While nobody expects the 979-page draft to go anywhere, the move is at least sparking some reform discussion in Washington.
For a plan labeled dead on arrival before it had actually arrived, Rep. Dave Camp's proposal to overhaul the bloated U.S. tax code has caused quite a stir both in Washington and across the country.
The 979-page "discussion draft" put out by the House Ways and Means chairman (pictured) on Wednesday has little chance of becoming law, with neither party willing to stick its neck out on such a central pocketbook issue, particularly in an election year.
The fact is, though, that Camp has started a debate that everybody agrees needed to begin, but that nobody else had the guts to initiate.
If you have gotten a 1099-C and you believe it's a mistake, there's a way to fight back, and it will keep the IRS from trying to collect in the meantime.
This post comes from Gerri Detweiler at partner site Credit.com.
An estimated 5.75 million forms reporting “cancellation of indebtedness income” have been sent to taxpayers this year. But how many of these 1099-C forms are correct? Given the complaints we’ve received on our blog, we suspect the number of mistakes is significant. Here are just a few examples of some of the mistakes our readers are battling:
Very old debt. I had a car lease back in 1997 for a vehicle. I received a deficiency letter from the IRS stating that I didn't claim it on my 2011 taxes. I never received the 1099 from GMAC… IRS is asking for a Fair Market Value of the vehicle that it sold for back in 1998. Like I am supposed to know that.
Debt due to fraud or identity theft. A friend for whom I do her taxes just received a 1099-C for $7.5K for credit card debt. She claims that she never applied for the credit card, never saw the card and never used it. She suspects that her late husband who passed away in 9/1999 applied for the card in her name after he trashed his credit.
Debt not owed. I have disputed the debt with the credit card company, in court twice when complaints were filed by attorneys and I maintain that I do not owe the debt. I do not owe the debt. What will happen if I simply ignore the 1099-C when I file my taxes?
Deductions are allowed on some hobby expenses when there's income involved. But only up to a certain point, so be careful.
By Kay Bell, Bankrate.com
Hobbies provide a great way to relax from the daily grind. For many people, they also offer a way to make extra spending money.
Be aware, however, when your hobby produces income, you owe tax on it. You can reduce your taxable hobby income by deducting your hobby expenses, but this tax break is limited.
Allowable hobby deductions
You can only deduct expenses up to the amount of money you make on the hobby. Even then, hobby expenses, along with other miscellaneous expenses you itemize on Schedule A, must come to more than 2 percent of your adjusted gross income before you can deduct them.
If you find you are regularly making money from your hobby, it might be to your tax advantage to turn the sideline into a business.
It's not as difficult as you might think. If you operate as a sole proprietor, you report the income on your Form 1040 tax return and you have more options when it comes to deducting your expenses.
Hobby vs. business
The Internal Revenue Service defines a hobby as an activity you pursue without expecting to make a taxable profit. Basically, you do it because you like it, regardless of the cost.
Every dollar of deductions and credits you uncover can mean money in your pocket. Don't file that return until you've gone over this list.
This post comes from Stacy Johnson at partner site Money Talks News.
Americans love tax breaks.
Everybody knows they can deduct mortgage interest, medical expenses over a certain amount, gifts to charity -- even the cost of preparing your tax return.
But those are just a few of the tax breaks you might be entitled to. Here are 10 commonly missed deductions and credits.
A new crop of fraudsters pops up every year like weeds on your lawn. Follow these tips to keep your info and any refund you're due safe.
By Cameron Huddleston, Kiplinger
The IRS just released its annual "Dirty Dozen" list of tax scams that taxpayers should take steps to avoid this filing season. At the top of the list is identity theft. This widespread scam typically involves stealing taxpayers' personal information to fraudulently file tax returns and claim refunds.
The experience can become a nightmare, as thieves gain access to your Social Security number, credit cards and bank accounts, among other things, leaving you financially vulnerable, says Rip Mason, CEO of LegalShield, a legal services and identity theft protection provider.
If you went looking for a new job last year, take some sting off that search by saving money with these write-offs.
By Kay Bell, Bankrate
These days, a lot of Americans find themselves pounding the pavement in a quest for a new job, whether they've gotten the pink slip or expect to get one soon.
The good news: The search may help you cut your tax bill because under certain circumstances, job-hunting expenses are tax deductible.
New job, same field
First, your hunt for new work must be in the same field in which you're currently or were formerly employed. Uncle Sam won't help out if you decide to totally switch career gears.
The government is hitting the rich with more taxes, but is it fair?
This post comes from Maryalene LaPonsie at partner site Money Talks News.
It's tax time and that means the rich better get ready to open their wallets to pay even more this year. Depending on where you fall on the political spectrum, that's a bit of news that could have you cheering or grumbling.
Abba and Lady Gaga did it, so why can't you? Just be careful which articles you claim, because the IRS has heard this all before.
By Robert W. Wood, Forbes.com
Everyone needs tax deductions, and they can alter behavior.
That was true even in the feel-good 1970s, when you could hear the feel-good music of the past: ABBA. Turns out ABBA wore outrageous outfits onstage to claim tax deductions. The Swedes were famous for glittering hotpants, sequined jumpsuits and platform heels.
Björn Ulvaeus now reveals the reason for the outfits was the Swedish tax code. Newly published "Abba: The Official Photo Book," says their expensive outfits were tax-deductible only if they were so outrageous they couldn't be worn on the street. U.S. tax law is similar, and that means Lady Gaga's meat dress (pictured) qualifies, her favorite outfit ever. Of course, Gaga has many unique styles, and they're all tax-deductible.
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