Fiscal cliff Feed

Every taxpayer is well aware of the length of the federal tax tentacles. What Congress does to the Internal Revenue Code affects state taxes, too. And it’s not just the residents who live in the states who are affected. It’s the states themselves. Even before any tax code changes have been made, many are already feeling the Trump Effect on their treasuries. “April income tax returns brought bad news for state budgets,” according to the Rockefeller Institute of Government. “Payments with tax returns usually arrive in April and early May, and often they are surprising. By mid-to-late May, states know... 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 →

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 →

Benjamin Franklin's famously noted that there are only two sure things: death and taxes. I'd like to add a third: Congressional Groundhog Day. Yes, our Representatives and Senators, at least this current crop, seem to like doing the same thing in the same way over and over and over. I am talking, of course, about lawmakers' penchant for walking to the brink of financial and tax disaster and peering over the edge. Sorry history of fiscal brinksmanship: We had it with the debt ceiling fight during the summer of 2011. That led to the 2012-2013 fiscal cliff, which we briefly... Read more →

With the enactment of the Small Business Jobs and Credit Act of 2010, workplace retirement plans were expanded for many employees. That law made it possible for workers to convert their traditional 401(k) plans, in which money is contributed pretax and earnings grow tax-deferred, to Roth 401(k)s. Like its Roth IRA cousin, money goes into a Roth 401(k) after taxes are taken out, but eventual retirement distributions are tax free. Now, thanks to the American Taxpayer Relief Act of 2012 (ATRA), otherwise known as the fiscal cliff bill enacted this Jan. 2, it is even easier for more workplace retirement... Read more →

Tax filing season 2013 is finally fully under way. As promised, the Internal Revenue Service completed its updating and computer testing of the last batch of forms (29 of them) over the weekend and now is accepting all 2012 tax filings for individuals and businesses. Have fun! As every forced-to-wait taxpayer already knows, the IRS had to accept 2012 returns in phases because Congress took way too long to complete action on tax legislation that affected filings. The season didn't start at all until Jan. 30, eight days later than planned. Even then, the agency couldn't take all returns. More... 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 →

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 →

Did you get so caught up in the fiscal cliff fight and the subsequent tax rate changes for 2013 that you almost forgot that our first tax deadline of the new year is almost here? Me, too. But tax time marched on and tomorrow, Jan. 15, is the due date for the final estimated tax payment of 2012. Dealing with estimated taxes also is today's Daily Tax Tip. The good news is that when it comes to 1040-ES forms and payments, either by check or money order payable to the U.S. Treasury, the Internal Revenue Service uses the same "timely... Read more →

2012 and 2013 tax rates, income brackets

If you're a higher income earner, take a good long look at your 2012 return. It will be the last one for a while -- at least until 2017 and only then if a Republican moves into the White House -- where your top ordinary income tax rate will be 35 percent. This time next year, you'll face a top income tax rate of 39.6 percent. To acknowledge the changing tax rates, today's Daily Tax Tip presents the 2012 and 2013 income tax rates and income brackets. The table below shows the rates and income ranges that will be used... Read more →

The end of 2012 and the beginning of 2013 all came together in a blur, thanks in large part to Congressional procrastination that led to a mad rush to pass fiscal cliff legislation. So it's no surprise that what is and isn't in the eventual fiscal cliff tax bill dominated 2013's debut discussion last week at my other tax blog. The first Bankrate Taxes Blog post of 2013 arrived with an unwanted welcome: Happy higher new year payroll tax. The 6.2 percent payroll tax amount was not part of fiscal cliff talks and quietly returned on Jan. 1. That means... Read more →

While we're waiting for the Internal Revenue Service to update tax forms and publications and reprogram its computers to mesh with the new fiscal cliff tax bill changes, we can entertain ourselves by running some numbers in connection with our 2013 taxes. Last week I mentioned the Tax Foundation's fiscal cliff tax law changes calculator. I also just ran across the Tax Policy Center's update of its online numbers cruncher. The TPC folks have plugged in the American Taxpayer Relief Act (ATRA) of 2012 data. As in its earlier calculator versions, the Tax Policy Center has created sample taxpayers that... Read more →

It's baaaaack and for some folks it is as scary as the ghosts in Poltergeist. It is the full 6.2 percent payroll tax once again being collected from employees. In 2011 and 2012, the amount of tax taken out of workers' paychecks to go toward Social Security was 4.2 percent. The so-called payroll tax holiday was created to give workers more spending money incrementally throughout the year in the hope that they would pump the cash back into the stumbling economy. Although we've technically been out of recession for a while, things still aren't all that rosy. So there was... Read more →

Are you rich? You might be according to the new tax laws that were enacted as part of the bill to keep us from falling off the fiscal cliff. Democrats are spinning enactment of H.R. 8, the American Taxpayer Relief Act (ATRA) of 2012, as a victory because wealthier individuals now face higher taxes for the first time in more than a decade. Republicans are touting the permanence of the lower tax rates that originated during the George W. Bush administration for the rest of us less wealthy Americans. The hubby and I definitely fall into the not-rich category. When... Read more →

Keeping track of all the fiscal cliff machinations these last few days has left me feeling like a special agent (a very sleepy special agent!) who just completed a crazy mission and who's facing debriefing today. I'm trying to keep my eyes open long enough to take in follow-up information and share what I know. Please bear with me. As I mentioned earlier, the 157-page H.R. 8, otherwise known as the American Taxpayer Relief Act (ATRA) of 2012, is full of tax provisions that will affect every filer, some retroactively and others beginning in 2013. I've covered the bill's major... Read more →

518 days after we knew the country was going to face what has become known as the fiscal cliff, federal lawmakers finally backed away from the edge. Our long, and stupid, financial nightmare is partly over. At 11:01 p.m., the House voted 257-to-167 to approve the tax bill cobbled together by the Senate (primarily thanks -- or blame if you prefer -- to Minority Leader Mitch McConnell of Kentucky and Vice President Joe Biden) on New Year's Eve and officially -- and overwhelmingly -- approved by the upper chamber in the early morning hours of New Year's Day. House Kabuki... Read more →

Early reports of what's in the Senate-approved fiscal cliff deal were pretty darn spot on. The Senate took H.R. 8, the Republican sponsored and House-passed (by a 256-171 party-line vote on Aug. 1, 2012) measure to continue all the Bush tax cuts, thereby conforming to the constitutional requirement that tax legislation originate in the House, and amended -- or, more accurately, overwrote -- the bill. Now we wait for the House to act. Vice President Joe Biden met with Democrats there this afternoon and judging by the press conference that followed, most of them are on board. The Republican House... Read more →

By an overwhelming 89-to-8 vote, the Senate OK'ed a fiscal cliff package around 2 a.m. ET on New Year's Day. Yep, tax geeks were watching the 97 Senators vote live on C-SPAN2. And I was sober! Five Republicans -- Chuck Grassley (R-Iowa), Mike Lee (R-Utah), Rand Paul (R-Ky.), Marco Rubio (R-Fla.) and Richard Shelby (R-Ala.) -- and three Democrats -- Michael Bennet (D-Colo.), Tom Carper (D-Del.) and Tom Harkin (D-Iowa) -- voted against the bill. Sens. Jim DeMint (R-S.C.), Mark Kirk (R-Ill.) and Frank Lautenberg (D-N.J.) missed the vote. As blogged earlier, the deal maintains the current income and investment... Read more →

Assume crash positions, people. We are going over the fiscal cliff. The Senate is still working on a proposal to deal with the expiring/expired tax provisions that are part of the fiscal cliff. The House, however, has called it a day. Regardless of what the Senate might do later today, the House will vote on it tomorrow at the earliest. So technically, we're all part of the Wyle E. Coyote cartoon family, dropping helplessly into a financial canyon. Cliff jump courtesy Realistically speaking, it won't matter that much if the final tax deal is done at 11:59 p.m. tonight... Read more →

Is your email box as flooded as mine today with pleas for money from charities? Those nonprofits know that today is the last day that we can donate if we want to claim the gift as an itemized charitable deduction on our 2012 tax return. Even the youngest have the giving spirit. Photo courtesy Bart Everson via Flickr Creative Commons. This could be particularly important to higher income folks if we go off the fiscal cliff and prior tax laws returns. In that case, the limitation on all Schedule A deductions, including gifts to your favorite charity, could be limited.... Read more →