With taxes prices increasing a record rates, the National Treasure Employees Union has called on the IRS to issue a mid year adjustment to the IRS’ 2008 standard mileage rate. I have included the full text of the release below, but if you would like to download it in Word format head over to NTEU.org.
NTEU Leader Seeks Mid-Year Adjustment From IRS in Mileage Reimbursement Rate
Washington, D.C.—In the wake of record—and still rising—gas prices, the head of the nation’s largest independent union of federal employees has called on the Internal Revenue Service (IRS) commissioner to make a substantive mid-year adjustment in the reimbursement rate for personal use of a vehicle for business reasons.
In a letter to IRS Commissioner Douglas Shulman—who has the policy authority to make such a mid-year adjustment, which would impact everyone in the country—President Colleen M. Kelley of the National Treasury Employees Union (NTEU) noted that record levels of gas prices are “placing an especially heavy burden on those who must travel to perform their work duties.”
These include a great many NTEU members employed by the IRS, as well as those at a number of financial regulatory bodies and other federal agencies. The NTEU leader made the request in the interest of all federal employees and others who use their personal vehicle for business travel.
The federal government’s reimbursement rate is set by the General Services Administration (GSA), but cannot exceed the amount set by the IRS as the maximum rate allowed as a business deduction. That rate currently is 50 ½ cents per mile.
“Given the extraordinary rise in gasoline prices,” currently averaging more than $4 a gallon across the nation, President Kelley wrote, “I would request that the IRS make a mid-year adjustment to the mileage reimbursement rate to accurately reflect the actual cost traveling employees pay.”
Pending legislation in the Senate would raise the rate to 70 cents per mile, she noted, but said that action by the IRS “would provide much more timely relief than depending on the slow pace of the legislative process.”
While unusual, this would not be the first time the IRS has made such a mid-year change in the rate; in 2005, then-IRS commissioner Mark Everson used his authority to honor a request from NTEU that the maximum rate be increased. Then, as now, gas prices were rising rapidly and with little prospect they would moderate.
“The needed relief his action provided to private and federal sector employees,” Kelley wrote of the Everson decision, “helped save many employees from having to pay work-related traveling expenses out of their own pockets.”
As the largest independent federal union, NTEU represents 150,000 employees in 31 agencies and departments.
Tuesday, June 17, 2008
Monday, June 16, 2008
Top 10 Tips for New Entrepreneurs
As most of you may know, I am the founder and CEO of both a nationwide tax resolution law firm, and a tax preparation franchise. I opened my law firm from a one-bedroom apartment and built it up into a large corporation that allowed me to also open the tax preparation franchise.
People always ask me what advice I would give to new entrepreneurs looking to achieve success. Although everyone is different, and every business will require it’s own plan, below are the top 10 tips I have found helpful in my entrepreneurial experiences.
1. Do something you are passionate about
When you are deciding on the type and style of business you aspire to run, make sure it is something you are truly passionate about. Starting up a company can require long hours, 7-day workweeks, and a ton of energy. If you are not passionate about it then you can lose your drive quickly.
2. Always be original
Do something that will set your business apart from the competitors. There is no use in competing against a well-established competitor with a carbon copy of their products or services. In order to get interest in your business you need to set it apart from the competition and offer additional benefits.
3. Prepare a business plan & write it down
Even if you do not plan to get a business loan, you should still prepare a well-written business plan. Think about it – would you want to invest your hard-earned money in a new company that does not even have a written business plan?
4. Triple your anticipated startup costs
One of the biggest problems new entrepreneurs encounter is not properly anticipating start-up costs. It can take weeks, even months to begin generating revenue and you need to make sure you have ample funds to establish your company.
5. Do not even think about profits
When you think about opening a business, do not even begin to think about profits. When you prepare your business plan you obviously want to create a structure that produces a profit, but it should not be the main reason you open a business. You need to focus on generating capital for your business, not adding money to your personal bank account.
6. Live & learn, live & lean
Everyone makes mistakes, but it is important turn these into opportunities to learn. Do not spend time being depressed because your business is slow to take off, or you lose your first major client. Learn your lesson and move on.
7. Set goals and work towards them
It is one of my strongest opinions that in order to achieve success you need to have goals. You need to look forward to the future, and envision where you want your business to be in 3, 5, or even 10 years. Then you will have something to work towards.
8. Build professional relationships
Networking with other business owners is important as it can help your form professional relationships that can generate business for both parties. These alliances, such as exchanges of work or services, client referral systems, etc., can be highly valuable to new business owners with a tight budget.
9. Get help from others
You cannot try to do everything on your own. There are only 24 hours in a day, and only so much work you can complete in that time. If you have too much business then you should consider hiring employees to help or seeking help from a professional service.
10. Continue to educate yourself
You can never know everything about running a business, so continually educate yourself by reading books or business blogs. You may even consider writing a blog of your own, as writing entries on topics you are not familiar with can present excellent learning opportunities.
People always ask me what advice I would give to new entrepreneurs looking to achieve success. Although everyone is different, and every business will require it’s own plan, below are the top 10 tips I have found helpful in my entrepreneurial experiences.
1. Do something you are passionate about
When you are deciding on the type and style of business you aspire to run, make sure it is something you are truly passionate about. Starting up a company can require long hours, 7-day workweeks, and a ton of energy. If you are not passionate about it then you can lose your drive quickly.
2. Always be original
Do something that will set your business apart from the competitors. There is no use in competing against a well-established competitor with a carbon copy of their products or services. In order to get interest in your business you need to set it apart from the competition and offer additional benefits.
3. Prepare a business plan & write it down
Even if you do not plan to get a business loan, you should still prepare a well-written business plan. Think about it – would you want to invest your hard-earned money in a new company that does not even have a written business plan?
4. Triple your anticipated startup costs
One of the biggest problems new entrepreneurs encounter is not properly anticipating start-up costs. It can take weeks, even months to begin generating revenue and you need to make sure you have ample funds to establish your company.
5. Do not even think about profits
When you think about opening a business, do not even begin to think about profits. When you prepare your business plan you obviously want to create a structure that produces a profit, but it should not be the main reason you open a business. You need to focus on generating capital for your business, not adding money to your personal bank account.
6. Live & learn, live & lean
Everyone makes mistakes, but it is important turn these into opportunities to learn. Do not spend time being depressed because your business is slow to take off, or you lose your first major client. Learn your lesson and move on.
7. Set goals and work towards them
It is one of my strongest opinions that in order to achieve success you need to have goals. You need to look forward to the future, and envision where you want your business to be in 3, 5, or even 10 years. Then you will have something to work towards.
8. Build professional relationships
Networking with other business owners is important as it can help your form professional relationships that can generate business for both parties. These alliances, such as exchanges of work or services, client referral systems, etc., can be highly valuable to new business owners with a tight budget.
9. Get help from others
You cannot try to do everything on your own. There are only 24 hours in a day, and only so much work you can complete in that time. If you have too much business then you should consider hiring employees to help or seeking help from a professional service.
10. Continue to educate yourself
You can never know everything about running a business, so continually educate yourself by reading books or business blogs. You may even consider writing a blog of your own, as writing entries on topics you are not familiar with can present excellent learning opportunities.
Myanmar Denies Cyclone Aid Taxes
According to a new article from the AP, Myanmar's has denied reports that they have been deducting a 10 percent tax from foreign donations to cyclone victims. Government officials claim that all incoming money is being spent on relief efforts. Below is a snippet of the article, to read the full thing check out Myanmar denies cyclone aid is being taxed from the Associated Press.
“The state-owned New Light of Myanmar newspaper said foreign radio broadcasts had wrongly accused the government of deducting the tax from donations deposited in the Myanmar Foreign Trade Bank.
The state bank, which usually deducts 10 percent from all foreign currency deposits, has opened special accounts to accept U.S. dollars, euros and Singapore dollars from which all donations would be fully channeled to cyclone survivors, the newspaper said.
Organizations and individuals that have misused relief funds sent from abroad will be punished, it said.
The United Nations estimates Cyclone Nargis affected 2.4 million people and that more than 1 million of them, mostly in the hardest-hit Irrawaddy delta, still need help. The cyclone, which struck May 2-3, killed more than 78,000, according to the government.
In separate reports, state media said there have been no outbreaks of contagious diseases in storm-hit areas and that 911 staffers from international aid organizations and neighboring countries were issued visas to enter the country between May 5 and June 5.
The junta has been criticized for dragging its feet on issuing visas and, until recently, not allowing foreign aid workers into the Irrawaddy delta, where most of the victims are.”
“The state-owned New Light of Myanmar newspaper said foreign radio broadcasts had wrongly accused the government of deducting the tax from donations deposited in the Myanmar Foreign Trade Bank.
The state bank, which usually deducts 10 percent from all foreign currency deposits, has opened special accounts to accept U.S. dollars, euros and Singapore dollars from which all donations would be fully channeled to cyclone survivors, the newspaper said.
Organizations and individuals that have misused relief funds sent from abroad will be punished, it said.
The United Nations estimates Cyclone Nargis affected 2.4 million people and that more than 1 million of them, mostly in the hardest-hit Irrawaddy delta, still need help. The cyclone, which struck May 2-3, killed more than 78,000, according to the government.
In separate reports, state media said there have been no outbreaks of contagious diseases in storm-hit areas and that 911 staffers from international aid organizations and neighboring countries were issued visas to enter the country between May 5 and June 5.
The junta has been criticized for dragging its feet on issuing visas and, until recently, not allowing foreign aid workers into the Irrawaddy delta, where most of the victims are.”
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Tuesday, June 10, 2008
ABA Accredits 199th and 200th Law Schools
Earlier in the week, the American Bar Association (ABA) granted provisional accreditation to Charlotte School of Law and Elon University School of Law. These two additions bring ABA’s total number of accredited law schools to 200, which is exciting for anyone in the field of law. To see their full list of accredited law schools check out ABAnet.org.
IRS Targets Billionaire Philip Anschutz
According to the Wall Street Journal, the IRS is going after billionaire Philip Anschutz to him to pay owed back taxes totaling $143.6 million. It is part of their broad attempt to crack down on taxpayers that use confusing strategies to avoid paying capital gains taxes. Below is an excerpt of the article, but you can read the whole thing at IRS Targets Billionaire's Lucrative Tax Strategy on WSJ.com.
"The imbroglio stems from transactions that Mr. Anschutz entered into involving shares he owned in Union Pacific Corp. and Anadarko Petroleum Corp. in 2000 and 2001. The deals netted him cash, as well as a share of any future rise in the stock price, with a total value of roughly $429 million. The arrangement is also set up to protect him against losses if the stock price falls.
He contends the deals technically weren't completed sales for tax purposes, and thus didn't trigger tax obligations, according to filings in U.S. Tax Court in Washington. Consequently, he has not paid capital gains taxes on the transactions.
Mr. Anschutz -- an oil, railroad and media investor identified as the 41st-richest man in the U.S. by Forbes -- isn't the only person to use such an arrangement. Executives at companies including Starbucks Corp., Costco Wholesale Corp., Tyson Foods Inc., IAC/interactive Corp., Cablevision Systems Corp. and Apollo Group Inc. have all used similar "variable prepaid forward contracts" to cash in shares in these companies and related entities, according to securities filings.
The tax treatment of these executives' arrangements isn't public, so it isn't clear whether the transactions involved deferral of taxes of the type the IRS is targeting. Experts say tax deferral is a typical component of such arrangements."
IRS Adds Functions to Online Payment Agreement Application
Earlier today the IRS introduced new features to their interactive Online Payment Agreement application. The changes will make it easier for taxpayers and their authorized representatives to make changes to existing installment agreements.
According to the news release, the system will now permit:
According to the news release, the system will now permit:
- Individuals to revise their payment due dates and/or amounts on existing agreements.
Individuals to revise existing extensions to regular installment agreements and direct debit installment agreements. - Individuals to revise existing regular installment agreements to a payroll deduction installment agreement or a direct debit installment agreement.
- Practitioners with valid authorizations to use the signature date found on their approved Form 2848, Power of Attorney and Declaration of Representative, or the caller ID as an alternate way to authenticate when requesting agreements for clients.
Unemployment Rate has Record Increase in May
According to a new article on CNN money, the unemployment rate increased from 5% to 5.5% in May. This represents the highest increase since 1986, and another sign of the looming economic recession. To read the full article, click here, or enjoy the excerpt below.
"A spike in the unemployment rate - the biggest in more than two decades - raised new concerns Friday that a weak labor outlook, high oil prices and continuing woes in the housing and credit markets are leading the U.S. economy into a painful recession.
The government said Friday that the unemployment rate soared to 5.5% in May from 5% in April - much higher than economists had forecast.
The surge marked the biggest one-month jump in unemployment since February 1986, and the 5.5% rate is the highest level seen since October 2004. Unemployment is now a full percentage point higher than it was a year ago.
‘You're not going to have a lot of people arguing "no recession" with this data,’ said Lakshman Achuthan, managing director of the Economic Cycle Research Institute. The prolonged job loss and jump in unemployment are better indicators that the economy is in a downturn than is the traditional thumbnail rule of two quarters of falling gross domestic product, he said.
The jobs report came on the same day that oil prices soared to $134 as the dollar lost value against the euro and the yen. It also comes the day after the Mortgage Bankers Association reported that homes in foreclosure crossed the 1 million mark during the first quarter, a record high."
Tuesday, June 03, 2008
Tax Exemptions of Charities Face New Challenges
The New York Times recently posted an interesting article on some of the new challenges tax exempt organizations are facing with recent changes to the tax code. I have included a snippet from the article below, but you can read the full thing at NYTimes.com.
“Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment.
One issue is the growing confusion over what constitutes a charity at a time when nonprofit groups look more like businesses, charging fees and selling products and services to raise money, and state and local governments are under financial pressure because of lower tax revenues.
And there are others: Does a nonprofit hospital give enough charity care to earn a tax exemption? Is a wealthy university providing enough financial aid?
In a ruling last December that sent tremors through the not-for-profit world, the Minnesota Supreme Court said a small nonprofit day care agency here had to pay property taxes because, in essence, it gave nothing away.”
“Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment.
One issue is the growing confusion over what constitutes a charity at a time when nonprofit groups look more like businesses, charging fees and selling products and services to raise money, and state and local governments are under financial pressure because of lower tax revenues.
And there are others: Does a nonprofit hospital give enough charity care to earn a tax exemption? Is a wealthy university providing enough financial aid?
In a ruling last December that sent tremors through the not-for-profit world, the Minnesota Supreme Court said a small nonprofit day care agency here had to pay property taxes because, in essence, it gave nothing away.”
IRS Issues Spring 2008 Statistics of Income Bulletin
Late last week the IRS released the Spring 2008 issue of the Statistics of Income Bulletin. The document features data from the 138.4 million individual tax returns filed for the 2006 tax year and data from high-income returns filed for the 2005 tax year.
According to the IRS announcement, the bulletin also features articles on the following:
To see all the information presented in the bulletin, check out it’s page on IRS.gov.
According to the IRS announcement, the bulletin also features articles on the following:
- Trends in non-cash charitable contributions, including a big drop in car donations in 2005 that was likely related to tax law changes.
- Statistics on cash flows and holdings of Individual Retirement Accounts (IRAs). For example, at the end of 2004, almost 51 million taxpayers held roughly $3.3 trillion in IRAs.
- Repatriation of funds by U.S. corporations due to the one-time received dividend deduction enacted in the American Jobs Creation Act of 2004.
- Statistics on federal estate tax returns with gross estates greater than $1.5 million.
- Growth in the number and assets of taxable Real Estate Investment Trust subsidiaries.
To see all the information presented in the bulletin, check out it’s page on IRS.gov.
Thursday, May 22, 2008
8 Reasons to Support a Gas Tax Holiday
In order to keep the content on my blog somewhat balanced, I wanted to make an effort to counter my recent entry, Top 10 Reasons a Gas Tax Holiday is a Bad Idea. I was trying to come up with a top 10 list of reasons to support the holiday, but there were only really 8 things I could come up with. However, without much support, and Memorial Day just around the corner, the idea of supporting a gas tax holiday seems moot. Nonetheless, I have composed the following list of 8 reasons to support it.
1. It Sounds Good
A federal “gas tax holiday,” it just sounds so nice. With record high temperatures, a weakening economy, and an increased cost of living, don’t we deserve an extra holiday this summer?
2. You’ll Save $30 Bucks
Some estimates actually say that the average American will save as much as $60-$100. However, no matter what the actual savings amount turns out to be, it is still free money.
3. Immediate Stimulus
In addition to the benefit of getting free money, it would also be immediate. Every time you pumped gas into your car you will get the discount. You will not have to wait months and months for a rebate check to arrive – instead you will get instant savings.
4. Everyone Benefits
Although not everyone would benefit equally from the gas tax holiday (people who use public transportation would not really benefit), the holiday is designed to give everyone who uses a car some relief.
5. Other Reduced Prices
Because of the increased gas prices the cost of other products is also being raised. In addition, some companies such as airlines or shipping stores are adding a fuel surcharge to their products. Hopefully the benefits of a gas tax holiday would pass down to those purchasing these other products as well.
6. Will Not Increase Costs
Many economists are arguing that the gas tax break would do nothing as it would increase demand and raise prices. However, supporters of the holiday claim that since fuel is traded on the world market the actual effects on demand would be negligible.
7. Revenue from Oil Companies
To make up for the loss of federal revenue some are hoping to raise taxes on the large oil corporations who are seeing billions in profits. This would mean that the federal government would not have to cut construction jobs.
8. Pressure on OPEC
In addition to taxes on the oil companies, another idea surrounding the gas tax holiday is to pressure OPEC to release more fuel and help lower the demand. Although it would help lower prices, this is probably more of a downside as it continues to encourage reliance on foreign oils.
1. It Sounds Good
A federal “gas tax holiday,” it just sounds so nice. With record high temperatures, a weakening economy, and an increased cost of living, don’t we deserve an extra holiday this summer?
2. You’ll Save $30 Bucks
Some estimates actually say that the average American will save as much as $60-$100. However, no matter what the actual savings amount turns out to be, it is still free money.
3. Immediate Stimulus
In addition to the benefit of getting free money, it would also be immediate. Every time you pumped gas into your car you will get the discount. You will not have to wait months and months for a rebate check to arrive – instead you will get instant savings.
4. Everyone Benefits
Although not everyone would benefit equally from the gas tax holiday (people who use public transportation would not really benefit), the holiday is designed to give everyone who uses a car some relief.
5. Other Reduced Prices
Because of the increased gas prices the cost of other products is also being raised. In addition, some companies such as airlines or shipping stores are adding a fuel surcharge to their products. Hopefully the benefits of a gas tax holiday would pass down to those purchasing these other products as well.
6. Will Not Increase Costs
Many economists are arguing that the gas tax break would do nothing as it would increase demand and raise prices. However, supporters of the holiday claim that since fuel is traded on the world market the actual effects on demand would be negligible.
7. Revenue from Oil Companies
To make up for the loss of federal revenue some are hoping to raise taxes on the large oil corporations who are seeing billions in profits. This would mean that the federal government would not have to cut construction jobs.
8. Pressure on OPEC
In addition to taxes on the oil companies, another idea surrounding the gas tax holiday is to pressure OPEC to release more fuel and help lower the demand. Although it would help lower prices, this is probably more of a downside as it continues to encourage reliance on foreign oils.
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Economists Predict Credit Crisis Nearing an End
According to this article on CNN Money, economic experts are predicting that the credit and housing crisis will dissipate in the second half of this year. However, they are expecting the economy to continue it’s downward spiral, and the unemployment rate is likely to increase.
“A growing number of economists believe the country is on the brink of a recession or in one already, dragged down by all the problems in housing, credit and financial markets. Now 56% of the economists think the economy has started or will enter a recession this year. That's up from 45% in a survey in February. If there is a recession, it probably will be short and shallow, economists said.”
“Forecasters downgraded their projections for economic growth. They now predict the economy, which grew by 2.2% last year, will slow to 1.4% this year. That is lower than the 1.8% growth projected in February. If the new figure proves correct, it would mark the weakest growth since the last recession in 2001.”
“A growing number of economists believe the country is on the brink of a recession or in one already, dragged down by all the problems in housing, credit and financial markets. Now 56% of the economists think the economy has started or will enter a recession this year. That's up from 45% in a survey in February. If there is a recession, it probably will be short and shallow, economists said.”
“Forecasters downgraded their projections for economic growth. They now predict the economy, which grew by 2.2% last year, will slow to 1.4% this year. That is lower than the 1.8% growth projected in February. If the new figure proves correct, it would mark the weakest growth since the last recession in 2001.”
Monday, May 19, 2008
Top 10 Reasons a Gas Tax Holiday is a Bad Idea
1. It’s Just a Gimmick
When it comes to campaigning, it is all about choosing the right words to use in your marketing. Anyone who remembers the phrases “weapons of mass destruction,” or “axis of evil” will know what I mean (how many times did we hear those phrases in the lead up to Operation: Iraqi Freedom?). In this election cycle, Senator Obama has made a strong effort to push the word “change,” which explains why the word is visible in almost every picture you see of Obama. Nonetheless the phrase “gas tax holiday” is merely another political slogan designed to encourage Americans to vote for a candidate.
2. Loss of Federal Revenue
If the federal government stopped collecting a tax on fuel, then it will be a direct loss of revenue for the government, plain and simple. With our economy continuing in a downward spiral, record breaking military expenses in the middle east, an ever increasing national debt, I doubt the government can afford to lose this source of revenue, let alone any.
3. Direct Impact on Working Families
If the government does not have revenue from gas taxes, then it is going to have a direct effect on people working in the construction industry. The tax levied on gasoline and diesel is what pays for highway and road construction. Without this money, the government would not be able to pay those working in this industry. Some estimates put the number of lost jobs at over 300,000, which does seem slightly inflated to me. However, any reduction of the tax collected from gasoline will definitely result in lost jobs.
4. Poor Quality Roads
The lack of federal transportation revenue will impact more then just those working in construction. The condition of our roads and highways is deteriorating, and without revenue to fix them the condition will only get worse. So a gas tax holiday may save you some money this summer, but you will probably regret the money this fall when you are stuck in hours of traffic on your way to work.
5. State Gas Taxes
The gas tax holiday only applies to the federal excise tax of 18.4 cents on gasoline and 24.4 on for diesel. However, these are not the only taxes that consumers pay on fuel. Nearly every state has their own tax, and some are upwards of 40 cents per gallon. The gas tax holiday would do nothing about these state fuel taxes.
6. Bad Message
Earlier in the week, polar bears were officially added to the added to the endangered species list. What does that have to do with a gas tax holiday? Well, exhaust fumes are bad for the environment and could lead to pollution and harm to the environment. Also, with the added threat of global warming looming, shouldn’t the government be discouraging motorists from using excess gasoline? In Europe, the taxes on fuel are higher then in the United States and consequently there is less gas consumption. If anything, our government should be encouraging people to reduce their gas consumption. How about increasing hybrid credits?
7. Increased Demand = Higher Prices
Many economists are claiming that lower prices will correlate directly to an increase in demand, which on the open market will likely increase the cost of fuel. Some argue that since gasoline is traded on the world market that we will not see a price increase. However, it is obvious that if gas was cheaper people would use more of it.
8. Continued Record Oil Profits
With the increased demand that would result from a gas tax holiday, some estimate that it would give even more revenue to the big oil corporations. These corporations already post record breaking profits every quarter for the last five years. Instead of lowering fuel taxes on consumers, why not increase taxes on the oil corporations?
9. Does Not Solve Anything
A gas tax holiday ignores the bigger problem; this country is dependent on foreign oil. It will do nothing to solve this problem. Gas prices are increasing at alarming rates and a small tax break is not going to stop prices from increasing in the long run.
10. Bottom Line: 30 Bucks
Let’s face it, all you really get under a gas tax holiday is about $30. Some estimates from Senator Clinton’s and Senator McCain’s camp say that this number is slightly higher, maybe $50. But what kind of effect is a $50 tax credit really going to have on the nation’s economy?
When it comes to campaigning, it is all about choosing the right words to use in your marketing. Anyone who remembers the phrases “weapons of mass destruction,” or “axis of evil” will know what I mean (how many times did we hear those phrases in the lead up to Operation: Iraqi Freedom?). In this election cycle, Senator Obama has made a strong effort to push the word “change,” which explains why the word is visible in almost every picture you see of Obama. Nonetheless the phrase “gas tax holiday” is merely another political slogan designed to encourage Americans to vote for a candidate.
2. Loss of Federal Revenue
If the federal government stopped collecting a tax on fuel, then it will be a direct loss of revenue for the government, plain and simple. With our economy continuing in a downward spiral, record breaking military expenses in the middle east, an ever increasing national debt, I doubt the government can afford to lose this source of revenue, let alone any.
3. Direct Impact on Working Families
If the government does not have revenue from gas taxes, then it is going to have a direct effect on people working in the construction industry. The tax levied on gasoline and diesel is what pays for highway and road construction. Without this money, the government would not be able to pay those working in this industry. Some estimates put the number of lost jobs at over 300,000, which does seem slightly inflated to me. However, any reduction of the tax collected from gasoline will definitely result in lost jobs.
4. Poor Quality Roads
The lack of federal transportation revenue will impact more then just those working in construction. The condition of our roads and highways is deteriorating, and without revenue to fix them the condition will only get worse. So a gas tax holiday may save you some money this summer, but you will probably regret the money this fall when you are stuck in hours of traffic on your way to work.
5. State Gas Taxes
The gas tax holiday only applies to the federal excise tax of 18.4 cents on gasoline and 24.4 on for diesel. However, these are not the only taxes that consumers pay on fuel. Nearly every state has their own tax, and some are upwards of 40 cents per gallon. The gas tax holiday would do nothing about these state fuel taxes.
6. Bad Message
Earlier in the week, polar bears were officially added to the added to the endangered species list. What does that have to do with a gas tax holiday? Well, exhaust fumes are bad for the environment and could lead to pollution and harm to the environment. Also, with the added threat of global warming looming, shouldn’t the government be discouraging motorists from using excess gasoline? In Europe, the taxes on fuel are higher then in the United States and consequently there is less gas consumption. If anything, our government should be encouraging people to reduce their gas consumption. How about increasing hybrid credits?
7. Increased Demand = Higher Prices
Many economists are claiming that lower prices will correlate directly to an increase in demand, which on the open market will likely increase the cost of fuel. Some argue that since gasoline is traded on the world market that we will not see a price increase. However, it is obvious that if gas was cheaper people would use more of it.
8. Continued Record Oil Profits
With the increased demand that would result from a gas tax holiday, some estimate that it would give even more revenue to the big oil corporations. These corporations already post record breaking profits every quarter for the last five years. Instead of lowering fuel taxes on consumers, why not increase taxes on the oil corporations?
9. Does Not Solve Anything
A gas tax holiday ignores the bigger problem; this country is dependent on foreign oil. It will do nothing to solve this problem. Gas prices are increasing at alarming rates and a small tax break is not going to stop prices from increasing in the long run.
10. Bottom Line: 30 Bucks
Let’s face it, all you really get under a gas tax holiday is about $30. Some estimates from Senator Clinton’s and Senator McCain’s camp say that this number is slightly higher, maybe $50. But what kind of effect is a $50 tax credit really going to have on the nation’s economy?
Wednesday, May 14, 2008
Sen. John McCain: a Deeper Look at his Tax Views
As the fight for the Democratic nomination continues, the voters decided that Senator John McCain would get the Republican nomination months ago. Although there were a few other conservative candidates, they all dropped out early on in the election cycle. However, other Republicans frequently criticize McCain for being too liberal and not representing the whole party. Who can forget when attention-starved, political author Anne Coulter announced she would vote for Hilary Clinton over John McCain?
This is the third and final entry in my deeper look at the presidential candidate’s tax views. Unlike Clinton and Obama, McCain’s economic views represent the views of conservatives with tax cuts for higher income individuals and no tax increases.
Make Tax Increases More Difficult
One of the most radical tax views of McCain is his desire to make additional tax increases more difficult. He hopes to follow California Republicans in requiring a 3/5 super majority for any tax increases. This will, in effect, give the minority in congress more power and leverage to negotiate trades for important votes. However, in given the current economic uncertainty, such a barrier could have devastating effects. This is especially the case under McCain’s plan to increase our military presence around the world. It will cost the government billions of dollars. But without proper funding, a war cannot continue. Yet, with McCain’s plan it would be difficult to pass tax increases to cover these military expenses.
Alternative Flat Tax System
Although McCain does not support an outright switch to a flat tax, he is making strides towards one. Like any Republican, McCain is not a big fan of our current progressive tax system. His plan is to expand the 15% tax bracket to lower taxes on millions of middle income Americans. Under his plan, the ceiling for the 15% bracket would increase from $43,050 to $70,000 for married couples filing jointly, and from $25,750 to $35,000 for single taxpayers.
The more revolutionary aspect of his plan is the offering of an optional flat tax system. This system would be held out as an alternative to the current progressive system and the myriad of credits, exemptions, deductions, carryover rules, and different tax rates for different forms of income. McCain’s plan would be to tax all taxpayers on all income sources at one single rate. The flat rate would be set at 19% for first two years, 17% thereafter.
McCain’s tax cut plan is estimated to cost the federal government about $240 billion in the next five years, and over $500 in 10 years. However, these are early estimates and with current inflation levels, his plan could cost even more.
When speaking about his plan to fix the tax code, McCain claimed that, "the tax code now requires $140 billion of American families' income to prepare their tax returns." Unfortunately, he greatly overestimated this number. The exact cost attributed to individual taxpayers was only $65 billion, and some estimate the total at a much lower $20 billion. Although McCain's camp said he was drawing his figures from a 2005 report by the President's Advisory Panel on Federal Tax Reform, the study was not just on families, it included both individual and business taxes
Gas Tax Holiday
The Gas Tax Holiday is one of the few tax proposals that are supported by both McCain and Clinton. As I have mentioned before, this plan is to stop the collection of federal taxes on gasoline and diesel from Memorial Day to Labor Day. Currently the federal government collects an excise tax in the amount of 18.4 cents for gasoline and a 24.4 cents for diesel. Some estimates have cited average savings of $70 per person, but the exact numbers are widely disputed.
Although the phrase “gas tax holiday” sounds good, this holiday is getting a lot of criticism for being nothing more then a campaign gimmick. Within a few days of the announcement 200 of the top economists came forward saying the plan was worthless. Many claim that lower prices would lead to more demand, and only the big oil companies would get anything out of the holiday.
Repeal Alternative Minimum Tax
In addition to lowering taxes on middle income families, McCain also wants to repeal the Alternative Minimum Tax (AMT), which would basically be a tax cut for the upper middle income taxpayers.
“I believe that we've got to simplify the tax code,” claims McCain. “But one of the first areas we've got to go after is the alternate minimum tax, which is going to eat in to 20 million American families if we don't eliminate it, and very quickly.”
Although the AMT is very unpopular it generates billions of dollars in federal revenue. In addition, remember that the president does not have the power to just remove a tax – only congress does. If McCain wants this tax fully repealed, then he is going to have to strike a deal with congress, and it seems highly unlikely that he would get enough support to make this drastic change.
Extend President Bush Tax Cuts
Although McCain had originally voted against the Bush tax cuts, he now claims to support an extension of the plan. “I voted to extend them because it would have the effect of having a tax increase,” claimed McCain when asked about his flip-flop. “The tax cuts have increased revenues enormously. They've been very beneficial. The problem is that spending has lurched completely out of control. My proposal was to restrain spending. I do not support tax increases. And the effect of not making them permanent would have the effect of a tax increase.”
Unfortunately, changing your view on important issues is suicide for a presidential hopeful. Think back to the 2004 election, and how strongly the Bush campaign pushed the flip-flop label on John Kerry. Voters do not tend to vote for someone they feel will flip on an issue, yet if McCain wants to win the election he is going to need to.
Cut Corporate Tax Rates
Another tax cut McCain supports is cutting the corporate tax rate from 35% to 25%. The United States has one of the highest corporate tax rates in the developed world. If we want businesses to stay in this country then we need to keep our tax rates competitive. McCain’s plan does just that.
Revisions to Charitable Contributions
Another controversial component of McCain’s tax plan is his hope to revise the current laws on charitable contributions. Under his plan, taxpayers that give charitable contributions in the form of stock, real estate, bonds, or artwork would not be able to take a tax deduction for the current, inflated value of the gift. Instead, they would only be allowed to take a deduction for the original cost of the asset.
McCain claims this would only affect the richest Americans who take advantage of this loophole to reduce their tax liabilities. However, the plan has been met with loud criticism. The current administration has publicly stated “anything that would take money away from a charity is a step in the wrong direction.”
“Wealthy Americans shouldn’t get a tax write-off for contributing a fancy painting or an overvalued stock,” responded a spokesperson for McCain. “Bush is protecting his wealthy donor base at the expense of the middle class.”
Health Insurance Tax Credit
When it comes to health care, McCain wants to give more responsibility and control to individual patients. His plan would remove current tax breaks given to employers to provide health insurance, and replace it with a $5,000 credit to families who purchase their own health care. He suggests that it would encourage choice and competition in the market, thus lowering current prices. “I’ll work tirelessly to address the problem,” Mr. McCain claimed in a speech at the University of South Florida. “But I won’t create another entitlement program that Washington will let get out of control. I won’t do it. Nor will I saddle states with another unfunded mandate.”
This is the third and final entry in my deeper look at the presidential candidate’s tax views. Unlike Clinton and Obama, McCain’s economic views represent the views of conservatives with tax cuts for higher income individuals and no tax increases.
Make Tax Increases More Difficult
One of the most radical tax views of McCain is his desire to make additional tax increases more difficult. He hopes to follow California Republicans in requiring a 3/5 super majority for any tax increases. This will, in effect, give the minority in congress more power and leverage to negotiate trades for important votes. However, in given the current economic uncertainty, such a barrier could have devastating effects. This is especially the case under McCain’s plan to increase our military presence around the world. It will cost the government billions of dollars. But without proper funding, a war cannot continue. Yet, with McCain’s plan it would be difficult to pass tax increases to cover these military expenses.
Alternative Flat Tax System
Although McCain does not support an outright switch to a flat tax, he is making strides towards one. Like any Republican, McCain is not a big fan of our current progressive tax system. His plan is to expand the 15% tax bracket to lower taxes on millions of middle income Americans. Under his plan, the ceiling for the 15% bracket would increase from $43,050 to $70,000 for married couples filing jointly, and from $25,750 to $35,000 for single taxpayers.
The more revolutionary aspect of his plan is the offering of an optional flat tax system. This system would be held out as an alternative to the current progressive system and the myriad of credits, exemptions, deductions, carryover rules, and different tax rates for different forms of income. McCain’s plan would be to tax all taxpayers on all income sources at one single rate. The flat rate would be set at 19% for first two years, 17% thereafter.
McCain’s tax cut plan is estimated to cost the federal government about $240 billion in the next five years, and over $500 in 10 years. However, these are early estimates and with current inflation levels, his plan could cost even more.
When speaking about his plan to fix the tax code, McCain claimed that, "the tax code now requires $140 billion of American families' income to prepare their tax returns." Unfortunately, he greatly overestimated this number. The exact cost attributed to individual taxpayers was only $65 billion, and some estimate the total at a much lower $20 billion. Although McCain's camp said he was drawing his figures from a 2005 report by the President's Advisory Panel on Federal Tax Reform, the study was not just on families, it included both individual and business taxes
Gas Tax Holiday
The Gas Tax Holiday is one of the few tax proposals that are supported by both McCain and Clinton. As I have mentioned before, this plan is to stop the collection of federal taxes on gasoline and diesel from Memorial Day to Labor Day. Currently the federal government collects an excise tax in the amount of 18.4 cents for gasoline and a 24.4 cents for diesel. Some estimates have cited average savings of $70 per person, but the exact numbers are widely disputed.
Although the phrase “gas tax holiday” sounds good, this holiday is getting a lot of criticism for being nothing more then a campaign gimmick. Within a few days of the announcement 200 of the top economists came forward saying the plan was worthless. Many claim that lower prices would lead to more demand, and only the big oil companies would get anything out of the holiday.
Repeal Alternative Minimum Tax
In addition to lowering taxes on middle income families, McCain also wants to repeal the Alternative Minimum Tax (AMT), which would basically be a tax cut for the upper middle income taxpayers.
“I believe that we've got to simplify the tax code,” claims McCain. “But one of the first areas we've got to go after is the alternate minimum tax, which is going to eat in to 20 million American families if we don't eliminate it, and very quickly.”
Although the AMT is very unpopular it generates billions of dollars in federal revenue. In addition, remember that the president does not have the power to just remove a tax – only congress does. If McCain wants this tax fully repealed, then he is going to have to strike a deal with congress, and it seems highly unlikely that he would get enough support to make this drastic change.
Extend President Bush Tax Cuts
Although McCain had originally voted against the Bush tax cuts, he now claims to support an extension of the plan. “I voted to extend them because it would have the effect of having a tax increase,” claimed McCain when asked about his flip-flop. “The tax cuts have increased revenues enormously. They've been very beneficial. The problem is that spending has lurched completely out of control. My proposal was to restrain spending. I do not support tax increases. And the effect of not making them permanent would have the effect of a tax increase.”
Unfortunately, changing your view on important issues is suicide for a presidential hopeful. Think back to the 2004 election, and how strongly the Bush campaign pushed the flip-flop label on John Kerry. Voters do not tend to vote for someone they feel will flip on an issue, yet if McCain wants to win the election he is going to need to.
Cut Corporate Tax Rates
Another tax cut McCain supports is cutting the corporate tax rate from 35% to 25%. The United States has one of the highest corporate tax rates in the developed world. If we want businesses to stay in this country then we need to keep our tax rates competitive. McCain’s plan does just that.
Revisions to Charitable Contributions
Another controversial component of McCain’s tax plan is his hope to revise the current laws on charitable contributions. Under his plan, taxpayers that give charitable contributions in the form of stock, real estate, bonds, or artwork would not be able to take a tax deduction for the current, inflated value of the gift. Instead, they would only be allowed to take a deduction for the original cost of the asset.
McCain claims this would only affect the richest Americans who take advantage of this loophole to reduce their tax liabilities. However, the plan has been met with loud criticism. The current administration has publicly stated “anything that would take money away from a charity is a step in the wrong direction.”
“Wealthy Americans shouldn’t get a tax write-off for contributing a fancy painting or an overvalued stock,” responded a spokesperson for McCain. “Bush is protecting his wealthy donor base at the expense of the middle class.”
Health Insurance Tax Credit
When it comes to health care, McCain wants to give more responsibility and control to individual patients. His plan would remove current tax breaks given to employers to provide health insurance, and replace it with a $5,000 credit to families who purchase their own health care. He suggests that it would encourage choice and competition in the market, thus lowering current prices. “I’ll work tirelessly to address the problem,” Mr. McCain claimed in a speech at the University of South Florida. “But I won’t create another entitlement program that Washington will let get out of control. I won’t do it. Nor will I saddle states with another unfunded mandate.”
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Study Shows Capital Gains Increase Won’t Impact Investing
A study from Bloomberg has come out claiming that affluent investors are not likely to alter their investments if the capital gains tax rate were increased by a small margin. This study goes against claims from Sen. John McCain who has claimed that it would stop upper income Americans from investing.
According to the Bloomberg and Los Angeles Times investor poll, “69 percent of upper-income investors say a raise in the capital gains tax to 20 percent from 15 percent wouldn't cause them to sell assets they would otherwise hold.”
“The poll of 2,208 adults nationwide included 607 investors with household incomes of at least $100,000 and was conducted May 1 to May 8. The investor group has a margin of sampling error of plus or minus 4 percentage points.”
The nationwide poll has a large sample size, and was conducted by two credible news outlets. However, the poll does not mention how investors would react to Obama’s plan to nearly double the Capital Gains tax rate. I assume that it would be a lot lower then 69 percent.
According to the Bloomberg and Los Angeles Times investor poll, “69 percent of upper-income investors say a raise in the capital gains tax to 20 percent from 15 percent wouldn't cause them to sell assets they would otherwise hold.”
“The poll of 2,208 adults nationwide included 607 investors with household incomes of at least $100,000 and was conducted May 1 to May 8. The investor group has a margin of sampling error of plus or minus 4 percentage points.”
The nationwide poll has a large sample size, and was conducted by two credible news outlets. However, the poll does not mention how investors would react to Obama’s plan to nearly double the Capital Gains tax rate. I assume that it would be a lot lower then 69 percent.
Tuesday, May 13, 2008
Another Tax Case in the Media
With taxes and rebate checks still fresh on everyone’s mind, another story of unpaid taxes has gotten the attention of the national media. But this time it is not a celebrity, the defendant in question is the famous civil rights activist Reverend Al Sharpton. Records obtained by The Associated Press show that Sharpton and his businesses owe about $1.5 million in unpaid taxes and fees.
According to the report, Sharpton’s lawyers have been trying to negotiate with the federal government for about a year. They are disputing the total debt amount, and have been trying to pay off some of the debt related to unpaid workers compensation and unemployment insurance. However, Sharpton is not accepting full blame for the tax liability and points to problems in the government.
"Whatever retaliation they do on me, we never stop," Sharpton told the AP. "I think that that is why they try to intimidate us. The infrastructure was trying to keep up with that pace, and it was not a perfect fit. The National Action Network may not have been perfect, but nothing was going on that was untoward."
According to the report, Sharpton’s lawyers have been trying to negotiate with the federal government for about a year. They are disputing the total debt amount, and have been trying to pay off some of the debt related to unpaid workers compensation and unemployment insurance. However, Sharpton is not accepting full blame for the tax liability and points to problems in the government.
"Whatever retaliation they do on me, we never stop," Sharpton told the AP. "I think that that is why they try to intimidate us. The infrastructure was trying to keep up with that pace, and it was not a perfect fit. The National Action Network may not have been perfect, but nothing was going on that was untoward."
Local Teen Girl Plays on Boy’s Baseball Team
Check out this video on Yahoo, of a news report on a local teen girl. She is the only girl to play on the boy’s baseball team at a nearby high school. Gabby Sanchez is a freshman at Rio Linda High School and has already made it onto the Junior Varsity baseball team, playing along with older male students.
It warms my heart to hear stories like this one. For those of you who do not already know, I absolutely love baseball, and have been playing my entire life. At the age of 11, I became the first female in the history of California to play little league baseball on an all boys’ team. Then when I was 12, I was selected as an All-star player. But Gabby takes the cake.
I strongly encourage Gabby to continue doing what she loves, and to not be concerned about gender stereotypes or what anyone else has to say. Follow your dreams, and do not let anything stand in your way.
It warms my heart to hear stories like this one. For those of you who do not already know, I absolutely love baseball, and have been playing my entire life. At the age of 11, I became the first female in the history of California to play little league baseball on an all boys’ team. Then when I was 12, I was selected as an All-star player. But Gabby takes the cake.
I strongly encourage Gabby to continue doing what she loves, and to not be concerned about gender stereotypes or what anyone else has to say. Follow your dreams, and do not let anything stand in your way.
IRS Commissioner Douglas Shulman Speaks to ABA
The IRS’ website has posted the transcript of remarks made by current IRS Commissioner Douglas Shulman before the American Bar Association. Below are a few quotes I found particularly interesting.
“As I settle in to my new role, it becomes clearer to me each day what a privilege it is to be the Commissioner of the IRS. I am taking every opportunity to listen and learn — both internally with the IRS workforce, and externally with important constituencies: Congress, taxpayers, tax practitioners, foreign tax authorities, and other colleagues in the federal government.”
“We must continue on the path to modernizing the IRS. When I think of modernizing, I am not merely speaking about building new technology. We need to ensure that our systems, processes and people reflect the changing environment in which both individual taxpayers and businesses operate.”
“Another critical issue is our need to target the root causes of noncompliance, and look for opportunities to improve voluntary compliance rates.”
“In my view, a crucial part of the path forward is through increased transparency. When all parties are working from the same information, the opportunity for miscommunication and misunderstanding decreases dramatically. But transparency alone is not sufficient. With transparency comes the need for trust among the players in the tax system, and a responsibility of the tax authorities to use information appropriately.”
“As I settle in to my new role, it becomes clearer to me each day what a privilege it is to be the Commissioner of the IRS. I am taking every opportunity to listen and learn — both internally with the IRS workforce, and externally with important constituencies: Congress, taxpayers, tax practitioners, foreign tax authorities, and other colleagues in the federal government.”
“We must continue on the path to modernizing the IRS. When I think of modernizing, I am not merely speaking about building new technology. We need to ensure that our systems, processes and people reflect the changing environment in which both individual taxpayers and businesses operate.”
“Another critical issue is our need to target the root causes of noncompliance, and look for opportunities to improve voluntary compliance rates.”
“In my view, a crucial part of the path forward is through increased transparency. When all parties are working from the same information, the opportunity for miscommunication and misunderstanding decreases dramatically. But transparency alone is not sufficient. With transparency comes the need for trust among the players in the tax system, and a responsibility of the tax authorities to use information appropriately.”
Thursday, May 08, 2008
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.
Wednesday, May 07, 2008
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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Bush hails early delivery of stimulus checks and hopes they will boost weaker economy.
Clinton-McCain gas tax holiday slammed as bad idea.
States get in on calls for a gas tax holiday.
Duff & Phelps announces formation of strategic tax advisory services practice.
Dollars for defense: war, taxes, and sacrifice.
Finally, an economist supports Hillary’s gas holiday.
Who said taxes were fair?
Clinton-McCain gas tax holiday slammed as bad idea.
States get in on calls for a gas tax holiday.
Duff & Phelps announces formation of strategic tax advisory services practice.
Dollars for defense: war, taxes, and sacrifice.
Finally, an economist supports Hillary’s gas holiday.
Who said taxes were fair?
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.
Friday, April 25, 2008
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."
"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.
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.
Wednesday, April 23, 2008
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:
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.
Latest Good Reads
Is big business getting bigger by cheating?
If we're special, can we ignore taxes and user fees?
Taxpayer must file joint return to get innocent spouse relief
Who gets a "negative inheritance" and why?
IRS solicits recommendation for 2008-2009 guidance priority list
IRS launches political activity compliance initiative for 2008 election
If we're special, can we ignore taxes and user fees?
Taxpayer must file joint return to get innocent spouse relief
Who gets a "negative inheritance" and why?
IRS solicits recommendation for 2008-2009 guidance priority list
IRS launches political activity compliance initiative for 2008 election
Wednesday, April 16, 2008
Latest Good Reads
Celebrity tax scandals.
IRS disciplined 2.3% of its 100,000 employees in 2007.
Presidential candidate John McCain finally unveils his tax plan.
Quiz: English "Legalese" vs. "Plain English."
The dual subsidy theory of charitable deductions.
Random thoughts about the Euro-Yen currency pair.
Debt consolidation advice.
IRS disciplined 2.3% of its 100,000 employees in 2007.
Presidential candidate John McCain finally unveils his tax plan.
Quiz: English "Legalese" vs. "Plain English."
The dual subsidy theory of charitable deductions.
Random thoughts about the Euro-Yen currency pair.
Debt consolidation advice.
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.”
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.”
Tuesday, April 15, 2008
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
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
Monday, April 14, 2008
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.
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.
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.
Latest Good Reads
IRS audits of big companies fall to all-time low
Citizens for tax justice: on Bush's impact on "Tax Day"
Getting more specific with that withholding question
Gay couples face higher tax bills
April 15 filing deadline is tomorrow
Don’t cheap out at the post office
If you think your taxes are unjust, just think again
Top 5 tax paper downloads
Citizens for tax justice: on Bush's impact on "Tax Day"
Getting more specific with that withholding question
Gay couples face higher tax bills
April 15 filing deadline is tomorrow
Don’t cheap out at the post office
If you think your taxes are unjust, just think again
Top 5 tax paper downloads
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.
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
Sunday, April 13, 2008
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
Saturday, April 12, 2008
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
Friday, April 11, 2008
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.
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
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
Wednesday, April 09, 2008
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
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
Monday, April 07, 2008
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
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
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
Sunday, April 06, 2008
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.
Saturday, April 05, 2008
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.
Friday, April 04, 2008
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.
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.
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