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January 2008

Rebate scammers already on the prowl

Lawmakers are still squabbling over the economy-boosting tax rebate checks, but con artists aren't wasting any time. The IRS has already received reports of identity thieves using rebate promises to try to trick people into revealing financial and personal data. The latest tax scams, which you can be sure will continue throughout this filing season, include: Rebate phone call At least one scheme is using the word "rebate" as part of the lure. Individuals get a phone call from someone identifying himself as an IRS employee. The caller then tells the targeted victim that he is eligible for a sizable... Read more →

Carnival of Personal Finance #137

The latest Carnival of Personal Finance is now available for your financial reading pleasure. Thanks to this week's host The Dividend Guy. Entitled "The Passion Edition," this 137th edition is "dedicated to those passions that keep us moving forward and provide us with all the excitement and fulfillment that life has to offer." In that regard, here are some items from the Carnival that I found particularly inspiring: Finances For Couples from Plan Your Escape takes a look at how one husband and wife manage their finances; Why the Recent Market Decline Isn’t That Bad from Advanced Personal Finance offers... Read more →

Florida homeowners approve
property tax overhaul

Sure, the presidential campaign lured a lot of folks to Florida's polling places yesterday. But to many homeowners, their vote on changing the state's property tax system was just as important. Floridians overwhelmingly approved a constitutional amendment that overhauls the state's property tax laws and saves the average homeowner $240 a year. (I blogged about the early stages of this state tax battle back in March; click here.) The savings, however, will require a trade off when it comes to local government services funded by property taxes. Amendment 1 doubles the state's $25,000 homestead exemption (except for taxes that apply... Read more →

Snipes tax fate now in jury's hands

This morning, both sides in the Wesley Snipes tax evasion trial presented their closing arguments. Now it's up to the actor's ostensible jury of his peers. The defense unexpectedly rested Monday without calling any witnesses. Rather than put a string of celebrities on the stand to underscore Snipes' argument that he simply got bad tax advice, his attorneys opted to rely on the contention that the prosecutors' case was so weak that they bore the "complete failure of their burden." Courtroom gawkers were no doubt disappointed that the trial was cut short. Among the defense's potential witnesses were Sylvester Stallone,... Read more →

Tax rebate questions

Expect to hear tonight from Dubya about how the proposed tax rebate checks will solve all our economic woes. And expect to hear from the Democrats about how that ain't necessarily so. Most folks, however, aren't too concerned about the macro-economic properties of the rebates. They are focusing on the micro-economic issues, specifically, when will I get my money and how will my personal situation affect the amount, if any, I receive? I write another tax blog for Bankrate, and readers over there sent in some questions over the weekend. You can read their queries and my answers to them... Read more →

Are Girl Scout cookies deductible? Maybe

It's one of my favorite times of the year: Thin Mint Season! I admit it. I have no willpower when it comes to Thin Mints and any kind of ice cream. I could eat a whole box of these wonderful Girl Scout cookies (ideally crumbled atop a big bowl of creamy vanilla ice cream) in one sitting. So the hubby is the keeper of the GS cookies, storing them on a high shelf in the pantry. And, when we do munch them, guarding the foil sleeve containing the addictive treats. Aside from their scrumptiousness, one of the other great things... Read more →

Electoral Compass offers candidate selection guidance

You've watched the debates, or at least the fun parts on the Internet. Talked it over with your spouse, other family members and coworkers. Read the news weeklies, daily papers and online political blogs. And sat through the TV coverage until your eyes crossed. So you know who you want in the Oval Office for at least the next four years. Right? Well, if you're still vacillating, here's one more way to help you decide: an online quiz from Electoral Compass. Electoral Compass USA 2008 is a product of Kieskompas BV, an Amsterdam-based company that, according to its Web site,... Read more →

Wondering about the tax whisperer

It's no surprise that taxes are playing a big role the presidential campaign. But the topic took a bizarre turn in the Republican candidates' debate Thursday night from Boca Raton, Fla. Conspiracy theorists say a whispered "he raised taxes" was a cue to Mitt Romney to enable him to more smoothly answer a vague question posed by NBC's Tim Russert. Decide for yourself. Below is a video clip; if your browser isn't picking up the YouTube item, watch it at this link. I guess since the debate was so low-key and polite, we needed something, anything, to spice it up.... Read more →

Erroneous tax forms sent out by SSA

Almost 3 million recipients of Social Security benefits are going to have to wait to see if they owe taxes this year. A tax statement the Social Security Administration (SSA) just sent them is wrong. The erroneous document that went out to 2.7 million retirement benefit recipients is the Social Security Benefit Statement, or Form SSA-1099. That document is needed by Social Security recipients to complete their income tax returns and determine whether their federal benefits are subject to federal tax. According to an SSA fact sheet on the error, the statements were mailed earlier this month to 53 million... Read more →

Rebate checks mean more work for IRS

Pity the poor IRS. Really. Already this filing season, the agency is scrambling to get its computer systems fully operational to deal with late changes to the alternative minimum tax (blogged about here). Now the IRS will have to handle millions of rebate checks, perhaps in the thick of filing season if the legislation moves quickly on Capitol Hill. The New York Times' tax reporter David Cay Johnston takes a look at the added burdens the rebate program will put on the IRS. Johnston notes that the rebate mailing will likely "impose major strains on the Internal Revenue Service, delays... Read more →

Rough rebate plan reached

The House leadership has worked out a basic tax rebate plan, according to the Wall Street Journal. It's the first step in getting checks ranging from $300 to $1,200 in taxpayer mailboxes in a couple of months. The newspaper says that House Speaker Nancy Pelosi and House Minority Leader John Boehner reached an "agreement in principle" in meetings last night on a bill to provide roughly $100 billion in tax rebates to individuals and about $40 billion in tax breaks for business. The rebates would be at least $300 for anyone who earned at least $3,000 in 2007, with $300... Read more →

Recession tax legislation: Does it work?

Suddenly, the economy is the big topic in the nation's capital. Welcome to our world, D.C. Economic concerns have dominated the lives of most of us out here in the rest of the country for quite a while.But now, presidential candidates are talking loudly, if not particularly coherently, about it. Tuesday, prompted by fear that the U.S. economy is faltering, the Federal Open Market Committee implemented an emergency interest rate cut. And Dubya and Congress are considering once again sending us taxpayers a rebate check (blogged about last week here). While you can never safely say the involvement of politicians... Read more →

Home office tax pros and cons

Since I'm bogged down here in my home office today and don't have a lot of time to blog, I thought a few words about the tax considerations of working from your residence might be appropriate. The Taxpayer Advocate's recent report to Congress cites government data showing the number of home offices jumped about 20 percent between 1999 and 2005. The report also estimates that slightly over half of small business are home-based. But, according to the report, "many" business owners don't take the home-office deduction. One reason home-based workers avoid it: The home-office tax deduction has long been considered... Read more →

Will your state make you pay up
on forgiven federal mortgage debt?

California will. Right now, the Golden State does not conform to the Mortgage Forgiveness Debt Relief Act of 2007 that was signed into law on Dec. 20, 2007. That means California homeowners who restructure their residential loans or lose their properties to foreclosure won't see their state tax bills reduced in the same way as their federal ones. As y'all know by now, the new law allows taxpayers who meet certain qualifications to exclude this discharged debt from their federal taxable income. That can mean substantial tax-time savings for those already cash-strapped homeowners. This often is referred to as cancellation... Read more →

MLK Day redux

Today is the official federal holiday commemorating the life of Dr. Martin Luther King, Jr. Last week, on Dr. King's actual birthday, I posted an item that offered some ways to celebrate. It also discussed the earned income tax credit, or EITC. This EITC was created almost a decade after Dr. King's death, but it was developed in the same spirit of trying to help others reach their goals. In this case, the target is taxpayers who work at the lower end of the pay scale and who lose a large chunk of their take-home pay to Social Security withholding... Read more →

What a bargain! Or is it?

As I was walking into my local HEB grocery store the other day, the product bin below caught my eye. Wow! $0! I didn't really need any small plastic garden tools, but I was sorely tempted to pick up a few at that bargain price. While the bin's price tag was no doubt the work of some bored employee or mischievous shopper, it does offer a catchy visual reminder to always carefully check shelf prices. Take, for example, this item from The Consumerist: A big box store shopper who was paying attention noticed -- and recorded for the blogosphere --... Read more →

Is a mortgage insurer crisis imminent?

Jim Cramer is a little annoying. OK, he's a lot annoying. But on Friday, Cramer's comments on the Administration's possible stimulus package caused a bit of pause in our household. Speaking on Hardball -- yeah, that's one of the joys of working from home; cable TV in the afternoon -- the "Mad Money" host scoffed at just how much of a boost tax rebates of $800 per person (twice that for joint filers) would do the economy. A few more bucks to buy Nike shoes or a new suit at Men's Wearhouse is "crazy," said the voluble Cramer. I tend... Read more →

Uh oh! Audits are up

When you work on your tax return this long holiday weekend, and I know that's what most of y'all will be doing, take extra care. The IRS just announced preliminary audit statistics for fiscal 2007 (Oct. 1, 2006, through Sept. 30, 2007) and the news is not encouraging for those of us who already fear we'll make a mistake that'll catch the IRS' eye. Enforcement efforts increased again last year. That's not really what we want to hear as we struggle to get our 1040s done. But there's one relative bright spot for most of us. Tax examiners have been... Read more →

Celebrity tax trouble slide show

Wesley Snipes, whose tax evasion trial began this week, is in good -- well, that's probably not the most appropriate word, but you know what I mean -- company. ABC News has put together a slide show of 16 celebrities, including Snipes, who've had run-ins with the the tax man. The network's full list, with links to mentions of the stars' tax troubles here on the ol' blog, includes: Wesley Snipes, actor Joe Francis, "Girls Gone Wild" video series creator Marc Anthony, singer, actor, husband of Jennifer Lopez Al Capone, the real OG Andre Agassi, tennis champion Boris Becker, tennis... Read more →

Supreme Court gives IRS win in trust case

The U.S. Supreme Court ruled today that deductions for trusts and estates are subject to the same 2 percent of adjusted gross income limits that individual taxpayers face. The case, Knight v. IRS, revolved around a relatively tiny tax amount: $4,448. Yeah, I do think almost $4,500 is a tidy sum. But I use the word relative because that amount was in connection with a tax return filed by a trust established for the heirs of the Pepperidge Farm company. When you're talking about Pepperidge Farm (yes, I said "fahhrm" in my head as I typed that), you're not just... Read more →