Stimulus plan Feed

The law that created coronavirus stimulus payments just took effect yesterday and we're weeks at best from getting actual money. But tax planners have been thinking about COVID-19 tax intricacies since the illness exploded in the middle of this tax season. These payments just add a new tax filing wrinkle, since what we put on our 2019 returns could be a key part in the relief amount's ultimate dollar calculation. Tony Nitti, a CPA and tax partner with RubinBrown in Aspen, Colorado, has a good preview of what our tax filing actions now could mean to our potential coronavirus payments... Read more →

As you're getting your 2013 tax filing material together (you are doing that now, aren't you?) take a good look at your final W-2 of 2012. It's the last time you'll see that small of a FICA withholding amount. Since January 2011, the amount of FICA, sometimes indicated as Social Security tax on pay stubs, taken out of workers' paychecks has been 4.2 percent. That will change on Jan. 1, 2013. Next year the 6.2 percent withholding rate returns. The tax cut holiday always was meant to be temporary, a short-term stimulus measure to keep folks spending during the recession.... Read more →

The deficit reduction back-and-forth between Democrats and Republicans on the super committee continues. This Veterans Day week, Democrats suggested that savings from ending the Iraq and Afghanistan wars be used to pay for a new stimulus package, according to The Hill. A summary of the $2.3 trillion plan obtained by the Capitol Hill newspaper includes $200 billion in defense cuts and slashes $200 billion from other discretionary spending. Part of that savings, say the six Democrats on the Joint Select Committee on Deficit Reduction should go toward spending on infrastructure. The proposal also raises $650 billion in new federal revenue... Read more →

Americans are more pessimistic about the economic recovery. A report late last month from the Conference Board, a business research association, found that consumer confidence fell in May to its lowest level since last November. "Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects," said Lynn Franco, Director of The Conference Board Consumer Research Center. "Inflation concerns, which had eased last month, have picked up once again." I see those inflation concerns on every grocery shopping trip I make with my mother. She's a senior citizen living primarily on Social Security... Read more →

In most locations, the school year is over. But when it comes to paying higher education costs, students and parents need to do their financial homework year-round. One subject they want to study is 529 college savings plans. These accounts are named for the Internal Revenue Code section under which they were created. They also are a tax-saving way to bank bucks for college. Today, 5/29, also is 529 Plan Day. So it's only natural that the savings plan/tax code name is this week's By the Numbers figure. Tax benefits of 529s: Contributions to a 529 plan aren't tax deductible,... Read more →

Folks are pretty ticked off by a Government Accountability Office investigation that found thousands of contractors who got federal stimulus money back 2009 owed Uncle Sam big tax bucks. We all should be angry at tax scofflaws getting more of our tax money. But one proposed solution -- preventing such contracts from ever being awarded -- also could have major costs to the U.S. Treasury. First, let's look at the latest examination of the price of federal payments to companies that already owe the IRS. At least 3,700 Recovery Act contract and grant recipients -- including prime recipients, sub-recipients and... Read more →

Are you as excited as I am that Congress will be back at work next Monday, Nov. 15? Mark your calendars! Program C-SPAN as one of your TV remote's favorite channels! Really, Representatives and Senators swear they're going to work during this lame duck session. That, unlike all the other months, they'll actually get some bills to the White House for signature. However, gridlock is as just as likely. But, hey, I'm trying to be optimistic because that's just who I am (today, at least). And that roar of laughter you hear across the blogosphere is from the hubby. Anyway,... Read more →

IRS paid more than $111 million in erroneous stimulus-related tax benefits

If people dressed as Lady Gaga, Kim Kardashian, The Situation and various Twilight characters aren't scary enough for you this Halloween (and those get-ups are why adults should not be allowed to don costumes!), you can read the IRS watchdog report that reveals the agency let almost $111.4 million in stimulus-related tax payments go out to unqualified filers. "The passage of two significant tax laws impacted the 2010 Filing Season and presented additional challenges for the IRS," notes Michael Phillips, Deputy Inspector General for Audit for the Treasury Inspector General for Tax Administration, or TIGTA, in the Sept. 30 report.... Read more →

"Several tax cuts are slated to expire at the end of the year, which means that the lame-duck Congress will face several tough decisions come November. To hear campaigning lawmakers tell it, however, the only tax issue out there is whether to extend the Bush-era tax cuts for the rich. The debate and the work can't end there." That's the assessment of pending tax legislation in One-Note Tax Debate, an editorial in today's New York Times. As the opinion piece notes, Bush tax cuts and tax breaks in the 2009 Obama stimulus package are scheduled to expire at the end... Read more →

The midterm election is just two weeks away and Democrats are in good shape because for the last two years every working American has seen his or her federal taxes go down. Say what? That's the reaction of most U.S. taxpayers. But it's true -- that being the statement that federal taxes have been reduced, not the part about Democratic candidates being in good political shape this year. I'm talking about the Making Work Pay tax credit. You remember this. It was the centerpiece of the 2009 Obama stimulus measure and, for 2009 and 2010 tax years, has cut income... Read more →

Midyear tax tip #1: Welcome summer with energy-related tax breaks

How's your first day of Summer 2010 going? If this longest day of the year is already too sweltering, here's a tax tip that could make it more comfortable, from both temperature and financial perspectives. Connie, our first contestant in the ol' blog's Midyear Tax Moves contest, reminds us that the $1,500 tax credit for home-energy improvements is still available for this tax year. It could be extended -- you never know with Congress -- but just in case, if your A/C system is on its last legs and just not doing the job efficiently, let Uncle Sam help you... Read more →

More big business stimulus tax breaks

How does this keep happening? Apparently private sector lawyers are much better than Uncle Sam's attorneys. Or, as Scott Jagow who blogs at Marketplace radio's The Scratchpad, puts it: "The government's generosity toward big business in this recession has known few boundaries." The latest example, per the Wall Street Journal, is JP Morgan Chase & Co., which is nearing a deal that would allow it to benefit from a tax refund of as much as $1.4 billion, becoming the latest company to tap a little-noticed plank in an economic stimulus bill. That law let companies apply losses from 2008 or... Read more →

Last week I got a call from my mom. Usually she just wants to chat about how her life is going, what's up with me and dish some dirt on relatives. Just kidding dear extended family members! Just wanted to see if y'all were still reading the ol' blog! This time, though, she had a tax question. She wasn't sure about this Schedule M and what is this recovery payment it wanted to know about? She swore she never got a check last year. As it turned out, my mom, along with millions of other Social Security recipients, did get... Read more →

7 new tax laws that could save you money

Welcome to prime tax-filing time. Tax forms (W-2s, 1099s and the like) have arrived and folks are ready to get their 1040s into the IRS so they can get their refunds. If you're among the 40 percent of taxpayers working on your return this month, here are some tax law changes that could help you maximize your refund. Or at least reduce any amount you might owe Uncle Sam. 1. Home is where the tax heart is The big break this filing season is the first-time and move-up homebuyer credits. The tax break underwent three revisions in less than two... Read more →

Schedule M errors cropping up

This happens every time there's a new form. Taxpayers and tax preparers make an innocent mistake and the tax return gets sent to the IRS' Error Resolution System, or ERS. ERS is a computer program used to correct errors and inconsistencies detected by the IRS computer system during processing of tax return information. It's automatic when there are such things as omissions of data the IRS needs to substantiate an item on a return. In the most simple application, the program is looking to make sure that taxpayer info is entered where it should be on a form, either by... Read more →

New year, new withholding amounts

No, I'm not talking about adjusting your withholding, although that's always a good idea so that you pay in through payroll taxes just what you'll owe the IRS when you file. I'm talking about what your first paycheck of 2010 is likely to look like. For some, it will be less than they got in their final 2009 check. The reason is more withholding changes because of the Making Work Pay credit. Yep, that provision in the American Recovery and Reinvestment Act of 2009, aka the stimulus, that was supposed to put more money in our hands will appear to... Read more →

It's been a wild time for taxes, not only in just-ended 2009, but the last decade. While I'm not one for dwelling in the past, I do believe that old saying that those who don't learn from the past are doomed to repeat it. And that's certainly true when it comes to taxes. So before we get knee-deep in our annual tax-filing tasks, let's take a quick look back at the tax legislation that got us here. Below are my top five federal tax developments over the last 10 years. 1. Dubya's tax cuts Learning his daddy's hard lessons of... Read more →

My earlier warnings about problems that the Making Work Pay tax credit will cause some folks are now official. The Treasury Inspector General for Tax Administration (TIGTA) has issued a formal report on the matter that I blogged about back in March. The credit seemed like such a good idea. Under the stimulus package enacted in February, the credit will provide individuals up to $400 and couples up to $800. To get it, all people have to do was continue to collect their paycheck. The IRS rejiggered the withholding tables so that workers would simply have a bit less in... Read more →

That headline is correct. The official name of these country club vehicles is golf cars, not carts. And the distinction comes in handy under a tax credit for all-electric vehicles. You might have seen the feature on the golf car tax break this morning on ABC's Good Morning America (story transcript here). But the tax credit has been around for months, precisely almost 13 months. It was part of the financial services bailout bill enacted Oct. 3, 2008. Under the Bush administration's Emergency Economic Stabilization Act (you know the law, the one that also included the arrow shaft tax break),... Read more →

During an economic conference last week in New York City, Treasury Secretary Timothy Geithner offered a few tax tidbits. In response to a question about a potential securities transaction tax, Tax Analysts' Lee Sheppard reports that Geithner acknowledged that he "hadn't seen a version of the tax that'd make much sense." That should calm the nerves of those who freaked out earlier this year when talk of a transaction tax was revived. Also referred to as the Tobin Tax after James Tobin, the late American economist and Nobel laureate who first suggested a securities transfer tax in 1972 as a... Read more →