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January 2013

I admit it. I watch TV commercials even when I'm viewing a taped program. Some ads are better than the so-called entertainment programs. And sometimes I need the break to take care of other things, like getting a snack. And I always look forward to tax season to see how today's Mad Men position tax-filing services. H&R Block has been paying attention, too, and thinks the television spots of one its competitors was a slap at its employees. Unfortunately for Block, a federal judge disagrees. U.S. District Judge Fernando J. Gaitan, Jr. of the Western District of Missouri has denied... Read more →

The more tax things change ...

Just ran across this tax tidbit as part of research I'm doing for a larger tax project and just had to share it on this first day of the 2013 tax filing season. According to the Wisconsin Historical Society, collecting income taxes has always been a struggle: "Taxing income (as opposed to real estate, personal property or other tangible assets) was begun by the Puritans in Massachusetts in 1643. It didn't work. In fact, all 16 states that tried to tax incomes from 1643 to 1911 failed to raise significant amounts of revenue. The principal reasons that income taxes didn't... Read more →

Have you filed your 2012 tax return yet? Millions already have filed today. Like racers in the starting blocks, these taxpayers have been poised to send their returns to the Internal Revenue Service for weeks, but had to wait. Because Congress waiting until Jan. 1 to approve the American Tax Relief Act, which includes many provisions affecting 2012 tax returns, the IRS needed time this month to get forms and instructions updated and its computers reprogrammed. The IRS is ready to take returns from most (but not all) taxpayers today. It's now accepting returns that are filed the old-fashioned way,... Read more →

Tax filing season 2013 finally begins tomorrow, Jan. 30, for most people. But if you want to claim an education tax credit, you'll have to wait a bit longer to send your tax paperwork to the Internal Revenue Service. The IRS says its computers won't be able to accept Form 8863, which is required to claim the American Opportunity or Lifetime Learning tax credits, until mid-February. And the wait gets longer for other forms. The IRS says in the notice on its tax forms and publications Web page (and pictured below) that it's working as "quickly as possible" to update... Read more →

What do you pay your tax preparer to complete and file your tax return? The national average to prepare an itemized Form 1040 with a Schedule A and a state tax return is $246. That's what the National Society of Accountants (NSA) discovered in a recent survey. It's also the latest featured By the Numbers figure. If you have a simple tax situation, $246 probably sounds like a lot more than you want to spend to get your taxes done. That's cool. You have lots of tax preparation and filing options, so find the one that works best for you.... Read more →

It seems like every other driver in my part of Texas has bought a car. OK, maybe not every other driver, but lately I've seen lot of cars bearing the sign of being recently purchased, paper tags. Photo of newly-purchased Ferrari with paper tags courtesy Fred, Greg, and Joan's Corvette do the Great Race! Maybe everyone was just waiting to make sure they could deduct their vehicles' sales taxes. The itemizing option to choose between deducting state and local income taxes or state and local sales taxes expired at the end of 2011. The American Taxpayer Relief Act renewed the... Read more →

Beginnings dominated tax discussions last week at my other tax blog. President Obama kicked off his second term and briefly mentioned tax reform in his inaugural address. It wasn't much, but it was a baby step toward tax reform ... maybe. Meanwhile, taxpayers are awaiting the start of the 2013 tax-filing season, which was pushed back to Jan. 30 because Congress took so long to act on the fiscal cliff and related tax measures affecting 2012 returns. Now it looks like next week's scheduled filing kickoff might encounter a bit of a snag thanks to a federal court ruling that... Read more →

You've probably seen the commercial where the tax preparer mentions a client who hadn't filed returns for eight years. It happens. There are lots of excuses reasons for not filing taxes. There also is a big reason for taking care of your delinquent tax duties: Penalties. That was a recurring theme when I asked tax professionals via Facebook and Twitter what advice they give folks who've neglected to file returns. "I make sure they understand the potential seriousness, i.e., criminal penalties, and emphasize the need to deal with it ASAP since it only gets worse," says Diane L. Gilabert, aka... Read more →

Next week is a big one for taxpayers. The 2013 federal tax filing season begins, finally, on Jan. 30. And the very next day is a deadline for several tax situations. Jan. 31 is the day that employers are required to send out the prior year's W-2 forms. If you employed household help last year, this deadline also applies to you. Yes, the so-called nanny tax applies to regular folks, too, not just political appointees. Find out more in January Daily Tax Tip #17. The last day of this month also is the mailing deadline for all those wonderful 1099s.... Read more →

Retirees who don't need all the money they've saved to live on (Call me, please; I'd love to hear how you do it.) can once again give some of their retirement account money to charity. And even though we're into 2013, you can do so and have your gift count toward the 2012 tax year … as long as you do so by Jan. 31. This IRA donation tax year time-shifting is also today's Daily Tax Tip. Before you send your emails about charitable giving, let me clarify. It's also a good time to elaborate on this option. Philanthropic retirees... Read more →

Tax season is fraud season. And a large amount of illegal tax returns are being filed by people who are already in jail. But a provision of the fiscal cliff tax law, officially known as the American Tax Relief Act of 2012, could help the Internal Revenue Service stop or at least slow down fake refund filings by inmates. Last December, as Congress was fighting about ways to deal with expired and expiring tax laws, the Treasury Inspector General for Tax Administration (TIGTA) released a report on tax fraud by prisoners. The tax watchdog office found that the amount of... Read more →

It's not often that the hubby's and my lines of work -- golf writer and tax writer -- converge, but that's happened thanks to Phil Mickelson. The professional golfer, known to his fans as Lefty, looked to be a little out in left field (if you'll indulge the mixing of sports metaphors) this past weekend when he let slip he was considering "drastic changes" in his professional life because of high state and federal taxes. The four-time major champion (2005 PGA Championship and 2004, 2006 and 2010 Masters) who has a reported combined net worth of nearly $180 million didn't... Read more →

Forty-four years ago a new tax system was created to ensure that the wealthy paid at least some tax. It wasn't necessarily a bad idea, but the newly created alternative minimum tax (AMT), had a major flaw. It was not indexed for inflation. That meant that as years went by and incomes increased, more people who weren't rich got caught in the AMT's trap. To determine if you must pay the AMT, you have to figure your ordinary tax bill and then calculate the AMT damage, which could be substantial because some major breaks, such as state and local income... Read more →

King to Obama, America's journey from 1963 to 2013

I was seven in 1963. But even though my younger brother and I were just small children, my parents made sure we were aware of current events. Before 1963 was over, Mom and Dad would try to explain the unexplainable, the assassination of a president. They also made sure we understood, as much as grade-schoolers could, the more positive, but challenging, things that were happening in America 50 years ago. So we discussed the Civil Rights movement. We were lucky in that in my small West Texas hometown, there was no formal segregation. All of us kids went to the... Read more →

I used to smoke. Lucky (no pun intended) for me the hubby is a nonsmoker and I gave up the nasty habit for him. Even luckier for me, years ago when I did smoke, cigarettes weren't nearly as expensive as they are nowadays. If I were still smoking, I'd probably be cutting back somewhere else. Or buying smuggled cigarettes. That, apparently, is what a lot of U.S. smokers do. New York is the highest net importer of smuggled cigarettes, totaling 60.9 percent of the total cigarette market in the state, according to a recent analysis by the Tax Foundation. The... Read more →

The second inauguration of President Barack Obama might be more low-key than his historic swearing in four years ago, but it's still going to be plenty profitable for lots of folks. No, I'm not talking about the D.C. power brokers this time. I'm talking about folks who own property in the national capital area and who are renting it to visitors. The ABC New blog The Note says "some D.C. residents are making a pretty penny off inauguration attendees this weekend by renting out their spaces through social media sites. Airbnb, a website that allows people to rent their homes... Read more →

The challenging thing about each new tax season is that while you have to worry about filing the prior year's return, you also need to pay attention to the current year's tax laws. Topics in those two areas were covered last week at my other tax blog. We started with this year, specifically the 2013 tax rates and income brackets as set earlier this year by the American Taxpayer Relief Act, aka the fiscal cliff tax bill. As everyone knows by now, the six Bush-era tax rates were made permanent and a new 39.6 top tax rate was added beginning... Read more →

Well, we have yet another turn in the winding road that is the 2013 tax filing season. Friday (Jan. 18) afternoon, a federal judge barred the Internal Revenue Service from imposing a series of new regulations, including a competency exam, on hundreds of thousands of tax preparers. Elmer Kilian of Eagle, Wisc., one of three tax preparers who filed suit against IRS tax preparer licensing regulations, is featured on the Institute for Justice website following the federal court ruling against the plan. The Registered Tax Return Preparer (RTRP) program, a pet project of former IRS Commissioner Douglas Shulman, was the... Read more →

In addition to the tax statements that are arriving this month, you'll need some other information to file your return. Today's Daily Tax Tip offers a checklist of what to round up, for either yourself if you plan to file on your own or for your tax professional. General information and documents that will be useful include: Social Security numbers for yourself, your spouse and all dependents. Last year's federal return. If you live in a state that collects taxes, dig out that old return, too. They can serve as guides to this year's filing. Records of estimated tax payments... Read more →

While we're waiting for the Internal Revenue Service to finish updating its forms, we filers can go ahead and get the other documents we need to file in order. Yep, I'm talking about gathering up all those tax-related statements that have been filtering into your snail mail or email boxes. Information on these exciting pieces of necessary filing paper is today's Daily Tax Tip. You'll need that documentation to fill out your Form 1040. Employers, clients, vendors and anyone else with whom you had a taxable transaction last year has until Jan. 31 to get the forms in the mail... Read more →