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October 2011

Good news for Social Security recipients. You'll finally get a cost of living increase next year. The Social Security Administration says senior citizens receiving the government payments will see a 3.6 percent cost-of-living adjustment (COLA) that will take effect with the first benefits check of 2012. My mother is so happy. For two years, her monthly benefit check has been flat and hints of rebate checks never came to fruition while her expenses have increased. But in a couple of months, she and approximately 55 million other older Americans will be getting around $39 more a month from Uncle Sam.... Read more →

Where do your earnings rank?

The 99 percenters gathering at Occupy Wall Street protests and Herman Cain's 9-9-9 tax reform plan have us once again wondering just where we stand in relation to our fellow income earners. You can find out your financial standing thanks to a Kiplinger calculator into which you enter your adjusted gross income (AGI) from your tax return; that's line 37 on the 1040, line 21 on the 1040A and line 4 on the 1040EZ. The online calculator then shows you where rank on the income scale. A $30,000 AGI entry reveals: Your $30,000 adjusted gross income puts you in the... Read more →

Businessman Herman Cain, who has surged to the front of the Republican presidential nomination race in large part because of his 9-9-9 tax proposal, tried to defend his tax plan on national television Sunday. Ultimately, though, Cain was forced to admit for the first time that some people with lower incomes would pay more under the plan. As the former CEO of Godfather's Pizza explained how his plan would eliminate what he calls embedded taxes, David Gregory, host of the NBC news show Meet the Press, challenged Cain, saying "it's incontrovertible, some people will pay more" under the 9-9-9 plan.... Read more →

Most U.S. taxpayers claim the standard deduction. The figure holds around 70 percent who simply fill in the set amount for their filing status each year. But it's a good bet that many of the taxpayers who are finally getting around to filling out their 1040 today, the final deadline for tax return extensions, also are completing Schedule A. So where do most of the taxpayers who itemize live? Glad you asked. And very glad that the Tax Foundation has the answer in a nifty map format: Click image for a larger map. My former home of Maryland is home... Read more →

This is it my fellow tax procrastinators. That extension to file you got back in the spring ends today, Monday, Oct. 17. You've got to get your 1040 to the Internal Revenue Service, or if you send it by traditional mail at least have it postmarked, by today. Even more time for less-than-ideal filing situations: While many of us are scrambling today to meet our filing duties, as I noted in yesterday's filing mistakes post, some folks get a bit more time. Of course, their filing situations are not necessarily optimal. If you've been affected by recent natural disasters, check... Read more →

While the first-time homebuyer credit helped some folks get into a home, it has been an unmitigated disaster for the Internal Revenue Service. It's not necessarily the IRS' fault. The changes to the credit, from the amount available (originally $7,500 that was increased to $8,000 along with $6,500 for some not so first-time buyers) to the payback vs. real credit conditions to the many deadline dates, also caused problems for taxpayers. The IRS had to deal with those confused and often frustrated home-buying taxpayers. And sometimes it didn't do such a good job, according to a recently released report from... Read more →

Taxes are confusing, intimidating and generally infuriating. That's why we all try to be done with them as quickly as possible. Even when we get more time to file our returns, when we get around to finally filling out the forms we just want the process to be over ASAP. But don't be in such a hurry that you make preventable mistakes. Before you send your Form 1040 (or 1040A or 1040EZ) off to the IRS, be it by tomorrow's impending extended filing deadline or next April, use this checklist to help you avoid a dozen common tax filing errors.... Read more →

You'd think because it's October, taxes wouldn't be so hot. You'd think wrong. Not only is Monday, Oct. 17, the final deadline this year for folks who got an extension to file their returns, but politicians also are talking tax reform and criminals are still using taxes to steal your identity and money. So last week at my other tax blog. I looked at two of these three topics. Tuesday's blog item was a reminder that while the high tax season of January to April is prime tax scam time, tax con artists work all year round. These crooks use... Read more →

Maximizing itemized deductions can really cut a tax bill. Sometimes, though, the requirements to claim some deductions make getting the most out of Schedule A difficult. Two areas on that form, medical and dental expenses and job expenses and certain miscellaneous deductions, have to exceed a certain amount or they are of no use. You must have eligible medical and dental costs that are more than 7.5 percent of your adjusted gross income. As for the job related and miscellaneous itemized write-offs, the AGI hurdle is 2 percent. Note that the key here is that your costs exceed these percentages.... Read more →

Most taxpayers every year claim the standard deduction. But every tax-filing season, a lot of attention is paid to itemized deductions. I'm as guilty as the next tax blogger of focusing on Schedule A. I apologize. Timing aside: I also apologize for posting this so late, but I'm on a business trip and was booked solid today. Thank you for your patience and understanding. For the 70 percent or so of filers who don't mess with Schedule A, this is a reminder that some deductions are available to you, too. Technically, these are known as adjustments to income. You'll find... Read more →

Apparently Americans prefer natural tanning methods to tanning beds. Or maybe the Internal Revenue Service is not doing as much as it could to collect the 10 percent excise tax on indoor tanning services that took effect in July 2010. The missed collections is the theory that the IRS watchdog agency is going with. The tanning tax has so far raised less than one-fifth of the revenue it was expected to bring in for the entire fiscal year. A new report on the tanning tax by the Treasury Inspector General for Tax Administration (TIGTA) says that as of March 31,... Read more →

The local NPR station here in Austin, KUT FM, just finished its fall fund raising effort. But being a public radio outlet, the channel is always on the lookout for more money. A regular ad on KUT is one seeking vehicle donations. Giving away a car, however, is not as easy as it once was. When the hubby and I handed the title and keys of our AMC Pacer -- yes, it was a second car we bought used so that we each had a bit more automotive independence -- over to the Washington, D.C., area Goodwill office back in... Read more →

Republicans offer their own Buffett Rule to help pay down the federal debt

First Warren Buffett wrote a newspaper piece saying he and his fellow millionaires don't pay enough income taxes. Then President Obama included a millionaires' tax in his jobs bill, dubbing it the Buffett Rule. Now Republicans have adopted that moniker for a deficit specific revision to income tax returns. Sen. John Thune (R.-S.D.) has introduced S. 1676, The Buffett Rule Act of 2011, which would add a line on 1040s so that taxpayers could more easily donate money to Uncle Sam. An identical version of the bill, H.R. 3099, was introduced in the House by Steve Scalise (R-La.). "If individuals... Read more →

When it comes to taxes, someone is always trying to take your money and I'm not talking about the IRS. Millions of taxpayers who are worried about making a tax mistake or who are looking for any way possible to cut a tax bill are perfect prey, and sometimes partners, of criminals at tax time. So from January through mid-April, con artists and identity thieves use taxes as hook. But tax concerns are year-round, and so are tax scams. That's why this week's Weekly Tax Tip is a reminder to be on guard against tax cons 365 days a year.... Read more →

Any time you get in a hurry to finish your tax return, be it in April or as the October filing extension deadline nears, you run the risk of missing out on some tax breaks. To prevent that from happening, here are 10 tax breaks, both credits and deductions, that are often overlooked. Make sure you don't miss them if they apply to your tax situation. 1. Child care costs You kept track of the after school care for your kids while you were at work. What about this summer? Did you send the kiddos to day camp? That cost... Read more →

A misleading and fear-mongering anti-tax chain email aimed at homeonwers is back. It first appeared in 2010 during the health care reform debate. I'm not surprised it's again showing up in in-boxes, but I thought it might resurface a little later, as the 2012 presidential election heated up. Here's what the deceptive email says: Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home, etc. When did this happen? It's in the health care bill and goes into effect in 2013. Why 2013? Could... Read more →

The ultimate deadline for filing a 2010 tax return is less than a week away. It's also the last chance to claim the Making Work Pay tax credit. You remember this tax break, right. The $400 tax credit for single filers, double that for married couples filing jointly even where only one spouse had a job. Free money! Yay! Except when it comes to taxes, there is no free money. You have to make sure you qualify and then you have to fill out more tax paperwork. Sometimes it almost doesn't seem like it's worth messing with. OK. I said... Read more →

Where might you find the Speaker of the House of Representatives and an MTV reality program star this Tuesday, Oct. 11? At an Internal Revenue Service hearing on the indoor tanning services excise tax. OK. Rep. John Boehner and Snooki probably won't be there when the tan tax proceedings kick off this morning in the auditorium of the Internal Revenue Service building in Washington, D.C. But it definitely would be cool if the two most famous bronzed Americans showed up to officially talk tanning and taxes. They wouldn't necessarily have to testify, although I'm sure the Jersey Shore guidette would... Read more →

Every taxpayer knows that filing status makes a difference to your eventual tax bill. You have five choices on how you can file your taxes: single, married filing jointly, married filing separately, surviving spouse with dependent child and head of household. Each option offers certain filing advantages or limits, so selecting the correct one is key. While the choices might seem straightforward, sometimes it's easy to make a status misstep, especially when tax dependents are involved. You did notice that dependents, those folks who rely on you for support, are expressly mentioned in one status, right? That's the surviving spouse... Read more →

Al Davis, one of the great thorns in the side of the National Football League, died Saturday. He helped change not only how the game was played on the field, but also how teams approach the business side of football. Oakland Raiders owner Al Davis died at the age of 82 on October 8, 2011 it was announced by the team. The football legend won three Super Bowls with his team that he owned for more than 40 years. He is shown in file photo in 2004 in Oakland, California. UPI/Terry Schmitt Davis' death also raises the issue of NFL... Read more →