The Sum of All We Are

What allows us to live and thrive in a good society? To grow and progress so much that we consider it a failure to have a few years of negative or low growth? To live in peace, at least within our borders? To enjoy almost endless possibility?

Link to the original site

Ask TaxMama Issue 583 – A Dream

Dear Family,

Someone on the news this morning was talking about how insulting it is that some schools are open on Monday, Martin Luther King Day. That got me to thinking about how much the world has changed since I was a child. When schools and restaurants and buses and bathrooms were segregated by color. There were signs making it very clear who was not welcome.

Today, we take for granted that people are people.

Sure, I am not naïve enough to believe there isn’t still a problem, or that there aren’t still slums. But when I look around at my friends and clients, and people in government, management, key roles in films and television shows – we have come a long way, baby!

It is important to honor pacifists like Martin Luther King, Jr. who helped make it all possible. Thank goodness that one person’s dream is on its way to being fulfilled.

Enjoy your Monday off, if you get the holiday – and Dream a little dream for me.

Remember, we will be using Twitter more and more often, to get quick notes and updates out to you – www.twitter.com/taxmama . You don’t need to subscribe to Twitter if you’re on Facebook. Just friend me there. The posts will appear there, as well.

The Tax Calendar is up and accessible from any phone at all (that accesses the web). In fact, you can reach our site and view the entire TaxMama site via your phone. Yay!

Oh goodness, I just heard from a friend of mine, Kris the Tax Lady. She’s been asked to teach a class on starting a business – and using my book as the textbook! Thanks Kris! Incidentally, have you read Kris’ weekly column in The Journal News – here is her latest effort:

Jim Blankenship, CFP, EA, just wrote a very perceptive review about this book. He’s right on target!

You can pick up your own copy inexpensively at Amazon.com. There’s even an ebook version out there for your Kindle or ebook reader.

CPE Link Classes

We’ll be back after tax season. Meanwhile, use the recorded classes as resources.

http://www.cpelink.com/teamtaxmama

There are lots of other great classes here, too. You’ll find tax updates, classes on Excel and QuickBooks, bookkeeping, and specialized areas of taxation, like religious institutions and more.

http://taxmama.com/earn-cpe-without-leaving-the-office/

EA Class News

Such excitement. I love it when people tell me they’ve passed all the EA Exams. You still have time to study for and pass one exam before the testing window closes on February 28^th.

http://irsexams.com/registration/

Remember, you get a 10% discount on the EA Class if you register for TaxMama’s Family first.

http://taxmama.com/membership/family-membership/

The discount code can be found in the Family Look-Ups resource.

http://taxmama.com/family-member-resources/

I am getting questions about the schedule for this year’s TaxMama’s EA Exam Review Class. Folks, have some patience. It’s tax season. Let us get settled. I will post the 2011 schedule by mid-February. You’ll get early-bird discounts then.

Other TaxMama News and Tax Articles:

This week’s MarketWatch column is a fun Tax Quiz. How much do YOU know about your own tax situation?

http://www.marketwatch.com/Journalists/Eva_Rosenberg

In this week’s Wall Street Journal’s SmartMoney Tax Blog, you will find my column about estate taxes (coming). There’s a fascinating article about the jockeying in the refund anticipation loan market. Keep an eye on this page for daily updates – http://blogs.smartmoney.com/tax/

Win a chat with Suze Orman! You might be the lucky person each month to win that prize, and some other goodies.

Just visit Suze Orman’s new MoneyMindedMoms.com site. You will find lots of practical money-saving tips – and ideas to help folks struggling with time, money, conflicts and more.

• You can ask Suze questions in the forum – Suze is actually dropping by an answering your questions, just as I do here. Join us and speak to Suze.

You’ll find TaxMama’s columns there each week, along with a dozen delightful women. This week, Phyllis talks about the odds of needing long-term care. That IS a frightening topic. Have you been following a similar discussion in the TaxQuips forum?

Doreen asks if “loyalty cards” really pay off? Tricia brings up every mother’s lament. She says she’s not a short–order cook! Jen provides low-cost ideas for family entertainment. Sabrina stretches the dollar a little more. Mariel discusses registering your business. Vicky has the solution to picky eaters. Liz wins at the Sales Smart Shopping Game!

http://www.moneymindedmoms.com/articles/

At Equifax this week, TaxMama tells you that it’s time to talk to your kids to coordinate your finances. Ilyce Glink shows you some DIY projects to increase the value of your home. Dan Solin laments that there are some many things to do for retirement planning; but so little time. Linda Rey helps you avoid the scam of Mortgage Credit Insurance. The Equifax Credit Experts tackle the mystery about why your lender and the credit agencies calculate a different credit score for you.

http://www.equifax.com/blog/tax/en_ff

This week’s AccountingWeb.com blog discusses a bizarre problem – no continuing education credit for the best tax education around? Huh?!?

Have you seen AccountingWeb’s new small business publication? Going Concern – focusing on keeping the profits flowing. http://goingconcern.com/subscribe/

In IRS News, we tell you about some Stupid Tax Tricks – Things Not to Do . and we give you Top 10 Tax Time Tips.

http://taxmama.com/category/asktaxmama/irs-news/

In Money Funnies we learn Latin for Today. You must realize I spent a year or two taking Latin in high school. It was a really fun class.

http://taxmama.com/category/asktaxmama/money-funnies/

In TaxQuips this week, We start the week with Karen who wants to know if her husband and brother could split the property taxes that were paid from her husband’s account. TaxMama gives you 10 Tips for Business Success. We end the week with Seth who wants to know if he needs to 1099 his lawn guy. http://taxmama.com/category/tax-quips/

Note: You can view them all on YouTube, too Daily TaxQuips from TaxMama® – taxmama1’s channel

As always, we love your feedback, opinions and ideas.

You are what makes all this fun – and interesting!

Please use the Comments link online.

http://taxmama.com/asktaxmama/ask-taxmama-issue-583

TaxNerd gear makes a bold statement year-round.

It helps attract the opposite sex!

Shop at www.taxnerd.net or http://www.zazzle.com/taxmama*

Hugs from your favorite TaxNerd,

http://www.zazzle.com/taxmama*

Eva Rosenberg, EA

Your TaxMama®

www.TaxMama.com

Your TaxMama® is watching…out for you.

www.TaxMama.com

www.snurl.com/homebiz-tax

www.TaxMama.com/TaxQuips

www.IRSExams.com

www.TaxNerd.net

==========================

• Ask TaxMama :: Where taxes are fun and answers are free
• TaxQuips :: The number ONE free tax podcast online
• Ask TaxMama at the site :: Where you can comment on this

Go to Source

Six Important Facts about Dependents and Exemptions

Courtesy of IRS

Some tax rules affect every person who may have to file a federal income tax return – these rules include dependents and exemptions. Here are six important facts the IRS wants you to know about dependents and exemptions that will help you file your 2010 tax return.

1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2010 tax return.
2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
3. Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the social security number of any dependent for whom you claim an exemption.
4. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received.
5. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.
6. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

For more information on exemptions, dependents and whether you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available at http://www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant at http://www.irs.gov to determine who you can claim as a dependent and how much you can deduct for each exemption you claim. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.
Links:

IRS Publication 501, Exemptions, Standard Deduction, and Filing Information

• Ask TaxMama :: Where taxes are fun and answers are free
• TaxQuips :: The number ONE free tax podcast online
• IRS News :: Where you can comment on this

Go to Source

Latin for Today

Revelare Pecunia!” (Show me the money!)

“Domino vobiscum!” (The Pizza guy is here)

“Motorolus interruptus.” (Hold on, I’m going into a tunnel.)

“Sic semper tyrannus.” (Your dinosaur is alway ill.)

“Sic temper Gloria Mundi” (Your girlfriend always starts the week angry.)

“Bodicus mutilatus, unemploymi ad infinitum”

(Better take the nose ring out before the job interview)

“Nucleo predicus dispella conducticus” (Remove foil before microwaving)

“Veni, vidi, velcro” (I came, I saw, I stuck around.)

“Veni, vidi, Visa” (I came, I saw, I did a little shopping.)

“Veni, vidi, Vichy” (I came, I saw, I surrendered.)

“Veni, vidi, itchy” (I came, I saw, the mosquitos found me.)

“Veni, vidi, bitchy” (I came, I saw, I complained endlessly.)

“Et tu, pluribus unum?” (Did the government just stab me in the back?)

“E pluribus anal” (I collect everything, meticulously)

Courtesy of Roberta Livingston who sends us lots of great material!

Please remember to send us your humor.
Clean jokes preferred.

Read more Money Funnies here:
http://taxmama.com/category/asktaxmama/money-funnies/

• Ask TaxMama :: Where taxes are fun and answers are free
• TaxQuips :: The number ONE free tax podcast online
• Money Funnies :: Where you can comment on this

Go to Source

Handicapping the Debt Ceiling Debate

Sometime this spring, Congress will vote to increase the debt ceiling. That vote won’t come easy. Newly ascendant House Republicans will threaten to withhold needed votes unless significant spending cuts or budget process reforms are attached to the measure. Democrats will denounce Republicans for threatening the government’s ability to pay its bills. And Treasury Secretary Tim Geithner will be forced into creative financing moves to buy Congressional leaders enough time to strike a deal.

But strike a deal they will. With monthly deficits running around $100 billion, the United States can’t cut spending or increase tax revenues enough to avoid further borrowing this year. It is equally inconceivable (I hope) that our elected leaders will decide to withhold payments from Social Security beneficiaries, our military, and our creditors.

So the debt ceiling will go up. And that means that at least 50 senators and more than 200 House members will cast a politically toxic yea vote.

Which lucky members will they be? The answer may well depend on what other budget provisions accompany the debt limit measure. That’s impossible to handicap today. In the meantime, though, we can look at past votes. They tell a clear story: debt limit votes are about politics, not principle.

Consider, for example, Senate votes on stand-alone debt limit measures over the past decade:

When Republicans held both the Senate and the White House (2003, 2004, 2006), they provided virtually all the yea votes, while almost all Democrats voted no. When the Democrats were in power (2009, 2010), the roles reversed: the Democrats provided all but one of the yea votes, while Republicans voted no. Only when government was divided – with a Democratic Senate and a Republican president (2002, 2007) – has the vote to lift the debt limit been bipartisan.

The House has taken fewer stand-alone votes than the Senate (because of the so-called Gephardt rule, which the Republicans abolished last week), but they show the same pattern: the party in power votes to increase the debt limit:

History thus suggests that Democrats will bear the burden of lifting the debt limit in the Senate; expect at least 50 yea votes. The only interesting question is whether individual Republicans filibuster the increase; if so, a 60-vote cloture measure would require at least 7 Republican votes as well.

Handicapping the House is more difficult since we’ve had no recent experience with divided government. If the Senate provides any guide, roughly equal numbers of Republicans and Democrats will ultimately vote for an increase. That would allow many Tea Party-backed Republicans to vote no without affecting the outcome. And other members might simply skip the vote. That’s what 21 members did in 2004, when it took just 208 votes to raise the debt ceiling.

Note: Congress increased the debt limit three other times during the past decade as part of larger bills: the 2008 housing act, the 2008 TARP act, and the 2009 stimulus. For simplicity, I have included all votes by Independents with the Democrats, since that’s how those members caucused during this period.

Link to the original site

Gardener 1099

Today TaxMama hears from Seth in the TaxQuips Forum with a sensible question. “I have a lawn guy for my house. I pay him $90 a month for 8 months out of the year ($720 for the year). The checks are made out to him directly. From an IRS standpoint, am I supposed to do anything? Am I supposed to send him a 1099 or something? I figured that it is very common for homeowners to have a lawn person that does not have a lawn business.”

Hi Seth,

That’s a good question. I’ll bet a lot of people wonder about that and are reluctant to ask, lest they find themselves having to take on another administrative obligation.

But, first let me point something out to you. Your gardener does have a business. He’s getting paid for doing your lawn – and other people’s lawns. That’s a business.

How does that affect your obligation? If the gardener is not performing services for your business, you don’t need to issue a 1099-MISC to him. Only businesses need to issue them – especially if they want to take a deduction for the amount they pay someone.

Next, let’s look at the household worker obligations. He may fall under those rules. As a household worker you are paying your lawn guy less than the aunnual threshold of $1700 for reporting.

See, either way, you’re off the hook. But thank you for being conscientious enough to ask.

And remember, you can find answers to all kinds of questions about household help, and other tax issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum

• Ask TaxMama :: Where taxes are fun and answers are free
• TaxQuips :: The number ONE free tax podcast online
• TaxQuips Forum :: Where you can comment on this

File Download (0:00 min / 2 MB)

Go to Source

IRS: “Don’t Hurry to File Your 2010 Taxes”

If you’re among the one-third of taxpayers who itemize deductions on their federal tax returns, the IRS says you can take your time filing your 2010 tax return. Or rather you have to take your time. The IRS won’t let itemizers (or people who claim either the college tuition or educator expense deductions) file until mid- to late-February. Why? Because Congress didn’t pass the 2010 tax act until mid-December. The IRS needs time to reprogram its computers to accommodate new tax rules—actually old rules since the tax act mainly extended last year’s law through 2012.

The situation echoes another a few years back when Congress waited until late December to “patch” the alternative minimum tax for 2007 returns. The patch boosted the AMT’s exemption and extended applicable credits, thus sparing more than 20 million taxpayers from owing additional tax. But the 4 million taxpayers still subject to the tax had to wait more than a month while the IRS rewrote its computer programs.

The IRS made sure that wouldn’t happen again this year. When the chairmen and ranking members of the Ways and Means and Senate Finance Committees told IRS Commissioner Doug Shulman back in November that they would patch the AMT for 2010, Shulman had his programmers update their computers with the promised—but not enacted—fixes. Fortunately, Congress followed through so taxpayers who owe AMT for 2010 can file whenever they’re ready—unless they want to itemize their deductions, which, of course, virtually all of them will.

Delaying tax filing is only the most tangible result of last-minute and temporary tax legislation. Over the past decade, the federal individual income tax has changed every year. Congress legislated some of the changes far in advance, but others popped up right before—or sometimes after—the new tax year started. People can’t plan when they don’t know which tax laws will apply. And they waste a lot of time and effort adapting to and complying with ever-changing rules.

The delay won’t affect procrastinators but people like me who want to file as soon as they have all of their W-2s and 1099s for the year won’t like it. I’m lazy about adjusting withholding to match my expected tax liability—it’s easier to use a safe harbor that overwithholds—so I typically get a large refund. But having already given the government a zero-interest loan during the year, I want my refund as soon as possible (in recent years so I could pay my daughter’s latest tuition bill). This year’s refund will come later than usual. Fortunately I’ve paid my last tuition bill so I can afford to wait. But there’s still the principle of getting that refund quickly.

Those of you who pay estimated taxes and haven’t already made your January payment might want to trim that payment back if you expect a refund. On the other hand, sticking with a safe harbor saves your doing the arithmetic needed to make sure you won’t get hit for underpayment.

There is one bit of good news: Because the IRS resides in the District of Columbia, which celebrates Emancipation Day on April 15 this year—a Friday—tax returns aren’t due until April 18. Itemizers may have to wait many weeks before the IRS will let them file their returns, but they’ll have three extra days to mail them.

Link to the original site

New Tax Law Changes The Estate And Gift Tax Rules

The new federal estate and gift tax laws (briefly summarized in this posting) do not impact many of the laws on the books in California about probate. It may be easy to think that because Congress will allow each one of us to pass up to $5 million estate tax free that we don’t need a living trust since there might not be any tax benefits to having a trust. It is IMPORTANT TO KNOW that passing ownership of property to an heir or beneficiary may still require going through probate since the law passed by Congress does not avoid probate. Estate taxes and probate are unrelated since one involves federal rules while the other involves state rules. To avoid probate, Californians should use a living trust even if the estate is under $5 million in value and the trust provides no tax benefits.

Maximum Estate Tax Rate

The estate tax rate is lowered to 35% for deaths in 2011 and 2012, and for 2010 deaths where the estate tax regime is elected.

Unused Estate Tax Exemption “Portable” to Surviving Spouse

For 2011 and 2012 deaths, unused estate tax exemption of the first spouse to die can be transferred to the surviving spouse and added to his or her own exemption. There are limitations on receiving exemption from more than one predeceased spouse, however.

Sunset in 2013

Beginning in 2013, everything goes back to the 2001 rules, so the estate tax exemption will be $1 million, with a 55% rate; the gift tax exemption will be $1 million with a maximum 55% rate for gifts above $1 million; and the GST exemption will be $1 million (adjusted for inflation from 1997).

Estate Tax Exclusion Increased for 2011 and 2012 Deaths

The estate tax exemption amount will be $5 million for deaths in 2011, and $5 million indexed for inflation in 2012. For deaths in 2013 and later, however, the sunset causes the 2001 estate tax exemption ($1 million) to come back.

Estate and Generation-Skipping Transfer Tax Reinstated for 2010 Deaths, With Election

For 2010 deaths, an election may be made between either (a) paying estate tax with a $5 million exemption and 35% maximum rate and receiving a stepped-up income tax basis or (b) paying no estate tax but receiving carryover basis, subject to certain modifications. The estate is deemed to choose option (a) unless affirmatively electing option (b). Method and deadline for electing have yet to be determined.

Gift Tax Rate and Exclusion Remain As-Is for 2010 Gifts, but Increase for Later Years

For 2010 gifts, the lifetime gift tax exemption will remain $1 million and the rate for gifts above $1 million will remain 35%. For gifts in 2011 and 2012, however, the lifetime gift tax exemption will increase to $5 million (indexed for inflation in 2012); the rate for gifts above $5 million will remain 35%. The sunset causes gifts in 2013 and later, however, to be subject to a lifetime gift tax exemption of $1 million and a maximum rate of 55% for gifts above $1 million.

GST Exemption Increased and Rate Decreased

For gifts and deaths in 2010 through 2012, the GST Exemption is $5 million (indexed for inflation in 2012). GST Exemption may be allocated for 2010 deaths even if the “no estate tax” option is elected. The GST Tax rate is 35% for 2011 and 2012.

No GST Tax Payable in 2010

For gifts and deaths in 2010 only, the Generation-Skipping Transfer (GST) Tax rate is 0%, so no GST tax will be payable with respect to such transfers. This could present significant 2010 year-end planning opportunities for a small number of individuals.

Certain Filing Deadlines Extended

For deaths from January 1, 2010, through December 16, 2010, deadlines for filing estate and GST tax returns, paying estate tax, and making disclaimers are extended until the later of September 17, 2011 (9 months from the date of enactment), and the regular due date.

Link to the original site

Activist Fiscal Policy

This paper reviews the recent evolution of thinking and evidence regarding the effectiveness of activist fiscal policy. Although fiscal interventions aimed at stimulating and stabilizing the economy have returned to common use, their efficacy remains controversial. This paper reviews the debate about the traditional types of fiscal policy interventions, as well as more targeted policies. It concludes that while there have certainly been some improvements in estimates of the effects of broad-based policies, much of what has been learned recently concerns how such multipliers might vary with respect to economic conditions.

Link to the original site

New US Estate Tax Laws – for US Citizens Living Abroad or Who Own Assets Abroad

Link to the original site

Next Page »