* Fellow twit, and fellow tax blogger, Michael Rozbruch “turned me on” to an article from the Washington Post titled, “Don’t Wait for Obama to Cut Your Taxes”. It provides some good advice and resources.

* The TAXGIRL does not take week-ends off (actually none of “us” do this time of the year). Last Saturday she provided a good answer to a common question in “Ask the taxgirl: 1099 for Closed Business”.

* Kelly answers another oft asked question in “Ask the taxgirl: Running As Fast As I Can”. Her correct answer points up another inequity in the Tax Code – another instance where the taxpayer must bend over. Income is reported on Page 1, increasing AGI, but related deductions claimed on Schedule A (lost to non-itemizers) as “miscellaneous” subject to the 2% of AGI exclusion. To be fair only excess hobby income should be reported on Page 1.

* From the “I couldn’t have said it better” file – Kay Bell said it all when she pointed out “From the get-go, the lack of oversight in administering the Troubled Asset Relief Program (TARP) has made every bailout handout a very unfunny, and egregiously costly, joke. And since Congress opened up the bailout door so wide, then who’s to stop any legal business form seeking relief?” in her post “Next In Bailout Line: Porn” at DON’T MESS WITH TAXES.

* Kay has also provides a good basic overview of the many educational tax benefits that are available in her post “Rags, Riches and College Costs”

* TAXPROF Paul Caron quotes from the Wall Street Journal to tell us “Obama Plans to Keep Estate Tax” -

“President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010.

Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million — $7 million for couples — from any taxation.”

*Jeff Rose provides a good answer to ”Reader Question #4- Can I Take a Tax Loss on My Kids 529 Plans?” over at GOOD FINANCIAL CENTS (Helping you make “cents” of your investments).

Jeff smartly ends his answer with, “be sure to speak with your tax advisor just to make sure”.

* An AccountantsWorld.com article reports “Americans Failing Taxes 101”.

A survey by of all people The Tax Institute at H&R Block indicates that “most can’t answer even the most basic tax questions correctly . . . the majority doesn’t know a credit from a deduction”. Duh! Hey – it seems that many Americans have something in common with H+R Block tax preparers!

*WebCPA reports that “IRS May Expand Enforcement During Tax Processing” and pay closer attention to returns claiming the Child and Dependent Care Credit and Earned Income Credit while in the course of the initial processing of returns.

* The weekly NATP member email newsletter reports-

“The IRS has announced that victims of the severe storms and flooding on December 10, 2008, in the city and county of Honolulu, have more time to make tax payments and file returns. As a result, the IRS is postponing certain deadlines for taxpayers who reside or have a business in the disaster area until February 9, 2009. The postponement applies to return filing, tax payment, and certain other time-sensitive acts otherwise due between December 10, 2008, and February 9, 2009.”

* We have a winner – actually two. Peter Pappas of THE TAX LAWYER’S BLOG reports the results of his online poll in “Worst Tax Cheat Poll Results Final: Kiss Your Sister, We Have a Tie”.

* It appears that BO’s proposed economic “stimulus” package will include some individual tax breaks – Among them, according to the press release by Charles Rangel for the House Ways & Means Committee, the following:

· refundable tax credit of $500 per worker/$1000 per couple (up to $200,000 income)
· expansion of EITC
· expansion of child tax credit
· simplification of education credits and making the credit partially refundable
· turning the $7,500 loan for first time home buyers during 2008 into a subsidy (no repayment requirement)
· increased expensing for businesses
· increased bonus depreciation for businesses
· increased (5-year) carryback of net operating losses for businesses
· “prospective” repeal of Treasury’s illegal section 382 ruling (Notice 2008-83).
· annual one-year AMT fix {I added this to list – rdf}

More and expanded refundable credits – great! The mouths of tax-fraud scammers are most certainly watering.

I will provide more information when available.

TTFN

“President Elect Obama: Stop the Tax Code Lie” echoes what I have been saying for years.

In the post Chad explains, quite correctly, that (the highlights are mine) “a third of all taxpayers pay no income tax – projected to increase to 44% under President-Elect Obama’s plan {according to a report from the Tax Foundation – rdf}. The reason for this disparity in what people believe and what is actually true dates back to the initial passing of the Earned Income Tax Credit in 1975, and its massive expansion in 1990 and 1993.

Touted as one of the top anti-poverty programs in the country, the Earned Income Tax Credit is no more than a massive government welfare and wealth redistribution system – kept on the down-low from most Americans. It is not obvious because it isn’t called “welfare.” It is called a “tax refund.” I hate to tell Congress, but a refund is only a refund up to the amount that someone paid. Anything else, if NOT A REFUND, is welfare. Currently, taxpayers that paid no income tax (zero, zilch, nada) can receive a “refund” of up to $4,825. [Not a typo].

Bordeaux points out that “this lie has been going on during the Ford Era, the Reagan Era, the Bush I Era, the Clinton Era, and the Bush II Era. Obama did not start the lie”.

As I said in my post “Obama The Red Menace” (I was being facetious – and making a Broadway reference) –

“I do not believe that the Tax Code should be used to ‘redistribute’ wealth or assist in providing ‘welfare’ to lower income individuals. The purpose of the federal income tax is to raise the money necessary to run the government – period. While the Code can encourage certain positive activities such as saving and investment, higher education, charitable contribution and volunteer work, home ownership, etc – all things that benefit society in general – it should not be used for ‘social engineering’.

I am also against the concept of ‘refundable’ tax credits – credits that allow an individual or family to ‘make a profit’ from filing a tax return. This includes the current Earned Income Tax Credit and the Child Tax Credit.

The EITC does not provide the safeguards, checks, and balances required in other federal and state welfare programs necessary for responsible fiscal management. As a result, it is perhaps the most abused provision of the tax code. Studies have suggested that close to 30% of all EITC claims are bogus.”

I also said – “I am not against tax relief for the working poor or the concept of providing aid to families with dependent children, or other types of welfare programs for the working poor”. I just don’t believe these concepts should not be incorporated into the Tax Code.

So what do you think?

TTFN