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February 2012

Who is the average taxpayer?

Thanks to the baring of personal tax data during the battle to win the Republican presidential nomination, we've gotten good looks at some decidedly uncommon tax returns. Mitt Romney, again the frontrunner after primary victories in Michigan and Arizona, had income of $21.7 million in 2010 and $20.9 million in 2011. But because most of Romney's earnings came from capital gains and his compensation agreement at Bain Equity, which taxed that money as carried interest also subject to the low investment rate, Romney's effective tax rate was just under 14 percent. Newt Gingrich paid around 32 percent in taxes on... Read more →


Tax Carnival fans, your wait is over! The collection of tax data, information and tips that was supposed to go live yesterday is finally here. I could offer all sorts of excuses explanations, but I prefer to put a more positive spin on the delay. The 98th Carnival of Taxes is simply taking advantage of Leap Year's extra day. So with thanks for your patience, let's get jumping! We leap right into a tax situation that found a bit of consistency, at least as much as Congress allows nowadays. Peter notes that if the payroll tax cut had expired this... Read more →


Wild, wacky and illegal tax deductions

Americans seem to be their most creative when they're doing their taxes. They will try to convince their tax pros and the IRS that a wide range of weird claims are legitimate ways to reduce their tax bills. One area that always gets a lot of envelope pushing is dependents. First off for my friend and fellow feline lover Tracy, I must once again tell you that no, you still cannot claim your cat as your dependent. The answer is the same for dog lovers. Sorry pet owners. Also don't try these wild claims that were caught by members of... Read more →


What should we expect from Berkshire Hathaway's corporate tax return? Judging from CEO Warren Buffett's annual letter to shareholders, the filing could make it into the Guinness Book of World Records. In lauding the efforts of many of the company's employees, Buffett cited "the 23 men and women who work with me at our corporate office" and noted how the "group efficiently deals with a multitude of SEC and other regulatory requirements and files a 17,839-page Federal income tax return – hello, Guinness! – as well as state and foreign returns." Yep, the Oracle of Omaha's business return, which is... Read more →


Be a good tax client

Most taxpayers get professional tax help. And there's a lot of advice on how to hire a tax pro that fits your needs. But it's a two-way street. While you must carefully select and check out your tax preparer, the professional with whom you work to meet your tax responsibilities depends on you to get the job done. So today's Daily Tax Tip is the quick list below of ways you can help your tax pro do the best possible job. Be professional: Even if you're a personal friend with your tax pro, tax filing is a business arrangement. So... Read more →


Nine movies are nominated for Best Picture at tonight's Oscars ceremony. Five of those productions took advantage of state film tax credits, according to research done by Stateline. Since it's Academy Awards Sunday, that number is this week's By the Numbers honoree. In fact, reports the magazine, four of the nine movies that were made outside the United States got incentives from overseas governments to entice them to film in those countries. The only movie that didn't get any government financial aid, says Stateline, was "The Artist." If, as expected, that black-and-white mostly silent flick takes home the statuette for... Read more →


NASCAR kicks off every new racing season with its biggest race, the Daytona 500. This 2012 event is getting added attention thanks to driver Danica Patrick and two Republican presidential candidates. Danica daze: OK, the really big news first. Danica will be making her Daytona 500 debut. She won the pole for yesterday's Nationwide Daytona race (she'll be running in this second-tier series all year long), but crashed out early. She'll take the green in today's Sprint Cup race from 29th on the grid. Yes, Danica fans, I know that her starting position today is ahead of series regulars Clint... Read more →


The Republican presidential nomination process is continuing, much to the dismay of Mitt Romney, who had hoped to have it sewn up by now. But things keep getting in his way. Some folks, however, aren't too concerned about politics. They just want to know where the heck their tax refunds are. They are having as disappointing a time as Romney. Both of these topics were discussed last week at my other tax blog. First, to politics. President Obama released his corporate tax revamp proposal. Romney countered with his plan. But another corporate tax issue, Marriott's use of a disallowed tax... Read more →


Plastic surgery usually isn't tax deductible

Hollywood's biggest night is almost here. For film fans, it's a chance to see not only who takes home an Academy Award, but to check out the annual red carpet parade. The television commentators focus on the designer duds, but the hubby and I debate which stars got the best and worst plastic surgery jobs. Most years, it's a heated competition for the worst nip and tuck. MakeMeHeal.com is getting a head start on the annual Oscars facelift (or more) guessing game with speculation on which supporting actress nominees have had a little work done. Don't worry, ladies. The men... Read more →


And the winner is "The Descendants." OK, so it was the only nomination in this obviously fake Academy Awards category. But still, film and tax geeks (and yes, there are some of us who fall into both categories) are jazzed. That the plot of this George Clooney movie involves estate planning got attention from the tax world a couple of months ago when the movie and its cast were Golden Globe award contenders. The film won the Foreign Press Association's award for best drama and Clooney was named best actor. Now with the Oscars being handed out on Sunday, all... Read more →


It was an amazin' haul of New York Mets memorabilia that the baseball team's former clubhouse manager amassed. Too bad Charlie Samuels' collection techniques were illegal. While the MLB club for which he worked most of his adult life was working out on a Florida spring training field, Samuels was in a Queens court admitting that he cashed in on millions of dollars worth of signed team hats, jerseys and other souvenirs that he stole. Samuels was charged with stealing 507 jerseys, 828 bats, 304 hats, 22 batting helmets and 10 equipment bags. The items, valued at almost $2.3 million,... Read more →


OK, the Internal Revenue Service's online refund tracking tool Where's My Refund? is still there at the agency's website. But it just doesn't have correct or up-to-date information for a lot of taxpayers. The refund locator tool problem stems from the same computer upgrades implemented this filing season to stop tax identity theft. As I blogged back in January, the tax anti-fraud IT "improvement" has caused some tax refunds to be delayed. Now that same well-intentioned crime-stopping effort is preventing many taxpayers from even getting an update on the status of their refunds. Yep, technology is great until it isn't.... Read more →


The stock market topped 13,000 today for the first time since 2008 before ending the day just under that mark. So naturally, I'm thinking about stock losses. Seriously, though, even when the overall market does well, it's all too possible to have some individual holdings that stink. But those poorly performing assets could have some value at tax time. Today's Daily Tax Tip is a reminder that you can use a capital loss to help erase any taxable capital gains. Or if you don't have any gains you can use up to $3,000 of the losses to reduce your ordinary... Read more →


After today's Fat Tuesday celebrations a lot of folks probably will be looking at ways to trim the extra pounds they added. Uncle Sam might be able to help. But only if your diet program meets the many tax deduction requirements. On advice of a doctor: The major tax rule before you can write off any weight loss program expenses is that they be medically necessary. That means that you need more than just your judgmental self-diagnosis after you step on the scales. Your doctor must concur with your conclusion. The most common situations where a doctor demands you drop... Read more →


Many Americans for whom this third Monday in February is a day off from work are spending it at local stores, picking up some sales items. From 2004 through 2011, purchases made during Presidents' Day and other sales throughout those years also were a helpful tax tactic. That's because for those tax years, federal taxpayers had the option to choose whether to claim an itemized deduction of state and local income taxes or state and local sales taxes. And this tax deduction choice is today's Daily Tax Tip. Taking the bigger deduction: The option to deduct sales taxes is a... Read more →


The start of the summer driving season is more than three months away, but gasoline prices already are going through the roof. The U.S. Energy Information Administration says the average price for gas in the United States on Feb. 13 was $3.523 per gallon. That's four cents more than the previous week and 38 cents higher than that week a year ago. It's also the highest that U.S. gas has ever been at this time of year. That's good enough -- or bad enough if you have to drive a lot -- to earn this week's By the Numbers recognition.... Read more →


One of the best tax breaks around is the home sale exclusion. When a single homeowner sells his house, $250,000 of profit is tax free. The nontaxable amount is $500,000 for a married home-owning couple that files jointly. The current real estate market is horrid in many parts of the country, so making that much on a home sale and facing taxes is not a big concern for many. But things eventually will turn around. And when the market does recover and people sell their homes, they'll want to make sure they get the most out of the home sale... Read more →


The Republican presidential wannabes are still duking it out by waving their tax returns at each other. Meanwhile, Congress actually passed a bill before Representatives and Senators took a break from Washington. Didn't they just get back in town in Janaury? Anyway ... Both of these topics were discussed last week at my other tax blog. First, the momentous event of Republicans and Democrats agreeing just enough to pass a piece of legislation, specifically the payroll tax cut extension. Last week began with the announcement that the payroll tax cut extension was nearer. On Friday, the payroll tax cut was... Read more →


Free tax help

Free is good. Free tax help is better. There are lots of good no-cost tax resources via the Internet. To paraphrase the flight attendant spiel as the plane wheels to the gate, I know you have beau-coup options when surfing for tax info. And while I sincerely appreciate all y'all who drop by for the daily posts and tax tips, I'm a firm believer that you can never have too much tax information. So today's Daily Tax Tip is a look at some other ways and places to get some low- or no-cost help when you're working on your taxes... Read more →


You can head for the Presidents Day sales this long weekend knowing that when March arrives you'll still have a few extra dollars in your paychecks. The House and Senate have passed a continuation of the payroll tax cut through the rest of this year. The lower payroll tax rate produces around $20 more a week for a worker earning $50,000 a year. Payroll tax cut refresher: Just in case you've forgotten (or tried to), workers have enjoyed for the last 13½ months a 2 percentage point reduction in the tax taken out of their paychecks to cover Social Security.... Read more →