Wednesday, November 21, 2012

Tax Increases Loom after ‘Fiscal Cliff’

Taken from: http://blogs.wsj.com/wsjam/2012/11/21/tax-increases-loom-after-fiscal-cliff/

Almost all American households would take a financial blow next year—and low-income families would be among the hardest hit—if the White House and Congress fail to solve the “fiscal cliff” of big tax increases and spending cuts set to start Jan 2.

A married couple making between $20,000 and $30,000 a year would go from receiving, on average, a $15 tax credit to owing $1,408, according to research by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute.

These taxpayers would be part of the roughly 90% of American households that the Tax Policy Center estimates would face higher tax bills for 2013 if Washington cannot craft a deficit-reduction plan to replace the fiscal cliff—the $400 billion in tax increases and $100 billion in spending cuts slated to take effect next year.

The tax increases stem from the fact that various tax cuts and other tax measures all were passed on a temporary basis and are set to expire. Most of the increases would result from the expiration of Bush-era tax cuts, which would cause marginal rates to rise. Simultaneously, several temporary tax breaks pushed by President Barack Obama after the financial crisis also would end. The Wall Street Journal’s John McKinnon joined WSJTM’s Andrew Colton to discuss the impact the pending ‘Fiscal Cliff’ could have on the American household.

These posts are for informational use only to educate people about their taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word!

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Tuesday, November 20, 2012

Tax loopholes alone can't solve fiscal cliff - Lauren French - POLITICO.com

Here is an interesting post that shows the gravity of the fiscal cliff we're about to fall down.

Raise revenues and reform the Tax Code? Easy — just eliminate all the tax loopholes, right?

Good luck with that.

“Eliminating loopholes” sounds a lot better than “raising rates”: The tax rate is what I pay, and a loophole is what the other guy gets.

But the biggest loopholes in the U.S. Tax Code — generally referred to as tax expenditures — aren’t just the tricks of the trade for millionaires with offshore bank accounts. For the vast majority of Americans, they’re just how things work: You don’t pay taxes on your health insurance or Medicare benefits; you contribute tax-free to your 401(k); and your mortgage interest pushes down your tax bill each year.

And even if you dump the biggest of the set, these tax perks don’t even come close to closing the deficit. At best, the top 10 would pull in an extra $834 billion a year, according to Joint Committee on Taxation figures. Considering the hole lawmakers are trying to fill is several trillion dollars large, it’s clear they wouldn’t even come close.

Here are the 10 biggest tax loopholes — and the reasons why most of them will survive the fiscal cliff.

Read more: http://www.politico.com/news/stories/1112/84065.html#ixzz2CmkrHiNc

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Friday, November 16, 2012

Electronic Tax Filing News Update: Hurricane Sandy Scams

The world we live in is cruel and opportunistic. As our economy sinks and more people are left without jobs and/or stable living, those people turn to crime to fill the financial gap. Even during times of natural disasters, criminals see other peoples' plight as a chance to cash in on the generosity of others.

Hurricane Sandy's effect on New York

Even though hurricane Sandy hit almost a month ago, the devastation she left behind still has people without power and homes. These people need help, and with all these cries for donations come a few wolves in sheep's clothing. Irs.gov has released an article about how to avoid giving your money to someone other than the victims of Sandy: http://www.irs.gov/uac/Beware-of-Hurricane-Sandy-Scams.

Here is an excerpt from the article, and I hope that it helps you choose the right place to give your much-needed donation!

The IRS cautions both hurricane victims and people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:
  • To help disaster victims, donate to recognized charities.

  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) Web site at fema.gov.

  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.

  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

  • Call the IRS toll-free disaster assistance telephone number, 1-866-562-5227, if you are a hurricane victim with specific questions about tax relief or disaster related tax issues.
Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds. They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities, in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources.   Additionally, scammers often send e-mail that steers the recipient to bogus websites that sound as though they are affiliated with legitimate charitable causes.

Taxpayers suspecting disaster-related frauds should visit IRS.gov and search for the keywords “Report Phishing.”

More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”

View my other articles about tax scams to continue your education!

With the economy in the shape it's in, people need all the money they make just to make end's meat. Don't let someone take advantage of you and your personal information to make their life easier by making your life harder. We at Online Tax Pros hope you can benefit from this information and have an awesome tax refund!

Please leave a comment if you know of any other tax scams or other articles relating to people taking advantage of the victims of hurricane Sandy that are not listed here so we can spread awareness! Our thoughts and prayers go out to all the victims and their families.

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