The marriage penalty gives some couples a raw deal when it comes to paying taxes.
This post comes from Krystal Steinmetz at partner site Money Talks News.
When it comes to paying taxes, two-income married couples can be at a disadvantage.
According to National Public Radio, "secondary" wage earners are sometimes penalized by a tax code provision that dates back to the Ozzie and Harriet days -- the so-called marriage penalty. It's when a married couple pay more income tax together than they would as two single individuals.
Melissa Kearney, director of the Hamilton Project at the Brookings Institution, told NPR that the tax system was not designed to penalize working spouses, but it can, and it does.
In 1948, Congress enacted an income tax rate structure for married taxpayers in which spousal income was pooled. It worked well at the time, because most husbands were the primary breadwinners and wives typically stayed at home.
Times have changed.
It's likely your tax accountant will make fewer errors if you file an extension.
This post comes from Barbara Friedberg at partner site U.S. News & World Report.
Most people think the reason to file a tax extension is because you are really pressed for time or have a colossal problem that forces you to postpone doing your taxes. Filing a tax extension may be looked upon as a character weakness because you can't get your taxes in on time.
Actually, filing a tax extension has its pros and cons, even for retirees, who may have more discretionary time than those working folks. Although, if you’re a procrastinator, filing an extension won't make doing your taxes any easier.
Personally, I’ve filed a tax extension several times, and so far I have not seen my character tarnished or found that the extension sparked a tax audit.
Tax extension explanation
Filing a tax extension is not an extension to pay your income taxes. It is an extension of time to complete the tax paperwork such as the Form 1040, schedule A, B, C, D, E and all those other pesky forms we may need to prepare.
If you file an extension, you have until Oct. 15, 2014, in which to complete the tax return
And if you’re applying for a federal tax extension, make sure you investigate your state and local filing requirements as well.
Keeping a copy of your tax return? Mandatory. Keeping it on paper? Silly.
This post comes from Stacy Johnson at partner site Money Talks News.
The other day I picked up my tax returns from the accountant. Between my personal and corporate returns and the documents supporting them, it was at least 75 pages -- probably closer to 100.
Then I shredded the entire stack.
It wasn't easy. As a CPA of more than 30 years, I'm genetically predisposed to worship records, not destroy them. Defiling paper as precious as a tax return? Sacrilege.
But I've gotten used to tossing my taxes, and you should too. Because the only way to approach paperwork these days is with a scanner. And the only way to keep it is digitally.
Digital storage has become so ubiquitous and competitive, you can now store your tax returns, as well as every other piece of paper you'll ever touch, for free. So if you’re still storing mountains of paper, it's time to stop. You'll save time, money, stress and maybe a tree or two.
Here's how I do it, step by step:
One upside to having an outstanding student loan or other type of debt -- tax breaks.
Debt is not necessarily the most terrible thing ever. Sometimes, debt is a good thing -- it can help you fund college, build credit and can even help you save money on your taxes.
Taking on debt can be beneficial in many ways -- student loans are an investment in your future, for example -- and sometimes that means a tax break. This is the part where you can get (a little) excited about tallying up interest you paid on some of your debts last year. Not all loan interest corresponds with a tax deduction, but it's important to see if you qualify for one. After all, who doesn't like saving money?
A lot of these deductions are straightforward, but they also have some limits. If you're unsure whether you meet the requirements for a certain deduction, you should consult with a tax professional before plugging the numbers into your tax return. And you better hurry up!
How do taxpayers really feel about cheating, the inconvenience of filing annual returns or how much Uncle Sam charges?
By Marine Cole, The Fiscal Times
The April 15 deadline is here, but whether you have already postmarked your envelope or you're waiting until the last minute, you may be surprised by Americans' opinion on taxes. From opinions on cheating to taxing lower-income people more, here are five surprising thoughts Americans have on taxes.
More Americans are tolerant of tax cheating
Fudging the numbers "a little here and there," or "as much as possible," is fine, according to 12 percent of those recently surveyed by the Internal Revenue Service Oversight Board.
The trend is on the rise, as only 9 percent of Americans thought it was acceptable to cheat on income taxes back five years ago.
Missing the tax deadline is like missing a car payment -- and your credit scores could get smacked.
This post comes from Paul Sisolak at partner site GoBankingRates.com.
Look up the word "deadline" in your online dictionary of choice, and it should be accompanied by an IRS logo. That's because the Internal Revenue Service is dead serious about its tax filing deadline of April 15.
Miss the tax deadline and the consequences can be even more serious. Failing to pay your taxes can result in the IRS and assorted parties going to great lengths to get their money. But how does it affect other areas of life, like your credit score?
The truth is that unpaid taxes are an outstanding debt no different than a missed car payment or a bout with bankruptcy, and they can take your FICO digits down quite a few notches. If you're running late on filing your taxes, do it in time, or the consequences could pose a harmful impact to your credit.
A new study by a federal agency found that 17 of the 19 paid tax preparers it looked at made mistakes on tax returns.
This post comes from Krystal Steinmetz at partner site Money Talks News.
You might want to think twice before hiring a so-called tax professional to prepare your taxes. The Government Accountability Office released the findings (.pdf file) of an audit of tax preparers this week, and the results are surprising.
USA Today said the GAO's small undercover study focused on 19 tax preparers selected at random in states that don’t regulate tax preparers. Some of the findings include:
- Inaccuracies. Seventeen of 19 preparers made errors on customers' tax returns.
- Count those tips. The most common mistake was not reporting tips. Twelve of the 19 tax returns had errors on tip reporting.
- Big and small mistakes. "Errors ranged from giving the taxpayer refunds $52 less than due to a refund of $3,718 more than due," USA Today said.
A GAO survey from 2006 through 2009 showed that returns by tax preparation professionals had a higher rate of mistakes -- 60 percent -- than those done by taxpayers themselves (50 percent).
That's not really a surprising statistic considering pretty much anyone can claim to be a tax professional and charge you money to prepare your taxes.
Wealthy Americans aren't champing at the bit to give more to Uncle Sam. But the richer you are, the more likely you support higher tax rates.
This post comes from Robert Frank at partner site CNBC.
Conventional wisdom says that the rich hate paying taxes. And the vast majority say they pay too much.
But a new study shows that the richer you are, the more likely you are to support paying higher tax rates.
A study from Spectrem Group, a nonpartisan wealth research firm, asked investors what percentage of gross income they feel they should be paying in taxes.
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