Don't Mess With Taxes

The economy is a major presidential campaign theme, but one of the biggest economic threat -- the impending convergence of expiring tax laws and the debt reduction deal that imposes severe across-the-board budget cuts -- is still hanging out there. To a large degree, it's out of the president's hands. Congress must come up with a deal on taxes and spending cuts to keep the country from falling off the so-called fiscal cliff. And House and Senate lawmakers must do so in the few weeks that they will be in D.C. after the Nov. 6 election. Only then will the... Read more →

It's no secret that the very rich make up a very small percentage of America. It's also no secret that potentially bigger tax bills for the wealthy is the sticking point in the current national battle over what's to become of U.S. individual rates in 2013. Two tax policy research groups now have weighed in on the debate with calculations showing that only 1.9 percent of Americans would lose any part the current income tax cuts in 2013 under Obama's tax proposal. And that percentage is this week's By the Numbers figure. The Institute on Taxation and Economic Policy (ITEP)... Read more →

There's no question that when tax rates are lowered, the U.S. Treasury collects less money. And everyone agrees that when taxes are cut in one place, they need to be raised somewhere, on on someone, else or spending cuts must be made. Coming up with a way to do exactly that is the issue before Congress, the White House, every candidate running for every federal office this year and all of us taxpayers. The counter below gives us an alarmingly graphic idea of how much money the current tax rates, enacted in 2001 under the Bush 43 Administration and extended... Read more →

First $250,000 was designated the dividing line between wealthy taxpayers and the rest of us mere mortals. Then along came a really rich guy, billionaire Warren Buffett, who complained that the tax code was too easy on him and his rich compadres. That led to Obama's proposed Buffett Rule, which set the cutoff for potentially higher taxes at $1 million. Now the $750,000 difference between the original Democratic top tax bracket and millionaires is causing a bit of a stir, both politically and financially. A higher top tax bracket? Although Obama agreed to let the Bush tax cuts continue through... Read more →

It's no secret that folks in D.C. -- or at least on Capitol Hill -- have a different perspective about just about everything. And they definitely use a different dictionary when it comes to defining things. That sometimes skewed point of view and questionable lexicography is very evident when it comes to taxes. Take our current individual income tax rates, which start at 10 percent and top out at 35 percent. They're commonly called the Bush era tax cuts since they were put into the tax code when George W. Bush was in the Oval Office. However, since Obama made... Read more →

No, that headline question is not a spin-off of the popular television game show. It's the question being asked as federal lawmakers struggle to come up with a fiscal agreement that will lead to another increase in the U.S. debt ceiling. Back in March, an NBC-Wall Street Journal poll found 81 percent of those surveyed favored a surtax on millionaires to help cut the deficit. Perhaps that was part of the reason that Vermont Sen. Bernie Sanders, an Independent, introduced a bill to impose a surtax on millionaires. Majority Leader Harry Reid (D-Nev.) took the millionaires' tax a step further,... Read more →

On Tuesday I blasted Congressional Republicans for not being gracious winners when it comes to resolving the ongoing budget/deficit/debt ceiling battles. Today it's the Democrats' turn to catch heat. Shortly after Obama took office, progressives and the more liberal wing of the Democratic Party have been asking what's the deal? It seems to many that the prez has abdicated their ideals and programs in an effort to play nice with the loyal opposition. Or, as the Washington Post's Ezra Klein notes in his blog today: "Democrats control the White House and the Senate, Obama is the most popular national political... Read more →

For tax geeks, today is one of those "where were you?" days. On June 7, 2001, then-President W's first round of tax cuts became official. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 was enacted. "Tax cuts turn 10" is the topic of my Bankrate Taxes Blog today. Normally, I'd wait until Saturday to mention it as part of my weekend "at my other blog" feature. But the 10th anniversary of such major tax-law change is a pretty big deal, for tax geeks and normal folks alike. So I'm mentioning it now here at the ol' blog,... Read more →

You might still be working on your 2010 tax return, but your earnings so far this year have been going to pay your 2011 tax bill. So put down your Form 1040 instruction book and take a minute to celebrate. Today is America's Tax Freedom Day. That means, according to the Tax Foundation, that U.S. taxpayers on average will have earned enough by today to pay off their 2011 federal, state and local taxes. The Washington, D.C.-based nonpartisan research and policy group has been tracking Tax Freedom Day for 40 years. This year's Tax Freedom Day is three days later... Read more →

If you've been flipping through Obama's fiscal year 2012 budget -- Admit it. You're a tax geek. You've at least given it a glance. -- you've noticed that it's essentially a rehash of prior tax law proposals. Given the make-up of the 112th Congress, the prez's proposals are going to be a hard sell. We saw what happened at the end of 2010 with the Bush-era tax laws. Now Obama is facing more lawmakers, especially in the House, who are hostile to his points of view when it comes to the economy, government programs and taxes. Many of these more... Read more →

One of the best homeowner tax breaks is the ability to deduct your annual real estate taxes. For many homeowners, property taxes are second only to interest paid. That's especially true during the early years of a mortgage when most of your monthly payments go toward the finance charge. Later on in the loan's life, the amount of interest you pay decreases. Property taxes, however, always seem to go up, either because the value of your home increased (yes, that used to happen and it will again once we work through this housing cycle) or your local government bumped up... Read more →

The hubby gets a real paycheck, that is, regular money from a company as opposed to my periodic payments from various clients. The much-ballyhooed payroll tax cut showed up in the paycheck he received last week. So now we get to decide what to do with this bit of extra cash. After some discussion, we decided the easiest thing would be for the hubby to bump up his 401(k) contributions by 2 percent. His employer still matches employee money, so this will give him (and by him, I mean us) even more eventual retirement money. The decision really wasn't that... Read more →

IRA owners age 70½ got a tax benefit back when the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law last Dec. 17. They once again could transfer money, up to $100,000 a year, from their tax-deferred retirement accounts to qualified charities. This option had expired at the end of 2009. The new tax law retroactively reinstated the option for 2010 as well as extended it for 2011. Such a direct rollover is appealing to IRA owners who must take required minimum distributions (RMDs) from their accounts, but don't need the money to live... Read more →

Given the empty seat set aside for Rep. Gabrielle Giffords, the Arizona Democrat recovering from a head wound suffered a few weeks ago, Obama's calls during last night's State of the Union for national unity and optimism were not surprising. If the video of the State of the Union address does not open in your browser, you can watch it here. Neither was it unusual that the president didn't really get into specifics on any policy issues. The commander in chief's annual talk to lawmakers and the nation, regardless of the Oval Office's occupant, is really just one big cheer... Read more →

Did you claim the first-time homebuyer tax credit? What year? It could make a difference as to whether you owe the IRS more on your 2010 return or get back some money from Uncle Sam. Those are just two tax law changes that could affect your filing this tax season. So before you finish filling out your form, check them out. Related posts: The new tax bill and your 2010 taxes Important 2011 tax season filing dates and deadlines IRS launches smartphone app Taxes? There are apps for that Free File is open for 2011 tax business E-file, Free File... Read more →

Paychecks must have come out (although we're still waiting on hubby's) last week since I'm hearing a lot of grumbling about how the highly touted 2 percent payroll tax cut is not working. Some companies may not have yet instituted the new payroll tax tables to take the reduction from 6.2 percent to 4.2 percent in employees' withholding. This is the portion that goes toward Social Security and will apply to up to $106,800 of income made by all workers. But the unfortunate fact of the matter is that folks who make well less than the six-digit wage base cutoff... Read more →

Following the passage (finally!) in December 2010 of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that continued the current income tax rates (which just happens to be Today's Tax Tip) for the next two years and extended some popular tax breaks, the IRS announced that it would take a while for the agency to get ready for the filing season. Specifically, or actually not so specifically, the IRS said that the tax measure's late passage meant taxpayers who claim educators expenses and tuition expenses directly on their 1040 or 1040A would have to wait until... Read more →

Mark your calendars, fellow taxpayers. 2011 is an interesting year when it come to filing dates. The most notable tax timing issue primarily affects folks who itemize using Schedule A. The IRS says these taxpayers, as well as those who claim some specific deductions -- tuition and fees and educator expenses claimed directly on Form 1040 or 1040A -- will have to wait until mid- to late February to file. Yes, this year the IRS is imitating a cable TV technician, giving us taxpayers a vague, open-ended time frame in which to cool our heels while we wail for service.... Read more →

Last night I completed a quick mock 2010 tax return to see if the hubby and I should pay our property taxes this week to bump up our itemized deductions. In addition to offering guidance on the end-of-year tax moves we should make, the draft tax numbers also provided the good news that we won't face the alternative minimum tax (AMT). As a general rule, if your 2010 year-end projection indicates that you're likely to owe AMT, that situation will change your year-end tax strategy. Basically, it won't be worth it for folks facing the AMT to pay some expenses... Read more →

The way Congress screws around every year, taking its sweet time getting to tax legislation that affects all of us, reminds me of that old saying: Sadly, while that thought pops into our heads every time the boss brings us a last-minute project that "must be done yesterday!" we don't get to actually live by that phrase. Other people's lack of forethought almost always is our emergency. That's sort of how employers are feeling right now in connection with the payroll tax reduction that will be in effect for 2011. This 2 percent cut in the amount withheld from workers'... Read more →