Democrats hope refusal to extend the tax cut will show the Republicans favor the rich. GOP argues that the public will see the two-month extension as a gimmick and blame the Dems.
This analysis is by Charles Babington of The Associated Press.
Democrats feel they're closer than ever in their long-running bid to paint Republicans as being much more eager to cut taxes for the rich than for the working class.
But public contempt for Congress is so rampant that the effort may fade away in a pox-on-all-their-houses fog. If that happens, President Barack Obama and congressional Democrats could lose a political edge as they head into the 2012 elections with a struggling economy.
Democratic strategists say Republicans are blundering by refusing to extend a payroll tax cut, even after the Senate overwhelmingly approved a temporary compromise Saturday. GOP lawmakers previously fought hard to extend Bush-era income tax cuts for everyone, including the wealthiest.
"This is a rare moment when the public is with the Democrats on a tax issue, and against the Republicans," said Sen. Charles Schumer, D-N.Y.
Helping out those in need is always a good thing to do. But it's only sometimes tax-deductible. Make sure you know the rules.
This post is from Kelly Phillips Erb at Forbes.
Charitable donations are an excellent way to reduce your tax burden for the year, all while doing something for the greater good. But as with everything in tax law, there are procedures and rules that need to be followed.
You'll get a bigger deducation if the charity uses your car rather than sells it. Either way, be sure to follow the rules and save the paperwork.
This post is by Lynnette Khalfani-Cox of Insurance.com.
Looking to make a smart financial move before the end of the year? Try donating a car you no longer want, need or use.
Donating a vehicle to charity may net you a hefty tax deduction. However, you need to meet certain requirements to qualify for the deduction.
If you're feeling philanthropic, start by deciding on an IRS-approved charity you'd like to benefit. Just remember that the charity you select must be an IRS-recognized 501(c)(3) for you to get a tax deduction.
Consult IRS Publication 4303, "A Donor's Guide to Vehicle Donations," as well as IRS Publication 78, which lists qualified charities. (Religious groups aren't listed, but they qualify as well.)
No, you can't make a whole year's payments and save more. Be careful that accelerated payments don't throw you into an Alternative Minimum Tax situation.
This post is by Kay Bell at Bankrate.com.
Unlike rent, which you pay beforehand (i.e., your Jan. 1 bill covers your stay in the rental unit for that coming month), your mortgage payments are made at the end of your occupancy period. That means your Jan. 1 mortgage statement represents interest for the month of December, making it a tax-break-eligible bill for this year.
By accelerating that payment even by just a day, you get an additional tax deduction for the interest paid.
Don't get greedy, though. You can't make your February, or any other upcoming, mortgage payment early to boost your year-end tax deduction amounts. Tax law generally prohibits write-offs for prepaid interest (there is an exception for loan points in some cases). Each year, you can deduct only the home mortgage interest for that year.
A new poll finds support for continuing the payroll tax cut and deep discontent with Congress. More voters favor service cuts over tax increases.
This story is by Laurie Kellman of The Associated Press.
Most Americans want Congress to vote to continue the payroll tax reduction, according to a new Associated Press-GfK poll that comes as Democrats and Republicans wrestle over whether to extend the cut through 2012.
It's the latest instance in which lawmakers on Capitol Hill have allowed partisan sniping to hold up a measure to put in place a policy that most Americans support, like ending the Bush tax cuts, cap and trade, and a surcharge on millionaires.
The dragged-out debate over whether to extend an expiring payroll tax reduction is one of many developments that have kept voters furious with their leaders all year. On the brink of the 2012 presidential and congressional elections, virtually all Americans are disappointed and frustrated with the political scene and nearly 6 in 10 say they are angry, the AP-GfK survey showed.
"It seems like there are parties that only want to get their agenda done," said liquor store owner James Jacobsen, 47, of East Hartford, Conn. "They're catering to special interests and not Americans. They are not representing the individual American."
Treatment of short-term and long-term losses is different, but either may get you a reduction in taxable income, and therefore tax owed.
This post is by Kay Bell at Bankrate.com.
Plummeting stock prices can cast a dark cloud over anyone's finances. However, at tax time, these capital losses can produce a ray of write-off sunshine.
When you sell any pharmaceutical flops or banking blunders, you can use them to offset gains from more successful ventures -- or even a portion of your everyday income.
A capital loss is the result of selling an investment at less than the purchase price or adjusted basis. Any expenses from the sale are deducted from the proceeds and added to the loss.
The key point is that capital losses are only losses after you sell them. A stock sitting in your portfolio with a deflated price may cause you distress, but it doesn't do you any tax good until you dump it. (The sale of personal-use property, such as a car, doesn't get this favored tax treatment. Such losses can't be deducted as capital losses.)
States disagree over how deal purchases should be taxed. California has decided to levy sales tax only on what you pay, but New York argues you should pay tax on the full value.
This post is by Janet Novack of Forbes.com.
Good news for California deal-of-the-day addicts: The sales tax they have to pay when they use coupons purchased from Groupon, LivingSocial or other Internet daily deal sites has gone down.
In a special notice issued last month, the California State Board of Equalization said sales tax should be levied only on what a Groupon user has paid for an item, not the list price of the item he’s getting.
So if you paid $50 for a $100 Groupon that you use at a California merchant to buy a $100 item, the sales tax applies to only $50. If you buy a $115 item with that $100 Groupon plus $15 in cash, the sales tax applies to $65 — the $50 you paid to Groupon plus the extra $15 you had to fork over to the merchant.
The new ruling is significant because back in February a spokeswoman for the California BOE, which administers the state’s sales tax, said the board expected merchants to collect sales tax on the full face value of the item purchased — meaning the full $100 or $115. At that time, however, she also said the BOE had asked its legal counsel to review whether its position was correct.
GOP candidate's proposal would cut taxes 62% for millionaires and put a major hole in the federal budget, analysis finds. Gingrich disputes deficit projection.
This story is by Stephen Ohlemacher of The Associated Press.
The tax plan by GOP presidential hopeful Newt Gingrich would provide big tax breaks to the rich and blow a huge hole in the federal budget deficit, according to an independent study.
The analysis by the Tax Policy Center says households making more than $1 million a year would see their taxes drop by an average of 62%. Overall, federal tax revenues would drop by an estimated $850 billion in 2015, a figure that would dramatically worsen the budget deficit unless it is offset by unprecedented spending cuts, the study said.
"The revenue losses are enormous," said Roberton Williams, a senior fellow at the Tax Policy Center.
Gingrich proposes an optional 15% flat tax on income. Under the plan, taxpayers could stay in the current system, which has a top tax rate of 35% on taxable income above $379,150, or switch to the new 15% tax. The new tax would apply to income at all levels, but there would be a variety of tax deductions and credits.
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