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April 2014

April 15 is finally here! You can celebrate after you file something. As today's final 2014 filing season Daily Tax Tip points out, you have two choices as to what to send the Internal Revenue Service. You can finish and file your 2013 tax return. Or you can submit an extension request. Choose one option or be prepared to pay the IRS more money. Uncle Sam is serious about getting some sort of official document from you today. He actually has stiffer penalties for not filing than not paying. So get to work on one or the other. Timely filing:... Read more →

John Paul Pinette, the portly comic who is probably most recognized as the carjacking victim who set in motion the trial in the 1998 finale of "Seinfeld," died April 5. If the 50-year-old Malden, Mass., native had followed his original career path, he likely would be working on tax returns today. Pinette earned an accounting degree in 1996 from what is now the University of Massachusetts, Lowell and, according to the New York Times, "embarked on a brief, unhappy career in the field." "I was a very bad accountant," he told the Montreal Gazette in 2006. "I knew the book... Read more →

It's one day until the tax filing deadline. Are you panicking yet? Don't. You've got time. Technically, we have a day and a half (sorry for not posting sooner; one of those crazy days) to get our returns done -- and by "we," I mean all y'all planning to send in a 1040 because I've already filed an extension. The Internal Revenue Service accepts as timely filed returns that are postmarked or e-filed by midnight April 15 local time, so that gives you today and tomorrow. To help you cope with any still pending tax issues (remember, tomorrow is the... Read more →

Despite shutting down its system completely for most of last week after the Heartbleed bug was revealed, the Canada Revenue Agency (CRA) says that the ID numbers of around 900 people were stolen. The national tax agency reopened its computer systems Sunday, April 13, after applying a patch for Heartbleed. But before that was accomplished, the breach allowed the unauthorized access to the 900 CRA accounts. CRA Commissioner Andrew Treusch today released a statement regarding the unauthorized access to the tax system: "Regrettably, the CRA has been notified by the Government of Canada's lead security agencies of a malicious breach... Read more →

Good news, Canadian taxpayers. Canada Revenue is back! Canada's taxpayers normally don't have to file their annual tax returns until April 30. Still, our neighbors to the north lost almost a week of tax services when their version of the Internal Revenue Service shut down last week to ensure its online offerings weren't vulnerable to the Heartbleed bug. Canada Revenue Agency (CRA) officials, recognizing the problem that the closure might have caused some taxpayers, is letting individual taxpayers file this year as late as May 5. Those extra days equal the length of the interruption of the national tax agency's... Read more →

The hubby and I typically owe Uncle Sam every April 15. Usually not much, but some. We also tend to file for an extension. This is because I fill out our joint return and I have other things taking up my time during the first three-and-a-half months of the year. The six-month delay afforded by submission of Form 4868 also gives me, a sole proprietor, extra time to max out my prior-year contribution to my self-employed retirement account. If you are in the same do-it-later situation as the hubby and I, welcome to a pretty large club. Around 10 million... Read more →

It's not just federal taxpayers who are turning in droves to electronic filing. State tax e-filing also is growing in popularity. Electronically submitted returns this filing season account for 93 percent of state individual income tax filings, Ronald Alt, a researcher at the Federation of Tax Administrators, told Stateline. That's up 4 percent over last year as of mid-March. A key reason for the growth of e-filing at the state level is that so many states make it so easy. They also make it free, either via direct filing with the states' tax departments or through partnerships with private tax... Read more →

Thank you, thank you very much. OK, Internal Revenue Service Commissioner John Koskinen didn't exactly do his best Elvis Presley impersonation. But the sentiment was there in the email that the IRS chief sent Friday, April 11, afternoon to the overall tax community. Many tax professionals say it's the first time they can recall such a thank you being sent by IRS brass to all those involved in getting returns completed and submitted. Here's Koskinen message: "With the end of the filing season just a few days away, I want to take a moment to thank all the tax professionals... Read more →

Simpsons characters show the perils of last-minute tax filing

This old clip from The Simpsons highlights why most of us nowadays, even after the Heartbleed bug online security scare, are e-filing our annual tax returns. Ned Flanders, Homer Simpson & Taxes from Brent Mowery on Vimeo. If you're not an early filer like Ned Flanders and are still working on your return (or plan to this weekend) so you can get it to the post office on April 15 or, more likely, hit "enter" on your keyboard by that day, the Daily Tax Tips could help. Feel free to peruse them all; they started Jan. 6 and will wrap... Read more →

As of the end of March, more than 90 percent of taxpayers who had submitted their 2013 federal returns -- around 82 million filers -- did so electronically. In the wake of the Heartbleed Internet security concern, however, the millions of us who will be finishing up our 1040s in the next few days are a tad concerned about joining the e-file ranks. In case you've been diligently working on your taxes and missed the news, the Heartbleed bug affected the encryption tool OpenSSL that is used by around two-thirds of all websites to secure their customers personal information. Yep,... Read more →

Every tax filing season we hear the stories. Folks claim, often successfully, a variety of wacky tax deductions. There's the bodybuilder (No, not Arnold, but c'mon, what a great poster shot! I had to use it!) who was allowed to write off body oil as a business expense. The exotic dancer whose breast implants were deemed deductible stage props for her job. (Did you really think I'd go there with the image choice for this post?) The gas station owner who gave his customers free beer and then legally deducted the brewski promotion as a business expense. As all my... Read more →

Just when you thought tax season couldn't get any crazier, computer problems are plaguing the U.S. and Canadian tax agencies. Let's start below the 49th parallel because as much as I love our neighbor to the north and my Canadian readers, I focus on U.S. taxes and our tax deadline is next week. The Internal Revenue Service is in the same predicament as many computer owners, both individuals and businesses. It still has machines running the Windows XP operating system. The 12½-year-old computer operating system is now officially dead. Sure, it's still on machines, but Microsoft ended free support and... Read more →

We're a week away from Tax Day 2014. Some folks, however, are dreading the months, and possibly years, after the annual April deadline. That's when they will get to know the Internal Revenue Service better as it audits their returns. IRS Commissioner John Koskinen noted the always-present possibility of tax audits when he spoke last week at a National Press Club luncheon: "[T]axpayers need to be confident that the IRS will treat them fairly. It doesn't make any difference who they are, what organizations they belong to, or whom they voted for in the last election. None of that matters... Read more →

Mama Mia! Swedish tax break prompted ABBA's wild outfits

What do you remember more about ABBA? The 1970s Swedish pop quartet's outrageous outfits or the catchy songs? If you answered the wild clothing, the band and its tax adviser thank you. Those platform boots, brightly colored jumpers, ruffled bell bottoms and the occasional cape helped Bjorn Ulvaeus, Agnetha Faltskog, Anni-Frid Lyngstad and Benny Andersson reduce their taxes. The clothing tax break was revealed in ABBA: The Official Photo Book, published to mark the 40th anniversary of the group's Eurovision song contest win singing Waterloo. Swedish laws allowed performers to deduct the cost of outfits as long as the clothes... Read more →

Tax credits are great tax breaks. They apply after you figure what you owe Uncle Sam and help reduce your tax bill dollar-for-dollar. Refundable tax credits are even better. As the name indicates, they can eliminate any tax you owe and any excess credit is sent to you as a refund. From an eligible taxpayer's perspective, the answer to the question about refundable credits' worth is a hearty, "Definitely!" But from a wider point of view, many argue that refundable tax credits are not the best or most efficient way to provide economic assistance to folks who qualify for the... Read more →

It's that brief time of year here in Central Texas when there's a bit of chill in the evening air, but the days warm up nicely. That means for a few days while Mother Nature is trying to decide which season to wear, we use both our heater and our air conditioner. Click image to watch the classic Walter Lantz cartoon on YouTube. Of course, if we replaced our windows or at least caulked them, the indoor temperature might be steady enough that we'd not need either our heating or cooling units for this transitional time of the year. I'll... Read more →

If you are putting money into a retirement savings plan at your office or into an IRA, then make sure you aren't missing out on the saver's credit. This tax break, which offers a dollar-for-dollar reduction of your tax bill if you qualify, is today's Daily Tax Tip. The savings could be as much as $1,000 off your tax bill. Contributions to certain workplace accounts -- 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) -- and both Roth and traditional IRAs count towards the credit. But there are limits. Eligibility computations: This tax break, formally known as the Retirement... Read more →

The adage that the more things change the more they stay the same definitely applies to Congress in general and to tax legislation in particular. New Senate Finance Committee Chairman Ron Wyden (D-Ore.) called his panel together this morning to review the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act. That's Wyden's version of the extenders tax measures that ended with the start of 2014. Wyden's original version of EXPIRE called for many, but not all, of the now-dead measures to go back into the tax code for the 2014 and 2015 tax years. In his opening statement, Wyden emphasized... Read more →

And so it has begun. The countdown to the annual tax filing deadline. There are lots of tax moves to make in April. But for most of us, the focus is on April 15. And it's not just the Internal Revenue Service forms you need to worry about. There are seven tax considerations that face this mid-month cutoff. April 15 is the last day to: File your 2013 personal income tax return or an extension (Form 4868) that will push the deadline to Oct. 15. Pay any tax, or a close estimate, that you owe. That six-month extension is for... Read more →

If you've already filed your 2013 tax return, chances are you're getting a refund. Most taxpayers do, either serendipitously as my personal finance blogging colleague J. Money recently discovered or because they view over-withholding as a handy forced savings account. Through March 21, the Internal Revenue Service had issued more than 67 million tax refunds. The average amount for all refunds that week was $2,872. That's a little less than the $2,980 average refund amount that was directly deposited to taxpayer accounts during that same time period. Refunds and filing timing: It's also notably smaller than the $3,317 average refund... Read more →