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December 2010

Merry Taxmas! House OKs tax bill

The House late last night finally signed off on the tax bill that will keep the tax cuts that were scheduled to expire at the end of 2010 in place for two more years. The tax cuts account for most of the bill's $858 billion (spread over 10 years) price tag. Those tax breaks amount to $700 over the next decade. Here's what we're paying for: In addition to keeping the current six tax rates that range from 10 percent to 35 percent, the bill contains a raft other tax breaks for both individuals and businesses. Many of the provisions... Read more →

Democrats hold up tax bill consideration

This is a blog, not a wire service. Still, this bit of breaking news is worth sharing: House Democratic leaders pull the tax bill from the House floor. Actually, what was taken out of consideration was the procedure to debate the actual tax bill. Basically, right now House Speaker Nancy Pelosi doesn't have enough votes to get the bill, which was approved overwhelmingly by the Senate on Wednesday, to the House floor for final debate and vote. Pelosi knows this because Congress operates under the same rule that lawyers do. Never ask a question that you don't already know the... Read more →

Homeowner winners, losers in tax cut bill

It's no secret that homeowners get special tax treatment under the U.S. tax code. There are the biggies of being able to deduct mortgage interest and property taxes. In case you missed them, those tax breaks are the latest (numbers 33 and 34) in the running Weekly Tax Tips for 2010 feature (also spotlighted at the upper right of the ol' blog page). In recent years, Congress even enhanced homeownership tax benefits a bit. And provisions in (or not in) the tax bill awaiting final Congressional action mean that one such home-related tax breaks wins, but another loses. PMI deduction... Read more →

Tax cuts bill sails through Senate;
House vote likely Thursday

Continuation of current income tax rates and other tax breaks are a third of the way done. The Senate has overwhelmingly passed the Obama/GOP tax deal. The House is expected to vote on the measure Thursday. There will be some political Kabuki, but the bill will be approved as is by the Representatives. Everyone -- taxpayers, lawmakers, tax professionals, their dogs and families -- is tired of this. That's not necessarily the best way to pass major tax legislation that affects all our lives and the country's economy, but it is what it is. Then the deal will be sealed... Read more →

Form 1099 repeal fails yet again

While waiting for the Senate to get around to its final vote on the deal to extend the current income tax rates, the chair of the Finance Committee took another shot at repealing the new Form 1099 reporting requirement. This tax task was devised as a way to help pay for health care reform. Specifically, businesses will have to provide 1099 information returns to each payee that the business pays $600 or more during the year. The reporting requirement takes effect, per the legislation, on "payments made after December 31, 2011," so that gives everyone some breathing room. Still, as... Read more →

Estate tax: The House Democrats' line in the sand?

We Texans are a mouthy bunch. Many of our pronouncements have been enshrined in quotation collections. Among my favorites are Davy Crockett's "You may all go to hell and I will go to Texas" and "How 'bout them Cowboys?!" from former Dallas NFL coach Jimmy Johnson. There's no exact quote, but everyone's well aware that drawing a line in the sand means you're prepared to take no more and do whatever it takes to defend your position. Although it's likely apocryphal, the definitive line in the sand demonstration is said to have come from Col. William Barrett Travis in March... Read more →

Commuter tax benefit moving along as part of tax cuts extension bill

One of the provisions in the tax cuts extension deal is "parity for exclusion from income for employer-provided mass transit and parking benefits (sec. 727 of the bill and sec. 132 of the Code)." These are the transportation fringe benefits offered by many businesses. They typically include reimbursements to employees for the costs of parking, mass transit passes, van pool fees and certain bicycle commuting expenses. The great thing for workers is that these transportation perks are not counted as part of their income for tax purposes. In 2009, the American Recovery and Reinvestment Act (the Obama stimulus package) nearly... Read more →

Tax cuts extension deal passes first Senate test

The Senate has achieved the necessary votes to take the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, better known as the Obama/GOP tax cuts extension deal, to the next level. Today's vote, which actually will be going on for a few more hours to ensure that all Senators get a chance to make their positions known, was a procedural one. The upper legislative body voted not on the substance of the bill, but rather on whether they wanted to eventually vote on the tax cuts deal itself. The Senate vote on the actual legislation could come... Read more →

Senate to vote on tax cuts deal today

And so it begins. At 3 p.m. Eastern time today, Dec. 13, the Senate will vote on the Obama/GOP tax cuts deal. A key reason for existence of this legislation, officially entitled the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (but for ease of reference, let's just call it The Deal), is that it will take care of tax legislation that will expire on Dec. 31. So here we are, waiting for some modicum of tax certainty (yes, I realize that "tax certainty" is an oxymoron) with less than three weeks until the end of the... Read more →

OK, you've made your tax, investment, retirement and giving moves for 2010. Now what? There's still some financial housekeeping left. These tasks, which will help you stay on top of your money and taxes are highlighted here in part five of Don't Mess With Taxes' fourth annual Year-end Money Moves series. Get organized It does you no good to have information if you can't easily get to it. If your finances and simply stacked up on your desk (or, as I tend to do, on your floor), now's the time to get those documents in some sort of order. I'm... Read more →

Texas baseball fans, or at least those who follow the American League Champion Texas Rangers, are anxiously awaiting the decision by pitcher Cliff Lee as to which team's uniform he'll wear next year. Lee's timing in 2010 was perfect. His arm helped the Rangers get to the World Series for the first time in the team's history. Then he became a free agent. Cliff Lee pitching for Texas Rangers, courtesy Texas Mustang/Flickr Plus, the Rangers new majority owner is a Nolan Ryan, a legendary pitcher who's made it clear that he wants the team to play in -- and win... Read more →

Ready to share your wealth? Part four of Don't Mess With Taxes' fourth annual Year-end Money Moves series is for you. Today we look at giving options, charitable and otherwise, you should consider making by Dec. 31. Know the IRS rules Giving to your favorite nonprofit can produce valuable returns for it and you at tax time, as long as you follow the donation rules. You must itemize to deduct gifts to charity. If you claim the standard deduction, which most taxpayers do, your generosity will help out your charity of choice, but you won't get any tax benefits. Make... Read more →

'Survivor' tax scofflaw violates probation

Maybe Richard Hatch just couldn't take some other tax evader **cough, Wesley Snipes, cough** getting all the attention. You remember Hatch, the "fat, naked guy" who won the first "Survivor" realty television show competition a decade ago. He was convicted in 2006 of not paying federal taxes on the $1 million prize. Hatch was sentenced to 51 months in jail. He was released from federal custody in 2009 on three years probation. Now he reportedly has violated the terms of that probation, which he's been serving in Rhode Island, where he lives with his sister. Law enforcement officials aren't saying... Read more →

Treasury Secretary Tim Geithner was admitted to George Washington University Hospital in D.C. today for minor surgery. He's having a kidney stone removed. I'm wondering if some surgical team member might try to make some money off the results of the procedure. What would Geithner's kidney stone be worth on eBay? Yes, I hear the collective "eeeewwwww" across the Internet. But there's precedent. Back in 2006, actor William Shatner got $25,000 for his kidney stone. The man I prefer to think of as Capt. James T. Kirk rather than a profane social media father donated the money to Habitat for... Read more →

Up next for Obama: Tax system overhaul

Not content to fight with his own party over the continuation of the tax deal he cut with Republicans, Obama now has set his sights on a bigger tax battle. When the 112th Congress convenes in January, the prez reportedly wants to tackle comprehensive tax reform. It's not officially on Obama's legislative wish list yet, but the New York Times reports that the Commander in Chief has directed his economic team and Treasury Department analysts to review ways to close loopholes and simplify corporate and individual income taxes. Apparently, Obama is intrigued by his deficit panel's findings. One proposal, the... Read more →

Wesley Snipes finally reports to prison

Maybe you were distracted by inconsequential things like the Obama/GOP tax cuts deal, but another notable tax world act transpired yesterday. Wesley Snipes finally reported to federal prision to begin serving his three-year term for not filing tax returns. During his trial back in 2008, prosecutors presented evidence that the actor, best known for playing the vampire-turned-vampire-hunter title character in "Blade" movie trilogy, didn't file tax returns from 1999 to 2004 although he grossed more than $37 million during those years. In February 2008, Snipes was convicted on three misdemeanor counts of not filing tax returns for 1999, 2000 and... Read more →

Welcome to part three of Don't Mess With Taxes' fourth annual Year-end Money Moves series. Today we look at retirement related actions to make, or at least think about, by Dec. 31. To ensure that you can spend your golden years in the fashion to which you've become accustomed and deserve, you need to start stashing away as much retirement cash as soon as you can. Fortunately, the tax laws offer some benefits for many retirement vehicles. Convert to a Roth IRA Roth retirement accounts are great plans for many folks. Although your don't get an upfront tax deduction, the... Read more →

I sit in front of a computer almost all of my waking hours, blogging, writing and surfing for tax news. So I take one morning off to do another tax project (and then go to lunch with colleagues with whom I was working) and BOOM! Congress decides to do something! OK. Congress didn't really do anything. It was the House Democratic Caucus that decided not to back Obama on the deal he (via his tax task force) reached with the GOP on expiring tax rates. About the time I was sitting down to my chile relleño at Manuel's (yes, it... Read more →

I blog every year about this time on the need to spend your medical flexible spending account, or FSA, money by the end of your benefits year. For most folks, that's the end of the calendar year. That means you have just over three weeks to wipe out your FSA or lose the unspent money. Sign in Austin optometrist office; photo by Kay Bell Yep, as you know by now, this tax-favored workplace benefit is a use-or-lose program. Most folks have gotten better over the years in estimating how much to put each year into their FSAs. And some account... Read more →

Reaction to proposed tax deal mixed

It's been an interesting day in the tax world. As soon as the president announced Monday evening that he had reached a deal on extending the expiring Bush-era tax provisions, reaction was swift and in most cases harsh. That hasn't stopped. The White House is still pushing for quick Congressional approval of the deal. But some members are pushing back. As you might expect, most of the anger is coming from the Democrats. Many feel that the prez gave up way too much to the Republicans. To that point, the White House made its economic folks available today to the... Read more →