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May 2011

Austin, Texas, where I currently call home, is surrounded by a decent amount of water. And although the current drought has dropped the area lake levels a bit, the waterways were full of boats this Memorial Day weekend. The slice of Lake Austin (really just a portion of the Colorado River between two dams) that I see when I walk in my neighborhood. I always get a bit jealous when I see folks tooling about on their boats. But then I remember that old line about a boat being a hole in the water where you throw your money and... Read more →

As we all take at least a few moments on the Memorial Day to remember the men and women who made the ultimate sacrifice, let's acknowledge those who are now serving in our armed forces. It's a tough job on all fronts. Financially, many Americans in military uniform are struggling. For those folks, here are some practical tax and financial tips. Military taxes: Members of the military aren't excused from paying taxes. They do, however, get some special tax considerations. Combat pay, compensation that many of our service men and women are receiving right now, is treated differently. Some combat... Read more →

In most locations, the school year is over. But when it comes to paying higher education costs, students and parents need to do their financial homework year-round. One subject they want to study is 529 college savings plans. These accounts are named for the Internal Revenue Code section under which they were created. They also are a tax-saving way to bank bucks for college. Today, 5/29, also is 529 Plan Day. So it's only natural that the savings plan/tax code name is this week's By the Numbers figure. Tax benefits of 529s: Contributions to a 529 plan aren't tax deductible,... Read more →

Racing reflects the economy

This is one of my favorite days of the year. The last Sunday in May usually means three fantastic auto races. It starts early with the Formula 1 Grand Prix of Monaco. This is one of the greatest races in the world. Not only do the streets of Monte Carlo provide great racing, the location itself offers fantastic gawking opportunities at both the scenic locales (all those ginormous yachts in the harbor!) and all the celebrity hangers-on, party-goers, driver girlfriends/fiancés, spectators (Kim Kardashian reportedly popped in for a look-see). Formula One cars take a curve near the Monaco port during... Read more →

Sales tax holidays, gas excise taxes: Featured last week at my other tax blog

Welcome to the Memorial Day weekend. This holiday is a somber one, created to honor the memories of servicemen and women who gave their lives protecting us and greater causes. They should never be forgotten, and especially not on this special weekend or day. But in today's world, every three-day weekend also has come to represent other things. In the case of Memorial Day that's usually travel (at least a brief trip to kick off summer) or shopping (for summer getaways?). So last week at my other tax blog I posted on both topics. "Sales tax holidays on tap" looked... Read more →

As Memorial Day approached, lawmakers in several states started talking about gas excise tax holidays. That's not surprising. Politicians are always looking for a populist hook. And the beginning of the summer driving season provides a perfect one each year. So far a New York proposal to waive the state's gas excise tax on three holiday weekends -- Memorial Day, Independence Day and Labor Day -- has passed the Empire State Senate, which is Republican controlled. Obviously the Memorial Day target is over. But more to the point, the measure is likely to stall in the state's predominantly Democratic Assembly.... Read more →

I try to cover a lot of stuff here on the ol' blog. Sometimes, though, it's hard to keep track of what happens after a post. So I'm today instituting Follow-up Friday, a new feature that I plan to post at the end of the work week when there's something that needs further attention. In it, I'll update previous posts -- some that were recent, others from a while back -- just to close the loop on the issues. Newspaper reporter Hildy Johnson (Rosalind Russell) and her editor Walter Burns (Cary Grant) race to get the news out in "His... Read more →

If you're one of the almost 35 million Americans expected to hit the highway this Memorial Day holiday, make sure you have enough gas money. Gasoline prices aren't going to hit the $5 dollar a gallon mark (thank goodness!) that some predicted back in April when there was so much Mideast turmoil. But most of us are still shelling out close to $4 per gallon at our local filling stations. Still, according to AAA's annual Memorial Day travel survey, six out of 10 Americans say that higher gas prices won't affect their getaway plans. The single biggest factor in the... Read more →

It's no surprise that in connection with yesterday's Ways and Means Oversight Subcommittee hearing on problems with refundable tax credit payments that the usual political charges were made. Yep, this blog post's headline encapsulates what each side was saying about the other. The GOP's release was subtly entitled "Democrats Defend Fraud — Argue Taxpayer Funds Should Be Wasted." It then accused Ways and Means Democrats of refusing to address the rampant waste, fraud and abuse in the current tax code and cited Democratic-damning data on improperly claimed tax credits by prisoners and the first-time homebuyer credit. Meanwhile, the Democratic spin... Read more →

The Memorial Day weekend traditionally marks the beginning of summer. It also heralds the start of the summer-time state sales tax holidays. While most of the tax-free events are later in the season to lure back-to-school shoppers, three states -- Louisiana, Texas and Virginia -- are holding no-sales-tax celebrations in connection with Memorial Day 2011. VIRGINIA Actually, Virginia is getting a head start. The Old Dominion's sales tax holiday begins today, Wednesday, May 25, and runs through Tuesday, May 31. During Virginia's six-day sales tax holiday, a variety of hurricane preparedness supplies are exampt from the state's 4 percent state... Read more →

Let the IRS help with your travel

No, Internal Revenue Service employees aren't moonlighting as travel agents. But if you properly combine business and personal travel, the tax code could help cover some of your costs. Tax help for business, pleasure trips is our latest Weekly Tax Tip. The story has details on making sure you follow the IRS rules about combining business and personal trips, but I want to emphasize one here: Keep good records. If the IRS questions your deductions, you want to be able to substantiate what was business and show that you didn't improperly sneak some personal expenses onto your return. But as... Read more →

2011 is the year of finding every possible penny of revenue. As part of that effort, the House Ways and Means Oversight Subcommittee is today looking into refundable tax credit payments that shouldn't have been made. Refundable credits are, as their name indicates, those tax credits that allow eligible taxpayers to get money back from the IRS even when they don't owe any taxes. You'll find them on the second page of Form 1040, in the return's "payments" section. For 2010, they included the now-defunct Making Work Pay credit, the earned income credit (sometimes called the Earned Income Tax Credit,... Read more →

Washington, D.C., considers taxing municipal bond interest

The nation's capital is the only U.S. jurisdiction that does not tax the interest earned on out-of-state municipal bonds. That tax break could be coming to an end. The Washington Business Journal reports that D.C. Council Chairman Kwame Brown appears to have the votes to remove the District's muni bond interest exemption. That tax could allow the District of Columbia to avoid instead a proposed new 8.9 income tax rate on the city's residents who make more than $200,000 a year. The income tax hike is projected to bring in more than $18 million a year. Taxing muni bonds is... Read more →

Folks are pretty ticked off by a Government Accountability Office investigation that found thousands of contractors who got federal stimulus money back 2009 owed Uncle Sam big tax bucks. We all should be angry at tax scofflaws getting more of our tax money. But one proposed solution -- preventing such contracts from ever being awarded -- also could have major costs to the U.S. Treasury. First, let's look at the latest examination of the price of federal payments to companies that already owe the IRS. At least 3,700 Recovery Act contract and grant recipients -- including prime recipients, sub-recipients and... Read more →

How to help Minneapolis, Joplin (and other) tornado victims

Storm season is always awful, but Mother Nature has been particularly nasty this year. Sixty-eight tornadoes were confirmed over the weekend. Two cities were particularly hard hit. Now the residents of Minneapolis, Minn., and Joplin, Mo., are trying to salvage something, anything as storms continue to rumble in their areas. If you can spare some cash, there are several ways you can help. The Community Foundation of Kansas City has created two funds to pool donations. You can make donations online via the Greater Kansas City Community Foundation's Joplin, Mo., Disaster Relief Fund and the Reading, Kan., Relief Fund. Convoy... Read more →

I filled up my car this weekend and was pleased to see that the pump price at my local station had come down a few pennies. And that's exactly why the IRS isn't too keen on adjusting its 2011 optional standard mileage deduction rates right now. These rates -- for business, medical and moving related driving -- typically are adjusted for inflation and other costs of car ownership each fall. Tax deductions also are allowed for charitable driving, but that rate of 14 cents per mile is set by law and not annually adjusted. Back in 2008, when gas nudged... Read more →

I enjoy a beer now and then. For the most part, the price of a brewski isn't too bad, unless you're buying one at a major league sports event. Talk about a captive, and thirsty, audience! Part of the price of any beer comes from taxes. There are, of course, state sales taxes. Each state also assesses an excise tax on beer, ranging from 2 cents per gallon in Wyoming to $1.07 per gallon in Alaska. The manufacturers pay the excise tax, but you can be sure that it's factored into the price we beer lovers pay for a six... Read more →

There are a few hours left before the 2011 Amercian Craft Beer Week celebration ends, so head to your local pub for a specialty brew or two. And while you're there, here's something else you can toast: BEER, or the Brewer's Employment and Excise Relief Act of 2011. Officially known as S. 534, the bipartisan BEER Act -- Senators John Kerry (D-Mass.) and Mike Crapo (R-Idaho.) are the lead sponsors -- would cut the current tax per barrel on the first 60,000 barrels produced by small brewers to $3.50, half the current tax amount. The reduced tax is estimated to... Read more →

Last week at my other tax blog:
Refund tracking; auditing the rich

Last week marked one month since the April 2011 tax-filing deadline. That's why one of the posts at my other tax blog last week was how to track down your IRS refund. The IRS offers you refund tracking tools at its website with the Where's My Refund? search tool, as well as via your smart phone with its IRS2Go app. Tax refund tracking was my Tuesday, May 17, topic. On Thursday, May 19, on my other blog I looked at tax audits. Specifically, I discussed some questions being asked about the effectiveness of a special IRS group tasked with auditing... Read more →

Warm weather brings out bugs. Although it's still May here in Central Texas, we're overrun by June bugs. But in Internal Revenue Service facilities, the primary pest apparently is the bed bug. No jokes about IRS agents sleeping on the job. No jokes period, please. For the last year or so, several IRS offices have reported bed bug infestations. Image courtesy MidMos Solutions Now the agency and the union that represents its workers have reached an agreement on precisely how to handle the pesky critters. A nine-page Memorandum of Understanding signed late last month by the National Treasury Employees Union... Read more →