Don't Mess With Taxes

It was a long and crazy week what with the convergence of a hurricane and political convention, leading into a three-day holiday weekend, so I'm cutting to the chase in this report of what made the cut last week at my other tax blog.

First there was a look at 25 of the highest-paid U.S. chief executives who pocketed more in pay last year than their companies paid in federal income taxes.

In 2011, the top 25 execs raked in average compensation worth $20.6 million, according to the report "Executive Excess 2012: The CEO Hands in Uncle Sam's Pocket" from the Institute for Policy Studies. Meanwhile the companies they headed paid a total of $53 million to the Internal Revenue Service.

And that amount was just from a handful of companies. Some of the corporations owed nothing and most used corporate tax breaks to get refunds.

While some people are working to track precise tax figures, others are playing fast and loose with tax info.

That's the case with the perpetrators of a home-sale tax rumor that won't go away. Folks keep sending out an email that says every home seller will owe a 3.8 percent tax on the sales price they get for their residence.

Wrong.

While the 3.8 percent tax is a new levy in 2013 that will go to bolster Medicare, it will only apply to higher-income earners, not everyone. It's levied against investment income, which could include some real estate sale profits, of those wealthier taxpayers.

But home sellers, regardless of income, get to exclude a large portion of any profit they make on their home, specifically $250,000 for single sellers and $500,000 for joint filing married couples.

And it's the profit over the exclusion amounts that might, and I emphasize might, be subject to the tax, not the full sales price they got.

You also might find these items of interest:

• 3.8 percent health care tax does not apply to all home sale profits
• Don't fall for health care tax rumors
• GE and 14 other tax dodging companies