An income of $343,927 puts you into the top 1%. If you make $32,396 a year, you're in the top 50% of wage earners. Check how much each group pays in taxes.
And this comes in the shadow of a government bailout of big banks and a return to the days of gigantic bonuses on Wall Street. Mix in stubbornly high unemployment, a volatile stock market and a barely recovering economy, and it's no wonder that anger over the causes and consequences of the financial meltdown is packing presidential debates with heated rhetoric and filling the streets with protestors.
Undoubtedly, there are big issues here. And we think it’s important for you to know where you fit in. Does your income put you in that at once extolled and excoriated 1% of richest Americans? In the bottom 50%? Somewhere in between?
And, while Warren Buffett says he thinks rich folks like himself should pay more taxes -- and President Barack Obama would be glad to oblige with a millionaire surtax -- one-time Republican presidential candidate Herman Cain had called for throwing out the tax code altogether and replacing it with a 9% flat tax on individuals, a 9% corporate tax and a 9% national sales tax.
It makes you wonder: Are you bearing your fair share of the nation’s tax burden? Do you have a clue what portion you pay now?
67 provisions will end this year, including deductible SUVs for the self-employed, home energy improvements and AMT 'patches.'
By now, you’re probably aware that if Democrats and Republicans can’t reach a compromise in the next few weeks, your first paycheck of 2012 will be smaller as a temporary cut in the Social Security payroll tax expires.
But the payroll tax break is just one of an extraordinary 67 tax provisions that will run out on Dec. 31, including some with broad bipartisan support. (Full list here.)
On the individual tax side, two provisions that together save 26 million middle class Americans from the clutches of the dreaded alternative minimum tax (they're known as the AMT "patch") will expire. On the business side, the research and development credit, beloved by politicians from both sides of the aisle, will lapse.
Some of these disappearing tax breaks may not be renewed — meaning you should consider grabbing them now. So, for example, if you’re self-employed or own a small business and are in the market for a new vehicle, consider buying before Dec. 31. Until then you can write off the full cost of purchasing a new luxury SUV — provided it’s used 100% for business and its gross vehicle weight is more than 6,000 pounds. (More details here.)
If you’re considering making energy-efficient home improvements, get the work done before Dec. 31 to take advantage of an expiring $500 tax credit. (More on this green credit here.)
Virginia legislator seeks to boost space industry by offering a tax credit of up to $8,000 to residents who agree to a 'space burial' of their cremated remains.
Finally, a tax break for the dead. And it's not even in Chicago.
Legislation introduced in Virginia would give residents a tax credit of up to $8,000 for agreeing to have their cremated remains launched into space.
We couldn't find many specifics of the legislation, proposed by Republican Terry Kilgore, but it appears to be a "pre-need" plan that would allow you to collect your tax credit while you're still breathing and able to enjoy it.
"I know there's a giggle factor, but it's time to get over that," J. Jack Kennedy, a board member of the Virginia Commercial Spaceflight Authority, told WTVR-TV in Richmond, Va. "This is about business and job opportunities."
Under the proposal, to be debated by the state's General Assembly next year, taxpayers can get a credit of up to $2,500 a year, for a total of $8,000 for agreeing to have their cremated remains "buried" in space. The tax break would last from 2013 to 2020, and we don't know what happens if you change your mind between the time you get the credit and you actually need to be buried.
GOP presidential candidate Herman Cain -- the frontrunner, according to some polls -- has proposed a major overhaul of the U.S. tax system. What would it mean to taxpayers and the economy?
This post comes from Alison Fitzgerald at partner site BloombergBusinessweek.
Republican presidential candidate Herman Cain's plan to create a national sales tax would hurt retailers, threaten economic growth and shift the tax burden onto the middle class and poor, tax experts and business groups said.
Cain’s so-called 9-9-9 plan, which would replace the current tax code with a system of three separate taxes of 9% each, has boosted his popularity among voters. The former chief executive officer of Godfather's Pizza has surged in polls in recent weeks, and a Wall Street Journal/NBC News poll released this week put him in the lead.
Tax experts and business groups interviewed don’t like his tax plan as much as voters.
Never ignore a letter from the IRS. Sometimes you can solve the problem by sending more information, and sometimes you need a professional.
By now you’ve sent in your tax returns (unless you filed for an extension), and you may have already received a refund check. If you’re lucky, that’s the only letter you’re going to get back from the Internal Revenue Service.
But some are not so lucky and wind up getting audited.
Seventy percent of audits are just a letter asking for more information about your tax returns, and you’re asked to mail back forms proving your income or deductions. In other cases you’ll get an invitation to meet with an agent to discuss your tax forms, a scenario that sends many taxpayers into a panic.
In either case, there’s usually little need for panic, but there are certain steps you should take. To find out the best (and worst) course of action in the event of an audit, we talked to a certified public accountant and a tax lawyer, both of whom have worked for the IRS. Here’s what they told us you should do if you get that dreaded letter.
Doing business when you travel can grant you a tax break on your journey, but make sure to document everything.
How would you like to take a one-month trip all over Asia and Hawaii and write it off on your tax return? One of TaxMama’s clients did. Even after having the trip audited, the IRS agreed to allow all the expenses. Do you want to know the secret?
Repeat TaxMama’s mantra after me: document, document, document.
The simple secret to all tax-deductible expenses is keeping excellent records and documenting your business intentions, business purpose, and business-related activities.
Mary had always wanted to visit China. So this experienced film-set designer pitched a film producer working on a film about China. Once he accepted her proposal, she went to work. Mary started building her contacts in China -- the embassy, museums, artists, etc. She arranged for introductions to people whose homes or estates she could visit and photograph. The embassy helped Mary with a guide to organize her research.
Agency has $164.6 million in unclaimed refunds. If you're expecting a check, make sure the IRS has your correct address.
What could you do with $1,471?
That's the average amount of the tax refund checks that were returned in fiscal 2010 to the Internal Revenue Service because they were undeliverable.
Whether your unclaimed refund is less or more, any amount would be nice as your bills roll in.
In all, as of November 2010, the IRS had 111,893 refund checks totaling $164.6 million in missing money.
The main reason the checks were returned is simple: The taxpayers moved after filing their tax returns and forgot to give the IRS their new addresses.
No one wants to be audited, but following some simple guidelines can make the process less painful -- and maybe less expensive.
Talking with the IRS is no one’s idea of a picnic, but there are plenty of ways to make it more like a walk in the park than a slog through a murky, dangerous swamp.
Whether the IRS is auditing you, or you’re trying to work out a payment plan on a big tax bill, meeting an agent face-to-face -- and all the fear and resentment that situation may bring -- can lead taxpayers to make serious missteps, experts say.
The good news is audits are relatively rare: Just 1.1% of individual returns filed in 2009 were audited in fiscal year 2010, and 78% of those audits were by mail, not in person, according to the IRS. Still, that’s a not-insignificant 1.6 million returns. Taxpayers with heftier earnings should be more worried: 8.4% of returns with income above $1 million were audited.
Meanwhile, if it’s a big tax bill you’re struggling with, remember that if you owe $25,000 or less, you’re likely eligible for an installment plan. You can request one online. See more on this IRS page.
If the IRS does contact you, avoid some common taxpayer mistakes to make sure you keep your tax pain to a minimum.
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