Many Americans think the IRS is the villain of tax season, but identity fraudsters are lurking. Don't let them wreck your finances and your life.
A few weeks ago, a friend of mine – let's call her Mallory - got an unsettling call from her accountant. The accountant had been preparing Mallory’s taxes, hit "Send" to e-file the finished return, and it was rejected. Someone had already filed a tax return using Mallory's Social Security number. She'd been a victim of tax identity theft.
The accountant called the IRS, but they wouldn’t talk to her. Mallory called and was directed to the fraud department. While she was on hold, she made more calls: one to a friend at the FBI, another to the FTC and the last one to me.
Mallory had just become a statistic. The aftermath of tax identity theft is messy, and since 2012, the number of victims has been on the rise. Millions of Americans who expected refunds—often desperately needed to make ends meet -- have waited the better part of a year to get their money back -- and even then only after they had traversed a paper labyrinth to prove to the IRS they had been the victims of a crime.
In some cases, using this relatively new way to borrow money can help you get square with Uncle Sam.
This post comes from Gerri Detweiler at partner site Credit.com.
As the April 15 income tax deadline draws nearer, it's increasingly risky to put off thinking about how you're going to come up with the money to pay your taxes.
If the money hasn't magically materialized in your checking account, it's time for a Plan B. Or maybe you owe quarterly taxes, and a big client's project will be completed at the end of April, and that's when you'll get paid -- assuming things go as scheduled.
You can pay with a credit card, but you will pay a "convenience fee" of 1.89 percent to 2.49 percent. (Still, with some rewards cards, you can come out ahead, but only -- and this is incredibly important -- if you pay off the entire balance. And if you've waited to file because you weren't sure where the money would come from, chances are that's not you.)
There's a kind of personal loan, though, that many of us haven't considered: peer-to-peer lending. The two big players in this space are Prosper and Lending Club. A borrower goes to these sites, creates a listing, and then other users can opt into funding your loan. They make money on the interest you pay on the loan, and you cut out the middle man.
If you're going to put your tax refund toward a new car, consider your insurance coverage.
This post comes from Mark Chalon Smith at partner site Insurance.com.
The average IRS refund is expected to hit $3,000 this year, with as many as a quarter of taxpayers using the cash toward the purchase of a new car, according to a pair of recent surveys.
GoBankingRates says it studied auto loan details from more than 6,000 financial institutions and statistics gathered from eBay Motors to project that about 25 percent of Americans would use refunds to grab a fresh ride.
A separate online polling of more than 1,000 people came up with somewhat smaller numbers -- CarMax says its research shows that 17 percent of taxpayers would buy vehicles with the money.
The IRS announced earlier this month that the average refund will be $3,034, about 3 percent more than 2013. GoBankingRates Managing Editor Casey Bond says a reason many people are planning to take the cash to a dealership is because auto loan rates are reasonable.
If you're in the right bracket, the tax on assets held more than a year is no longer due. Find out if you're included.
By Kay Bell, Bankrate
You heard right. There's no -- nada, nothing, zilch, zero -- capital gains tax on the sale of assets held for more than a year. But you might not have heard the full story.
Bob D. Scharin, senior tax analyst from the tax and accounting business of Thomson Reuters, calls the law that was made a permanent part of the tax code Jan. 2, 2013, "the ultimate tax rate reduction." But as is often the case with tax provisions, this modification comes loaded with restrictions.
First, the elimination of capital gains tax applies only to assets owned for more than a year. Short-term sales remain taxed at your ordinary tax rate.
Then there is a monetary cap.
And it's not for every investor. Some young investors have been expressly excluded from the zero percent option. Others, such as Social Security recipients, could find that untaxed capital gains might mean new or additional taxes on their retirement benefits.
So before you rush to your broker to sell all your stocks and mutual funds, check out the law's finer points and how they might or might not apply to you.
Limited to lower incomes
The first, and for most the biggest, hurdle to overcome is the earnings limit. Individuals in the two lowest tax brackets -- 10 percent and 15 percent -- can sell long-term assets and escape any capital gains taxes.
Should Americans be taxed for excessive meat consumption? Here's the case for adding it to the list of 'sin taxes.'
This post comes from Charles Kenny at partner site Bloomberg Businessweek.
As tax season ramps up, we're bound to hear proposals aimed at making the revenue system simpler and more efficient. A perennial is the "sin tax." Rather than tax earnings—when we really want people to earn money—why not tax things we don't want people to do? Add duties to cigarettes, alcohol, and carbon dioxide to slow people’s smoking, drinking, and polluting, and you'll do them and the world a favor while raising revenue for schools, hospitals, and roads.
But why stop there? It's time to add one more sin to the list of habits that should be taxed: excessive meat consumption.
Meat has always been part of the human diet. Few dishes are as wonderful as a bolognese sauce made with a combination of pork, lamb, and beef. But taxing pigs, sheep, and cows is essential to contain the spiraling costs associated with massive meat eating.
When it comes to gorging on meat, Americans remain at the top of the global league tables. U.S. consumption of beef per person has actually declined over the past few decades, from 52 kilograms a year in 1970 to 41 kilograms in 2008. But chicken consumption approximately tripled over that period, to 44 kilograms per person, and overall meat consumption climbed from 105 to 122 kilograms a year—considerably more than the average personal weight (although some of that meat is thrown away or eaten by pets). By comparison, Indians consume less than 5 kilograms of meat per person.
But as the rest of the world gets richer, it’s closing the gap with the U.S.
For victims of natural disasters, the government provides important tax breaks that can provide extra relief on tax forms.
By Brian O'Connell, The Street
Were you the victim of a tornado, flood, fire, hurricane or other natural disaster last year?
According to the Federal Emergency Management Agency, there were 62 declared disasters across the U.S. last year.
Aside from direct relief from Uncle Sam (usually via FEMA), there are some good tax breaks that disaster survivors can take on their 2013 tax forms.
United Policyholders, a nonprofit insurance group that helps insurance customers through the process of filing a claim and dealing with personal insurance matters, has released Tax Tips For Disaster Survivors, which is worth reviewing if you've suffered from Mother Nature's worst last year.
Self-employed individuals may save money with these 10 simple yet effective tax write-offs.
Got an urge to cut corners on your tax returns? Your accountant probably isn't going to play ball.
This post comes from Mark P. Cussen at partner site Investopedia.
Jesus of Nazareth told His followers during the height of the Roman Empire to render unto Caesar the taxes that were levied upon them.
Two thousand years later, many people still struggle with this obligation. Rising taxes, a slow economy and the new costs of Obamacare have tempted some taxpayers to try to cut corners with Uncle Sam. As a professional tax preparer for a major national service, one of my jobs is to recognize when a filer may be giving me fraudulent information.
Although it’s not possible to catch all the bogus information, there is a list of common dodges that dishonest filers attempt to pull to reduce or avoid their tax bill.
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