Nov 26
Turkey day is finally here. So what does this mean to you?
History:
Thanksgiving Day is a harvest festival celebrated primarily in Canada and the United States. Traditionally, it is a time to give thanks for the harvest and express gratitude in general. While perhaps religious in origin, Thanksgiving is now primarily identified as a secular holiday.
The Alternative Minimum Tax (or AMT) is an extra tax some people have to pay on top of their regular income tax. Okay that sounds pretty messed up, doesn’t it?
In recent years, the AMT has been under increased attention. Why? Well, put simply, because the AMT is not cataloged or set up for inflation, thus because of recent tax cuts, an increasing number of middle-income taxpayers have been finding themselves subject to this tax. Until recently, the AMT affected less than 1% of all individual taxpayers. However, since the year 2000, the AMT has steadily grown, hitting roughly 3% of all taxpayers in 2005. Moreover, if left unchanged, the AMT will penalize nearly 20% of taxpayers by 2010. Almost 95% of all married filing joint couples.
The number of taxpayers affected by the Alternative Minimum Tax (AMT) is expected to exceed 30 million in 2010. Now that is really messed up.
Click to continue reading “A brief overview of the alternative minimum tax (AMT).”
Jan 25
Wow! What a week this has been. Not just in my world but around the world. As much as I’d like to talk about what is going on “everywhere”, I think I had better just stick with the taxing world and the world of taxguy.
Nine days ago I transmitted the first e-file return. Following that transmitted return, I started to complete a few other returns as the official start of tax season began. (Are you ready?) With it being officially the filing season, I thought I’d throw some info out there for you to help you get going.
We have a new president and he is off and running. The neatest thing so far that I have noticed, is President Obama created WhiteHouse.gov. “WhiteHouse.gov will be a central part of
President Obama’s pledge to make his the most transparent and accountable
administration in American history.” If you want to follow along with what is happening this is a very interesting site, along with a blog. Follow our government in a new and unique way.
Understandably, it is a work in progress but the information it is making available so far is really interesting. You’re able to find out about the Agenda of the new administration as well as read short bio’s on them. History of the White House, and other great informational places. I haven’t searched it all, but what I have read and seen, I think this is really interesting.
Second chance for economic stimulus check is a great informational tip from Bankrate.com. Every weekday until the end of tax season, Bankrate.com will be providing these tips. I strongly recommend to everyone to check these out.
I was lucky enough to take part in Second chance for economic stimulus check. Myself with fellow tax blogger Robert The Wondering Tax Pro have been included in the observations and insights of this article wonderfully written by Kay Bell. Thank you Kay for allowing me to provide my input.
Along those lines, I was also given the honor to join the ranks of tax professionals who were able to “vent” about a few client aggravations. As Kay Bell writes in her post Are you a good or bad tax client?, “. . . the truth is if you and I were better clients, we’d not only make our tax advisors’ jobs easier, we’d likely end up with a better tax result. That adage “garbage in, garbage out” applies here; even the best tax professional can only work with what he or she gets from the taxpayer.” The post is great, from a prepares point of view.
Finally, while I seem to be focusing on the writings of Kay Bell, the author of Don’t Mess With Taxes, Kay as also written a book that is now available. The Truth About Paying Fewer Taxes was released last week. I haven’t received my copy as of yet (UPS tracking says I’ll have it Tuesday).
February, I will be posting a book review of The Truth About Paying Fewer Taxes, and I will be having my first giving away, a signed copy by its author. So you’ll need to stay tuned for more information.
Okay, what else has been going on around the blog-o-sphere?
Grocery Store Mind Games form Wide Open Wallet is a real eye opener. “. . . according to studies as much as 60 to 70 percent of all purchases at the grocery store are unplanned.”
The Contest at Pecuniarities ended last night. Still waiting to hear who won. Also from Pecuniarities, Carnival of Personal Finance No. 188: The Jane Austen Edition has some great reading. You have to click the links.
File Your Income Taxes Online for Free is a post from No Debt Plan. The IRS has a list of all the places that offer e-file, most of which you have to click the link from within the IRS website. OF them all which is best? Well neither I or anyone else can answer for you without knowing your situation, but “. . .there is a pretty simple weeding out process you can do. Check the websites of the companies listed.”
This week Living Almost large reviews the book Coming Up Short – The challenge of the 401k plans. It’s a book talking about the challenges facing 401ks and what has happened since their inception in 1981. I love the history. But this isn’t just about the history. Read the review, get the book.
Guesstimating take-home pay from a job is a great bit of info for those trying to figure out their take home pay.
There are two post of interest at A Personal Finance Guide. “Becoming smart about money and thriving requires more than a basic financial plan. Knowing how much you need to put away for retirement or college is all very well but to achieve your goals and dreams you need a lot more than mere time-value-of-money calculations. There are many more aspects to being successful. . .” They are discussed in part here. Money and Success – Become Smart About Money and Thrive in Three Basic Steps. And Learning to Save Money Isn’t As Hard As You May Think, it may be a “. . . challenge at first, but the more you do it the easier it gets.”
Filing your taxes: D-I-Y Taxation Software or a Professional Preparer is a great post from Andy. (Even though I thought a small bit of info was miss-communicated.)
The Certified Financial Planner Board of Standards recently provided ten tips on selecting a financial planner as reported and linked to at Tick Marks in the post Planning to Choose a Financial Planner–10 Questions to Consider.
KEEPING TRACK OF BUSINESS MILEAGE and BRIDE OF KEEPING TRACK OF BUSINESS MILEAGE are both great pieces on keeping track of well, yes, your business milage from The Wondering Tax Pro.
Peter over at The Tax Lawyer’s Blog has a real look at on a few things in his post Repeal the Corporate Income Tax and Bring Those Jobs Back Home.
Kelly from Taxgirl reports Google ate Feedburner.
California Tax Refunds Delayed as reported by Russ Fox at Taxable Talk. Have you considered what you would do if this happened in your state?
Being from Oklahoma I always find interesting some of the things I hear from down there. The Tax Foundation Oklahoma’s Budget is ######## is just more interesting info from there.
Joe Kristan from Roth & Company, P.C. Tax Update Blog, reports Ways and Means passes stimulus bill, but weakens 5-year NOL carryback. Hummm.
He also looks at IRS guidance on reporting K-1 percentages.
Next post scheduled for 02/01/2009
This is kind of a “passing the week . . .” post but first I wanted to put a collection of history tidbits and info out there for you. At the end or after you’ll find a links to a few post of interest.
The idea behind the term “Black Friday” is that this is the day in which retail stores have enough sales to put them “in the black” – an accounting expression that alludes to the practice of recording losses in red and profits in black.
So where did the term “Black Friday” come from?
In 1975 the shopping craze that followed Thanksgiving turned into Black Friday, in reference to the hectic crowds and horrendous traffic. Despite a slipping economy shoppers still came out in full force that year and caused several newspapers to call the day ‘Black Friday’, and thus the tradition began.
The earliest uses of “Black Friday” come from or reference Philadelphia and refer to the heavy traffic on that day, an implicit comparison to the extremely stressful and chaotic experience of Black Tuesday (the 1929 stock-market crash). The earliest known reference to “Black Friday” (in this sense), refers to Black Friday 1965 and makes the Philadelphia origin explicit:
JANUARY 1966 — “Black Friday” is the name which the Philadelphia Police Department has given to the Friday following Thanksgiving Day. It is not a term of endearment to them. “Black Friday” officially opens the Christmas shopping season in center city, and it usually brings massive traffic jams and over-crowded sidewalks as the downtown stores are mobbed from opening to closing.
The term Black Friday began to get wider exposure around 1975, as shown by two newspaper articles from November 29, 1975, both datelined from Philadelphia. The first reference is in an article entitled “Army vs. Navy: A Dimming Splendor,” in The New York Times:
“Philadelphia police and bus drivers call it “Black Friday” – that day each year between Thanksgiving Day and the Army-Navy game. It is the busiest shopping and traffic day of the year in the Bicentennial City as the Christmas list is checked off and the Eastern college football season nears conclusion.”
The derivation is also clear in an Associated Press article entitled “Folks on Buying Spree Despite Down Economy,” which ran in the Titusville Herald on the same day:
Store aisles were jammed. Escalators were nonstop people. It was the first day of the Christmas shopping season and despite the economy, folks here went on a buying spree. … “That’s why the bus drivers and cab drivers call today ‘Black Friday,’” a sales manager at Gimbels said as she watched a traffic cop trying to control a crowd of jaywalkers. “They think in terms of headaches it gives them.”
It is an Accounting practice:
Look up in the red, in the black in Wiktionary, the free dictionary. Many merchants objected to the use of a negative term to refer to one of the most important shopping days in the year. By the early 1980s, an alternative theory began to be circulated: that retailers traditionally operated at a financial loss for most of the year (January through November) and made their profit during the holiday season, beginning on the day after Thanksgiving. When this would be recorded in the financial records, once-common accounting practices would use red ink to show negative amounts and black ink to show positive amounts. Black Friday, under this theory, is the beginning of the period where retailers would no longer have losses (the red) and instead take in the year’s profits (the black). The earliest known use, found by Bonnie Taylor-Blake, is from 1981, and presents the “black ink” theory as one of several competing possibilities.
The day after Thanksgiving in the United States. Retailers generally see an upward spike in sales and consider this to be the start of the holiday shopping season.
Historically Black Fridays have never been good events. History has shown many ‘Black’ days, most with dire consequences.
1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The attempt failed and the gold market collapsed, causing the stock market to plummet.
2. The term “black” has been used to describe other disastrous days in financial markets. For example, on Black Tuesday, October 29, 1929, the market fell precipitously, signaling the start of the Great Depression.
3. Black Friday in January 1939 refers to Australia’s day of horrible and devastating fires.
4. The largest one-day drop in stock market history occurred on Black Monday, October 19, 1987, when the Dow Jones Industrial Average plummeted more than 22%.
So what happened this time around? With the economy the way it is many are concerned. Businesses wondering about their sales (many make 30% of their income during this month) and the rest wondering about the economy.
Well I am currently working for a Toy distributor (I even worked yesterday) and the rumor from the “big boss” is that their stores reported higher sales Friday than in past “Black Fridays”.
Early data show strong Black Friday
Shoppers, clerks say ‘Black Friday’ crowds seem lighter
taxguy has a few mentions this week (and I would like to point out, it is “taxguy” not Taxguy, or Tax Guy or whatever else has been put out just plain and simple, no caps one word taxguy. Why? The same reason I guess a parent names a child Elizabeth and demands people call her Elizabeth and not Lisa, or Beth.)
Issue #4: Dr. Tax-O-Sphere, Or How I Learned to Stop Worrying and Love the Tax Code including pictures of your favorite tax bloggers.
Macho Macho tax blogs describes a site that shows you the chances in a blog (of a blog) if the author is male. As Joe points out it isn’t very accurate as it shows a few females bloggers ( including “Taxgirl”) as being “manly”. Although I question the overall findings, I found it interesting the score taxguy was given.
Friday inspiration: Facing an ugly reality and making changes. A mess I am in and trying to fix. An interview that I am now grateful I participated in and would encourage others to take part in this. The questions are pretty basic for everyone, if you can answer them, please respond to the request that is at the end of the post/interview.
And the Nominees for 2008 Twelve Blogs of Christmas are -
Okay enough about taxguy. . .
What the government should be doing during a recession
Tax Tips, Rates and Brackets for 2009 Returns
Russia to Cut Corporate Taxes, Washington Dithers
Nov 9
Well this is hit, as with the election much has come to pass and I am sure much is being missed. So here I will try and direct a path to some things (mostly other articles) that are most assuredly interesting reads. What you walk away with having read all my suggestions is going to depend on your own open mindedness.
I have tried very hard not to seem one-sided in this election. I have been asked a lot of my opinion of who to vote for, based solely on tax issues. It is my opinion that basing my vote on just tax issues is an error and should be by you too.
However you or I voted, we have our next president. Like a new tax preparer you have just hired after using the same person for years, give him a chance before you say he was the wrong choice. Let us see what he does.
The Wall Street Journal has an opinion article written by Jeffrey Scott Shapiro that I found interesting titled The Treatment of Bush Has Been a Disgrace What must our enemies be thinking? He brings up a few interesting points about our current President.
“Mr. Obama won it the old-fashioned way: he earned it. He confounded history to get it. And because he replaces a president whose unpopularity has impeded his ability to govern, he is, in a way, president from day one.” A Quote from Peggy Noonan in her article The Children Are Watching America makes history, but the mandate is for moderation.
And many have said Sara Palin is great. I have even heard people say that they were voting for her. (Yes even though she was the VP nominee.) So what about her now? Again I direct you to the Wall Street Journal and their article Palin and the GOP.
President elect, now has a new site, www.change.gov. if you wanna now what is going on then this is an interesting site. As for his tax “agenda”, go to
http://www.change.gov/agenda/taxes/.
With tax season coming up a great reminder to everyone who files a return is to keep a copy of your return. This is perfectly discussed in this post from TWTP in his post KEEP A COPY
Getting on with the tax and finance world I have a new blog that I have been trying to follow amongst everything else I have going on now. Please venture over to check out A Personal Finance Guide.
There have been some talks about a new stimulus coming our way. I have even heard that “our leaders” are hoping to get it worked out before the reins are handed over to the new administration. Something I have noticed in this is the first one was a cost of 180 billion dollars, the one being discussed now is only 50 billion dollars. Keep that in mind please as you try and figure your next check from our government. For more on this please head over to Don’t mess with Taxes in her post New stimulus plan: tax cuts, not rebates.
Also see The Next Economic Stimulus Payment a great post with great links on this subject. Do read the links as well.
How President Elect Obama’s Administration Will Affect Your Finances » is a great piece by Patrick from Cash Money Life. If you haven’t been keeping up with things Patrick is doing some great posting.
A note from Joe Kristen gives a look at a scary thought in his post You don’t think House Democrats are serious about getting rid of 401(k) plans? Which is preceded with The campaign to ‘protect’ you from your 401(k) plan. Be sure to click the links within those post.
taxgirl endorses Obama, is a post that is a great read, I also urge you to read the comments for this post.
Peter from The Tax Lawyers blog gives a great and to the point look at Taxes 101: What Filing Status Should you Use? Also from Peter and a must read for everyone (my opinion) is his post 5 Most Earth Shattering Tax Opinions Ever Written. Go there, now.
The Wondering Tax Pro gives us a look at WHAT THE IRS WILL BE UP TO NEXT YEAR. Robert also answers a very common Question in his post ASK THE TAX PRO – MARRIAGE AND FORM W-4.
I also want to thank TWTP for introducing me to The Baglady and would like to point out that he has a guest post there that is a must read by all. Please check out Gift Tax 101.
Looking for a book to read? Living Almost Large has a book review of what sounds to be a very interesting discussion of how wealth was created in the modern world. Looking at the historical aspects of wealth and what contributed to our current economic societies and norms. For the review go to Book Review: Birth of Plenty.
From Wide Open Wallet comes a few post I think most should read. In her post Stuck in the middle she discusses something I am willing to bet is very common in households today, spending less than last year. More consideration now on lower cost of necessities. And two other post for those of you with children. How do you teach value? I am a big advocate of teaching children the value of things, money being a top 10 item. Kids and the economic crisis. In my efforts you can’t help but bring up the current economic situation.
Sep 7
A short week but some great post around the blog sphere. . . .
Summer clearance starts my list because I really missed the posting from Wide Open Wallet and I am glad she got back to us. Thanks Ashely, for all your great post.
ASK THE TAX PRO – REVISING YOUR INCOME TAX WITHHOLDING – TWTP has a reader who is checking out pay stubs and thinking there is too much being taken out. THE WONDERING TAX PRO gives his reader some great advice be sure to check it out if you have been wondering about this yourself. Reader if you are here, I think you might read my post Are You Having Enough Withheld?
Speaking of TWTP, he and I sort of tag teamed the subject of Audits. Robert wrote a great piece called AUDITS and I wrote Everybody hates an Audit. IF you missed them on Tuesday, be sure to go check them out.
Something I missed last week and need to get in is a great post from Peter Pappas from The Tax Lawyer’s Blog (Newly added to my blog roll early in the past week) concerning why the IRS prevails in trials before the United States Tax Court in 9 out of 10 cases. Make sure to check out Lawyer Up! Unrepresented Taxpayers Likely to Lose in Tax Court. While you are there float around and read up on his past post.
Another report out over at THE FLACH REPORT. NEW IRS REGULATIONS FOR DEDUCTING START-UP COSTS. How many of you even knew you could deduct some start up cost?
My Spendthrift Wants to Come Out and Play from Kevin at No Debt Plan is a great post that I can relate to, all to well. I know many people who are with me on this. Go check it out.
How About a Tax on Sex? An interesting question. An interesting idea. My wouldn’t that be difficult to collect? Well (also new to by blog roll this week) go check out what the piece says and make your own conclusions over at The Tax Policy Blog. As Joe Kristan from the Tax Update blog writes “AT LEAST IT WOULD BE EASY TO FIND AUDITORS.”
If you are a cook then 20 Ways to Save Time and Money in the Kitchen from Patrick over at Cash Money Life is a must read. While you are there be sure to check out his post The History of Labor Day.
Aug 29
The U.S. government’s privilege to levy taxes was incorporated into the Constitution in 1787. The responsibility for how to collect these taxes fell to the Treasury Department where it has stayed. 30years later the issue of taxes was abandoned due to our governments needs were being met by taxes on imports. So no more taxes for citizens.
45 years later the Revenue Act of July1, 1862 was signed by President Lincoln due to the outbreak of the Civil War and the governments need for funding it. This established our nation’s first real income tax. The Internal Revenue Service is officially born.
When the war ended, as before, the nation’s financial needs were being met by the taxes on imports, along with taxes on tobacco and alcohol. This resulting in some 90% of our internal revenue. In 1872 (10 years after its birth) the “income tax” was once again abolished.
Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.
18 years after the Supreme Court ruling, Wyoming ratification of the 16th Amendment, provided the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to more or less re-enact an income tax. That same year, the first Form 1040 appeared after Congress levied a one percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.
Five years later, during World War I, the top rate of the income tax was raised to 77 percent to help finance the war effort. In the post-war years, that dropped down to 24 percent by 1929, and rose again during the Depression.
During World War II, Congress introduced payroll withholding and quarterly tax payments.
I am compiling a historical highlight section for my website that I don’t have completed (not that my site is up yet either) yet but when it is going I will be directing more to it and from it.
If you want to get a look at what the first 1040 form looked like with it’s instructions follow the link below to where the IRS has as a pdf file reproduction.
“first 1040 form and instructions”
Some things of interest to notice:
1. Taxes were only paid on income above $3,000, equivalent to $61,000 in today’s dollars, at the initial rate of only 1%.
2. The highest marginal tax rate in 1913 was 6%, which applied to income above $500,000, equivalent in today’s dollars to a little over $10 million.
3. The entire 1040 tax form in 1913, including all forms and instructions, and was only 4 pages. All instructions in 1913 were contained on a single page, compared to the 2007 1040 Instructions, which held 92 pages long, (without any forms).
Aug 22
“A compromise is the art of dividing a cake in such a way that everyone believes that he has got the biggest piece.”
I recently read the above and gave a great deal of thought to this.
With the study recently done by the Government Accountability Office, in any given year at least 60% of U.S. corporations surveyed paid no federal income tax, for the years of the study, 1998 to 2005. This reported by TAXGIRL in her post More Than Half of US Companies Pay No Income Tax. This is very interesting.
The nation has been screaming for a fair tax system throughout history. (Remember the Boston tea Party?) Sooner or later there will be a revolt again, and studies like this are going to help incite such a thing.
Where am I going with this? No where really. It just seems that more of us should think about what is going on. Our cost on, everything have gone up, we work and we pay our taxes. There is a system in place that mandates that corporations pay income tax. They have their rules and then there are rules that govern us, the working people of this country.
Any business has the ability that if it has a good year, it can offset its taxable income from losses it faced in a bad year. NOL allows a company to deduct losses generated in previous years, in a current year. However, an individual is not allowed to carry forward federal income tax losses. In other words, if an individual has a bad year, the loss is wiped clean.
I’m not suggesting a revolt by any means but how is this fair? If you earn income pay your taxes. A big advertising scheme by a lot of different folks is one announcing the complexity of the IRC (Internal Revenue Code). Does it really need to be so complex? I think not. However I don’t agree with the flat rate tax either. Too much goes on in life.
I have clients that still rent. If they decide to buy a home (and they are planning for such) it would be imposable if there was a flat tax. So there needs to be cuts for this and that. Relief for different situations. If one entity is allowed to do something, so should we all.
One of the biggest reasons I got into tax preparation was my desire to level the playing field somewhat. What I mean by this, is everyone deserves a fair share but not everyone knows how to get there. Corporate America (and around the world) gets breaks that would just make a person tax payer want to picket, something. There are a lot of rules and slides on rules that can help with your preparation and lower your tax bill. But with politics dictating that middle America pays the majority of the taxes then I say we need to change things.
Corporate America has the biggest piece of the cake, we should have ours, you should have yours.
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