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March 2013

Happy Easter. I hope it's been, and continues to be, a wonderful day, regardless of how you celebrate this Sunday. If you have young kids, you likely have been dying eggs, hunting eggs and now are looking for ways to consume the eggs. It's also a good time to think about taxes, not only your current tax return, which is due in just a couple of weeks, but also some tax planning. Photo by Gabriele Corno So on this egg-centric day, today's Daily Tax Tip looks at ways to spread your tax planning eggs across different baskets. Specifically, you should... Read more →


The last weekend of March means that the annual tax-filing deadline is just around the corner. But plenty of other tax-related things happened last week at my other tax blog. Taxes, specifically estate taxes, play a key role in one of the two same-sex marriage cases heard last week by the U.S. Supreme Court. Depending on what the nine justices decide, tax season soon could be very different for some individuals whose marriage is recognized by their states but not by Uncle Sam under the federal Defense of Marriage Act, or DOMA. Taxes also came up in another area where... Read more →


Being a homeowner offers many benefits, not the least of which is the variety of residential tax breaks. The hubby and I have owned five homes during our 30-plus years together. But they've all been our primary residence. We've never had the urge to own rental property. The main reason we never added real estate to our investment mix is that taking care of one house at a time is plenty. I definitely do not want to be hassling with two or more properties simultaneously. We have friends who swear by the money-making power of rental real estate. We've also... Read more →


Things have been tough for the Internal Revenue Service recently. The tax agency has taken some hits from the House Ways and Means Oversight Subcommittee chair (and the public) for two video tapes produced at the IRS' own studio in a Maryland suburb of D.C. Now an appellate court has refused the IRS' request that an injunction preventing testing of tax professionals be lifted. In January, a federal judge nullified IRS regulations that require preparers who aren't lawyers, CPAs or enrolled agents to pass a competency test and take annual continuing education courses. The registration component of the IRS proposal... Read more →


Monday is April Fools' Day, but it's no joke for some septuagenarians. April 1 is the deadline for some folks age 70½ to take money out of their tax-deferred retirement accounts. You know these savings plans: traditional IRAs, traditional workplace 401(k)s and several popular self-employment retirement plans. Earnings in these retirement vehicles grow tax-deferred. But Uncle Sam won't wait for his cut of your nest egg forever. So when you turn 70½, you must start taking out some of your traditional IRA et al money. These withdrawals are known as required minimum distributions, or RMDs. And for some who hit... Read more →


Kids. If your neighborhood is anything like mine, it's full of 'em. And chances are that some of those children racing bicycles down the street and yelling at each other and laughing with each other and tossing baseballs and soccer balls into your back yard were adopted. Parents have a lot of reasons for adopting children, but they share a couple of things. The process is time-consuming and expensive. Uncle Sam can't help speed up adoptions, but he can help, as today's Daily Tax Tip shows, cover some of the costs of adding a new family member. According to Adoptive... Read more →


It's tax-filing season, so you know what that means. It's also peak tax scam season. In addition to collecting Americans' tax returns (and money) this time of year, the Internal Revenue Service also keeps an eye out for tax scams. While con artists sometimes do get creative, most tax crooks tend to stick to tried-and-true scams. That's the case with IRS' annual list of tax skulduggery. All 12 scams cited this year made the agency's 2012 top 12 scam list. The only change is that more fake charitable organizations have popped up, many in the wake of Hurricane Sandy. After... Read more →


Everybody's a critic, even James Tiberius Kirk. That's right, William Shatner has weighed in on the Internal Revenue Service video parody of the original Star Trek. Shatner, whose distinctive staccato line delivery is forever connected to the Starfleet captain he brought to life on television and movie screens, is not amused or impressed. The actor delivered his criticism via Twitter: The sci-fi mini remake, which was shown at a 2010 IRS conference, and a Gilligan's Island training video were made at the tax agency's studio in New Carrollton, Md., and cost a combined $60,000. The Star Trek production accounted for... Read more →


The future of marriage is now in the hands of the U.S. Supreme Court. OK, maybe that's a bit of an exaggeration. Marriage has been around for ages and, despite what some folks say, the definition of this legal contract between two people has changed many, many times. But what the justices decide with regard to same-sex marriage could have dramatic effects on the lives of same-sex couples, both when it comes to their day-to-day lives and a variety of rights and benefits, including in the tax area. The country's highest court today heard arguments in Hollingsworth v. Perry, which... Read more →


Online shoppers, your days of tax-free purchases could soon be over. Late last week, by a 75-to-24 vote, the Senate made clear its support for a national sales tax on a wide variety of Internet purchases. The "yes" votes are this week's By the Numbers figure. The online tax vote was for an amendment to the Senate's fiscal year 2014 budget resolution. The amendment was drafted by Sen. Mike Enzi (R-Wy.) based on S. 336, the Marketplace Fairness Act, which Enzi introduced earlier this year. A companion measure, H.R. 684, is pending in the House. Supporters of the measure were... Read more →


The other shoe has dropped on the Internal Revenue Service videos under fire by a House Ways and Means Committee member. Or rather the beach flip-flop has dropped, since the second video in question is a training tape based on Gilligan's Island. Click image to go to YouTube video. In "FA Quality Island," the tax castaways discuss field assistance, or FA, the IRS term for face-to-face help provided taxpayers. You can read the IRS manual on FA if the 16-minute training skit is not enough for you. The set for FA Island isn't elaborate, but in the spririt of the... Read more →


No, the headline isn't a joke. It's part of a question considered today by Chuck Klosterman, who writes The Ethicist column for the New York Times Sunday magazine. Here's the situation: I am a tax lawyer. Is advising wealthy companies of ways to reduce their tax bills through sophisticated legal structures ethically permissible? The structures take advantage of legal loopholes in the tax legislation. NAME WITHHELD, NEW YORK Klosterman replies: The ethics of specific professions create unique realms of responsibility. In the same way that a defense attorney is ethically obligated to give his client the best possible defense —... Read more →


With the enactment of the Small Business Jobs and Credit Act of 2010, workplace retirement plans were expanded for many employees. That law made it possible for workers to convert their traditional 401(k) plans, in which money is contributed pretax and earnings grow tax-deferred, to Roth 401(k)s. Like its Roth IRA cousin, money goes into a Roth 401(k) after taxes are taken out, but eventual retirement distributions are tax free. Now, thanks to the American Taxpayer Relief Act of 2012 (ATRA), otherwise known as the fiscal cliff bill enacted this Jan. 2, it is even easier for more workplace retirement... Read more →


OK, back on track and just in time. April 15 is rapidly approaching. The tax-filing deadline, however, apparently hasn't been a problem for one professional athlete. And other folks have filed, but delays in their returns' processing have prompted them to take legal action. Both of those issues warranted closer looks last week at my other tax blog. Nick Diaz, an Ultimate Fighting Championship welterweight, confessed after a recent match that, "I've never paid taxes in my life. I'm probably going to go to jail." Later, Diaz's people said the mixed martial arts combatant was being a bit hyperbolic. But... Read more →


You know it's the heart of tax-filing season when my blogging gets jammed up. That's what happened last weekend when I missed my regular last week at my other tax blog post. That's my story and I'm sticking to it! So in addition to the regular look at what I posted last week at Bankrate Taxes Blog, I'm posting what I posted the week before. Let's just call it last last week at my other tax blog. First was a look at the ways governments use tax policy to shape individual actions and attitudes. Currently, taxes on weapons, both ammunition... Read more →


The gambling gods are going crazy today. The men's NCAA basketball tournament is in full swing and tonight's Powerball multistate lottery jackpot is at $320 million (and growing!). I don't have any money on March Madness results, but I did buy a Powerball ticket. Yep, that's my 1-in-175-million shot at the jackpot below. Feel free to play those same numbers, but I must warn you, I never win anything! Still, when the payout gets huge, I do drop a couple of dollars on a ticket. As you can see, I've opted for the cash payout of $198.3 million. I would,... Read more →


IRS boldly went too far with 'Star Trek' parody video

Lucky for the Internal Revenue Service that the House Ways and Means Oversight Subcommittee only set its phasers to stun. But it was a stinging hit nonetheless. On Wednesday, March 20, the subcommittee's chairman, Charles Boustany, Jr. (R-La), wrote to the IRS seeking release of video parodies produced in the agency's television studio in New Carrollton, Md. In addition to a take-off on the popular science fiction franchise Star Trek, the IRS also made a video based on the 1960's television sitcom Gilligan's Island. Boustany had asked in February about the productions and the IRS replied by letter, acknowledging the... Read more →


Marijuana smokers in Colorado were jubilant last year when voters passed Amendment 64 to legalize recreational use of the drug. But they aren't so happy now. Colorado lawmakers are working out how to regulate legal marijuana and it looks like taxes on the wacky weed will be a big part of the process. Recommendations approved this month by the Amendment 64 Implementation Task Force and sent to the Colorado General Assembly for further action could take more of bite out of the pocketbooks of pot smokers than their purchases of munchies. The task force suggests that when the recreational marijuana... Read more →


Attention Minnesota TurboTax users. Your state's revenue department has put that and other Intuit tax products back on the the approved vendor list. Earlier this month, Minnesota tax officials told its taxpayers "not to use Intuit (TurboTax, Lacerte, Intuit online, ProSeries) to file your Minnesota taxes electronically or on paper. Intuit has discovered multiple issues with their products." But the Minnesota Department of Revenue now has announced, "Based on information currently available, Intuit has fixed the reported errors and taxpayers can continue to use Intuit products." The tax preparation software leader also says it will provide all Minnesota customers affected... Read more →


Marches Madness thanks to taxes

I'm not a basketball fan, but I am a sports fan, so I know millions of folks -- including President Obama, who filled out his bracket picks before heading off to official business in Israel -- are following the men's NCAA tournament right now. In the spirit of March Madness, as the annual college basketball tourney is known, NPR has come up with a feature for music fans, specifically those of us who love marches. The public radio blog Deceptive Cadence is featuring those distinctive compositions in a feature it calls Marches Madness. I was in the band, concert as... Read more →