If you suffered losses from a flood, hurricane or other disaster that weren't covered by insurance, you may be able to deduct your losses on your federal income tax return.
This post is by Carole Feldman of The Associated Press.
Tornadoes and hurricanes. Wildfires and floods. Earthquakes and blizzards.
There were a record number of billion-dollar natural disasters in the United States in 2011, and taxpayers who suffered losses might be able to get some relief when they file their income tax returns.
"It's a silver lining on otherwise terrible events," said Mark Steber, chief tax officer at Jackson Hewitt Tax Service. "Tax laws in many cases are very favorable."
There are special provisions if the loss is a result of a federally declared disaster. But losses don't have to fall into that category to be deductible, said Bob Meighan, a vice president at TurboTax. Even if the storm was localized and on a smaller scale, you still might be eligible to take a casualty deduction for losses exceeding what you were reimbursed by insurance.
The Internal Revenue Service defines a casualty loss as "the damage, destruction or loss of your property from any sudden, unexpected or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption."
It's automatic, but it will expire Feb. 29 unless Congress extends the tax break. Employers and payroll services that didn't make adjustments in time will refund overpayments.
This post is by Barbrara Weltman for U.S. News & World Report.
When Congress agreed to extend the payroll tax cut Dec. 23, it created an important holiday gift for 160 million workers. Here are five things to help you understand how this tax break applies to you.
The extension is temporary. For 2011, workers enjoyed a 2-percentage-point reduction in their Social Security taxes. Instead of paying 6.2% on earnings up to the annual wage base ($106,800 in 2011), they paid only 4.2%. This rate had been set to run only through the end of 2011, but Congress extended it for two more months.
Thus, the rate applies through Feb. 29, 2012, on earnings up to the annual wage base of $110,100.
Congress likely will extend the rate reduction for the balance of the year. However, nothing is certain from Washington until a bill is signed into law by the president.
Tax refund anticipation loans may be nearly dead, but watch out for similar products that provide your refund early -- and come with high fees.
This post is by Kay Bell at Bankrate.com.
Quick cash based on expected federal tax refund amounts, known as a tax refund anticipation loan, or RAL, isn't quite the big business it used to be.
But since this is America, where ingenuity is rewarded, similar products have taken the place of these potentially costly refund loans.
First, a quick obituary for the strict refund loans. The efforts of consumer advocacy groups to educate people about the loans' high interest costs, along with the Internal Revenue Service decision to quit issuing information that made it easier to issue them, have led to a steady decline in the tax-related loans. Federal bank regulators also have tightened the screws on these products.
But the idea of getting a tax refund ASAP is still strong. And that's where good old American capitalism and creativity meet.
H&R Block, once a leading tax refund loan provider, announced last September that it would no longer offer tax refund anticipation loans. But the tax preparation giant is giving customers the option of receiving a refund anticipation check.
If Congress wants to extend the payroll tax cut beyond Feb. 29 without adding to the national debt, it has to cut somewhere else, raise fees or find other tax money.
This article is by Andrew Taylor of The Associated Press.
Republicans would cut federal employee benefits. President Barack Obama would raise fees for airline passengers and eliminate Saturday mail delivery. Democrats in Congress would charge employers higher premiums for federal pension guarantees.
As Congress returns from a three-week holiday break, those are a few of the ideas for how to pay for extending an average $20-a-week Social Security payroll tax cut through the end of 2012 without adding to the government's long-term debt.
Obama and fellow Democrats had insisted on taxing the wealthy to offset the deficit impact of the payroll tax cut and of providing jobless benefits to the long-term unemployed. While still useful as campaign fodder, that idea is largely a bygone one.
House and Senate negotiators are drawing on Obama's budget and the work of the defunct congressional supercommittee on deficit reduction to come up with the $160 billion or so needed to continue the tax cut and federal jobless benefits. Both are set to expire Feb. 29.
Property owners in Detroit are avoiding taxes by letting their homes and businesses go into foreclosure for unpaid taxes and then buying them back for $500.
Property owners in Detroit have found a novel way to avoid taxes: Let their properties go into foreclosure and then buy them back from the county for $500 each.
Landlord Jeffrey Cusimano avoided about $600,000 in taxes and liens by letting 34 of his properties go into foreclosure and then buying them back at auction, The Detroit News reported. He owes about $338,000 in taxes on 53 other properties that are headed for foreclosure.
"It's the times," Cusimano told The News. "I had my eye on 30 others in better neighborhoods if I couldn't get these."
The News calculated that owners of 400 properties were able to erase $4.7 million in taxes and liens last fall by buying back their own homes and businesses.
The president plans to propose tax incentives to reward companies that create US jobs. He wants to end tax breaks for companies that send jobs overseas.
This post is by Roger Runningen of Bloomberg.
President Barack Obama says he will propose new tax incentives to reward companies that invest in U.S. expansion or bring back jobs from overseas and elimination of tax breaks to companies that move jobs outside the country.
At a White House forum this week with representatives from more than a dozen companies, including Ford and Intel, Obama said more must be done to encourage business investment and job creation.
The tax initiatives will be part of the fiscal 2013 budget plan that is set to be sent to Congress the first week of February. The White House didn't release details. Obama also plans to propose adding $12 million for a program to promote foreign direct investment in the United States and work with state and local governments to attract businesses.
After Republican Sen. Mitch McConnell suggests Warren Buffett give his fortune to the U.S. Treasury, the billionaire pledges to match Republican contributions.
This post is by Andrew Frye and Noah Buhayar of Bloomberg.
Buffett, who has said the tax system favors the rich, made his offer after Republicans, including U.S. Representative Michelle Bachmann, suggested he donate his fortune to the government.
"If we go to a contribution system, I’ll match the total contribution made by all Republican members of Congress and I’ll even go 3-for-1 with McConnell," Buffett said of Senate Minority Leader Mitch McConnell, the Kentucky Republican, in an interview with the magazine.
The taxpayer advocate says an increased workload and decreased funding threaten taxpayers' rights and hamper the IRS in collecting revenue.
This post is by Steven Sloan of Bloomberg.
In her annual report to Congress this week, advocate Nina Olson told lawmakers that cutting the IRS’ budget while making frequent changes to the U.S. tax code poses difficulties for the agency in enforcing tax laws and collecting revenue. Lawmakers agreed last month to cut the agency’s budget by 2.5% for fiscal 2012.
"The overriding challenge facing the IRS is that its workload has grown significantly in recent years while its funding is being cut," Olson said in a press release. "This is causing the IRS to resort to shortcuts that undermine fundamental taxpayer rights and harm taxpayers and at the same time reduces the IRS’ ability to deliver on its core mission of raising revenue."
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