All Articles Tagged "income taxes"
(MONEY Magazine) — Next April may feel light-years away, but December will be here before you know it — and many of the benefits you can reap on tax day require you to act well before the end of the year. ”The further ahead you start your tax planning, the more strategies you will have to save money,” says Indianapolis accountant Kevin Aaron. The early-bird tactics that follow can together keep thousands of bucks in your pocket.
Reap green credits: The tax credits for energy-efficient basic home improvements — including the installation of insulation, certain HVAC systems, water heaters, windows, doors, and roofing — are skimpier this year.
(Businessweek) — For all those same-sex newlyweds in New York, Lawrence S. Jacobs has a message: Enjoy the Champagne and the honeymoon, but expect no gifts from the IRS. Jacobs, a lawyer in Washington, specializes in estate planning for same-sex couples—and in delivering the bad news that their unions aren’t legal in the eyes of the IRS, a policy that will cost them time and money during tax season. Same-sex couples in Washington, which last year legalized gay marriage, must fill out a federal return to make calculations required for their D.C. joint return. But then they must set that work aside and fill out separate federal returns because the IRS doesn’t regard their union as legal, Jacobs says. “You just spent decades getting your marriage recognized, and now the feds say, ‘No, you’re not,’” says Jacobs, who as a partner in a same-sex marriage has firsthand experience of the problem.
There are certain scenarios that play over and over again in celebrity news, and one of those is he case of the celebrity who refuses to pay taxes, and then, who goes to jail for said violation.
Ja Rule is the latest celebrity to get prison time for failing to pay taxes. He was sentenced to 28 months in prison in a New Jersey courtroom for failing to file income tax returns over five years.
Ja Rule, real name Jeffrey Atkins, lamented to the judge: “I in no way attempted to deceive the government or do anything illegal,” he said minutes before being sentenced, the Associated Press reported. “I was a young man who made a lot of money – I’m getting a little choked up – I didn’t know how to deal with these finances, and I didn’t have people to guide me, so I made mistakes.”
Ja Rule’s apology might’ve meant something in 1995, but in the current time of music when musicians are empowered as big business machines and in a time when they have evolved to become the decision makers in the music industry, it makes no sense that Rule didn’t know how to get help with his finances. He had enough help to rule the charts and negotiate a film career yet he couldn’t get any help in hiring a lawyer? Rule just may have taken the extra care to be careless in this situation.
Alongside this sentencing, Rule is also serving time for criminal weapon possession, for which he was arrested in 2007.
(Wall Street Journal) — The door has been opened to higher taxes for many out-of-state residents with second homes in New York after a state tax appeals tribunal reversed its ruling on a New Jersey man’s case. The tribunal ruled that a New Jersey resident who worked in Staten Island and bought his parents a home there is subject to pay New York resident taxes, even though the home was used by his parents and the man stayed there only when he visited. That decision last month overturned the tribunal’s previous ruling exempting the man from paying additional taxes for the years 2001 to 2003. The tribunal agreed to rehear the case at the request of the New York state tax department.
(Wall Steeet Journal) — Get the letter. Get the letter. Get the letter. That should be the mantra of taxpayers who make charitable gifts of $250 or more. ”The letter” refers to the charity’s missive acknowledging your donation, and it must say certain things by a certain date for the gift to be deductible. There isn’t any room for error here, as an Internal Revenue Service chief counsel memorandum from May demonstrates. In that case a donor who didn’t have a valid letter went to extreme lengths to correct the problem and still was denied. ”If you don’t have the correct paperwork, there’s no way to fix the problem,” says Laura Peebles, a director at Deloitte Tax in Washington. She once saw a six-figure deduction for a gift to a university denied because of no valid letter. In Jan Van Dusen’s case, the judge denied some of her larger foster-cat-care deductions because she didn’t have a proper letter from the charity she was doing volunteer work for.
(Washington Examiner) — The D.C. Council approved a $5.8 billion operating budget Wednesday that did not include a proposal by Mayor Vincent Gray to raise the income tax rate on the wealthy. The unanimous vote on the budget was a big victory for Council Chairman Kwame Brown, who stitched together a budget proposal that backed up his campaign promise to not raise the income tax rate and found dollars for key human services programs the mayor had proposed to cut. Some of those programs, like one that helps low-income earners pay the rent, will have to wait until dollars become available through an expected jump in a revenue projection that comes out next month. Brown successfully held off an effort to bring back the mayor’s tax increase on households earning $200,000 or more when the measure was defeated in an 8-5 vote.
(CNNMoney.com) — The fastest way to make the tax-averse incensed is to tell them that nearly half of U.S. households end up owing no federal income tax when all is said and done. But like most statistics, it is often misunderstood — and, in the case of those trying to stir political outrage, misrepresented. For tax year 2010, roughly 45% of households, or about 69 million, will end up owing nothing in federal income tax, according to estimates by the nonpartisan Tax Policy Center. Some in that group will even end up getting paid money from the federal government. That does not mean such households end up paying no taxes whatsoever. For instance, those in the group still pay other taxes suchas state and local income taxes, as well as property and sales taxes. And the group doesn’t necessarily get off scot-free when it comes to payroll taxes — which support Social Security and Medicare.
(New York Times) — What if you’re strapped for cash and can’t pay the full amount due at the bottom of your I.R.S. Form 1040? You can ask the Internal Revenue Service for extra time to pay — and can even apply for an installment plan, to pay off the debt over several years. But it’s questionable whether that’s a smart move. The government tacks on failure-to-pay penalties, enrollment fees and interest charges that compound monthly, and they can add up to as much as 25 percent of the tax owed. In fact, the I.R.S. itself suggests that it’s often better for filers to pay their balance up front with a cash advance from a credit card or a bank loan, because the repayment amount would be smaller.
(AJC) — Haircuts, groceries and Girl Scout cookies appear to have escaped the tax man, as Republican legislators near completion on a tax reform bill many considered dead weeks ago. Lawmakers on a special committee are close to turning a massive restructuring of the state tax code into a bill that could be unveiled Monday, House Ways and Means Chairman Mickey Channell said Thursday. The plan lowers the personal income tax rate from 6 percent to 4.5 percent, said Channell, R-Greensboro. He pointed to a lower income tax rate as a way to make Georgia more competitive for jobs, but House Majority Leader Larry O’Neal, R-Bonaire, noted that many people will end up paying essentially the same in income taxes.
(Kiplinger) — Almost everyone agrees that the federal deficit is a ticking bomb. But few can agree on how to defuse it. Ideas run the gamut from raising taxes to the wholesale elimination of scores of government programs. Some are contradictory. All are controversial. When you take a look at where the money actually goes, it’s easy to see why it’s hard to balance the budget.
Social Security, the Big Enchilada: Many folks think that Social Security shouldn’t be counted in the federal budget at all, because they contribute to the retirement fund with each paycheck. Actually, though, taxes paid in by today’s workers aren’t socked away for their future retirement, but are used for benefits for today’s retirees — an estimated $760 billion worth of them in fiscal year 2012. What’s more, the so-called trust fund — where payroll taxes not needed for current payouts are stashed — consists of $2.6 trillion in IOUs from the U.S. Treasury. The funds have been borrowed over the past two decades to pay for other federal programs.