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January 2012

Thank you, Citibank, for muddying the tax waters when it comes to frequent flier miles. Folks who opened Citibank savings or checking accounts last year got some airline miles for doing so. Now they're getting some potential tax trouble. The financial institution has sent them 1099-MISC forms, with copies to the IRS, letting the new customers know that the value of the miles they received is taxable income. What the ... ? Tax-free miles until now: For ages, recipients of these points for patronizing a specific airline have enjoyed them as a tax-free travel perk. That's because back in 2002... Read more →

Taxes low on the wealthy's worry list

"Let me tell you about the very rich. They are different from you and me." From the short story "The Rich Boy" by F. Scott Fitzgerald One of those differences is how the wealthy handle their vast sums of money. Most have financial advisers and they want specific things from those money experts. And despite all the recent clamor about politicians' tax returns and the historically low tax rates set to expire in 11 months, tax advice apparently is not a big concern of the uber rich. Cerulli Associates/Phoenix Market International conducted a survey last year of high net worth... Read more →

Even in today's global economy, the stiffest and most direct competition that states face often comes from other states. With that in mind, the Tax Foundation last week issued its eighth annual State Business Tax Climate Index. In calculating the rankings, the Washington, D.C., nonprofit takes into account dozens of state tax provisions to come up with each state's score against the tax climates of every other state. "Tax competition is an unpleasant reality for state revenue and budget officials, but it is an effective restraint on state and local taxes," notes Mark Robyn, an economist with the Tax Foundation... Read more →

UPDATE: Santorum's tax preparation comments to the media blogged below were made before it was announced the candidate's daughter is ill. That is the primary reason he returned to his Pennsylvania home. Thanks to readers for alerting me and good thoughts for the youngster's quick and full recovery UPDATE 2 (Jan. 30, 2012): Santorum's daughter is better and he's back on the campaign trail, although not in Florida. But true to the original post below, he's decrying the "gutter politics" of the GOP race. You know things have gotten politically toxic in the race for the Republican presidential nomination when... Read more →

You're an honest person, right? So you include every penny you make on your tax returns, right? Yeah, I know. But I had to ask. The Internal Revenue Service depends on full voluntary compliance by all of us. And that means reporting all our income, even when we don't get official tax statements listing that income. Technically, a person who pays you for a job isn't required to send you (and copy the IRS) a 1099-MISC if your earnings are less than $600. But that amount applies to the payer's reporting requirement. It has no bearing on your filing requirements.... Read more →

The battle to win the Republican presidential nomination has heated up, with taxes being a hot topic last week. So it's no surprise that the campaign related tax posts dominated last week at my other tax blog. Mitt Romney finally released his tax returns, confirming what we already knew (except for that surprising first name of Willard). But what Romney's 14 percent tax rate did provide was a way to differentiate beween marginal and effective tax rates. The other thing we learned about Romney is that he's essentially a play-it-safe taxpayer. If he'd been more aggressive, he might have paid... Read more →

Getting old tax filing information

During tax filing season you're focusing on last year's tax return. Sometimes, though, you need a copy of an older tax return. This is often the case when you're applying for a loan, especially a mortgage. In the wake of the housing/banking debacle, lenders are taking closer looks at potential customers' finances and that includes copies of old IRS filings. The best source is your own records. You don't need to keep all the documentation indefinitely, but you should hang onto copies of your past returns forever. Digital is fine. Just scan in those decades of 1040s and associated schedules.... Read more →

A couple of years ago -- Yikes! Has it been that long!? -- I asked in a post Are you ready for a Roth conversion? It looked at the elimination of the income limit on converting a traditional IRA to a Roth account. Back then, my fellow personal finance blogger and Twitter pal JoeTaxpayer. was among those who offered some answers to that question so I invited him to elaborate. He graciously agreed to write a guest post then and now he's updated it with 2011-2012 tax data. Today, I'd like to offer a look at what it would take... Read more →

Tax refunds via debit cards didn't work for Uncle Sam last year, but maybe the Empire State will have better luck. The New York Department of Taxation and Finance announced this week that the state's taxpayers can now choose to receive their personal income tax refunds on a prepaid MasterCard debit card. Click image to view a video on the NY tax refund debit card option. The option was created to provide folks without a bank account a way to have their refunds directly deposited. New Yorkers can choose the debt card refund method when they file their tax returns.... Read more →

Tax refunds delayed by fraud fine-tuning

Few folks are as eager as those awaiting a tax refund. Well, there's bad news for some of you early filers. New anti-fraud measures implemented this tax filing season have caused the Internal Revenue Service to be a bit slow in sending out refunds. After getting calls from taxpayers and tax professionals wanting to know why folks were still waiting for refunds -- e-filers generally can expect their directly deposited refunds in about 10 days -- the IRS announced that the tax cash could be delayed a week because of a new anti-fraud safeguards. Here's the official email word from... Read more →

Lost in the political sniping this week about which candidate pays how much in taxes was a report on which federal workers aren't paying what they owe. The latest tax delinquency data shows that at the end of fiscal 2010, about 98,000 federal, postal and Congressional employees owed $1.03 billion in unpaid taxes. Add in federal retirees and military personnel, and the Internal Revenue Service says the total comes to nearly 280,000 people owing $3.4 billion. The numbers are from the IRS' Federal Employee/Retiree Delinquency Initiative (FERDI). Since 1993, FERDI figures have been send to Congress as part of an... Read more →

State of taxes in Obama's State of the Union address.

Tuesday was the day that news really wasn't new. First, Mitt Romney released his tax returns, which didn't tell us very much we didn't already know. Then came Obama's 2012 State of the Union address, which also contained a lot of tax ideas that we've heard before. And we've still got a week until Groundhog Day! In case you missed it, you can watch the White House video of the speech. Or you can read the transcript. Or you can peruse a collection of Twitter comments posted while Obama spoke. But since you've stopped by the ol' blog, here are... Read more →

Not to run this Mitt Romney tax return thing into the ground, but I just ran across a nice 1040 comparison graphic by the Washington Post. That's a snippet of it below. Click image for full version view. So how did the prez and two of the guys who want his job do on their 2010 taxes? Barack and Michelle Obamas' tax effective rate was 26 percent. Newt and Callista Gingrich paid almost 32 percent in taxes. And Mitt and Ann Romney, as noted (and noted and noted) were the big tax winners, with an effective tax rate just a... Read more →

Now we know. The economic downturn also affected millionaire Mitt Romney. Tax data released by the Republican presidential candidate show that he had income of $21.7 million in 2010 and $20.9 million last year. For the 2010 tax year, Romney made public the joint personal tax return he and his wife Ann filed, as well as returns for the Mitt Romney Trust, the Ann Romney Trust, their family trust and the Tyler Charitable Foundation filing. He also released a 2011 estimated return. Details, details: What exactly have we learned from all these electronic pieces of paper? Mitt and Ann Romney... Read more →

Joe Paterno's estate tax mistake

There's a lot of talk about hiring a tax professional during filing season. But you also should get expert help any time of the year when your tax circumstances are a bit tricky. Joe Paterno, the former Penn State head football coach of 46 years, died on January 22, 2012 in State College, Pennsylvania. He was 85. His legacy as the winningest coach in college football was tarnished by his inaction in a sex abuse scandal leading to his dismissal in November, 2011. Shown is a statue of him on the Penn State campus on November 10, 2011. UPI/George Powers... Read more →

Long-time readers of the ol' tax blog know that in prior tax seasons I conducted several giveaways. That's not happening this year. It's not for lack of opportunity. Neither is it because of issues with the prizes or the companies that made them available. And it's definitely not because I don't love each and every one of you who stops by Don't Mess With Taxes for some tax filing info, tax planning advice or just to catch up on the latest, and goofiest, tax news. It's simply that I'm dealing with some added professional and personal demands this year and... Read more →

In 2009, the Internal Revenue Service electronically processed nearly 95.5 million individual tax returns, or roughly two-thirds of all individual tax returns filed that year, according to a Government Accountability Office (GAO) study issued in March 2011 on ways to improve electronic tax filing. In compiling that report, the GAO also noted that the IRS estimated that each e-filed return amounted to a saving of $3.10. That's enough to still get a small cup of coffee in some places. And it is definitely enough to qualify as this week's By the Numbers figure. The precise price comparison is $3.29 to... Read more →

Tax filing preparation checklist

Electronic tax filing began last week. Whether you choose to use Free File, use tax software on your own or seek professional filing help, you still need to do some pre-filing preparation. Today's Daily Tax Tip offers some guidance on how to do just that. Begin by rounding up your tax documents, such as: Last year's federal return. If you live in a state that collects taxes, dig out that old return, too. The personal identification number (PIN) you used to e-file last year. You'll need your PIN or your adjusted gross income (AGI) to verify your identity so you... Read more →

Two popular topics each filing season are how to get our taxes to the IRS and the tax rates that produce our tax bills. Both of those topics were the focus of posts last week at my other tax blog. The IRS' Free File program began accepting tax customers on Jan. 17, and this year more people might find themselves eligible because the income threshold is lower. For this filing season, you can use Free File if you made $57,000 or less. Last year, the income cutoff was $58,000. The IRS probably didn't intend it, but this lower income threshold... Read more →