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October 2008

For the most part, we're in control, or are trying to be, of our finances. But sometimes, external factors can help or hurt our money management efforts. CBS' Sunday Morning program earlier today featured a piece on what motivates us humans to run with the herd. Specifically, the feature asked whether our innate animal instincts have anything to do with the recent selling frenzy on Wall Street? The answer seems to be "yes." A reliance on natural instincts is understandable. All of us, in money and other matters, have depended on our gut feelings to make a decision. And sometimes,... Read more →


The chances for a second economic stimulus payment before the end of the year have essentially evaporated. Facing opposition from House Republicans as well as the strong possibility that many lawmakers might not be in a mood to return to D.C. if they are voted out on Nov.4, House Speaker Nancy Pelosi (D-Calif.) has backed off her earlier idea of pushing through a second rebate. Pelosi and colleagues briefly considered another stimulus payment. Democratic presidential candidate Barack Obama alluded to it in announcing his revised economic plan. Thankfully, some sanity prevailed. "We could add a rebate, tax cut, or something... Read more →


The chief of staff to New York's governor apparently didn't file state or federal returns for five years. Charles O'Byrne acknowledged that from 2001 to 2005 he didn't file. He worked for the state part of that time. He subsequently has paid more than $200,000 in back taxes, $151,000 to the IRS and $56,000 to the state treasury. Those amounts included penalties and interest. The reason for the tax oversight, O'Byrne said, was clinical depression. "Certainly, I'm ashamed of the fact that this has occurred in my life," O'Byrne told the New York Post. "But I'm clinically aware of the... Read more →


Cindy McCain releases 2007 tax info

Our presidential candidate tax return voyeurism has now been satisfied. Cindy McCain, who previously released some of her 2006 filing data, last night made public a couple of pages of her 2007 return. Mrs. McCain, heir to beer distributorship, paid almost $1.14 million in taxes during 2007 on income of more than $4 million. She and husband, Republican presidential candidate John McCain, regularly file separate returns. The McCain campaign issued a statement noting that the missus, like many of us, received an extension to file until Oct. 15. According to the return, around $2.9 million of Mrs. McCain's income came... Read more →


In one of my Joe the Plumber posts yesterday, I included an observation from Citizens for Tax Justice that John McCain might be edging toward support of a flat tax. The nonprofit public interest group cited McCain's comment during his final debate with Barack Obama about the Democrat's use of the phrase "spread the wealth." Spreading the wealth, says CJT, is the purpose of a progressive income tax with graduated rates. So by denouncing that concept, asks the group, is McCain indicating his support for a flat income tax or a national sales tax instead? That move might be on... Read more →


Fat naked tax scofflaw loses appeal

It's TV-related tax evasion day here on the ol' blog! Earlier today, I posted on the tax indictment of Dancing with the Stars and professional auto race winner Helio Castroneves. Now, in slogging through my tax news backlog, I see that this week the Supreme Court decided not to consider the appeal of Richard Hatch. Yeah, that Richard Hatch. The guy who became the first reality show millionaire, not the guy from the original and current Battlestar Galactica programs. The competitor who was dubbed the "fat naked guy" for his physique and immodesty in that inaugural Survivor season. (And yes,... Read more →


Helio Castroneves in tax trouble

Race fans know Helio Castroneves as a winning, exuberant Indy car driver. Television fans know him as the winner of the 2007 season of ABC's Dancing with the Stars. Now the two-time Indianapolis 500 champ has a less stellar item to add to his resume: indicted tax evader. Earlier this month, a Miami federal grand jury (Castroneves lives in South Florida) found there was enough evidence to hand up an indictment against the 33-year-old driver on charges of conspiracy and six counts of tax evasion. He allegedly failed to report to the IRS about $5.5 million in income that federal... Read more →


One more go at Joe the Plumber

As the day has gone on, more attention has been paid to Joe the Plumber and his potential federal taxes and overdue state taxes. I'm sure he's feeling a bit akin to the lead character in Kevin Costner's latest (and little-seen) election-themed movie, Swing Vote. Not to belabor the issue, but here are a few more Joe the Plumber post-debate reactions. Citizens for Tax Justice asks Does Joe the Plumber need a Tax Cut? The nonprofit public interest research and advocacy organization says: We estimate that only 2.3 percent of taxpayers will be above the $250,000/$200,000 AGI threshold this year,... Read more →


Joe the Plumber's tax troubles

Uh oh. Guess who owes back taxes? Joe the Plumber. Yep, the Holland, Ohio, man who, thanks to last night's presidential debate, has become the symbol of small business owners looking to lower their company taxes, owes the Ohio revenue department almost $1,200. According to Bloomberg.com, records on file with the Lucas County, Ohio, Court of Common Pleas show that the state filed a tax lien against Samuel J. Wurzelbacher for $1,182.98 on Jan. 26, 2007, that is still active. The state of Ohio places a lien on real property after several steps to try to collect a tax debt,... Read more →


Joe the Plumber's taxes

We have a new political star, Joe the Plumber. The big question is, how much more or less in taxes will Joe pay under the presidential candidates' tax plans? The next big question is, who will portray Joe the Plumber on Saturday Night Live and whether a particular tasteless anatomy joke will be part of the skit? In all seriousness, business taxes are a critical component of the tax proposals offered by presidential contenders Barack Obama and John McCain. During last night's final debate, both men addressed the overall topic of taxes, and to a degree, Joe's personal concerns. "Look... Read more →


Blog Action Day 2008: EITC

Over the years, lawmakers have used the tax code to do more than raise revenue. Tax policy frequently is social policy. One such instance is the Earned Income Tax Credit, often referred to as the EITC (or Earned Income Credit/EIC). It was created more than 30 years ago to help reduce the tax burden on individuals and families who hold low-paying jobs. The EITC helps offset some of the Social Security taxes that are withheld from eligible workers' paychecks. Even better, the EITC could help qualifying taxpayers receive refunds if they have no tax liability. For the 2008 tax year,... Read more →


McCain's new economic plan

In the high-stakes presidential poker game, which, by the way, is being played with the ultimate house money -- ours!, GOP candidate John McCain has seen his opponent's economic plan and raised him. McCain's move today was in response to Democratic nominee Barack Obama's revised economic proposal announced Monday. The Republican reiterated his call to spend $300 billion of the $700 billion bailout package to buy troubled mortgages and exchange them with fixed-rate home loans. His previous proposal to suspend required minimum IRA distributions for a while to allow the market turbulence to subside also is still in his latest... Read more →


Final filing deadline is tomorrow, Oct. 15

The IRS says that back in April, about 10 million of us asked for more time to complete our tax forms. That grace period is about to expire. Just in case you've been so obsessed by the economy or politics, I wanted to make sure you knew that you had to complete your Form 1040 (or 1040A or 1040EZ) and get it on its way to the IRS by tomorrow, Wednesday, Oct. 15. I finally finished up ours yesterday and hubby is on his way to the Post Office right now. That's right, we are mailing the paperwork. When we... Read more →


Second stimulus plan in the works

Well, it's obvious that Sen. Barack Obama doesn't pay any attention to me. In announcing his new economic policy plan today, the Democratic presidential nominee called on Congress "to pass a plan so that the IRS will mail out the first round of [Obama's proposed] tax cuts as soon as possible." Yep, that's the second rebate, which I argued against just this morning. Other tax proposals that Obama mentioned today in discussing his economic plan include: Eliminating capital gains taxes on investments in small businesses and start-up companies. Allowing families to withdraw penalty-free up to 15 percent from IRA or... Read more →


Another stimulus package? Say it ain't so!

Don't get me wrong. I'm all for you and me, not the IRS, having our money. But this rebate mania has to stop. Word is that House Democratic leaders are putting together a second economic stimulus package that could cost as much as $150 billion. They plan to call Representatives back to D.C. for a lame duck session to try to push it through. C'mon people. Get real about money for once. Rebates don't work on a macro-economic level. The Tax Foundation's Tax Policy Blog and the Tax Policy Center's TaxVox both say so. So does former Bush 41 Treasury... Read more →


Kids, money and economic chaos

Forget Wall Street vs. Main Street. The financial battles in this economic downturn are being fought in the trenches of family homes, pitting parents against kids. The hubby and I don't have any children, so I'm relying on other reports, such as a story in today's New York Times about how families are coping with new fiscal realities. According to Jan Hoffman's article The Frugal Teenager, Ready or Not, "Panicked, stressed parents are struggling to explain and impose restraints, just when teenagers are expecting more spending money, not less. Many adolescents respond with anger at what they see as a... Read more →


Corporate mileage rate variations

Here's some good economic news that got lost in last week's market tumult: Gasoline prices are lower. In some areas, including some Austin suburbs, you can get a gallon of gas for less than $3. But earlier this year, when pump prices were well above $4, the IRS provided a break for folks who must drive to do their business. The standard mileage deduction was increased. Vehicular business travel conducted since July 1 (and through December) can be deducted at 58.5 cents per mile. Business miles driven between Jan. 1 and June 30 can be deducted at 50.5 cents per... Read more →


Coping with market chaos
and shrinking 401(k)s

I've done my part to help stabilize the market. I put money into the hubby's and my retirement accounts. A fat lot of good that did. The Dow tanked again today (worst week ever). But I still believe in sticking with stocks. As one analyst on CNBC said yesterday (yes, I'm still watching the financial news; and sorry, I didn't catch the guy's name), when you get out of the market you have to guess right twice: That it is indeed the correct time to pull your money, and When the market rebounds, and it eventually will, that it's time... Read more →


Tax Gap closure suggestions

The IRS is trying a new "soft notice" approach (blogged here) to get more people to voluntarily correct underreported income. But some folks say more needs to be done to close the tax gap. That's the money the IRS says it is owed but which hasn't been paid. The IRS' last estimate of the tax gap was back in 2001. The figures then set the unpaid amount at $345 billion, or $290 billion after subtracting enforcement efforts and late payments. It's a safe bet that in the last seven years, the gap has widened. A group of tax experts convened... Read more →


The 'softer' side of IRS collections

Remember the kinder, gentler IRS? That tax collector persona appeared following the agency's 1998 reorganization that was mandated by Congress following public outrage over collection tactics. As the deficit has grown, and Congress can seem to make itself pay for projects, the IRS has been given more leeway to get tough again. Capitol Hill has instructed the agency to find ways to close the tax gap, the billions of dollars the IRS says it is owed but that hasn't been paid. To this end, private debt collectors have been hired. The IRS also has ramped up audits. But it looks... Read more →