* Speaking of the taxguy, Bruce starts the week off with a rerun of his post “Avoid a Tax Audit With These Tips”.
I especially want to point out #5-Document Everything:
“One of the best ways to prevent mistakes is by having all necessary paperwork handy when you file. This is also your best defense against penalties should the IRS ever come knocking on your door. You see, a lot of deductions really can be a red flag to the IRS. If you can back up each one, however, you are perfectly within your right to claim those tax breaks. Back up everything and keep those documents in a safe, organized place.”
* Bruce ends the week (Friday) with a good general overview of what is, and is not, deductible on Schedule A in “Let’s See What You Can Itemize One More Time”.
* As if we needed any more proof that New Jersey is one of the, if not the, highest taxed states in the country, the Tax Foundation has issued a press release that tells us “New Census Data: From 2005 to 2007, New York, New Jersey Counties Rank Highest in Property Tax on Homeowners; Louisiana Parishes Rank Lowest”.
* Kelly the taxgirl gives a good lesson on “Babysitter Bonus” in an Ask the taxgirl post.
BTW, I hope you have been following Kelly’s “12 Gifts of Christmas” series, which I started off last Monday.
* Michael Rozbruch of the TAX RESOLUTION UNIVERSITY blog provides what he considers to be “The Most Important Tax Tip of the Year - File An Accurate Tax Return to Reduce Your Chances of an IRS Audit”.
I agree that it is indeed one of the most important tax tips that one can offer. I will be giving my take on the most important in early January.
*Comcast.net Finance provides “A Primer on Homeowner Tax Breaks” by Bill Bischoff of Smartmoney.com that is really very good. It details “the tax-law catches your realtor probably never told you about” and provides “a more realistic expectation of how homeownership will affect your future tax bills”.
I often must deal with a young couple who has just purchased their first home and who are in total shock that doing so did not result in a humongous tax refund.
* Has BO discovered a secret money tree on the grounds of the White House? USAToday reports in “Obama Looking at $850 Billion Jolt to the Economy” that President-Elect Obama is working on a two-year stimulus package that could cost $850 billion - more than the $600 billion initially envisioned. In addition to additional government spending the package would include tax cuts aimed at middle- and lower-income taxpayers. And aides have said there would be no tax increases for wealthy Americans.
Seriously – where is all this money that Congress is and will be spending come from?
* CCH weighs in on the subject of a “stimulus” package in “Senate Tax Aide Predicts Congress Will Pass Early Stimulus Bill for Obama to Sign” from its daily tax headlines e-letter.
The item states – “A tax aide to a Republican member of the Senate Finance Committee (SFC) predicted that the new Congress will act quickly in January 2009 to pass stimulus legislation and have it ready for President Barack Obama to sign when he takes office”.
And, thank God, it also states, “The aide believes that a second round of stimulus checks is unlikely”. On the plus side, “there are proposals for a payroll tax holiday.” I have been suggesting this as a better option to rebate checks ever since the first fiasco early in George W’s first term.
* It has been a while since I have bitched about the dreaded Alternative Minimum Tax (AMT). FYI, the word “dreaded” is a permanent part of the term “Alternative Minimum Tax” just as “GD” is a permanent part of the word “extensions”.
Jeff Rose of GOOD FINANCIAL SENSE (“Helping you make ‘cents’ of your investments") provides a good discussion of this despicable tax in his post “The Alternative Minimum Tax — Not Just for the Wealthy”.
Jeff mentions the dreaded AMT exemption amounts for 2007 but fails to mention the numbers for 2008. Here they are – from my “What’s New for 2008” Page:
The Alternative Minimum Tax (AMT) exemption amounts are –
· $46,200 for Single and Head of Household
· $69,950 for Married Filing Joint and Qualifying Widow(er)
· $34,975 for Married Filing Separate
* I hope sincerely hope that President-Elect reads the letter he was recently sent by Ways and Means Chairman Charles Rangel, Oversight Subcommittee Chairman John Lewis and 12 other Ways and Means members urging him to end the private tax collection program – and takes their advice. I have long been against allowing the IRS to use private collection agencies to “dun” delinquent taxpayers.
According to “The Beginning of the End for Private Tax Collection?” at OMB WATCH the letter points out that – “The Committee...[argues] that tax collection is an inherent Government function and that professional IRS agents are more efficient at collecting outstanding tax debt. In 2007, the Committee conducted an investigation into the use of private debt collectors and found that their services often subjected taxpayers to undue harassment and confusion not associated with the use of trained IRS agents”.
* Congress recently suspended RMDs (Required Minimum Distributions from retirement plans for retirees age 70½ and over) for 2009 – but the relief was really needed for 2008. For a while it was thought that the Treasury Department would provide such relief. Kay “The Yellow Rose of Taxes” Bell gives us the word that there will be “No RMD Relief for 2008” at DON’T MESS WITH TAXES.
Kelly reports, “the Treasury Department has decided against granting any relief to folks who were hoping to get a break in 2008 on required withdrawals from their tax-deferred retirement accounts”. She advises, “So if you've been waiting to take your 2008 RMD, contact your account administrator ASAP and make arrangements to make the requisite withdrawal”.
* Cindy the MONEY MENDER is correct when she advises that now is the time to “Update Your Beneficiaries”. To quote Cindy, “Now is a good time to check all your accounts and make sure your beneficiaries and successor (backup) beneficiaries are accurate and up-to-date”.
* Always leave ‘em laughing - I may not always agree with TAX GURU Kerry Kerstetter’s politics, but I do agree that he finds the best tax-related comic strips. Click here for his latest find.
HO! HO! HO! MERRY CHRISTMAS!