The good news about the Making Work Pay credit, a key provision of the just-enacted stimulus bill, is that it will be showing up in paychecks sooner that most of us expected. As I noted earlier, the IRS knew delivery of the credit money was going to be via paychecks well before it passed. That gave the agency a head start in getting the distribution method ready so that the money would be in taxpayer hands quickly.  Well, the IRS' efficiency in this case has impressed me.
In an announcement posted at the agency's Web site today (yes, on a Saturday), the IRS notes that the new withholding tables that will result in more take-home pay for workers are ready. Today. Now. "For most taxpayers, the additional credit will automatically start showing up in their paychecks this spring," said IRS Commissioner Doug Shulman. "Since employers and payroll companies will handle this change, people typically won’t need to take any additional action. The IRS will continue working to implement this and other provisions of the new law as quickly as possible." Earlier, smaller payout: The withholding tables adjustment comes months before the previously projected June implementation of the credit payouts in ...
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The stimulus debacle awaiting the President's signature expands the "first-time homebuyer" tax credit. A call from a Des Moines Register reporter (for this story) got me to digging into it a bit more. It's a great deal for those who qualify, though there's no way it cures what ails the housing market. Some key points: - The credit is refundable. That means if you qualify, and the credit you qualify is more than your actual tax for the year, you get the whole credit anyway. If you qualify for an $8,000 credit, your federal income tax before the credit is $2,000, and you had $2,100 tax withheld on your W-2, you will get a refund check $8,100 - all of your withholding, because your net tax is zero, and the $6,000 amount that the credit exceeds tax...
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Happy Presidents Day! Thanks for taking some time out of your economy stimulating shopping to spend some time with us and the 48th Carnival of Taxes. Money and presidents have always been connected. It takes cash to run for office. Getting there is usually easier when politicians promise voters that they'll cut taxes. And once in Washington, the president gets to help shape fiscal and tax policy. In face, one of the presidents most closely associated with today's federal holiday is Abraham Lincoln. It was our 16th president who also signed the country's first income tax law. Such monetary considerations are probably why most U.S. currency bears the visages of our presidents. In recentyears, the U.S. Mint has given our bills and coins some face lifts. Themost recent to get a touch-up is the penny. 
Lincoln's face will remain on the obverse (heads) side, but now there will be four new images on the reverse (tails) of the one-cent piece. As part of today's Tax Carnival, you'll find images of the new pennies, along with other coins, sprinkled throughout the tax bloggings. No, the coins are not appropriately scaled, as you can see by the size of this one-cent image. But you can find out mor...
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 Taxpayers lost a champion last week when former Internal Revenue Service Commissioner Donald C. Alexander passed away.
Alexander was commissioner from 1973 to 1977. During that time he stood up to President Richard Nixon, refusing Nixon's efforts to use the IRS to investigate those on the former president's "enemies list." According to Alexander's obituary in the Washington Post, Alexander learned the day after his swearing-in of a secret band of IRS investigators who combed through the tax returns of 3,000 "notorious" groups and 8,000 individuals...
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What's the answer to our economic woes? According to James K.Galbraith, it's government spending. Uncle Sam needs to spend now. Spend a lot. Then spend some more.  In the Feb. 16 issue of Fortune magazine,Galbraith, a professor of government at the LBJ School of Public Affairs at the University of Texas, voiced his support for "a very, very big stimulus package."
"Every previous recession in my professional life has been a shock to a reasonably healthy system," Galbraith told the magazine, "This is a general collapse of the core funding mechanism all across the country, and you don't know what the scale of the base case will be. The task is to come up with a large enough program to get ahead of this unknown tsunami coming our way." That's why Galbraith supported the original $850 billion stimulus package proposed in January. The version eventually passed by the House was whittled down slightly to $820 billion. Earlier today, the Senate approved its own version, which carries an $827 billion price tag. Now the legislative fun begins. House and Senate negotiators will have to hammer out a combined version in a conference committee. Then they have to get both bodies to sign off on that plan...
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For many of us, this was the first week we could file our tax returns. The reason? We finally got all those tax statements we need to fill out our Form 1040 and associated schedules. You know the paper I'm talking about. Your W-2 from your employer is the biggie.  Then there are all those various incarnations of Form 1099, bearing suffixes such as INT, DIV, G, R, B and MISC, just to name a few.
If you're paying a mortgage, your lender will send you a 1098 (or an acceptable substitute) detailing the home loan interest and, if they're escrowed as part of your monthly payment, how much in property taxes you paid last year. Statements issuers have until Jan. 31 to get them in the mail. This year they got a couple extra days, as last month's final day fell on a Saturday and pushed the mailing deadline to Feb. 2. But most of the firms that I deal with have been on the ball, so I have a substantial collection, a snapshot of which is above. Time to check: I must confess, though, to having just stacked all my tax statements in a box. In the next week or so, I'm going to double check my financial and earning records to make sure that what the various payers are telling the IRS matches my data. If ...
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While there has been a lot of gleeful piling on related to the Obama nominee tax troubles, there is some dissent. Howard Gleckman at TaxVox says: In truth, if most of us had our returns picked over this way, we too would be fingered as tax scofflaws, or perhaps as suckers who paid more than we owed. Reason blogger Katherine Mangu-Ward notes: Should you be tapped for higher office, this is a brilliant path to shame and ruin for you, your family, your party, your president, and yes, your nanny. Yet for all of your peers, it is simply normal conduct. Not all tax sins are created equal. The "offense" of Nancy Killefer -- a $298 nanny tax underpayment that she had made good a long time ago -- is laughably trivial, except that it cost Ms. Killefer her nomination. If sins that trivial disqualify you from office, we might finally achieve a sensibly small government because they won't be able to staff it...
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Timing is everything, I suppose. At about the same time that my musings on the tax troubles of several of President Obama's nominees, in Tax Problem or Tax Symptom?, entered the blogosphere, the Washington Post, in Victims of the Tax Code? Not So Fast took the position that even though the tax law is complicated, the nominees' troubles were preventable. Several experts, including colleagues in the tax law professorship business, explained that these were not the most complex issues that taxpayers can encounter, that the complexity of the code is not an excuse for the errors on their tax returns, and that they should have known what was going on. Yet one practitioner, Kenneth Brier, a tax lawyer in Boston, noted, "What this is telling us is that even people who should know better somehow don't. People who should be able to hire good tax help still don't get it right." So why aren't they getting it right? Back in 1997, Money Magazine (March 1997 issue, page 80), in what appears to be the last test of this sort that it conducted, asked 45 tax return preparers to do the tax return for a hypothetical family. There were 45 different results. None were correct. Fewer than one-fourth were ... read more >>
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Tim Geithner screwed up his taxes. When caught, he wrote a check for the taxes, without penalties, for the years not yet past the statute of limitations. He then became head of the Treasury, which makes him second only to the President in the tax administration chain of command. How does it go for lesser treasury employees when they botch their taxes? Like this...
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Self-employed people and owners of partnerships, limited liability companies, and S corporations pay tax on their business income on their personal income tax returns. To cover this tax liability, they must make quarterly estimated tax payments; falling short on tax payments can result in a tax penalty. With many businesses struggling, owners should reconsider what [...] read more >>
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