Smart TaxesSmart Taxes

Lawmakers' efforts to correct economic and social problems have over the years transformed the nation's tax code into a multi-headed monstrosity.

By MSN Money producer Feb 3, 2014 5:42PM

Man working at laptop in home office (© Mark Bowden/Getty Images)By Allison Linn,

If you are dreading doing your taxes this season, don't blame the Internal Revenue Service for making it so hard.


After all, it's the nation's elected officials who have passed all those tax laws over the years -- for better or for worse.


"We have come to use the tax system as if it is a cure for every social and economic problem the country faces," said Michael Graetz, a professor of tax law at Columbia Law School and a proponent of major tax reform.


That's not necessarily what the federal tax system was intended for when it was introduced about 100 years ago.


A 'Fresh Start' initiative from the IRS can help some taxpayers get the lien withdrawn even before the underlying tax has been paid.

By Money Staff Jan 31, 2014 5:16PM

Worried man © CorbisThis post comes from Gerri Detweiler at partner site

A tax lien can be one of the worst items to appear on your credit report. It's considered very negative and can cause your credit scores to drop significantly. Even worse, under federal law, unpaid tax liens can remain on credit reports indefinitely, though in practice credit bureaus may remove them after a decade or so. (Once paid and released, a tax lien must be removed seven years from the date it was filed.)

There is a way to make tax liens disappear from your credit reports completely, and quickly, though. Unfortunately, not all taxpayers who are dealing with this problem know about it.

A Notice of Federal Tax Lien -- "NFTL" in IRS parlance and just "tax lien" to the rest of us -- is a tool the IRS uses to let creditors and others know that it has an interest in your property because of tax debt you still owe. 


These common tax preparation errors can cost you money or even lead to an audit by the IRS. Here's how to avoid them.

By MSN Money Partner Jan 31, 2014 2:55PM

This post comes from Stacy Johnson at partner site Money Talks NewsMoney Talks News

As humans, we all have the right to make mistakes. But tax time isn't the time to exercise that right. In the best case, mistakes on a tax return could mean a delayed refund. In the worst, a smaller refund, an amended return or an audit.


Most taxpayers concentrate on ways to reduce their taxable income, but they need to focus on adjusted gross income instead.

By MSN Money producer Jan 30, 2014 4:00PM

Tax forms © Corbis

By Robert D. Flach, MainStreetMainStreet

Most taxpayers concentrate on ways to reduce their "taxable income." However, it is your "adjusted gross income" (AGI) -- Line 37 on Form 1040 or Line 21 on Form 1040A -- that is really the most important number on your tax return.


There are two types of tax deductions -- those allowed "above the line" and those claimed "below the line." The "line" is your adjusted gross income.


"Above the line" deductions reduce your adjusted gross income. You do not have to itemize to claim these deductions, aka "adjustments to income", which include:


Most people don't and could easily get free help or do their own taxes with an online service. But if you truly need help, here's how to pick the right professional.

By MSN Money Partner Jan 29, 2014 1:57PM

This post comes from Stacy Johnson at partner site Money Talks News.

Money Talks News on MSN MoneyAccording to the IRS, 60 percent of Americans use a paid professional to prepare their taxes. But April 15 is taxing enough without blowing big bucks on paid preparers who are either overkill or overpriced.

For many people, there's no reason to pay at all.


If your wage statement gets waylaid, here's a substitute the IRS will accept.

By MSN Money producer Jan 28, 2014 5:18PM

By Kay Bell,  


You're still waiting for your W-2. You know you're getting a refund and you want to file your return, but it's something you can't do until you receive your annual wage statement.


TWoman with paperwork © Comstock Select/Corbishe Internal Revenue Service requires employers to get workers their earnings information by the end of each January, so allow a few days after the 31st for it to show up.


But if your Form W-2 never arrives, you can create your own for tax-filing purposes. Here's the information you'll need:


  • Year's wages.
  •  Payroll taxes withheld.
  •  Federal and state income taxes withheld.
  • Contributions to your company retirement/401k plan.
  •  Employer's tax identification number.

If the Bronco's quarterback doesn't retire after Sunday's game, his earnings will fall victim to New Jersey's 'jock tax.'

By MSN Money producer Jan 28, 2014 4:03PM

By K. Sean Packard,

Peyton Manning has the opportunity to pull a John Elway and ride off into the sunset as a Denver Bronco after winning his second ring, not that he wants to retire. His career will hinge upon an offseason exam on his surgically repaired neck, according to ESPN's Chris Mortensen. Obviously, the most important implication of the exam will be Manning's health. But whether his career continues will have an effect on how much tax New Jersey can collect from him for his appearance in the Super Bowl XLVIII.


Denver Broncos' Peyton Manning answers questions during media day for the Super Bowl. © Matt Slocum/APShould the Broncos beat the Seahawks, Manning -- and the rest of his teammates -- will earn $92,000. The loser's share in the Super Bowl is $46,000. So why does Manning's future beyond Feb. 2 matter to New Jersey? It would seem logical that the Garden State would apply its tax rates on the $92,000 or $46,000 Manning earns for his week in East Rutherford. Unfortunately, we are dealing with tax laws, not logic.


New Jersey, and every other state that imposes a jock tax, taxes players on their calendar-year income from each employer. If the Broncos defeat the Seahawks, Manning's 2014 playing income to this point would be $157,000 derived from playoff bonuses. If the Broncos lose, his playing income would be $111,000.


Beware of the 7 factors outlined below that can raise your AMT risk.

By MSN Money producer Jan 27, 2014 6:01PM

By Jeff Brown,

Will I or won't I? Now that it's January, let the annual AMT guessing game begin.  

Man with bullseye © Getty ImagesEven if you've been paying the reviled alternative minimum tax known as the AMT for years, your status can change. It all hinges on how much you make, where your money comes from and the deductions you can claim. 

"I love to describe the AMT as one of those big roulette-type wheels that goes round and round, and where it stops nobody knows," said Pete Lang, president of Lang Capital, a Hilton Head, S.C.–based private wealth manager. 

This may come as a surprise, but it's not the rich who have the most to worry about. Some 3.9 million taxpayers -- 4.2 percent of the nation's total -- are expected to get hit with the AMT for 2013, according to experts from the Tax Policy Center. The average tab for individuals: $6,600.

"Unfortunately, AMT is really targeted at the middle market," said Dave McKelvey, partner in Friedman LLP, a New York City accounting and advising firm. "If you make a lot of money, your regular tax is going to be high enough that AMT is not going to be an issue, and if you make an income that's low enough, AMT is not going to be an issue." 




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