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If other states follow Oregon's lead, federal tax changes could make hikes doubly painful.

By Teresa Mears Feb 4, 2010 12:00PM

This news article comes from Ashlea Ebeling and Janet Novack at partner Forbes:

 

Last week, Oregon voters approved a package of corporate tax hikes and an increase in the state's top individual income tax rate from 9% to 11%, putting the state in a tie with Hawaii for the highest state income tax rate in the nation. (Oregon is listed as second in Forbes’ list, however, because its 11% rate starts at a higher income level.)

 

The Oregon increases were first adopted by the legislature in July to cover a $773 million budget shortfall and then targeted for voter rejection by the referendum. In previous referendums, Oregonians had nixed tax increases that would have affected a majority of the population directly, notes the Washington-based Tax Foundation.

 

But this time the tax hike hit only corporations and 2% of individual income taxpayers -- couples with incomes above $250,000 and individuals earning more than $125,000. So voters blithely ignored the warnings of the state's most successful entrepreneur and its only Forbes 400 member, Nike founder and Chairman Phil Knight. He campaigned against the hikes, dubbing them "Oregon's Assisted Suicide Law II" and predicting that "thousands of our most successful residents will leave the state."

 

Does Oregon's vote mean more income tax hikes targeted at the "rich" are on the way? That's certainly what state employee unions, which backed the Oregon increase, and liberal leaning groups are hoping. And Jamie Yesnowitz, a senior manager in Grant Thornton's state and local tax group in Washington, D.C., thinks such hikes are very possible.

 

Lawyer went all the way to Tax Court with attempt to write off prostitutes and porn as medical deductions.

By Jeff Schnepper Feb 3, 2010 11:47AM

You gotta admire his chutzpah.

 

“Chutzpah” is a technical tax term that means, “Nice try … but no way we’re going to allow this deduction!”

 

Attorney William G. Halby, who practiced law for 20 years and specialized in taxation, went all the way to Tax Court. When the members stopped snickering, the Court said no.

 

Halby’s attempted medical deductions for visits to New York prostitutes and the costs of videos and other pornographic materials were not allowable under the Tax Code.

 

Obama wants to retain or expand many tax credits, reinstate estate tax.

By Kay Bell Feb 2, 2010 12:31PM

The president released his fiscal year 2011 budget Monday. As expected, the main focus has been on the immensity of the numbers.

 

If Obama gets everything he put in the 192-page document, it will cost us $3.8 trillion.

 

Don't worry. He won't get all his budget wishes. But it's still fun to look at some of the key tax provisions. Who knows, a couple might make it into law.

 

There's no estate tax on the books for 2010, but that situation probably won't last long.

By TheStreet Staff Feb 1, 2010 6:01PM

TheStreetBy Joe Mont, TheStreet

 

The old saw goes that no one can escape death and taxes. A pending fix to the nation's curiously missing estate tax will likely keep that cliche intact.

 

Currently, there is no estate tax on the books for 2010. In 2001, Congress, taking its lead from the Bush administration, approved a multi-year reduction of the rate and increased the exemption limit a deceased benefactor can leave to heirs tax-free. Last year, the final year of the relief package, set the exemption at $3.5 million and the top level tax hit was 45%. Even though the rate one again rises to 55%, with a $1 million exemption, in 2011, the current tax year was not covered by the 2001 legislation.

 

Although it was fully expected that Congress would pass a new rate for the missing year, a ramp-up to bridge the gap, it never happened. As 2009 drew to a close, the House of Representatives approved a new rate and exemption limit. The Senate, however, took no action.

 

 

Instead of getting a tax refund, you can keep the money to use during the year.

By Jeff Schnepper Feb 1, 2010 12:20PM

It makes no sense to me.

 

In 2003, the average federal income tax refund was $1,988.  It jumped to $2,081 in 2004, rose to $2,171 in 2005 and exploded to $2,237 in 2006, $2,309 for 2007 and $2,400 for 2008.  As of April 24, 2009, the average 2009 refund was $2,683. The total refunded in 2008 was almost $257 billion, to 107 million taxpayers. In 2009, the numbers rose to $259 billion owed to almost 97million taxpayers.

 

That’s a huge interest-free loan to the IRS.

 

Congress gives taxpayers a choice of taking deduction in 2009 or 2010 but you have to itemize.

By Jeff Schnepper Jan 29, 2010 12:19PM

No good deed ever goes unpunished -- but sometimes you can get a big tax deduction out of it.

 

Our U.S Congress actually did the right thing, even if they still can’t play well with others.

 

You’ve got to itemize to get this one. But if you do, your charitable contributions are deductible.

 

 New Rule: Any contributions to earthquake relief in Haiti made between Jan. 11, 2010, and March 1, 2010, will be allowable against your 2009 tax return.

 

Value assigned to reward points is low, plus you have to pay a fee.

By Kay Bell Jan 28, 2010 12:08PM

If you're filing your taxes in January, it's probably because you're going to get a refund.

 

But for folks who will be facing an IRS bill and likely filing and paying later, one credit card company is already touting its new tax payment option: reward points.

 

American Express customers who have Membership Rewards accounts can use those points to pay federal, state and local taxes. The company says the arrangement is a first for the credit card industry.

 

Previous fraud prompts IRS to require paper documents to claim home buyer tax credit, which will delay refunds.

By Jeff Schnepper Jan 27, 2010 1:12PM

The IRS wants you to e-file.

 

In 2009, individuals e-filed a record 95 million federal tax returns, up almost 6% from 2008. That’s almost two of every three tax returns filed. By 2011, all professional preparers will be required to e-file if they do 10 or more returns.

 

Returns filed electronically get processed faster and are significantly less expensive for the IRS.

 

The IRS even provides free e-filing on its website, www.irs.gov, for those making up to $57,000.

 

But, sorry new home buyer, if you want to claim the home buyer credit on your 2009 tax return, the IRS won’t let you e-file.

 

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