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January 2011

The IRS has a message for folks who prefer to file the old-fashioned way: "See ya!" OK, it's not filers of paper tax returns that the IRS is bidding goodbye. Those folks still can file that way if they insist. But this year the IRS is not going out of its way to help them do so. Specifically, the IRS is no longer mailing out paper tax packages to folks who want to fill out their 1040s by hand. The annual mailings used to contain the tax forms, schedules and instructions needed to complete them. Last year, the packet contained... Read more →

A complex tax code works for me

The old saying in Washington, D.C., is that every tax bill should have the subtitle "Tax Professionals' Employment for Life Act." We tax journalists also benefit. I've made a quite decent living for more than a decade scribbling about the ever-growing, constantly changing tax code. So while we're all frustrated by taxes occasionally, or more than occasionally, the people who help us through the tax madness get to keep their jobs. Or, as Catherine Rampell writes in the New York Times Economix blog, the tax code and its resultant inefficiency isn't bad for everyone. Related posts: The ever-growing tax code... Read more →

The long holiday weekend is over! Not that I want to nag or anything, but it's time to file your final estimated tax payment for 2010. Pay electronically if you have an account already set up (EFTPS is in the process of grabbing my money as I type) or via credit or debit card. Or, if you're old-school, just make sure the envelope containing your 1040-ES voucher and check is postmarked today. Whatever estimated tax filing method you use, just make sure you meet the deadlines. And in 2011, the first one of the year is on Tuesday, Jan. 18.... Read more →

IRS has role in TV boxing show plot

Did you catch the premiere of FX television's boxing drama Lights Out last Tuesday? Probably not. Not too many folks did. I was one of the few watching (albeit later via DVR) even though I'm not a big boxing fan. But I really like the movies Raging Bull and The Harder They Fall and I've enjoyed several other FX shows, so I decided to give Lights Out a shot. Plus, Clark Johnson, who played my Homicide: Life on the Street's fave Meldrick Lewis, directs several episodes, including the first one. Lights Out wasn't bad, so I'll keep watching (the second... Read more →

2011 marks the 25th anniversary of the Martin Luther King, Jr., federal holiday. To commemorate the holiday's quarter century mark and encourage ongoing service throughout the year, the Corporation for National and Community Service has launched the MLK 25 Challenge. The challenge is a call to all Americans to honor Dr. King by pledging to take at least 25 actions during 2011 to make a difference for others and strengthen your community. The actions don't have to be momentous. They could be as simple as cleaning a neighborhood park. Or, if you have the time, you could do something more,... Read more →

Welcome to By the Numbers, a new feature here on the ol' blog. Each Sunday a figure -- a percentage, dollar amount, raw number and the like -- with a tax connection will the highlighted. I've planned numerical posts through this filing season, but if there's interest, by me as well as all y'all!, I'll keep it up year-round. As with the tax tips, I'll collect these numerical postings on a special page so you can peruse them at your tax wonky leisure. So enough text already. To the digits. The inaugural By the Numbers number is 2 percent. No,... Read more →

Paychecks must have come out (although we're still waiting on hubby's) last week since I'm hearing a lot of grumbling about how the highly touted 2 percent payroll tax cut is not working. Some companies may not have yet instituted the new payroll tax tables to take the reduction from 6.2 percent to 4.2 percent in employees' withholding. This is the portion that goes toward Social Security and will apply to up to $106,800 of income made by all workers. But the unfortunate fact of the matter is that folks who make well less than the six-digit wage base cutoff... Read more →

The end of last week was so crazy, what with the Treasury tax refund debit cards and the beginning of the 2011 e-file and Free File season, that this annual tax deadline almost slipped right past me, both from blogging and personal tax perspectives! Estimated tax payments are due once again on Tuesday, Jan. 18. These payments are required when you get money that's not taxed via payroll withholding, such as self-employment income, investment earnings, prizes or even alimony. This is the fourth and final filing of a 1040-ES voucher for the 2010 tax year, covering untaxed earnings between Sept.... Read more →

If your adjusted gross income for 2010 is $58,000 or less, you can prepare and file your taxes at no cost at Free File. This partnership between the IRS and tax software manufacturers who are members of the Free File Alliance kicked off its ninth year today, Jan. 14. During the formal announcement of Free File 2011, IRS senior executive David Williams, had some advice for all e-filers: Submit your tax returns as soon as you can. Despite the tax processing problems caused by the end-of-year passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010,... Read more →

E-file, Free File 2011 are now available

It's electronic tax day! Today, Friday, Jan. 14, 2011, marks the beginning of the annual electronic tax return filing season. The IRS is now accepting e-filed returns. Of course, as I mentioned in my tax software contest post earlier today, some folks will have to wait until February to hit the "enter" button on their PCs and send their returns off to Uncle Sam. Still, most taxpayers will be able to electronically submit their 1040s much sooner. Today also marks the opening of the electronic door to the IRS' Free File program. I'll be posting more details on this public-private... Read more →

No bank account, no problem. That's the U.S. Treasury Department's new mantra. Treasury officials today launched a pilot program offering low-cost, prepaid debit cards to taxpayers who may not have a bank account, just in time to have their 2010 federal tax refunds directly added to the cards. Around 600,000 low- and moderate-income individuals across the country will soon get a letter from Uncle Sam giving them the chance to have a MyAccountCard Visa Prepaid Debit Card. This is the latest move by the federal government to go paperless. Last summer, the Obama Administration announced that it wanted all federal... Read more →

A year ago today, a horrified world watched as Haitians struggled to survive a massive 7.0 earthquake. In the following days, there was a massive outpouring of assistance. Charitable donations flowed into relief groups. The concern led to the creation of a new way to give, the texting of charitable gifts. The disaster also produced a special tax law. Since the earthquake occurred so early in 2010, taxpayers were given the option to deduct their charitable gifts to earthquake relief efforts on their 2009 tax returns filed last year. Specifically, Haitian earthquake contributions made between Jan. 12, 2010, and Feb.... Read more →

10 tax forms that will delay filing
of your 2010 return

Following the passage (finally!) in December 2010 of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that continued the current income tax rates (which just happens to be Today's Tax Tip) for the next two years and extended some popular tax breaks, the IRS announced that it would take a while for the agency to get ready for the filing season. Specifically, or actually not so specifically, the IRS said that the tax measure's late passage meant taxpayers who claim educators expenses and tuition expenses directly on their 1040 or 1040A would have to wait until... Read more →

Got your guacamole ready for tonight's BCS title game? It is, after all, the Tostitos championship bowl from Glendale, Ariz. (FYI, I'm not getting any remuneration, in cash or product, from the avocado industry or Frito-Lay, dang it!) Befitting a big game, there's lots of drama to go around. The excitement of the Oregon Ducks making to to the title match. The questions about Auburn quarterback Cam Newton's eligibility. And, of course, there's the annual blasting of the the Bowl Championship Series itself. Some folks, however, have moved beyond grumbling. Playoff PAC, a federal political committee, is, according to its... Read more →

House postpones health care repeal vote

In the wake of the weekend shooting of Arizona Rep. Gabrielle Giffords at a constituent rally and the deaths of several of the event's attendees, House Speaker John Boehner has postponed the scheduled vote to repeal the health care reform law. "An attack on one who serves is an attack on all who serve," said the Ohio Republican in a statement announcing the legislative delay. "Such acts of violence have no place in our society. I want to commend the federal, state and local officials, as well as the Capitol Police, for all of their efforts. And I've told the... Read more →

TVs and boats aren't allowable
retirement plan hardship purchases

I ran across an interesting item on the IRS website about how you can, or rather can't, spend money you pull out of a workplace retirement plan early. "Expenses for the purchase of a boat or television would generally not qualify for a hardship distribution." Yep, the quotes are correct. The statement above is directly from the IRS. Did Uncle Sam really have to say that you don't need to be raiding your retirement account to buy a big screen TV or a fishing boat? Apparently so. The occasional meal at a waterfront restaurant is the closest I get to... Read more →

Mileage tax deduction rates
for tax years 2010 and 2011

If you use a vehicle for business travel, moving, to go to medical treatments or to help out a charity, those miles might be deductible. IRS standard mileage deduction rates per mile for 2010 and 2011 tax years Business Medical Moving Charity 2010 cents/mile 50 16.5 16.5 14 2011 cents/mile 51 19 19 14 Use the 2010 rates for applicable travel you can claim on that year's tax return, due by April 18. The 2011 rates will give you an idea of what next year's deduction amount will be. Business travel options: The standard mileage rate for business is based... Read more →

Pet trusts are now OK in Massachusetts

Rejoice Bay State pet owners! Massachusetts Gov. Deval Patrick on Friday, Jan. 7, signed legislation that authorizes the creation of a trust to provide for the care of one or more pets if the owner becomes disabled or dies. The bill, An Act Relative to Trusts for the Care of Animals, will become law 90 days from the date the governor signed his name to the measure. Every so often a crazy old rich person dies and leaves his or her (usually her) fortune to a dog or cat. We all remember Leona Helmsley and Trouble. More recently, there was... Read more →

Want to find out more about specific tax expenditures? Then check out Subsidyscope, a new online tool from the Pew Charitable Trusts. It provides federal tax expenditure estimates from the Department of Treasury and the Joint Committee on Taxation and, in many cases, make side-by-side comparisons of different government estimates of the same tax expenditure. Tax expenditures -- losses to the U.S. Treasury from certain tax deductions, exemptions or credits to specific categories of taxpayers -- are the new hot phrase, having gotten a lot of attention late last year when the deficit reduction commission released its proposals to stop... Read more →

The list of folks supporting a major overhaul of the U.S. tax system got a little longer this week. In her annual report to Congress, National Taxpayer Advocate Nina E. Olson cited tax reform as the number one priority in tax administration. Research by the Taxpayer Advocate Service found that individual taxpayers and businesses spend 6.1 billion hours a year complying with tax-filing requirements. Put into dollar terms, the financial burden on the typical taxpayer comes to $258 annually. "There has been near universal agreement for years that the tax code is broken and needs to be fixed," Olson said... Read more →