Taxes

You know the saying, nothing is certain but death and taxes. Well, we can't help you with the first one, but here you'll find all the latest tax planning news, advice and calculators you need to help you with the second.

Learn how to maximize the money you keep in your pocket without setting off red flags to the IRS.

Stay on top of today's top tax news and take advantage of expert advice.

AMT Relief in the Works, Says Congress

Kelly Phillips Erb Nov 14th 2010 @ 3:00PM EST Filed Under: Tax, Tax - AMT

Imagine having to calculate your federal income taxes twice. That's actually what will happen to more than 20 million taxpayers in 2011 if Congress doesn't take steps to fix the alternative minimum tax, or AMT, before the end of the year.

When it was enacted in 1969, the AMT was intended to ensure that high-income taxpayers didn't avoid paying taxes. The idea was that wealthy taxpayers should not be able to whittle their taxable income down to zero by taking advantage of too many tax breaks, like the home mortgage interest deduction or real estate tax deductions. With the AMT, taxpayers calculate their federal income tax twice, once under the "regular" rules and again under the AMT rules, which eliminated most of those favorable tax breaks. Taxpayers would then pay the highest tax amount calculated under both schemes.

Over the years, however, the AMT hasn't worked as planned. The AMT hasn't been indexed for inflation, so the number of taxpayers subject to the tax includes those never intended to be affected in the first place. The National Taxpayer Advocate has reported that 77% of the income subject to AMT is actually attributable not so much to breaks associated with the wealthy but for the disallowance of "ordinary" deductions like those for state and local taxes as well as personal and dependency deductions.

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What the Proposed Social Security Reform Might Mean for You

Jennie L. Phipps Nov 11th 2010 @ 7:00PM EST Filed Under: Retire, Tax, In the News

Remember Cold War bomb drills in elementary school where you had to take shelter under your desk? That's what the deficit-reduction commission's proposal to retool Social Security makes me think about. Well-meaning, but could it possibly be all that effective?

Click on this link if you'd like to read the entire plan. If you just want to know what's in it, here's what is being proposed:

Change how Social Security checks are calculated so people who earned less during their working lives get a larger percentage of benefits relative to what they earned, while people who made big salaries would get relatively smaller checks. That would encourage high-earners to save more because Social Security would be an even smaller proportion of their retirement income than it is now.

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5 ways the election could affect your taxes

Kelly Phillips Erb Nov 8th 2010 @ 9:00AM EST Filed Under: Tax

Less than a week after the midterm elections, politicians and special interest groups are both plotting their next moves. With an overwhelming majority of voters citing the economy as the deciding factor in the election, both parties realize that some kind of change is inevitable for the coming year.

Here's a quick guide to potential tax changes to look out for:

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South Dakota named best state for business taxes

Kelly Phillips Erb Oct 30th 2010 @ 8:00AM EST Filed Under: Tax

Mt. Rushmore - S. Dakota is the best tax state

South Dakota has the nation's best tax climate for business in 2011, according to the Tax Foundation. The Mount Rushmore State won the distinction for the second year in a row, beating out also sparsely-populated Alaska for the number-one spot. Wyoming, Nevada, Florida, Montana, New Hampshire, Delaware, Utah, and Indiana round out the top 10.

The 2011 version of the State Business Tax Climate Index (SBTCI), released this week by the Tax Foundation, ranks states according to their tax systems and how they affect competition for new business and growth. Rankings are chosen not based merely on business tax burdens, but on a combination of tax factors that influence corporate decisions. Specifically, the rankings are based on five areas: major business taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes.

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Death tax repeal gets new life

Kelly Phillips Erb Oct 28th 2010 @ 5:30PM EST Filed Under: Tax, Wealth

When the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001) was signed into law by President Bush, many expected that years of fighting over a permanent repeal of the federal estate tax would finally be over. Under EGTRRA 2001, the personal exemption available under the estate tax increased to $3.5 million in 2009 with a temporary repeal for 2010. The expectation was that some form of compromise bill would take effect, boosting the personal exemption to between $3.5 million and $5 million. That didn't happen.

Just four years after EGTRRA 2001 passed, the idea of complete repeal was back in the news. Majority Leader Sen. Bill Frist (R-Tenn.) was at the forefront of the movement, arguing that the federal estate tax destroyed small businesses. In a dramatic speech on the Senate floor, he argued:

If you are an enterprising entrepreneur who has worked hard to grow a family business or to keep and maintain that family farm, your spouse and children can expect to hear the knock of the tax man right after the Grim Reaper.

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Why Tax Day won't be April 15 in 2011

Kelly Phillips Erb Oct 28th 2010 @ 12:00PM EST Filed Under: Tax

If you're one of the hundreds of thousands of taxpayers who wait until the last minute to file your taxes, make a note: The IRS has just announced that the due date for 2010 individual federal income tax returns will be Monday, April 18, 2011.

Traditionally, Tax Day falls on April 15 unless that day happens to be on a Saturday, Sunday or federal holiday. In 2011, April 15 meets none of those criteria -- it falls on a Friday, and there's no federal holiday that day.

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If you have an IRA, it may be time to settle up with Uncle Sam

Jennie L. Phipps Oct 26th 2010 @ 12:00PM EST Filed Under: Tax, Retirement - 401(k), Retirement - 403(b), Retirement Advice, Tax - Advice

After a year's reprieve, if you are more than 70 1/2 in 2010, you have to ante up a required minimum distribution (RMD) from your IRA, 401(k) or 403(b) and pay Uncle Sam his due.You'll also owe an RMD if you inherited a taxable IRA, no matter what your age.

Last year, because even Uncle realized we were all in dire financial straights, we got a break, but not this year. Anybody born before July 1, 1939, with a tax-advantaged retirement account must withdraw the amount equal to the total balance of your retirement accounts as of Dec. 31, 2009, divided by the distribution period of your life expectancy. You must figure out what the IRS considers your life expectancy by using these tables.

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Phony tax e-mail pretends to be from IRS as extension filing day arrives

Linda Doell Oct 15th 2010 @ 10:00AM EST Filed Under: Tax, Fraud, Identity Theft, Consumer Ally

As Friday's tax deadline approaches for those who applied for extensions in April, don't be fooled if you get an e-mail that appears to be from the U.S. Internal Revenue Service -- it's a scam to trick you into giving up personal information to potential ID thieves.

The Better Business Bureau, Greater Maryland issued an alert to be on the lookout for an e-mail with the subject line: "Your Tax Payment ID: 010377149 has been rejected. Urgent Report information," following reports from consumers and businesses who received the message.

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FTC: American Tax Relief ran $60 million scam as owners drove Ferraris

Jorgen Wouters Oct 6th 2010 @ 4:30PM EST Filed Under: Tax, Consumer Ally

The Federal Trade Commission put the brakes on a massive tax relief scam it says cheated struggling consumers nationwide out of more than $60 million while its owners lived lavishly and collected luxury cars, including Ferraris, Bentleys and Rolls-Royces.

The FTC, which is seeking compensation from American Tax Relief for its victims, asked a Chicago federal judge to halt the company's operations and freeze its owners' assets. The FTC lawsuit names names American Tax Relief LLC of Beverly Hills, Calif. and its two co-owners, Alexander Seung Hahn and Joo Hyun Park. Park's parents, Young Soon Park and Il Kon Park, are also named for allegedly holding funds obtained from customers.

"We've made it a top priority to go after scammers who try to exploit the financial hardship of others," said David C. Vladeck, Director of the FTC's Bureau of Consumer Protection, in a statement. "For people having a tough time paying their taxes, the last thing they need is to lose more money to a fraud."

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