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March 2008

DMWT featured in WSJ Blog Watch

As I was finally catching up on my reading today, I got a pleasant surprise: Don't Mess With Taxes received a very nice mention in the Wall Street Journal's Blog Watch column. Beckey Bright, an editor for WSJ Online, included the ol' blog along with two other tax blogs, TaxProf and TaxVox. I am honored to be in such esteemed company. You can read Ms. Bright's comments on tax blogs, as well as several that focus on other topics, here. In case you don't have a subscription to the WSJ, here's the blurb about DMWT: This blog by Texas journalist... Read more →

Placing blame for the subprime crisis

James Pethokoukis, the money and politics blogger for U.S. News & World Report, has an interesting piece today on a conversation he had with former Senator Phil Gramm. The question Pethokoukis was looking to answer was whether the Texas Republican, who's now John McCain's campaign economic adviser, was at least partially to blame for the subprime crisis. That charge has been leveled by political opponents who say 1999's Gramm-Leach-Bliley Act, that allowed banks, securities companies, and insurance companies to directly compete with one another, led to the creation of financial conglomerates. Those mega-financial businesses then starting offering ill-advised mortgage products... Read more →

Capone tax investigation info now public

All this talk about IRS investigations brings to mind the most notorious tax evasion case of all time: the conviction of legendary gangster Al Capone. The Chicago mobster, reputed to have ordered hundreds of hits, was felled in 1931 not by traditional lawmen or criminal rivals, but by the tax man. And now the IRS has released some of its records from that historic case. As it was complying with a Freedom of Information Act request for a copy of Special Agent Frank Wilson's report on the 1931 case, the IRS discovered additional documents related to the three-year Capone investigation.... Read more →

Television, taxes and audits, oh my!

Vidiots like me are so relieved that the writers are settled in and new, post-strike programming is finally appearing on our television screens. I doubt that many of the new story lines will focus on taxes, but not to worry tax fans. AccountingWeb has gone through the classic TV vault and found a couple of tax-related episodes. There's the George Burns and Gracie Allen Show episode in which they work with their tax accountant. While sorting through the couple's records, the tax pro wonders why Gracie has included a receipt for a $50 full-length mirror in the couple's medical expenses... Read more →

Combat pay and the stimulus rebate

If you or a family member is in the military and received combat pay, make sure you count that income when figuring just how much of a stimulus package rebate check you can expect later this year. Combat pay is nontaxable income, and nontaxable income normally would not count toward the rebate edibility. But for the stimulus package purposes, the IRS has announced that members of the armed forces can include combat pay on their 2007 or 2008 tax returns if it helps them qualify for the rebate. This applies to regular military, as well as to members of the... Read more →

Texas tops tax procrastination list

I meant to blog about this a couple of days ago, but I just didn't get around to it. Actually, it's only fitting that I pushed the posting back, since it's about putting off tax filing and I live in Austin, one of the cities on TurboTax's 7th Annual Top 10 Tax Procrastinating Cities list. Intuit, maker of the popular tax software, determined the 2008 rankings by the number of tax returns electronically filed online via the TurboTax Online service from April 14 through April 17, 2007. Below is this year's list, along with Intuit/TurboTax's assessment of the procrastination order.... Read more →

Virginia returning transportation 'taxes'

Late last month, the Virginia Supreme Court threw out the state's $300 million tax plan, ruling that the General Assembly violated the Virginia Constitution by giving unelected, regional panels in Northern Virginia and Hampton Roads the power to tax. In the wake of the unanimous ruling, the Department of Motor Vehicles and the Department of Taxation stopped collecting taxes imposed by the Northern Virginia Transportation Authority. And now the state has created a plan to refund the more than $24 million collected earlier this year from seven taxes and fees paid by Northern Virginia residents and visitors. The two vehicle... Read more →

'Super Saturday' offers free filing help
for select stimulus rebate recipients

Do you need help completing your tax return? Then mark Saturday, March 29, on your calendar. That day the IRS and several other community organizations will be out in force to help folks complete their 1040s. Even better, the help is free. But there is one caveat. The filing service is only for individuals who usually don't have to file a return. That's right. The outreach effort was created to help folks who will be filing out a tax return for the first time in years. The reason they haven't recently submitted a 1040? They didn't make enough to require... Read more →

Refuting the rebate solution

"We need to stop and ask whether we can afford to spend $117 billion that the Treasury Department does not have on a program of dubious effectiveness." That's the assessment of Bruce Bartlett, a former official in the Reagan and elder Bush administrations, in an op-ed piece that questions the value of the economic stimulus payments. "It simply makes no sense to send out checks to people who have no need for it as some kind of election-year bribe to vote for incumbents of both parties." writes Bartlett in Monday's New York Times (yeah, I'm a tad late in getting... Read more →

Accelerate your rebate by flipping
spousal Social Security numbers

The ingenuity of the American taxpayer is something to behold. I'm talking about the creative way that some married couples have devised to speed up receipt of their economic stimulus package payment, aka tax rebate. As blogged about last week, the IRS has announced the delivery schedule for the checks based on the last two digits of a taxpayer's Social Security number. Some taxpayers who included direct deposit information on their 2007 returns will see the stimulus payments show up in those accounts as early as May 2. Mailed checks will take a bit longer, but the IRS says the... Read more →

Beware these bad tax eggs

By now on this Easter Sunday, the kids probably have already dived into their Easter baskets, consuming way too much chocolate, in the form of hollow-eared rabbits, and sugar, courtesy of those gooey little Peeps. And, of course, there are the Easter eggs. There are many explanations as to why the thing of omelets came to be "hunted" on this special Christian holiday; you can read some of them in this Wikipedia entry. Hunting for Easter eggs naturally brings to mind, for tax geeks anyway, our annual hunt for tax breaks. I'll post more on these soon; in the meantime,... Read more →

Britons deep in debt, too

The United States and Great Britain share more than a mostly common language. Consumers in Britain, just like many here in America, have been on a debt-financed spending spree for most of the last decade. That's made the United Kingdom the most indebted rich nation in the world, according to an article in today's New York Times. The newspaper reports that our fellow shoppers across the pond have racked up a record £1.4 trillion in debt ($2.8 trillion U.S.). That's more than the country’s gross domestic product. Here in the U.S., personal debt, including mortgage loans, is $13.8 trillion, slightly... Read more →

Coffee, taxes, closure

The connection between taxes and coffee is well documented. Untold pots are brewed in the wee hours leading to April 15 as taxpayers work to get their 1040s filed on time. But the caffeine/tax link for Nicholas Cho hasn't worked out so well. Cho is the proprietor of Murky Coffee, a popular Washington, D.C., coffee shop. He purchases fair-trade beans, offers a teacher discount and gives away coffee grounds for use as organic fertilizer. Those are just the kind of actions that have endeared him to his Capitol Hill clientele. Unfortunately, he's not so beloved by the D.C. Office of... Read more →

Deductible spring cleaning

Happy First Day of Spring 2008! Those bluebonnets there to the right have sprung up in our front yard, valiantly fighting their way through the dandelions that also have had impressive growth spurts following recent spring rains here in Austin. Although my gardening hubby would vehemently disagree, I don't really begrudge the dandelions their day, too. You know what they say: A wildflower is just a weed with a good PR agent. This traditional season of renewal is naturally associated with clearing out and reorganizing your life. But this year, instead of simply throwing away clothes and household goods you... Read more →

Iraq war protesters arrested at IRS HQ

More than 30 anti-war protesters were arrested today when they crossed a barricade and blocked entrances at the IRS building in Washington, D.C. The demonstrators said they were focusing on the IRS because it gathers taxes used to fund the Iraq war. "We need to find lots of different ways to resist the war, and I decided to try this," said one picketer. I'm sure the IRS took a tiny bit of consolation in the fact that they weren't run-of-the-mill tax protesters. More on the protests at: Forbes WTOP Washington Times USAToday Read more →

Property tax promises and problems

Property tax concerns are popping up in media reports nationwide. The Tax Justice Digest, the blog from Citizens for Tax Justice, tells us that Poorly Reasoned and Poorly Targeted Property Tax Reductions are Gaining Steam. Specifically cited in that blog are property tax proposals, affecting both personal property and real estate, in Georgia, Oklahoma and Arizona. The problem with all these, argues Tax Justice Digest, is that "we've learned on the federal level that tax cuts simply don't pay for themselves." Then there's the inevitable cuts in public services -- a fear voiced in Tax cap would harm schoolkids --... Read more →

Tax office workers win lottery millions

Eight women who work in the Monongalia County, W.Va., sheriff's department tax office are millionaires, thanks to their lucky numbers coming in Powerball Lottery. Since the $276.3 million winning ticket wasn't confirmed by the start of business Monday, all eight showed up at work. Wanna bet how many won't be back once the lottery check clears? Once their win is confirmed, they will receive a lump sum payout of $140 million before taxes. After Uncle Sam gets his cut, the women will have about $95.5 million, or roughly $12 million apiece. And Monongalia County might need another lawman, too. One... Read more →

Rebate delivery schedule announced

The hubby and I will be getting our stimulus rebate check by May 9. Or maybe sometime after June 20. That calendar calculation is based on the IRS' just-released rebate mailing schedule. The May date is if our 2007 return ends up showing a refund and we have it directly deposited. The June date is if we end up owing money. In that case, with no bank account information on our 1040, the IRS will mail our rebate check. OK, I hear you yelling, "Enough already! We don't care when you will get your check. What about ours?!?" Here's the... Read more →

17 ways to save on your taxes

Happy St. Patrick's Day! To celebrate, here are 17 ways to save some green when it comes to your taxes. 1. Get organized. If you haven't started getting your tax materials in order yet, do it now. You've got less than a month until your 1040 is due and you don't want to have to take that Tuesday off just to get your taxes done. There are better ways to spend "sick" days! These checklists from Bankrate, TurboTax and H&R Block will help you get some filing control. 2. Pick your state tax deduction. Compare the state and local sales... Read more →

Social Security taxes: Political and practical considerations

Andrew G. Biggs has some problems with Democratic presidential candidate Barack Obama's proposed changes to the Social Security payroll tax. Biggs, a former principal deputy commissioner at the Social Security Administration, is a resident fellow at the American Enterprise Institute, a conservative think tank. In a recent Wall Street Journal opinion piece, he elaborates on why he thinks Obama's Social Security tax changes won't work. So what Obama proposal prompted Biggs' disagreement? Elimination of the cap on the amount of earnings subject to the Social Security payroll tax. Obama broached this subject last fall and wrote about it in a... Read more →