, like most other people working in the tax industry I have not been able to get away since tax season begun. So to help all the tax professionals and accounts that are planning their post-tax season vacation, I compiled the following list of the top 10 things to do in Hawaii.

However, just because you do not work in the tax industry do not think this article does not apply to you. May is just a few days away, and that means the IRS is going to begin sending economic stimulus checks shortly. If you are wondering what to do with this “free money,” or if you have not yet spent your tax refund, then consider taking a relaxing vacation to one of the most relaxing places in the world.

1. Go Surfing
It is probably no surprise to anyone who has seen my Halloween costume that I love surfing! Hawaii is the perfect place to surf as all of the islands get decent waves and some can be as large as 30 feet.

2. Relax on a Beach
Hawaii is known around the world for it’s beautiful sandy beaches and sapphire water. Although some of the beaches may get crowded during peak seasons, if you do a little hunting then you can probably find a quite place to relax on the beach.

3. Attend a Polynesian Luau
No trip to Hawaii is complete without attending an authentic Polynesian luau. Even if you do not like kālua pork, a luau is still an exciting experience as they often feature music and dancing in addition to a wide variety of authentic foods.

4. Go Snorkeling
When planning your trip to Hawaii, make sure you bring your snorkel and fins! Molokini is considered the most popular snorkeling site in Hawaii as it has clear water with swarms of beautiful fish. However, there are dozens of other good snorkeling sites if your prefer something more exclusive.

5. Play Golf
Hawaii is known all over the world for their top-notch golf courses. There are nearly 100 different courses on the Hawaiian Islands, with locations ranging from deep in the rainforest to coral sea cliffs.

6. Go Volcano Watching
The Hawaiian Islands are filled with both dormant and active volcanoes that are beautiful see and exciting to visit. The Volcanoes National Park is located on the Big Island and features the most active volcanoes and dozens of tour opportunities.

7. Take a Helicopter Tour
By taking a helicopter tour of one of the islands you will be able to experience it in an all-new way, from hundreds of feet above. You will be overwhelmed by the beautiful the scenery is and how much of the island you can see in a relatively short amount of time.

8. Visit Pearl Harbor
Honoring the lives of those who were lost during the attack on Pearl Harbor is a must for any one who visits the Hawaiian Islands. You can view the USS Arizona in her final resting place by visiting the museum and monument that allows you to look through the glass floor to view the sunken ship.

9. Dolphin Convocation
During the first week of May each year, large amounts of dolphins gather near Oahu Island, swimming in a gigantic wheel or spiral pattern. No one knows exactly why this happens. You can join Hawaiian marine biologists this spring as they venture out to observe and research this strange phenomenon.

10. Take a Bike Ride
There are plenty of good bike trails throughout the Hawaiian Islands and places you can easily rent a bike for a few hours. But always remember to pack ample water and diluted juices as the heat and physical activity can easily dehydrate the novice biker.

For more information, check out Go Hawaii.com.

Today is Tax Freedom Day

Although Tax Day was over a week ago, today is this year’s Tax Freedom Day. What is the difference, you ask? Well, as we all know Tax Day is the deadline for filing your tax returns. However, Tax Freedom Day is the date that the average American has earned enough wages to pay their federal, state, and local taxes for the year. Since today is Tax Freedom Day, it means that Americans work for nearly a third of the year just to cover their tax liabilities.

For more information on tax freedom day, and the methodology used to calculate it, check out The Tax Foundation’s website.

Or, just watch this entertaining video celebrating Tax Freedom Day:

McCain Tax Cuts Would Bloat Deficit Or Take Huge Spending Curbs

The Wall Street Journal had added this interesting article on the disadvantages of McCain’s tax plan. Below is picture that summarizes his plan, but you can check out the full article by clicking here.

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Tax Season is Over

Yes, today is April 16, and that means that tax season is now over! Today is a day of celebration for Roni Lynn Deutch, A Professional Tax Corporation and the Roni Deutch Tax Center™ corporate headquarters, as I am sure it is for anyone else working in the tax industry.

But even though tax season is over, do not just wait until next January to think about taxes again. Below are a few tips you can keep in mind over the next year to make next tax season less stressful next year:

Review your return one last time. You might have accidentally overlooked a valuable credit or deduction. If so you can always file an amended return to make the changes.

Keep all your documents. Just because you mailed in your return does not mean you can shred all your tax documents and receipts. You will need all of these in case you are ever audited.

Start saving your receipts and documents in a safe place. If you are one of the people who ran around trying to gather all your receipts at the last minute then consider saving them all in a designated location over the next year. That way they will be easily accessible next year.

Educate yourself on taxes. If you read a book on taxes, or even attend a local tax school, then you will be better prepared for next tax season.

I am also happy to announce that earlier this morning Stan Ciemiecki was randomly selected as the winner of our 12 Days of Taxes contest. His answer to his favorite thing about tax season was: “After the taxes are done and submitted it is like the feeling after exams and you know you aced them.”

Celebrate Tax Season with the 12 Days Of Taxes!

Happy tax day everyone! In case you have forgotten today is your last day to enter the 12DaysOfTaxes $500 gift card give away! Make sure to remind you friends and family to enter, if they have not already.

To celebrate the end of tax season most people will go out and blow all of their refund on something wasteful like a new car or television. But before you do, consider the following 12 smart ways to use your tax refund.

1. Pay down your credit card debt
2. Save it for a rainy day
3. Make an extra mortgage payment
4. Open an IRA
5. Invest in the market
6. Prepay major bills
7. Upgrade faulty appliances
8. Open a college fund
9. Service your car
10. Invest in yourself
11. Prepay a future vacation
12. Donate it to charity

To see more information check out 12DaysOfTaxes.com

Money for Breakfast Video

Earlier today I appeared on FOX Business Channel’s Money for Breakfast again. This time I was interviewed by Alexis Glick, and we talked mostly about IRS audits. Please enjoy the streaming video below.

The interview host, Alexis Glick, even posted this entry about me on her personal blog.

40 Hours to Freedom

To help all those “last minute filers” out there, the Roni Deutch Tax Center™ will all stay open for extended hours today and tomorrow. Some participating locations will even stay open all night as part of our “40 Hours to Freedom” program. Check out the locations page on our website to find a location near you. If you do still need to file it is probably a good idea to call and make an appointment so that you are guaranteed a spot.

I cannot stress the point enough. Do not let tax day go by without either filing your return or filing an extension. If you ignore the tax deadline then you will be hit with interest and penalties that can very quickly add up to a decent amount of money. Additionally, this year it is especially important to file so that you can get your economic stimulus check this summer. Now, if you know you cannot file on time or you are not confident that you have all of the information to accurately prepare and file your return, then make sure you file for an extension. Check out IRS.gov for more information on extensions.

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IRS moves Audit Pressure from the Largest Companies to Individual Taxpayers

The IRS's scrutiny of the biggest U.S. companies is running at a 20-year low, according to a study conducted by a research group affiliated with Syracuse University. The study, made public Sunday, points to "a historic collapse in audits." It found that major corporations - defined as those with assets of at least $250 million – have about a one in four chance of being audited, down from about three in four almost 20 years ago.

That makes me wonder where the IRS is placing its extra audit scrutiny. Well, according to the research group – the Transactional Records Access Clearinghouse, or TRAC – individuals have about a 10 percent chance of being audited, more than double the odds in 2000. However, the IRS claims it is more focused on partnerships and other “opaque [business] entities.”

For the International Herald Tribune’s full article, click here.

On the eleventh day of taxes the government gave to me…

Tomorrow is the last day of taxes, but as tax season ends it is still important to think about your finances all year long. Especially in the weakening economy, it is more important then ever to make sure and plan for your retirement. Below is a list of 11 common retirement planning methods, for more information including their tax advantages check out 12DaysOfTaxes.com.

1. 401(k)
2. Roth IRA
3. Roth 401(k)
4. Traditional IRA
5. Simple IRA
6. Social Security
7. 403(b)
8. 457 Plan
9. Thrift Savings Plan
10. Veteran's Pension
11. Old Fashion Savings

Ten 1040 EZs

Tax day is less than 48 hours away, but do not worry if you have no filed your tax return yet. With e-filing and federal tax extensions you are not late. However, if you wait until after April 15 to take any action, then you will likely face penalties and fees. Follow these top 10 ways to make your last minute filing adventures a little more EZ.

1. Gather all your important documents
2. Use last year’s tax return as a guide
3. Practice on paper
4. Do not rush, you will make mistakes
5. Visit a local CPA or tax preparation office
6. Do not just take the EZ route
7. Do not short-change yourself
8. Hold onto your receipts
9. File an extension
10. Prepare for next year

On the ninth day of taxes the government gave to me…

Today is the ninth day of taxes and to celebrate we are reminding everyone to include all available tax credits on your tax return. Below is a list of the nine most common tax credits, for more information check out 12DaysOfTaxes.com.

1. Earned Income Tax Credit
2. Lifetime Learning Credit
3. Saver's tax credit
4. Environmental Credits
5. Child and Dependent Care Credit
6. Child Tax Credit
7. Additional Child Tax Credit
8. Hope Credit
9. Adoption Tax Credit

Tax Day Countdown

As many of you are well aware tax day is less than a week away, which means you only have a few days left to file your tax returns without being assessed additional penalties or fees. But do not worry if you have not yet filed, you still have time to do something. The worse thing you can do is just ignore the problem, because it will not go away. If you still need to file your return consider the following options:

• File on your own – there are dozens of software programs and websites that walk you through the steps of filing your return. However, be sure not to rush the process as you will not have a professional to review the return.
• Visit a CPA or tax preparation office – you can have experts prepare and file your returns so that you know it will be done correctly. Many tax preparation offices are even open extended hours in the lead up to tax day.
• Call the Roni Deutch Tax Center™ – call the tax professionals at the Roni Deutch Tax Center™ by dialing 800-230-1083, and they can prepare your return over the phone or schedule an appointment at a local office.
• File an extension – if you absolutely cannot file your returns on time then you should at least file for an extension. However, this does not extend your time to pay the IRS. So if you are likely to owe money then you should probably include some type of payment.

Money for Breakfast… Again

I am happy to announce that I will once again be a guest on the FOX Business Channel’s Money for Breakfast on Monday, April 14. The show airs on the East Coast from 7 to 9 am, and unfortunately I do not know the exact time I will be on. Fortunately I will post the streaming video here as soon as it becomes available.

The topic of the episode is Mood on Main Street. The show is going to focus on the countries poor economic state, and I am going to discuss why people need to be more thorough with their taxes in this poor economic state.

Eight e-filers filing, seven short-sales selling…

On the eighth day of taxes the government gave to me… eight e-filers filing! With modern technology and the government’s e-file program filing your tax returns has never been easier! Below are the op 8 reasons to e-file this tax season.

1. Convenience
2. Speed
3. Less IRS Employees
4. Security
5. Faster Money
6. Delayed Payment
7. IRS Confirmation
8. State Returns

Seven short-sales selling, six gift deductions, five gross incomes…

Today is the seventh day of taxes, and to help families dealing with financial trouble because of the housing market slump we have put together the follow list of tips to help lower your property taxes.

1. Understand Your Local Tax System
2. Review Tax Property Card
3. Think Twice About Remodeling
4. Limit Curb Appeal
5. Walk with the Assessor
6. File an Appeal
7. Move to a Lower Taxed Area

Six Gift Deductions

The 12 days of taxes is almost half way over, but do not worry you still have 6 more days to enter our contest for $500 in gift cards. Just check out 12DaysOfTaxes.com and tell us what is your favorite thing about tax season.

Today’s featured article discusses 8 different crazy taxes that are levied upon citizens of this country. The 8 taxes are listed below, but for a full explanation check out 12DaysOfTaxes.com.
1) Illegal Drug Possession
2) Profit from Illegal Drug Dealing
3) Utah Nudity Tax
4) Money received from bribes
5) Jock Taxes
6) Stolen Property Taxes
7) Alabama Card Tax
8) Maine Blueberry Tax

On the fifth day of taxes the government gave to me…

Tax day 2008 is just one week away! If you are stressed about tax season then take a deep breath and head over to 12DaysOfTaxes.com. You can enter to win $500 in gift cards, and enjoy our videos and articles. Today’s featured article is “5 Legal Ways to Lower Your Adjusted Gross Income.” Below are the 5 different tips, but to check out the full version head over to 12DaysOfTaxes.com.

1) Take all available deductions
2) Make charitable contributions
3) Pay extra into your 401(k)
4) Defer income until next year
5) Use your credit card for year-end expenses

Money for Breakfast

On Friday morning I was interviewed on the television program “Money for Breakfast,” which airs on the Fox Business channel. During the segment we spoke about preparing for tax day, and how taxpayers can avoid getting into debt with the IRS. In case you missed the show, below are the embedded videos of my two-part appearance.

Top 50 Charitable Americans

Philanthropy.com has compiled a list of the top 50 charitable Americans for 2007. The article lists the 50 people who gave the most to charity last year, and includes the amount they have committed to donating. Those who made the list include: William Barron Hilton, Michael R. Bloomberg, Oprah Winfrey, and 47 other. Check out the full list at Philanthropy.com.

Latest Good Reads

Obama releases tax returns from 2000-2006.

Citizens for Tax Justice find the House’s budget plan better than the Senate’s.

The complications of business taxes for partnerships.

Credit repair – exactly how important is it?

13 different characters that almost all corporations have. Which one are you?

IRS examines less than 1% of exempt organizations each year.

Combat Pay Can Count toward Economic Stimulus Payment Eligibility

We all Make Mistakes – Even the Government

Today is the fourth day of taxes, and the featured topic on 12DaysOfTaxes is the covered the top 10 mistakes people make on their tax returns.



Below is a list of the top 10 mistakes, to check out the summary of each mistake head over to 12DaysOfTaxes.com.

1. Math Errors
2. Sign and Date Your Return
3. Attach Forms
4. Social Security Number
5. Check Subject
6. Verify Check Amount
7. List all Dependents
8. File Form 8606
9. Save Copies
10. File on Time

On the Third Day of Taxes…

The government gave to me… Three French returns, two W-2’s, and a partial payment in a money tree! Today is the third tax of taxes, and the featured video surrounds the idea that taxes are not just something we have in the United States.

Today’s featured article is titled “Average Tax Rates of 70 Countries around the World,” and includes the average personal and business income tax rates of 70 different countries. Check out the full table by clicking here.

Two W-2’s, and a Partial Payment in a Money Tree…

Today is the second day of taxes, and the featured article at 12DaysOfTaxes.com is titled, “9 Ways to Cut Down on Paper Usage this Tax Season.” Below is a summary of the article, but be sure to check out 12DaysOfTaxes.com for the full version along with details on how you can win $500 in gift cards!

1) Keep all important documents and tax forms in a designated file, drawer, or even box.

2) E-file your state and federal income returns.

3) E-file quarterly tax payments.

4) Save copies of online purchases on CD-R and thumb drives instead of printing them out.

5) Use software or electronic payments for payroll taxes.

6) Use a virtual fax instead of a fax machine that prints out on paper.

7) If you intend to buy a new car, consider making the purchase online.

8) Paper has two-sides: use both!

9) Print preview before every print.

Celebrate Tax Season with the 12 Days Of Taxes!

No, not the 12 days of Christmas… The 12 Days Of Taxes! Today, April 4th, begins our 12 day countdown to tax day 2008. It always surprises me how many people fear tax day, when statistics show that over ¾ of the people who file a return actually get a refund.

The employees of the Roni Deutch Tax Center™, and myself, do not fear tax season. We celebrate it! And to encourage taxpayers across the country to join in on the celebration we have launched a new site, 12DaysOfTaxes.com.

Every day leading up to April 15th a new “day of taxes” will be unveiled at exactly 12:00am. The days will feature videos of Roni Deutch Tax Center™ employees singing and dancing to the 12 Days Of Taxes paired with interesting tax articles. Additionally, we are also sponsoring a contest with a $500 gift card package for the winner. All you need to do to enter is go to 12DaysOfTaxes.com and tell us what is your favorite part about tax season. So go check out the site, enter the contest, and tell every one you know about it!



Today, the first “day of taxes” features RDTC Inc. employee Sue Ann Wilkes singing the phrase, “on the first day of taxes the government gave to me, a partial payment in a money tree.” The associated article is titled “12 Different Ways Americans are Taxed,” and describes the following 12 different ways to Americans pay the government:

1) Income Taxes
2) Business Taxes
3) Payroll Taxes
4) Capital Gains Taxes
5) Inheritance Taxes
6) Sales Taxes
7) Property Taxes
8) Excise Taxes
9) Gift Taxes
10) Retirement Taxes
11) Tariffs
12) Tolls

To read the full article, and see the first video installment please check out 12DaysOfTaxes.com.

SacBee Article

On Saturday, my tax franchise and I were featured in the business section of the Sacramento Bee. In case you missed it I have included a quote below. You can also check out the online version of the article.

“Sacramento-area tax attorney Roni Deutch has launched more than 170 Roni Deutch Tax Center franchises across the country, mushrooming beyond the 17 centers she debuted in a nationwide opening in January.

Long known as the ‘Tax Lady’ through her tax resolution legal practice and her many television appearances, Deutch stepped last year into a U.S. accounting and tax preparation market worth upward of $65 billion.”

Tax Season Do’s & Don’ts

Do - File Something
You must file a return with the IRS before April 15. If you do not then you will face penalties and fees that will eventually catch up with you. Even if for some reason you cannot file a return, at least file for an extension using IRS Form 4868. If you are likely to owe the IRS money, also consider sending in a payment to avoid additional fees.

To become eligible for benefits under the economic stimulus package, you need to file a return this tax season – even if you do not normally file a return. The IRS is going to determine the names and addresses of those eligible for a stimulus check based off this year’s tax returns. Therefore, if you do not file a return you will not get up to $600 in payments.

Don't – Omit Any Income
One of the biggest mistakes taxpayers make when preparing their returns is to omit part of their income. Remember that the IRS requires you to report all income including wages, business profits, interest, dividends, capital gains, pensions, tips, and even gambling winnings.

Do – Seek Help
If your taxes are too confusing or you simply have a question about your return, then do not be afraid to ask for help. There are accountants and tax preparation offices all over the country to prepare your return for you. Most will answer simple questions for you over the telephone.

Don’t – Get Audited
Technically you are always at risk for an audit since there is a random element in the IRS’ audit selection process. However, below are five red flags you can avoid to decrease you chances of getting an audit.

1. Drastic changes in income
2. Too many charitable contributions
3. Excessive amount of credits taken
4. Inconsistencies between previous returns
5. Reporting a suspiciously low income

Do – E-file
If you are going to file your return yourself then you should e-file. Studies show that people who e-file make fewer errors. You will also have confirmation from the IRS within a few days of receipt of the return. Additionally, if you chose to have your refund direct deposited, then you will receive it in as little as 10 days.

Don’t – Throw Away Documents
Just because you have sent your return to IRS does not mean it is ok to throw away your important forms, records, and receipts. If you are ever audited you will need all of these documents. Please make sure to store them in a safe place.

Do – Save Your Refund
Although most taxpayers look at a refund from the IRS as “free money,” the smartest thing you can do with your refund is use if to pay off high interest debts. The average household has nearly $10,000 in just credit card debt and most Americans either have a home mortgage or an automobile loan. Instead of wasting your refund on something useless why not pay extra on one of these lines of credit?

Happy St. Patricks Day

LA Times: How to Avoid a Tax Audit

Yesterday, I was quoted in an article for the Los Angeles Times on IRS tax audits. Below is a short quote from the article, to read the full version check out "How to avoid a tax audit, and how to prepare for one."

You can take some comfort in the fact that audits are remarkably rare, hitting about 1% of taxpayers each year. However, the rate is rising, and if you happen to pull a few audit triggers, your chance of getting that ominous letter or phone call from the Internal Revenue Service can soar tenfold or more, experts say.

"I am hearing about more audits than I ever have," said Roni Deutch, a tax attorney in Northern California who has been practicing for 17 years. "People will try to alleviate your fears and tell you that an audit is not a big deal. It is a big deal. It's like having a root canal without Novocain."

The number of returns audited by the IRS jumped 7% last year to 1.38 million, up from 1.29 million in 2006.

MLB Files Incorrect Return

According to TaxProf.org and Street & Smith's Sports Business Journal there are some potential problems with the Major League Baseball’s October 2006 Tax return.

"MLB did not include the compensation amounts for its other top officers in its most recent return. The names of MLB President Bob DuPuy and four executive vice presidents are listed but without pay totals. Those numbers appeared in prior MLB tax returns, with DuPuy pulling in a total of $4.875 million in the 2005 fiscal year.

Nonprofit tax experts said such omissions are not permissible under the current tax code. "The [tax return] instructions just couldn’t be clearer. The compensation of the officers, directors and key employees must be disclosed in the return," said Marcus Owens, former director of the IRS’s exempt organizations division and currently an attorney with Caplin & Drysdale in Washington, D.C., representing a variety of nonprofits.

Said DuPuy of that assessment, "We respectfully disagree."

Leaving out officer compensation in Part 5-A of the nonprofit return could be considered an incomplete return and could subject MLB to fines up to $50,000 per year from the IRS, Owens said."

“Hi, I’m Roni Deutch!”

While, it is nice to get noticed, the "flickering bale light of hell" is a bit much.

IRS New CADE System Processes 15 Million Tax Returns

According to the IRS, one quarter of all individual tax returns so far this tax season are being processed by the IRS’ new, modernized computer system. It is called the Customer Account Data Engine, or CADE. It has already successfully processed over 15 million individual tax returns, or 25 percent of all those processed so far this year.

"This system is the centerpiece of our modernization efforts at the IRS," notes Richard Spires, IRS Deputy Commissioner for Operations Support. "CADE is handling significantly more tax returns each year. The long-term investment in this program is paying off with meaningful results for the American taxpayer."

CADE, which is at the core of the effort to replace many of the agency’s aging systems, dramatically speeds up internal IRS processing, permitting taxpayer accounts to update on a daily basis. The older system updates only on a weekly basis.

"This supports better customer service for the taxpayers, processes refunds quicker and helps the IRS better administer the nation’s tax system," continued Spires.

Today’s Tax Reads

World Central banks unite to help ease current credit strain.

Are State gasoline taxes the best source of highway revenue?

IRS announces 2008 low-income taxpayer clinic grant recipients.

U. S. Senate holds hearing today on federal estate tax alternatives.

The Wall Street Journal examines Obama’s plan for fixing social security.

IRS using every trick in the book to track down those eligible for an economic stimulus check.

12 Days Of Taxes

I am excited to announce the launch of 12DaysOfTaxes.com, a new site that will showcase some of my employees celebrating the 12 days that lead up to tax day. Although the full site will not be up until April 4, they posted the following short teaser video.



For more information check out 12DaysOfTaxes.com and signup for the newsletter.

Tuesday Linkage

Wealthy Americans using inflated art appraisals to gain millions from excessive deductions.

A few things to consider when deciding weather to e-file or not.

Tax court rules against deductions for getting a Harvard MBA as an educational expense.

Reasons why everyone should file a tax return this year, even if you normally do not.

Medical expense deductions for embryo and cord blood storage.

Interest rates drop for the second quarter of 2008.

15 Tax Blogs Worth Reading

IRS Claims E-Filing off to a Strong Start

The IRS announced that e-filing is off to a great start this tax season. So far, over 38 million returns have been electronically filed. This represents a 5 percent increase from the same period last year, with double-digit growth coming from taxpayers filing from their home computers. More than 12.3 million returns were filed from home computers, which is an increase of almost 14 percent from the same time last year.

“E-filing continues to be the preferred way to file your tax return. It is the fast, easy, safe and more accurate way to file your tax return,” claimed IRS Acting Commissioner Linda E. Stiff.

As for the total amount of all refunds, $106.7 billion has been issued so far in 2008 with the average refund amount of $2,708, up two percent from the same time last year. So far this year, the IRS has directly deposited 33 million refunds out of the total of 39 million refunds. The direct deposit refunds were valued at just over $96 billion with the average amount of a direct deposit refund of $2,900.

10 Ways to Avoid Back Taxes this Tax Season

Follow these 10 simple steps to make sure you do not owe IRS back taxes after you file your tax returns this tax season.

1. Claim the right filing status

Make sure that you claim the correct filing status. Do not claim something different in order to get a bigger refund such as claiming "Head of Household" when you really should file as "Single". Alternatively, if you are married you should consider filing jointly to lower your total liability.

2. Make sure your math is correct

Always triple check the math in your income tax returns, even if you have them professionally prepared. For the most part the IRS will fix all simple math errors, but problems can arise if you have the wrong numbers listed for income or deductions that lead to an artificially inflated refund.

3. Include income from ALL sources

Make sure that you include income from all sources on your tax return. This includes regular wages, self-employment earnings, tips, independent contract work, child support, alimony, etc. Trying to hide income from the IRS is a big mistake as they have access to mass amounts of information and can determine your exact earnings for each year.

4. Remember winnings from gambling

All the money you win from gambling must be treated as income. However, you can deduct any money you lost at gambling from your total. For more information on taxes and gambling, check out “How to Accurately Reporting Gambling Profits & Losses To The IRS” on the RDTC Tax Help Blog.

5. Do not over exaggerate charitable contributions

In recent years, the IRS has been cracking down on taxpayers that abuse the charitable contribution deductions. Make sure that you only claim contributions that you can document with some type of proof. Also, do not over inflate the donation amount as excessive donations send a huge red flag to the IRS’s audit department.

6. Mail to the correct address, or e-file

Before popping your tax return in the mailbox, make sure that you are sending it to the correct address. If you mail your return to the wrong address it can get lost and result in unnecessary IRS fees or penalties. Fortunately you can avoid this potential problem completely by e-filing your return.

7. File on time, or request an extension

It is essential that you file your tax return on time or at least request an extension from the IRS. If you just ignore tax day then you will be unhappy when you realize what it will cost you. If you cannot file on time, visit “Need More Time to File?” on IRS.gov.

8. Forgetting to pay taxes on time

If you do owe money to the IRS then you must pay it before the April 15 deadline. Not paying does not mean your debt will magically go away. Instead it will begin accruing fees and penalties. To pay your taxes enclose a check with your tax return and write your Social Security number, tax form number and tax year on it.

9. If you notice any errors, re-file immediately!

If you notice an error on your tax return, you should file an amended return as soon as possible. If you wait for the IRS to catch your error then you will likely be faced with fees and penalties in addition to the owed back taxes.

10. Make immediate adjustments to withholding or estimated tax payments

Okay, okay, I will admit, this has more to do with 2008 than this year. However, after preparing, filing, and paying your 2007 federal income taxes, you need to take the information from the return and put it to immediate use. If you ended-up owing taxes, you need to adjust your withholdings and/or start making larger estimated tax payments. If you end-up with a very large refund, again, you may need to adjust your withholdings or estimated tax payments. That way you will receive that refund immediately in your regular paychecks. You could then take that money and put it to good use in wise investments or replenish your savings.

Also, if you do owe for 2007 and will need to work with the IRS at resolving your IRS tax debt (instead of paying in one lump sum), you will be required to make adjustments to your withholding and/or estimated tax payments. That is because the IRS is unwilling to work with taxpayers until they have taken steps to ensure that they will not owe again in the future. Higher withholding taxes and/or estimated tax payments are also allowable expenses, which is important in qualifying for some forms of IRS tax debt resolution (i.e. Offer in Compromise, Installment Agreements, Currently Not Collectible status, etc.).

Other Countries Have Simpler Tax Systems

The Tax Foundation Tax Policy Blog has an interesting article on how other countries around the world are taking steps to simplify their tax systems. Additionally, some of these countries are greatly lowering their corporate tax rates, while the United States corporate rates remain the second highest in the industrialized world at 39.3%. According to the entry, the following countries are taking the actions listed:

• Poland may adopt a flat tax
• Iceland and Taiwan to cut corporate tax rates
• People leaving Ireland due to high personal income taxes
• Hungarian government considers a flat tax
• Kuwait cuts corporate tax rate
• Swiss canton adopts flat tax

For the full entry check out More Countries Move to Simpler, Lower Taxes.

IRS Reminds Farmers & Fishermen They May Have Until March to E-File

The IRS published a release reminding agricultural taxpayers, including farmers and fishermen that they may need to wait until March 3rd to e-file their tax return. According to the IRS, any taxpayer who files Form 1040 returns with Form 4136, Credit for Federal Tax Paid on Fuels, will have to wait.

"Normally, 1040 filers who are farmers or fishermen are not required to make an estimated tax payment if they file their return and pay all taxes due by March 1," claims the IRS. "But this year, because March 1 falls on a Saturday, the date extends to Monday, March 3. For eligible farmers and fishermen who attach Form 4136 to their Form 1040, the return will be considered timely filed with all tax paid if the return is e-filed and accepted on or before March 10 and all tax due is paid on or before March 10."

The IRS expects this delay to affect about 77,000 farmers and fishermen who electronically file Form 1040 with Form 4136 in the early weeks of the filing season. For more information, please visit www.IRS.gov.

Clinton, Obama, & McCain: The Good, Bad, & Ugly Candidate Tax Views

As the primary elections continue across the United States, I am keeping to my commitment to getting the candidate’s tax views more attention. So much attention is being placed on superficial topics that taxes are taking a back seat. Taxes and the economy will probably become a popular topic in the general election, but I strongly encourage every one to think taxes now! Read up on the candidate’s respective websites, and check out neutral information sources like SmartVoter.org.

At this point in the game there are only three major candidates left in the race. Each have quite different tax views. Below are the good, bad, and ugly tax views of each major remaining candidate.

Hilary Clinton

The Good

Let Bush’s Tax Cuts Expire

Ms. Clinton adamantly claims that the middle class has been ignored by the current administration and seeks to strengthen and grow the middle class and restore the basic bargain: "if you work hard and do your part, you can build a better life for yourself and your family." One method of doing so would be to let the Bush tax cuts expire. This may be a controversial view, but most liberals will agree that it’s essential for the improvement of the American economy. These tax cuts only go to the extremely wealthy individuals in the country and do nothing for the hard working American class. Although some argue that cutting taxes for the rich stimulates the economy, since these tax cuts were enacted the national debt has only increased. Most Americans are quick to judge any tax increase because no one likes paying more in taxes. However, I doubt any one reading this blog would be affected, as letting Bush’s tax cuts expire would only raise taxes on the super rich.

The Bad

Maintain Current Social Security Cap

Clinton supports retaining the current income cap on the Social Security tax, which is a good idea. Currently income over $102,000 is not subject to taxation from the social security tax. Therefore the top income earners do not pay the social security tax on their full income. Increasing the limit on the social security cap, or removing it all together, would create millions of dollars in additional federal revenue.

The Ugly

Mandatory Health Insurance

With heath care issues on the top of every one’s mind Clinton recently proposed the "American Health Choice Plan" which revolves around an individual mandate requiring everyone to have health insurance. Her plan would give more choices to taxpayers seeking health insurance without quite making it universally available through he federal government. Clinton claims her program would cost about $110 billion per year, but has not yet given any specific information on how the plan would be funded. The concept is not so bad on it’s own, but the lack of funding information makes this an ugly tax view.

Barack Obama

The Good

Tax Wealth More Than Regular Wages

One of the tax cuts enacted by President Bush was to drop the tax rate on capital gains from 20% to 15%. This was another tax break that specifically targets the wealthiest in this country who do not earn wages, but rather live off of investments and accumulated wealth. There’s no reason that capital gains should be taxed so much less then regular wages, and Obama agrees. By raising the tax back to 20% some studies estimate that an additional $100 billion in revenue could be generated for the federal government.

The Bad

New Tax Credits

Obama's tax plan features a prominent "Making Work Pay" credit that would offset federal taxes on the first $8,100 of a taxpayers earnings. It would essentially generate a credit of up to $500 for single persons or $1,000 per family. According to Obama this credit would eliminate income taxes for at least 10 million low-income Americans. The idea of lowering taxes for low paid working Americans is considered great by many liberals, but there isn’t really a need for a new credit to accomplish this. Instead, why not expand the Earned Income Tax Credit or the standard deduction amount rather than trying to get a new credit passed by codgers.

The Ugly

No Taxes For Senior Citizens

One of Obama’s tax proposals is to eliminate all federal taxes imposed on senior citizens making under $50,000 per years and not requiring them to file tax returns. This may be a good way to get the senior vote, but it’s much more complicated than it seems. First of all, senior citizens often have income from multiple sources including capital gains, dividends, Social Security, retirement plans, etc. Determining their exact income would still require the same effort as filing a tax return. Additionally, this plan gives special tax treatment to a group if individuals based solely on their age, which seems like borderline age discrimination. Why should a struggling single mother have to pay taxes on her $49,999.00 income when a retired grandmother would pay noting on the same income amount?

John McCain

The Good

Investment Tax Cuts

McCain is a strong supporter of lowering taxes to encourage economic growth, which is the dominant economic stance of the Republican party. Not only does he support renewing the Bush tax cuts, but he also favors numerous tax cuts. McCain hopes to reduce taxes on Capital Gains, Interest, Dividend, Investment income, and even corporate tax rates. And as if his tax cuts weren’t enough, McCain also supports a new rule that would require a 3/5-majority vote to raise taxes. In summary, McCain is a strong supporter of permanent tax cuts, and the Republicans love him for it.

The Bad

Continued War Funding

McCain is a strong supporter of the American military and the "War on Terror," with promises of a continued military presence in Iraq. According to his website, he believes that the answer to our current national security problems is to not "roll back our overseas commitments," but to increase the size of our Army and Marine Corps and continue the current War on Terror. McCain has recognize there is a problem with current military spending but has not provided any information on how to continue the military efforts while lowering the current $12 billion-per-month budget.

The Ugly

No Pledge Against Taxes

Although liberals typically support raising taxes to stimulate the economy, this view is very unpopular among republicans. McCain is one of the only republicans who ran for president this year who declined to sign the pledge put forth by Americans for Tax Freedom not to impose any new taxes or increase existing taxes. The conservative wing of the Republican Party are almost always against increasing taxes and this lack of a commitment could hurt his chances of winning the presidency.

Economic Stimulus FAQs

There has been a lot of confusion lately about the recently passed economic stimulus package. To help sort out the bewilderment about these rebate checks, the tax professionals at the Roni Deutch Tax Help Blog have composed answers to the following rebate related FAQs.

1. How are the rebate amounts determined?
2. How will the "reduced rebate" work?
3. Who will qualify to receive a "reduced rebate"?
4. Who will NOT qualify to receive a rebate?
5. Do I need to apply for the rebate?
6. What if I only have Social Security income and no tax liability?
7. When will I get my check?
8. What if I filed as Head of Household or Married Filing Separately?
9. Will the rebate delay or impact my 2007 tax refund?
10. Will I be taxed on my rebate check?
11. Will this rebate cut into my 2008 refund?

You can check out the full entry, including answers, by check out Economic Stimulus Package: Clearing Up Any Confusion on the Tax Help Blog.

IRS Now Processing AMT Affected Returns

Yesterday afternoon, the IRS announced that they have begun officially processing the five tax forms that were affected by the last minute AMT legislation. On Monday, IRS systems began to unofficially accept and process returns that include the five affected forms. After several days of processing, the IRS has confirmed that their systems are in fact working properly.

Back in December, the IRS announced that they would have to delay the processing of several AMT affected tax forms. However, for most people the filing season this year began on time. Only taxpayers whose return included the five affected forms were forced to wait.

The affected forms include:

• Form 8863, Education Credits
• Form 5695, Residential Energy Credits
• Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
• Form 8396, Mortgage Interest Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit

World’s Dumbest Taxpayer

An Oregon man trying to pay his taxes in cash led to the state’s largest marijuana bust in over 10 years after a tax clerk smelt marijuana on the money.

According to the Associated Press, in Oregon, the Benton County sheriff's department arrested a man for trying to pay a tax clerk his tax liabilities with $600 in cash. Paying your taxes in cash is not usually considered illegal – however, the bills this gentlemen used apparently smelled like marijuana.

The concerned tax worker reported Eric Brian Michaelis to the Benton County sheriff’s department who then discovered over 230 marijuana plants inside Michaelis’ home. Deputies found plants in almost every room in his house, some reportedly over four feet tall. They also discovered a back-up generator that could be used to power "grow lamps" in the case of an electrical power outage.

"It's safe to say that it's at least the biggest indoor marijuana bust in the last 10 years," claimed the Chief Deputy District Attorney Chris Stringer.

Mr. Michaelis was arrested and forced to turn over $65,000 in cash that was seized in his house. He was also sentenced to 16 months in prison. However, there was no mention as to whether his original $600 payment was accepted or not.

As we get closer and closer to tax day stories that mention taxes are gaining popularity. Usually these articles talk about humorous tax deductions or advice on filing your taxes, but this article really stood out and made me laugh aloud. I guess the lesson learned is that federal taxes and illegal drugs do not mix.

Tax Policy Podcast with Taxpayer Advocate Nina Olson

The Tax Foundation Blog recently conducted an interview with interview with Ms. Nina Olson, the nation's Taxpayer Advocate at the IRS. The podcast interview can be downloaded at the Tax Policy Podcast page.

In the interview Ms Olson discusses the role of the Taxpayer Advocate in protecting taxpayer rights, the independence of the office, and the annual report she submits to Congress identifying problems facing taxpayers. She also talks about the problems that both the IRS and taxpayers face when they make last minute changes to the tax code. The interview is slightly over 20 minutes, but presents tons of great information for any one interested in tax policy.

IRS Warns Taxpayers of Correct Locations

With tax season in full swing, taxpayers across the nation are beginning to file their returns with the IRS. As such the IRS distributed a press release reminding taxpayers that they may have to send their return to a different location than prior years.

If you received a booklet from the IRS then the correct mailing list will be included on the labels you receive. Additionally, taxpayers that e-file their returns will not need to worry. According to the IRS the mailing changes affect returns from seven states: Iowa, Kansas, Kentucky, Oklahoma, Pennsylvania, West Virginia, and Wisconsin.

Taxpayers should send:

• Returns from Iowa, Kansas, Oklahoma and Wisconsin to the IRS center in Fresno, California.
• Returns from Kentucky to the IRS center in Austin, Texas.
• Returns from Pennsylvania and West Virginia to the IRS center in Kansas City, Missouri.

For more information on the correct mailing addresses for the IRS centers, please visit IRS.gov.

Top 10 Reasons Wesley Snipes Was Acquitted

Last Friday, a jury acquitted actor Wesley Snipes of all the charges of felony tax fraud. He was however found guilty of three misdemeanor charges of failing to file tax returns and will still have to pay millions to the IRS. The maximum sentence carries up to three years in prison, but he is expected to get a much lighter sentence. Although he was found guilty for the lighter charges his felony tax fraud had carried a maximum of up to sixteen years in prison.

Essentially the jury determined that Snipes had no intention to defraud the government, but the more I thought about this case the more I realized there were probably dozens of other reasons the jury decided to acquit Snipes. Below is a list of the top 10 reasons why Snipes was actually acquitted.

10) Wesley Snipes is an international celebrity, and everyone knows that famous people automatically get one "get out of jail free" card. It is the American way.

9) At his trial, Snipes was frequently attired in a very "Matrix-y" look of a solid black suit, dress shirt, and tie, and sunglasses. The jurors were probably fooled into thinking Snipes was from the future and that the statute of limitations for his crimes had already expired.

8) Snipes said under oath that he did not intend to defraud the government, although he had never paid taxes on tens of millions of dollars he earned. The jury probably just assumed that since he was under oath, he must have been telling the truth.

7) In the Blade films, Snipes played a vampire hunter who devoted his life to saving the lives dozens of innocent people. How could the jury possible be expected to put a Vampire-hunter in prison? What if we come under attack from Transylvania?

6) In 2001 Snipes was nominated for Best Actor in a Network/Cable Movie for his work in HBO’s made for TV movie, "Disappearing Act." Unfortunately he got beat out by T. K. Carter, who famously played Milo Williams in "Good Morning, Miss Bliss" a/k/a "Saved by the Bell, the Junior High Years". The jury probably figured it was punishment enough to go from being an international movie star to losing a network/cable movie award to Milo Williams.

5) Before his trial, Snipes spent a few months in the African country Namibia, the same place Angelina Jolie chose to give birth in. Jurors probably assumed Snipes was doing charity work with Brad and Angelina and therefore felt he deserved a lighter sentence.

4) Over the past few years, IRS has successfully charged numerous high profile individuals for criminal evasion including Edward and Elaine Brown and Richard Hatch. The jury probably just figured since the New England Patriots could not go undefeated, neither should the IRS.

3) In the movie, "White Men Can’t Jump," Snipes’s character famously uttered the phrase, "you can put a cat in an oven, but that don't make it a biscuit." At trial, his attorneys successfully confused the jury by repeatedly citing this phrase when objecting to any evidence the IRS presented of Snipes’s tax fraud.

2) One spectator reportedly filmed the entire trial. Another repeatedly yelled, "Action" and "Cut" at the beginning and end of each session of the trial. This confused the jury into thinking they were in fact cast into a movie – a courtroom drama, starring Wesley Snipes. It probably also helped that the judge in the case looked like actor Tom Wilkinson, and that Snipes’s list of potential witnesses included Sylvester Stallone, Muhammad Ali, Spike Lee, and Tom Brokaw. When the prosecutor failed to get Snipes to say, "You can’t handle the truth," the jury figured they had to acquit.

1) "Blade: Trinity," Snipe’s 2004 episode of the Blade franchise was poorly received by critics and took in substantially less money then the previous films at the box office. Five of Snipe’s latest six movies went directly to DVD and were not released in theaters. Snipes has not had a multi million dollar pay check in nearly five years and it is unlikely Snipes will ever be featured in a large budget film again. It is even more unlikely that Snipes saved enough of his money to fully re-pay his tax liabilities. The jury figured, "hey, why beat a dead horse?"

Survivor Winner’s Tax Appeal Denied

Former Survivor winner Richard Hatch – who made the list of biggest tax evaders on the RDTC Tax Help Blog – had his appeal denied by a Boston-based 1st U.S. Circuit Court of Appeals on Friday. Hatch claimed that he caught Survivor employees smuggling food to other contestants, but CBS denies these allegations. He said the show’s producers made a deal to pay his income taxes if he kept his mouth shut. However, the court noted that that Hatch was given several opportunities to testify about the deal, but he never took the opportunity.

"The failure of Hatch to present any evidence of such conversations when invited by the court strongly suggested that no actual promises were made, and no such 'deal' actually existed," the court wrote in its 52-page decision. "It was not the court's right, much less duty, to put words in Hatch's mouth." For more details check out Yahoo News.

IRS Audits More Millionaires

According to ABC News, in 2007 one out of every 11 households with incomes over $1 million were audited by the IRS in 2007. However, the IRS claims it’s auditing rates were up for people of all income levels last year.

The audit rates in 2007 were as follows:

• 9.25% for those with incomes of more than $1 million, up from 6.3% in 2006.
• 2.87% for those with incomes above $200,000, up from 2.5% in 2006.
• 0.93 percent for those earning under $100,000, up from 0.89% in 2006.

The IRS looked at a total of 1,384,563 returns in fiscal 2007. This represents 1.03% of the total individual returns filed with the IRS. The average audit rate was up 7% from the year before. On the business side, the IRS focused on partnerships and mid-market corporations in 2007, especially those with assets between $10 million and $50 million.

IRS Promotes EITC Awareness

The Department of Treasury, the IRS, and dozens of other non-government partners are kicking off EITC (Earned Income Tax Credit) Awareness Day to promote the refundable tax credit for low-wage workers and options for free tax preparation.

"Believe it or not, there are many taxpayers who are eligible to receive the Earned Income Tax Credit, but fail to claim it simply because they are not informed," claimed U.S. Treasurer Anna Escobedo Cabral.

According to IRS data, over 22.4 million taxpayers received more than $43.7 billion from the EITC last year. However, they estimate that approximately one in four eligible taxpayers fail to claim the EITC.

"Ensuring that more eligible families receive their EITC is important this year, as it is every year. I encourage people all across America to check to see if you are eligible for the Earned Income Tax Credit," said Treasury Secretary Henry M. Paulson, Jr.

IRS Warns of Rebate Scams

According to the IRS, there are a few new e-mail and telephone "scams". These scams pretend to be from the Internal Revenue Service and attempt to get taxpayers personal or financial information The IRS is expecting the scams to continue through April 15th.

This time around the IRS is warned to lookout for scams that mention advance payment checks from the IRS. Congress has not yet passed the economic stimulus package, and even so, the checks are not expected to be mailed out until this spring.

The IRS’s new release claims: "identity thieves use a victim’s personal and financial data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows "scamsters" to act quickly and cover their tracks before the victim becomes aware of the theft."

Therefore, it is important to be aware of these scams so you do not fall victim to their gimmicks. The IRS never sends out e-mails requesting personal or financial information. If you do receive an e-mail like this, do not reply to it. Instead, forward it to phishing@irs.gov.