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January 2014

If you're a Californian, forget about your current federal tax return for a minute. You need to check on your 2012 state tax return. Were you due a refund last year from the Golden State's tax collector? Did you get it? Nearly 48,000 Californians didn't. The state is holding around $16 million in snail mailed refund checks that were returned as undeliverable. The returned refund checks range from $1 to $54,000. However, Most of the returned tax refunds (nearly 45,000) are for $1,000 or less. But just about any amount sure could come in handy for those Christmas credit card... Read more →


The Internal Revenue Service has apparently dodged a major bullet in the controversy over how it mishandled applications for nonprofit status by so-called social welfare groups. The Wall Street Journal reports that Federal Bureau of Investigation won't file criminal charges over the IRS' extra attention to conservative groups who sought tax-exempt 501(c)(4) status. The questionable review process was detailed in a Treasury Inspector General for Tax Administration (TIGTA) report last May. BOLO blowback: The TIGTA examination found that in reviewing the applications, IRS agents in its Tax Exempt Organizations unit used a be on the look out, or BOLO, list... Read more →


The U.S. tax system is based on the pay-as-you-earn concept. Every worker who gets a paycheck knows this by the amount of income and payroll taxes withheld each payday. If you get money from other sources where withholding isn't in effect, Uncle Sam expects you to take care of your due taxes in a timely fashion, too. The mechanism for this is estimated tax payments. Estimated taxes are paid via four extra payments filed with the Internal Revenue Service using Form 1040-ES. Click image to access the PDF version of Form 1040-ES, including all vouchers and instructions. They are due... Read more →


This morning I logged on to EFTPS, pronounced eff-tips and officially known as the Electronic Federal Tax Payment System, to set up my final 2013 tax year estimated payment due next week. Despite a few glitches now and then, I've been a pretty satisfied user of the Treasury Department's electronic tax payment service. I make our annual Internal Revenue Service bill payments (and yes, we usually owe) via EFTPS, saving us any credit card fees for paying with plastic. And the best part is that with EFTPS you can schedule recurring payments, such as estimated taxes, well in advance to... Read more →


Personal exemptions are one way for taxpayers to reduce their adjusted gross income to a lower taxable income amount. Remember, the less money that the Internal Revenue Service can tax, the smaller your eventual tax bill. Personal tax exemptions also are today's Daily Tax Tip. Each of the three individual returns allows each filer to claim a personal exemption for him- or herself, as well as one for a spouse and eligible dependents. Don't be confused by the lack of specific mention of exemptions on the 1040EZ. It's there, but the exemption amount is included in the form's combined standard... Read more →


I'm a big believer in you get what you pay for. Apparently, so is National Taxpayer Advocate Nina Olson. Olson this week released her annual report to Congress. In the yearly analysis, the Internal Revenue Service's internal watchdog details at least 20 of the biggest problems that taxpayers face. For 2013, Olson enumerated 25 taxpayer troubles. And she put the inability to get good service from the IRS near the top of her latest list. One of the most frustrating taxpayer-IRS interactions is telephone service. Folks seeking answers via phone are getting worse service now. And why is there such... Read more →


Colorado tax collectors appear to be the big winners in the state's sale of recreational marijuana. Owners of the 37 new dispensaries around the state reported first week retail sales exceeding $5 million. Around $1 million in legal pot transactions were made on New Year's Day, when the new law took effect. Despite the smart-ass caption by the Lubbock Avalanche-Journal photographer (was that you, Milton Adams?), I was lighting up a Marlboro cigarette, not the wacky weed back in my early days as a newspaper police beat reporter called in late one night to cover a breaking story. Sanctioned marijuana... Read more →


LBJ's war on poverty, aided by the Earned Income Tax Credit

Fifty years ago today, President Lyndon B. Johnson delivered his war on poverty speech. It was LBJ's first State of the Union Address on Jan. 8, 1964, just seven weeks after he moved to the Oval Office following John F. Kennedy's assassination. "This administration today, here and now, declares unconditional war on poverty in America," the new president announced to the joint session of Congress and all of America in his Texas drawl. And for LBJ, the war was personal. Johnson's specific war on poverty section begins at 12:48 and runs to 22:39. (Hang on through the test screen; the... Read more →


Regardless of whether you file a 1040EZ or a long 1040 with a dozen schedules attached, some planning before you start filling out the forms can keep the process from being an ordeal. It also can make sure you get all the tax breaks to which you're entitled so you don't overpay Uncle Sam. So while we're waiting for the Internal Revenue Service to open its 2014 tax filing season doors, check out today's Daily Tax Tip: 7 ways to get organized for the tax year. This includes things such as rounding up (or applying for) all the Social Security... Read more →


Another tax year has arrived. All together now: Happy New Tax Year! Sure, the celebrating has been a bit subdued because our actual tax filing has been pushed back a bit. But just because the Internal Revenue Service isn't quite ready to start processing our returns doesn't mean we can't get to work on them now. So let's have a hearty toast for Tax Carnival #124: Happy New Tax Year 2014, our first carnival of the year. It's a relatively small midway for this first Tax Carnival of the year, but then isn't smaller the goal of most of us... Read more →


Welcome back and welcome 2014. If you made it back to work and the Internet last week, welcome back again! Once you get settled in, your first task is to focus on filing your 2013 tax return. Hey, you are at a tax blog! The 2014 Daily Tax Tip series starts today to help make that job, well, less taxing. Kicking off this year is my look at 10 new tax traps to watch out for in 2014. Here's a quick overview: Get ready to wait early in the year. Get ready to wait later in the year. Watch for... Read more →


In addition to the many dollar amounts that the Internal Revenue Service adjusts annually for inflation, a key figure that affects our taxes is the Social Security Administration's official contribution and benefit base. For us working stiffs, this is the amount of our income that is subject to Social Security taxation. This is part of the payroll tax, also known as FICA (short for Federal Insurance Contributions Act), that comes out of salaried workers' checks and goes toward the federal retirement benefits program. The tax rate is 6.2 percent for employees with employer contributions matching that rate. The Social Security... Read more →


How many of your holiday gifts, either given or received, were purchased online? Probably at least a few. Black Friday online shopping passed the $1 billion mark for the first time in 2013. The $1.2 billion take by Internet retailers was up a hefty 15 percent over the previous year. That's very close to overall e-commerce sales estimates, which predict slightly slowing percentage growth, but increased dollars spent, in this sector. That trend is why states are cutting deals with Amazon to get the online retail giant to build structures in within their borders. The latest real estate/tax break blockbuster... Read more →


Lorraine Yaleni Begazo and her younger brother Brandon Ferdinando Begazo have no idea of the tax benefits they've provided their parents. The twins just want their next meal and clean diapers. That's to be expected, they're just a few days old. But because they were born in two different years, the New Year's Eve/New Year's Day babies give their mom and dad an immediate tax benefit when the folks file their 2013 tax return. Then they get double the benefits with their 2014 filing next year. New mom Yaleni Santos Tohalino (pictured with her babies) delivered Lorraine, who weighed in... Read more →


Wow! Has your first work day of 2014 been as crazy as mine? If this is what the new year holds, I'm going to have to get a bigger coffee pot! And hire a personal Zen yoga trainer. Now that I've finally had a chance to catch my breath, I want to remind everyone -- as if y'all need it -- that the 2013 tax year is done. All that's left, for the most part, is the filing of our annual tax returns. But 2014 also brings us the chance to make sure that the filing process is as painless... Read more →


For good or ill, 2013 is gone. Welcome 2014! On the tax front, 2013 was quite an eventful year. So before we get too deep into this new year, I thought it would be fun to reflect on what happened in the tax world last year. Taxes, of course, are very personal. That one-to-one relationship we all have with the tax code extends even to major developments in tax laws. What seems momentous to me might not be so important to you and vice versa. So the following list of 10 tax happenings in 2013 is in no particular order.... Read more →