Low-income workers may actually pay higher taxes this year, with the loss of the Making Work pay credit.
I'm hearing a lot of grumbling about how the highly touted 2 percent payroll tax cut is not working.
Some companies may not have yet instituted the new payroll tax tables to take the
reduction from 6.2% to 4.2% in employees' withholding. This is the portion that goes toward Social Security and will apply to up to $106,800 of income made by all workers.
But the unfortunate fact of the matter is that folks who make well less than the six-digit wage base cutoff aren't likely to get anything from the payroll tax cut. In fact, some will see less, not more, in their paychecks this year.
Many states are facing huge budget problems. Expect lots of wrangling over how to cut budgets and whether to raise taxes.
With President Obama and Congressional Republicans having sealed a deal in December to extend the Bush tax cuts through 2011 and 2012, the tax debate has taken a short Washington hiatus and hit the road.
On Wednesday, Illinois kicked off this national tour with high drama. In a lame duck session vote just hours before a new, less heavily Democratic legislature was to be sworn in, the state’s Senate gave final legislative approval to raising the state's personal income tax by two-thirds, from 3% to 5%, and its corporate income tax rate by 45%, from 4.8% to 7%. The tax package, designed to close half the state’s $13 billion 2011 deficit, also brings back the state’s estate tax with an exemption of just $2 million per person, compared to the new $5 million per person exemption from the federal estate tax. (For other states’ 2011 estate taxes, click here.)
"Our state was careening towards bankruptcy and fiscal insolvency,"’ Gov. Pat Quinn said at a news conference confirming he will sign the stunning increases. "Our fiscal house was burning,’" he added.
Not surprisingly, state business leaders warn the tax hikes used to put out the fiscal fire could douse Illinois’ growth prospects, too. The Washington-based Tax Foundation has already recalculated Illinois’ ranking on it s 2011 State Business Tax Climate Index, downgrading it from 23rd to 36th. The Tax Foundation says that when an additional 2.5% property replacement tax imposed on Illinois corporate income is figured in, the state will have a 9.5% corporate income tax rate -- the third highest in the nation.
The agency prefers direct deposit, but it will offer debit cards to taxpayers without bank accounts.
This article is from The Associated Press.
The Treasury Department is offering to put tax refunds on prepaid debit cards for low-income taxpayers who don't have bank accounts.
The department announced Thursday that it will send letters to 600,000 households next week, offering to put their tax refunds on the debit cards, which can be used to get money from ATM machines or to buy goods and services from retailers.
Committee chair wants to looks at changes to tax code for corporations and individuals simultaneously.
Rep. Dave Camp, chairman of the House Ways and Means Committee, said he wants to begin discussions on rewriting individual and corporate taxes at the same time.
Obama-administration officials have focused their discussions in recent weeks primarily on tax changes that would affect corporations.
Camp, R-Mich., said that tackling the corporate-tax code alone wouldn't help the growing number of small businesses that are organized as partnerships, sole proprietorships or s-corporations.
"Tax reform is about getting the economy moving again," he said in a brief interview recently outside the House floor. "I'd like to begin discussions on both" individual- and corporate-tax changes, Camp said.
Businesses organized as so-called pass-throughs aren't subject to the corporate-tax regime and pay taxes at individual rates.
Crackdown aimed at making sure sex workers are paying their taxes, including required 19% sales tax on services.
This article is by Toby Sterling of The Associated Press.
Workers in the world's oldest profession are about to get a lesson in the harsh reality of Europe's new age of austerity.
The Dutch government has warned prostitutes who advertise their wares in the famed windows of Amsterdam's red light district to expect a business-only visit from the taxman.
Prostitution has flourished in Amsterdam since the 1600s, when the Netherlands was a major naval power and sailors swaggered into the port looking for a good time. The country legalized the practice a decade ago, but authorities are only now getting around to looking to sex workers for taxes.
"We began at the larger places, the brothels, so now we're moving on to the window landlords and the ladies," said Janneke Verheggen, spokeswoman for the country's Tax Service.
The IRS has expanded the list of forms that won't be ready for filers until mid- to late February.
Following the passage (finally!) in December of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that continued the current income tax rates for the next two years and extended some popular tax breaks, the IRS announced that it would take a while for the agency to get ready for the filing season.
Specifically, or actually not so specifically, the IRS said that the tax measure's late passage meant taxpayers who claim educators' expenses and tuition expenses directly on their 1040 or 1040A would have to wait until mid- to late-February to file.
That same postponement, noted the IRS, also applies to itemizers filing Schedule A.
Now, however, the agency has expanded its list of forms that it won't be able to process for a while.
With all the maneuvering, it's hard to keep up without a scorecard. Here are the major changes that will affect your taxes this year.
This post is from The Wall Street Journal's Tax report.
It's customary to start the year with a roundup of what's new for taxpayers. Given last December's theatrics in Congress, some items on our list may seem familiar unless you were out mapping the tributaries of the Amazon.
But keeping tax details straight is tough -- even for tax reporters. Our mailbox is full of queries from bewildered readers trying to sort out issues such as which Roth IRA conversion rules expired last year, how the new payroll tax cut works, or at what income level the zero rate on long-term capital gains ends.
The most important point to remember is that last year's 11th-hour tax changes, though favorable for most, are temporary. After 2012, many provisions are set to snap back to what they were before 2001, and a few even expire this year.
|Tags:||capital gains taxestate taxfederal taxRoth IRAtax bracketstax creditstax deductiontax ratetaxes|
No one knows what will happen after 2012. As for 2010? A few billionaires got a special deal.
This article is by Kevin McCormally of Kiplinger.com.
A funny thing happened on the way to the funeral for the federal estate tax. In December, Congress announced its own Christmas miracle: The tax didn’t really expire December 31, 2009, as everyone thought it had. Instead, the lawmakers retroactively revived the tax to cover all deaths in 2010. But get this. The lawmakers also performed a stutter-step move worthy of a great wide receiver: Any 2010 estate that’s better off ignoring the tax can do just that.
A little background is needed to explain this strange turn of events. You’ll recall that part of the 2001 Bush tax cuts was to gradually reduce the bite of the estate tax, kill it all together for 2010, and then allow it to come back with a vengeance in 2011. The plan was to reinstate the estate tax with the $1 million exemption level and 55% tax rate that was in effect in 2000.
But that won’t happen. Under the new law, for 2010 and 2011, up to $5 million can go to heirs tax-free (and that number will be indexed for inflation for 2012). The tax rate for amounts over the tax-free level is a flat 35%.
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