Wednesday, October 3, 2012

WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’ – WEDNESDAY EDITION


* Kay Bell has posted “Tax Carnival #107: TaxtoberFest 2012” at DON’T MESS WITH TAXES.

It includes my post “What To Do”.

* And Kay suggests some “Tax Moves to Make in October 2012” to “ensure our 2012 tax bills are less scary than the ghouls roaming our streets on Oct. 31”.

* A recent “tweet” provided the following warning –

Kiplinger Tax Letter today noted that head of IRS says slower refunds expected next tax season due to identity theft.”

I can also predict that there will be a delay in processing returns due to the fact that the idiots in Congress will not be addressing the “tax extenders” issue until after the election.

As for the delay due to identity theft – I expect this will only apply to returns filed electronically.  Since I cannot do so, as I will not use flawed and expense tax software to prepare returns, none of my clients’ refunds should be delayed.

* Check out the TAX FOUNDATION’s “Chart of the Day: Effective Tax Rates by Income Category”.

People mistakenly think that because the rich benefit from many popular tax credits and deductions they pay a lower average (or “effective”) tax rate than other taxpayers.  That is not the case.  The average tax rate for all Americans is 10.1%.  However, taxpayers earning over $250,000 pay 1 23% effective rate, more than twice the national average.  Meanwhile, the effective tax rate for Americans making less than $30,000 is actually negative due to refundable credits.”

* Jason Dinesen, who will be the subject of this coming Friday’s “Tax Blogosphere Buddy” post, provides a real life small business example of the “The Difficulties of Tax Planning with an Inept Congress” at the DINESEN TAX TIMES.

He is being kind calling Congress “inept”.

Jason’s main concern in this particular situation is planning estimated taxes for the client.  Since estimated taxes are generally based on the prior year return, and, as Jason indicates, the 2012 income has “spiked”, the client should not be hit with a penalty for underpayment of estimated taxes if the estimations were based on the extender in question being extended.  But he could have a substantial balance due when he files his 1040.

Let’s call a spade a shovel.  They are idiots!

* Peter J Reilly scores an exclusive for the Tax Blogoshphere with a live “Interview With Green Party Candidate Jill Stein - Part One” at FORBES.COM.

As one would expect, Peter discusses tax policy among other issues.

I do think there is too much emphasis placed on the release of candidates’ tax returns.  As long as they have been filed, and filed properly, what does it really matter?  And do 12 years of returns tell more than 2?  I suppose it could say something if a candidate had tons of dividend income from oil company stocks and as a politician he/she publically advocated for special tax breaks and other benefits for oil companies. 

One item of note, which does not bear well for demonstrating Ms Stein’s ability to govern - the Steins use Turbo Tax to “self-prepare” their, I expect, joint tax returns.  Not a smart move.  As I have said multiple times in the past, a “box” is no substitute for a competent tax professional.    

* Professor Jim Maule wonders “So what’s going wrong” in “Federal Agency Tax Withholding: Making the Simple Complicated” at MAULED AGAIN.

If the idiots in Congress, and perhaps government in general, have one actual talent it is “Making the Simple Complicated”.

* Roger McEowen of the Iowa State University Center for Agricultural Law and Taxation gives us a good listing of tax provisions that either have already expired or will expire on 12/31/12 in “Tax Provisions Up in the Air”.

The conclusion (highlights are mine) –

Unless action is taken, beginning in 2013, income tax rates across all brackets go up dramatically, particularly for individuals in the lower income tax brackets, the child tax credit is halved, the marriage penalty returns, capital gain rates go up significantly, the divided tax rate increases and the payroll tax goes back up. Lowerincome persons will be hit most significantly by these provisions. Also, the estate tax will reach more estates and will do so at a higher rate, and the AMT will impact significantly more taxpayers. Needless to say, there is a lot riding on the fall election.”

Thanks to Joe Kristan for “turning me on to” this item.

* The Tax Foundation’s TAX POLICY BLOG quotes a new FoxNews poll in “What do Americans Think of Nonpayers: Part II”.

The question asked was – “Do you believe all Americans should be required to pay some amount of federal income taxes, even if it is as little as one percent of their income?

It appears that many agree with me that there should be a true “Minimum Tax” for all Americans.

* In her post “Chicken or Egg Tax Cut” at OUR TAXING TIMES Trish McIntire talks specifically about a Kansas state tax reduction, using her own business as an example. 

However, the point she makes also applies on the federal level -

I’ve said before we shouldn’t be making tax decisions on assumption (hopes) on how businesses and individuals will behave.”

* Bill Perez continues his series on year-end tax planning for 2012 with “Consider Accelerating Salary Income into 2012” at ABOUT.COM TAX PLANNING:US.

I agree that this may be a good idea, because –

The employee-portion Social security taxes are scheduled to revert back to the normal 6.2% rate from the 4.2% rate that has been in effect for 2011 and 2012. This two percentage point reduction in the Social Security tax rate probably will not be renewed for 2013, reports the New York Times.”

Bill also suggests that “tax rates for 2013 are scheduled to revert to their pre-2001 levels, up from the tax rates in effect for 2012”.  However, while they will wait until the last minute to do so, I believe that the idiots in Congress will extend the current tax rates for 2013.

* And Bill tells you “What to Do if You Cannot Afford to Pay Your Taxes All at Once” after “finishing up your 2011 tax return for the deadline on October 15, 2012”.

Bill’s bottom line echoes what I tell my clients and readers -

My best advice is to be sure to file your tax return no later than October 15, 2012 {even if you cannot pay all, or any, of the tax due – rdf}. If you previously requested an extension, filing by October 15th will avoid a 5% per month penalty, based on your balance due, for filing your return late past the extended deadline.”

TTFN

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