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June 2010

As Alex, the first hurricane of the Atlantic season, bears down on Mexico and the South Texas coast, it's time for the official annual hurricane tax relief post. OK, it's a bit late for my fellow Lone Star Staters and our neighbors to the South, but for the rest of us, this is a good, real-life reminder to get ready. The first thing to remember is take care of yourself and your family, then your property. If you're in a hurricane evacuation zone, leave! Disaster financial plans: Also get prepared financially. Get some cash, and be sure to break those... Read more →

Senate leaders also propose extending the first-time homebuyer tax credit

In the grand poker game that tax legislation has become, the Senate last night saw the House's proposal to extend the first-time homebuyer credit and raised the bet. Where the House late Tuesday afternoon overwhelmingly passed a bill to extend the credit's closing date to Sept. 30, the Senate matched that new deadline and raised the legislative stakes by combining it with, among other things, continuation of unemployment benefits. The House considered the homebuyer credit and unemployment extensions separately yesterday, passing the real estate tax break but defeating the continued assistance for the long-term jobless. Without the extra time, around... Read more →

The homebuyer credit: It's baaacckkk!

The first-time homebuyer credit is supposed to expire tomorrow, June 30. That's the date by which buyers who had a contract in place by April 30 are to close on the residence in order to claim the $8,000 tax break. But late this afternoon, the House approved a bill that would extend the closing date another three months, until Sept. 30. The measure, passed 409 to 5, now goes to the Senate. Just last week, that legislative body tried to get the longer closing time added to the tax extenders measure that kept failing. So it's likely that the Senate... Read more →

Jon spends almost as much time thinking about retiring as he does working. OK, Jon's boss, in case you're reading, he swears that he spends a little more time on his job responsibilities. But he is committed to being able to retire on his terms: When he wants with the lifestyle he wants. That means, says Jon, socking away retirement savings now! And that's our seventh piece of Midyear Tax Moves advice. If you have a workplace retirement plan such as a 401(k) or 403(b), contribute as much as your budget will allow. Ideally, that's enough to meet your employer's... Read more →

Your patience, please, for a bit of tax wonkery. Sen. Robert Byrd passed away yesterday at age 92. As the longest-serving member of Congress (51 years in the Senate and six prior to that in the House), it's no surprise that he had a big influence on the ways our laws are made. Most folks will remember Byrd for all the federal money he got for his West Virginia constituents. Remember, under our system of representative government, that was one of his key jobs and he was very good at fulfilling it. But Byrd also had a lasting effect on... Read more →

Nancy loves her two boys. She also loves the day camps they go to when school is out for the summer. As a working mom, Nancy not only appreciates the programs that keep her preteens occupied during business hours. She also is thankful that the camp costs can save her some tax money when she files her 2010 tax return. How the kids' summer fun could be a tax break for their folks is #6 in our Midyear Tax Moves series. Most parents already know they can claim the Child and Dependent Care tax credit for expenses they incur for... Read more →

Has Vice President Joe Biden met his own Joe the Plumber? While in Milwaukee, Wisc., this weekend to participate in a fundraiser for Sen. Russ Feingold, Biden went looking for some ice cream. He was directed instead to an area shop that offers a different frozen treat. Donning a paper hat, the Veep went behind the counter at Kopp's Frozen Custard Stand, scooped some cones and then, digging into his pocket, asked shop manager Scott Borkin what he owed. Borkin quipped he'd call it even if Biden would just "lower our taxes." Biden, as he's wont, didn't let it go.... Read more →

If you ever skim the right and left columns of the ol' blog (are they still called nav, short for navigation, bars?), you might have noticed a couple of new items in the Horn tootin' section there to the left. Last week, Don't Mess With Taxes was included among the Top 100 Accounting Advice Blogs, as well as being named a Top 40 Business Blog, Saving Money category. I'm thrilled and grateful for the honors. Now back to work to continue to deserve the plugs! Want to tell your friends about this blog post? Click the Tweet This or Digg... Read more →

A 'responsible' estate tax

Five Senators say their proposal to reinstate the estate tax for the "richest of the rich" is a fair and responsible way to deal with the expired statue. S. 3533 would affect only the top 3/10 of 1 percent of taxpayers, says bill sponsor Sen. Bernie Sanders (I-Vt.). "99.7 percent of American people would not pay any estate tax whatsoever. It is geared toward the richest of the rich." Joining in introducing what they have dubbed the Responsible Estate Estate Tax Act are Democratic Senators Tom Harkin of Iowa, Sherrod Brown of Ohio, Al Franken of Minnesota and Sheldon Whitehouse... Read more →

Today's taxes aren't too bad

Really. when compared to where tax rates have been over the years, we're in pretty good shape. Don't believe me? Check out this graphic from Click on the image (or here) for a larger view. Depending on your browser, you might have to re-click the image once it opens as a pop-up to get maximum magnification. Coming down since 1976: When I was in college, the top tax rate was 70 percent. That tax rate applied to married couples with taxable earnings of more than $200,000; to single and married filing separately taxpayers with income exceeding $100,000; and head-of-household... Read more →

I gave up smoking more than 28 years ago. I was lighting up almost three packs a day back then, but my new hubby didn't smoke; never had. He dealt with it while we dated, but as a wedding gift to him, I quit. It's turned out to be one of the best health and financial moves I've ever made, especially now that states and cities are regularly hiking tobacco taxes to try to close their budget deficits. The latest cigarette tax increase comes from New York lawmakers. On July 1, that state's excise tax on cigarettes will go up... Read more →

Admit it. You still obsess about the stock market. Paying continual attention to the ups and downs of your stocks will drive you crazy. But sensibly assessing your portfolio and making appropriate moves now instead of at the end of the year could pay off at tax time. That's Midyear Tax Moves tip #5, courtesy of @fcn who, when he's not Tweeting, posts as nickel at Nickel's tax move to make now: Do some tax loss harvesting if you have any losing investment positions. As the name indicates, you'll want to find the holdings that will result in a... Read more →

IRS issues BP payment tax answers

Whoa! That didn't take long. Louisiana Sen. Mary Landrieu asked and the IRS answered. Specifically, the IRS has issued the requested guidance on the tax treatment of payments by BP in connection with the Deepwater Horizon oil spill. The bottom line is what we expected, If you got or get money from the oil company, you'll owe taxes on it. The IRS tackles that issue in the first item of its Gulf Oil Spill Questions and Answers: Q1. Is a taxpayer required to include in gross income payments the taxpayer receives for lost business income, lost wages or lost profits?... Read more →

Louisiana Sen. Mary Landrieu is officially asking the question I did last week: Are BP payments taxable income? As noted in that post, the consensus is that the money paid to Gulf Coast residents who are out of work because of the Deepwater Horizon oil spill are taxable as replacement compensation. Still, the Pelican State Democrat wants to hear it from the country's top money men, Treasury Secretary Timothy Geithner and IRS Commissioner Douglas Shulman. In a letter to the duo, Landrieu points out that the United States' worst oil spill has "triggered some unprecedented questions of tax policy" and... Read more →

Extenders package fails in Senate again

They're taking a break. At least that's what Senate Majority Leader Harry Reid says about the contentious tax extenders package. Thursday evening, after the Senate came up three votes short of the 60 needed to advance H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, Reid reiterated that lawmakers will give the measure a rest and move on to small business legislation. And don't expect, said the Nevada Democrat, to see the unemployment benefits that were part of the tax package rolled into the business bill. That, however, probably will change after the Dems debrief and reconnoiter.... Read more →

The tax clock is ticking, but well-prepared taxpayers won't take a licking from the IRS if they follow our fourth entry into the inaugural Midyear Tax Moves feature. (Thanks to Timex and John Cameron Swayze for the inspirational turn of phrase and the memories!) Today's timely tax tip comes from Robert D Flach, the Internet's Wandering Tax Pro, who reminds us that Uncle Sam wants estimated tax payments when we expect to owe more than $1,000 when we file our 1040s. The second 1040ES voucher of 2010 was due just last week, but it's never too late to assess your... Read more →

First-time homebuyer tax credit extension is no sure thing

I know I just blogged about how pushing the closing date for first-time homebuyer tax credit until Sept. 30 is part of the Senate tax extenders bill. But based on some questions and reaction I've been getting from readers and seeing in other media outlets, I must reiterate: The proposal to give folks who had a signed home purchase contract on April 30 but couldn't close by June 30 three extra months to complete the sale is far from a done deal! This latest change to the homebuyer credit is a Senate add-on to the House version of H.R. 4213,... Read more →

Tax extenders moving (maybe) in Senate

Senate Finance Committee Chair Max Baucus is trying yet again. He's released a third take on the American Jobs and Closing Tax Loopholes Act of 2010, aka H.R. 4213 aka the tax extenders (and much more) package. This latest version comes after his Senate colleagues balked at two earlier iterations. This time the Montana Democrat further tweaks the provision that would change the treatment of carried interest income, as well makes as further cuts in spending provisions so that the bill won't add as much to the federal deficit. A Senate vote to end debate and approve the latest Chairman's... Read more →

Midyear tax tip #3: Adjust withholding

Now that the 2010 tax year is half over, it's time to ask yourself some questions. Did you end up writing a large check to Uncle Sam that included an underpayment penalty? Did you receive a large refund check? If you answered "Yes" to either question, The Missouri Tax Guy Bruce says it's time to make a Midyear Tax Move. The key is to send the IRS only enough money to avoid interest and/or penalties. It's easy to do by adjusting your withholding. If you think that you'll owe more taxes this year, adjust the number of allowances (fewer mean... Read more →

Would, could the U.S. 'tax and axe'?

All eyes are on England and the United States, but I'm not talking (this time) about the World Cup matches. Rather, it's Great Britain's "most severe package of spending cuts and tax increases since the early days of Margaret Thatcher's era." New Prime Minister David Cameron has proposed average budget reductions of 25 percent for almost all government departments -- except health and international spending -- over the next five years. Or, as the Evening Standard's catchy headline characterized the move, "Tax and Axe." Cameron and his coalition are hoping the cuts, along with a series of tax increases (roughly... Read more →