* What to OJ Simpson, Dionne Warwick and comedian Sinbad all have in common (no, not the obvious). According to an article in the WebCPA weekly email newsletter all three owe more than $1 Million in back taxes (plus penalty and interest) to the California Franchise Tax Board!
* MY MONEY BLOG asks the question ‘If you had to choose between contributing $4,000 to a Roth IRA or keeping/putting it towards your Emergency Fund, which should you choose?’ in the post “Roth IRA Contribution vs. Emergency Fund Savings”. His answer – “I used to be in the Emergency Fund First camp, but now I think I’ve changed my mind.” I agree with MMB. One reason is, as the author puts it, “the annual $4,000 Roth IRA contribution limit is a ‘use it or lose it’ proposition. You can’t put nothing in this year, and then $8,000 the next. Once April 15th rolls around, you’ve missed out on potential tax advantages that may extend several decades (even to your heirs).”
If you do need money for an emergency, with a ROTH IRA you can always withdraw your actual contributions tax-free and penalty-free. There is no income tax or 10% premature withdrawal penalty until your total withdrawals exceed your total contributions.
* Jeremy Vohwinkle of ABOUT.COM: FINANCIAL PLANNING offers some good advice to college grads starting their first “real” job in his post “Make the Most of Your Paycheck from Your First Job”. Under the category “Begin Saving for Retirement” he suggests that you consider opening an IRA if your employer does not offer a 401(k). I would highly recommend that new employees contribute the maximum (or as much as they can afford) to a ROTH IRA in addition to participating in a 401(k) while their income is such that they qualify and their expenses are still relatively low. A few years of ROTH contributions now will grow to a sizeable tax-free amount at retirement 40+ years down the road.
* A report issued by the Treasury Inspector General for Tax Administration last month states that millions of taxpayers overlooked important tax breaks and made other costly mistakes on their 2006 returns. The report estimates that over 2 million individuals who were eligible to deduct state and local sales taxes didn't, 50% more than last year. This is possibly because, as Congress waited until literally the last minute to extend this deduction, this deduction was not indicated on Schedule A or included in the printed instructions for Schedule A. Many taxpayers also failed to claim the one-time telephone excise tax refund. As of September the IRS has only paid out half of the $8 Million it has anticipated. The report also concluded that the 2007 tax-filing season "generally" was successful, and also said "most" returns were "timely and accurately" processed by the IRS.
I would expect that most of the taxpayers who missed out on tax breaks on their 2006 return prepared their own returns, maybe via software, instead of using a competent tax professional. Or if they did use a paid preparer it was probably one employed by Henry and Richard or one of the other fast food chains.
* The NATP’s TAXPRO WEEKLY email newsletter reports that “The IRS has certified the 2008 Honda Civic Hybrid CVT as eligible for the alternative motor vehicle credit. The credit amount for the vehicle is $2,100."
* This past week I reported on the Social Security COLA increases for 2008, including the new Social Security wage base of $102,000. The SSA website has a page that lists the annual changes in the taxable wage base since Social Security began in 1937. FYI, the wage base for 1937 through 1950 was $3,000. When I started doing 1040s, in 1972, the wage base had tripled to $9,000. Since then the wage base has increased by 1033 1/3%! A tip of the hat to Kay Bell of DON’T MESS WITH TAXES for bringing this page to my attention.
* The TAXALICIOUS blog brings us the “Willie Nelson Tax Commercial”. Willie is now doing commercials for Henry and Richard, exploiting his famous tax problems of a few years back. One can only imagine how much “more worse” his tax problems would have been if H+R Block had prepared his returns!
* I apologize for wasting space here on TWTP on such an idiot – but I can’t help myself. Perennial tonsorially-challenged arsehole Donald Trump just can’t let go. He once again made a fool of himself putting down celebrities – including his obsession Rosie O’Donnell - in a recent interview on Larry King to promote his latest useless book. He said Rosie ate like a pig at his wedding, Joy Behar has no talent (what does Trump know of talent – he has none himself) and Angelina Jolie is no great beauty (what – did she turn him down?). If you can’t say anything nice about a person then don’t say anything. The only person Trump can say anything nice about is himself!
* Once again let’s leave with a joke – this time on “Verifying Donations” from the self-proclaimed TAX GURU’s website.