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February 2012

Santorum needs professional tax help

Rick Santorum, the latest Republican presidential nominee wannabe to give Mitt Romney fits, apparently has had a tax filing epiphany. The former U.S. Senator from Pennsylvania released his tax returns this week. The filings from the last few years show that like most candidates for office, Santorum is sort of rich. On earnings ranging from $660,000 in 2007 to $1.1 million in 2009 to $923,000 in 2010, Santorum paid a tax rate of around 28 percent. That's double the effective tax rate Romney paid on his vastly larger earnings. But Santorum now sees his tax problem. "Look, I do my... Read more →

America's housing problems continue to dominate economic and political discussions. You can add taxes to the mix, too. Back in 2008, the original first-time homebuyer credit was enacted. It was ostensibly created to help new buyers get their first homes. How successful the credit and its subsequent iterations was and just who benefited more -- buyers, vote-seeking members of Congress or the real estate industry -- is still being debated. Vintage moving van ad courtesy aldenjewell via Flickr But everyone agrees that the administration of the credit, particularly the 2008 version, has been a nightmare. The biggest problem is that... Read more →

The most romantic day of the year has past. Some folks are very happy today. Others, not so much. If yesterday was a great Valentine's Day and you are now engaged, congratulations! Here's my wedding gift to you: Some tax issues to consider as a married couple. Filing status: The date you choose to exchange your vows will affect your filing status. If you eloped yesterday or are planning to exchange vows soon, then the IRS will likely consider you married for all of 2012. I say "likely" because some of you might find yourself in the same situation as... Read more →

It's Valentine's Day so you know what I'm thinking about. Taxes. And yes, the hubby has learned to live with my idiosyncratic approach to most holidays. One of the Internal Revenue Service's most famous victories was a direct result of one of the bloodiest days in mob history on Feb. 14, 1929. This day for lovers 83 years ago was marred by the St. Valentine's Day Massacre. As the Roaring '20s were winding down, Al "Scarface" Capone was weary of Chicago's escalating gang warfare, so he decided to bring it to an end by eliminating criminal rivals. Although Capone was... Read more →

Today's Tax Carnival is a bit delayed. You can blame the Fiscal Year 2013 budget, or celebrate it if you're a total budget wonk. Whatever. Actually, the Obama Administration was late in releasing the federal budget. It is by law supposed to be delivered on the first Monday in February. But for the second year in a row, it's out a week late. So I don't feel as bad about being just a few hours behind my self-imposed schedule in posting this 97th Tax Carnival. And to note the effect that the president's latest wish list, campaign blueprint, budget had... Read more →

The Buffett Rule is a great replacement for the alternative minimum tax

By now you've seen the highlights of Obama's fiscal 2013 budget. Depending on your fiscal and/or political leanings, it's a solid financial hybrid of stimulus and deficit reduction efforts or simply a document filled with monetary gimmicks. There is, however, one thing everyone can agree on: There's not much new in this budget. Senate Budget Committee staff member Kathleen Llewellyn (R) hands out a copy of the FY2013 Budget as it is delivered to the Senate Budget Committee on Capitol Hill in Washington, D.C. on February 13, 2012. UPI/Kevin Dietsch The president has put forth most of his FY13 tax... Read more →

It's good to know that most of us are honest, or so we say, when it comes to filing our taxes. Every year, the IRS Oversight Board conducts a Taxpayer Attitude Survey. For 2011, the board found that the vast majority of those surveyed find cheating on taxes unacceptable. That's been the norm over the years. In this latest survey, 84 percent said that it is "not at all acceptable to cheat on one's income taxes." But our honesty has slipped a bit. The 2011 results were down three points from 2010, when 87 percent said that it was not... Read more →

NOTE: This post was edited/updated on Feb. 26, 2018, to reflect 2017 tax year numbers and changes coming due to the new tax law's changes for the 2018 through 2025 tax years. Every taxpayer's situation is different, but there are a few tax rules that apply to almost every person who has to file a return. One of the most welcome is the tax exemption. This family will likely jump for joy again when they see how much personal exemptions will save them on their tax return. (Photo by Emergency Brake via Flickr Creative Commons) Like deductions, an exemption helps... Read more →

Did you e-file this season? More of us are doing so, but apparently with more trepidation. And speaking of fear, owners of foreign assets have more information to report to the IRS or face the consequences. Both of these issues were discussed last week at my other tax blog. A survey conducted by Ipsos for the online tax filing company found that most Americans are concerned that their personal and financial information might be compromised by efiling state and federal tax returns. The biggest worry was transactions via smartphones. That's not good news for tax software makers who are... Read more →

Last year the IRS jumped into the digital tax pool with IRS2Go. This filing season, Uncle Sam has upgraded the app for iPhone and Android. The IRS venture into mobile devices is just one part of the growing tax app world. And a look at those options for filers on the go is today's Daily Tax Tip. IRS2Go 2.0: Let's start with the latest smartphone tax options from the official federal tax office. Watch Us. The IRS videos provide short features on a variety of tax topics. The channel ranks as the fourth most viewed channel among more than 125... Read more →

'Join hands and jump' is the only way to achieve a payroll tax compromise

What will it take for the payroll tax conference committee to arrive at a deal? One Washington, D.C., tax expert predicts a full 2012 extension of the employee payroll tax cut (and unemployment benefits and the doctors' Medicare payment fix) will come only when the Republican and Democratic negotiators go behind closed doors, join hands and jump. The conferees' eventual compromise won't please hardliners in either party. And we taxpayers will likely not get any advance warning that a deal is done. "We'll realize they are joining hands and jumping when they fall on us," said Mel Schwarz, partner in... Read more →

Another short-term payroll tax cut?

Groundhog Day was last week, but it's obviously Congress' favorite movie. Capitol Hill lawmakers just love doing the same thing over and over and over. This time the payroll tax cut conference committee has stalled in a repeat of the battle the House and Senate fought just before Christmas. After a game of political chicken, Congress agreed to keep the 2-percentage-point payroll-tax cut, the Medicare reimbursement fix and unemployment benefits in place through Feb. 29. The hope was that after the holdiay break, conferees would be able to come up with mutually acceptable ways to raise the estimated $160 billion... Read more →

Tired of reading about people with much more money than you paying taxes at a much lower rate? Then here's something to cheer up all you tax Schadenfreude types. James Ross, founder and managing member of a Manhattan-based private investment firm, is a self-acknowledged member of the 1 percent. But the percentage that's raising eyebrows is 102. Ross told the New York Times that in 2010 he paid 102 percent of his taxable income in federal, state and local taxes. "My entire taxable income, plus some, went to the payment of taxes," Ross said in an email to the newspaper.... Read more →

The president is planning to release his fiscal year 2013 budget on Monday, Feb. 13, and two tax proposals expected to be part of the plan already are under intense scrutiny. Obama's budget for the government's new fiscal year beginning Oct. 1 will likely include: Continuation through calendar 2012 of the payroll tax cut set to expire on Feb. 29, and Ending the Bush tax cuts for households making more than $250,000 a year. The prez has been facing push-back from Republicans on Capitol Hill and the campaign trail for both of these. The political opposition is no surprise, especially... Read more →

Will sales taxes come between Washington and Oregon shoppers?

Washington and Oregon have been good neighbors. But a change in sales tax collection could put a strain on that friendly relationship. Washington has no income tax. The Evergreen State's 6.5 percent tax on retail sales is its principal tax source. Shoppers who come up from Oregon, however, don't have to pay Washington's sales taxes. To get tax-free treatment, Oregonians simply show their state IDs and Washington businesses don't charge them sales tax on their purchases. This courtesy is extended to Beaver State shoppers because their home state doesn't collect a sales tax. Actually, the same tax-free treatment is given... Read more →

Maybe it's time for those of us who dismiss those goofy Super Bowl prop bets to reassess our position. Two wagers that many of us considered to be throw-away bets paid off big for Jona Rechnitz. Rechnitz's $1,000 bet on a safety being the first scoring play of the Super Bowl returned $50,000 when Tom Brady's intentional grounding in the end zone gave the New York Giants an early two-point lead. Rechnitz's buddy Benjamin Lyons promptly posted a picture on Twitter of the 50-to-1 winning betting slip. Rechnitz pocketed another 10 grand for a second bet that there would be... Read more →

Republicans and Democrats trying to work out a full-year extension of the payroll tax cut are at loggerheads again. When the payroll tax cut short-term extension was approved in late December 2011, the measure also included the continuation of unemployment benefits and a Medicare payment tweak. But all three will expire if Congress doesn't act by Feb. 29. A House and Senate conference committee has been meeting since Jan. 18 to find a way to keep those provisions in place through 2012. The hope was that the political PR debacle just before Christmas would put the lawmakers in a mood... Read more →

My running joke is that my ultimate retirement plan is winning the lottery. That's not likely to happen, so I still contribute as much as I can each year to my nest egg. Today's Daily Tax Tip is that you do the same. Self-employment retirement plan choices: If you're self-employed like me, you've got several options: SEP (Simplified Employee Pension) IRA, Solo 401(k) or SIMPLE (Savings Incentive Match Plan for Employees) IRA. The plans vary depending on earnings amounts, how much you can put into them, when they must be opened, how easy (or difficult) they are to administer, so... Read more →

Got a little money riding on Super Bowl XLVI? You definitely aren't alone. Every year Super Bowl Sunday is the biggest single day of betting. Last year, U.S. gamblers bet an estimated $8.6 billion on the NFL championship game. The 2012 rematch of the New York Giants and New England Patriots is expected to attract more than $10 billion in wagers. The good news for folks who aren't football fans but who want to get in on the action is that you can bet on a lot of ancillary Super Bowl events. Known as prop, or proposition, bets, these are... Read more →

The Super Bowl, Facebook and frequent fliers. What do all those things have in common? They were all topics last week at my other tax blog. The New York Giants are facing off Sunday against the New England Patirots in Super Bowl XLVI. But behind the scenes, Giants tax personnel are fighting with East Rutherford, N.J., officials about a property tax bill on the team's practice facility. Some Giants and Patriots fans probably used frequent flier miles to get to Indianapolis for the Super Bowl. If they got some of those miles thanks to a Citibank promotion for new account... Read more →