At the eleventh hour, Congress averted the tax side of the ominous “Fiscal Cliff” that it faced as 2012 drew to a close. The end result of the intense negotiations was the American Taxpayer Relief Act of 2012 (ATRA).
The most publicized part of ATRA prevented scheduled federal tax rate hikes from going into effect for most taxpayers in 2013, while raising taxes on America’s highest earners. ATRA also keeps in place many expiring income tax breaks and revives some tax increases that had expired over the past several years.
Individual Tax Rates
For tax years beginning after 2012, ATRA makes permanent almost all of the federal income tax rates first put into place in 2001. Those rates otherwise would have increased in 2013. For high‑income taxpayers, Continue reading
Even if you’re a taxpayer with simple returns and few supporting documents, you can become a little snowed under by tax records as they accumulate over the years, raising the question of how long you should hold on to such records. The answer depends on the types of documents and transactions involved, but if you have been a tax records pack rat for many years, chances are you can safely dispose of the oldest such records without inviting trouble.
You won’t find many financial advisors who vigorously advocate dipping into the money in your 401(k) retirement account while you’re still working. It is for retirement, after all. Still, using some of what could be a sizeable amount of money sitting in the account for current financial needs may sometimes be too great a temptation to resist. Taking that step is not always ill-advised, but you should know all the ramifications before doing so.
If records were kept about such things, Tonda Lynn, a waitress at a pancake house, may have received the largest tip in history when a customer gave her a
lottery ticket that turned out to be worth $10 million. As the U.S. Tax Court put it in a heading in its opinion resolving gift tax issues arising from subsequent
events, suddenly “She’s Got a Ticket to Ride.”
The federal income tax code provides for a refundable tax credit to a first-time homebuyer of a “principal residence.” In 2008, the year that Joseph took the
plunge and bought his first home, the credit was 10% of the purchase price, up to $7,500. When he claimed the maximum credit on his 2008 tax return, the IRS
came calling to challenge his eligibility for the credit.
The Voluntary Classification Settlement Program (VCSP) is a voluntary amnesty program created by the IRS that provides an opportunity for taxpayers to
reclassify their workers as employees for employment tax purposes for future tax periods, with partial relief from federal employment taxes. To participate, the
taxpayer must meet certain eligibility requirements, apply to participate in the VCSP by filing Form 8952, “Application for Voluntary Classification Settlement
Program,” and enter into a closing agreement with the IRS.
Some say the world is divided between dog lovers and cat lovers. Jan is the latter.
She has seven cats of her own that live with her in her modest California home. But Jan also puts her modest financial means where her mouth is. As a volunteer for a local IRS-approved charity, she has taken care of some 70 stray cats at her home while adoptive homes were being found for them. The charity’s mission is to trap stray cats, neuter them, and then place them in homes temporarily until they can be adopted or released.
To help struggling taxpayers who owe back taxes, the Internal Revenue Service (IRS) recently unveiled a series of new steps to help people get a “fresh start,” to use the phrase invoked by the IRS Commissioner, with their tax liabilities. The general idea is to recognize the challenging economic environment the country faces while also keeping the tax revenue flowing in at acceptable levels. The focus is on changes to the tax lien system and other collection tools already used by the IRS that will make paying taxes a little easier on taxpayers.
For you to claim a federal income tax deduction for a charitable donation valued at $250 or more, you must obtain from the recipient of the donation a
“contemporaneous written acknowledgment” letter. Failure to obtain such a letter can result in a disallowance of the deduction by the IRS.
The acknowledgment letter, which may be in the form of a thank you letter to you as the donor, should include the following information:
It is no secret that businesses generally, and small businesses in particular, have been through rough times, and those are not over yet. Still, there is some
assistance to be had as a small business owner if you know where to look. One prominent example is the Small Business Administration (SBA) and its
Guaranteed Loan Programs.