Simply Junior

The year 2011 seems to hold promise for tax payers with the new tax laws that are being enacted. The tax payer will not have to worry about trying to pay taxes if they can prove hardship. The average tax payer will see an IRS tax relief as they are going to be allowed to earn more money and pay less on their taxes. This will be a great stride for the American tax payer since they usually have to carry the brunt of the nation’s bills.

The IRS tax relief for 2011 will cover millions of Americans who have had it pretty hard this past year. Millions of homes have been foreclosed leaving Americans homeless. The jobs are not there to be had and the economy has worsened by degrees. It is even predicted that we might plunge into a double digit fall back in the economy. This would be a devastating event for most Americans. This is not what the President wants for the country and that is why he is trying very hard to get the Congress to compromise with some IRS tax relief programs.

It is possible that with some of the new tax laws that this will help save the families and put more money into the pockets of the consumers helping the economy to stay more at an even base. It is not totally up to the president it seems that some of the governors are trying hard to increase employment in their states. This increase of work will help the American to earn more money and create a better and stronger economy. The only thing left is for American business to stay in this country and give the jobs to the American people instead of outsourcing the work to foreign countries.

It is not the best solutions that have come forth from the 2010 Congress but it has given the economy a jump start which if the 2011 Congress carries it forward will help all Americans. One of the most important things at this time is to put more money back into the pockets of the consumers by giving them an IRS tax relief program that will help families stay on track financially. It would be a great advantage as well if the IRS would consider collecting back taxes from business’s who have made it a point to outsource jobs. The money that these businesses owe would really help the economy. Since they took the tax breaks in the past but did little to nothing to help the countries economical growth they really do not deserve an IRS tax relief program.

President Obama’s Tax Proposal, Expiration of the Bush Tax Cuts Pay Lower Taxes Now…Higher Taxes Later

Obama’s Tax Proposals. Many will pay lower taxes now and higher taxes later whether or not President Obama’s Fiscal Year 2011 Revenue Proposals (translated: tax changes) becomes law. Outlined in generalities in more than 150 pages, President Obama proposes tax increases and tax decreases for businesses and individuals and many complex provisions whose precise impact and details will not be known for years.

Increases for Higher Income Tax Payers. Overall, the revenue changes produce a net increase in tax revenue to the federal government from 2011 to 2020 of $1,103,250,000,000 dollars. Of this, $969,467,000,000 or almost 88% of the new tax revenue comes from upper income individuals. This is done by exempting high income tax payers from the Bush tax cuts set to expire at the end of this year. The President proposes to reinstate the maximum rate of 39.6% on earned income from the Clinton administration as opposed to the 35% rate under the Bush tax cuts. This maximum rate would apply to taxable incomes over $373,650 for married persons filing jointly and single fliers. This 39.6% rate is projected to produce about a third of the new revenue to come from the increase of taxes on upper income people. There will be a top 36% rate, up from 33%, which will apply to married filed jointly with $250,000 of annual income (less the standard deduction and two personal deductions) and $200,000 for single filers, less the standard deduction and one personal exemption.

In addition, for the $250,000/$200,000 income and above group, there will limitations on itemized deductions, phase out of the personal exemption, a 20% capital gains rate and limitation of the value of a deduction to a maximum of 28%. These items raise $642 billion over the next ten years, the other two thirds of the new $970 billion of revenue from upper income tax payers. Many people who think that they will not be in the $250,000/$200,000 brackets will be shocked when they find that when they sell real estate or stocks at a profit that this could move them into these brackets in the year they make these sales.

Extension of the Bush Tax Cuts. In a short paragraph on page 147 of the Revenue Proposals, President Obama proposes an extension of the Bush tax cuts for those below the $250,000/$200,000 and above brackets. As promised by him during his campaign, he said he would not raise taxes on the middle and lower classes. This extension of the Bush tax cuts, together with indexing of the Alternative Minimum Tax, will cost about $3.8 trillion of lost revenue over 2011-2020, or a loss of nearly four times the revenue increase from all of the other provisions in the 146 pages before the one page on the AMT and the Bush tax cuts. The largest item is a revenue loss of about $1.6 trillion resulting from the Bush tax cuts for middle and lower income tax payers. The Bush tax cuts took millions off of the tax roles and provided large tax rate reductions for lower and middle income earners; President Obama plans to continue these tax breaks. This results basically in an income transfer of about $970 billion from upper income taxpayers and $2.8 trillion from government deficits to middle and lower income taxpayers of about $3.8 trillion over ten years.

Will it Pass? Congress will have their own ideas about tax changes and there is a lot of talk about an omnibus tax bill. Such a bill will have tax increases, tax loopholes, closing of tax loopholes and hundreds of pages of nearly indecipherable tax talk. Republicans will probably vote as a block against the bill as a “tax increase” and the Republicans who vote for it will fear a tea party challenger in their Republican primary. Many Democrats will worry about reelection if they vote for a large tax increase. Of course, the fear of voting for a tax increase ignores that the President’s proposal is really the continuation of the Bush tax cuts for most people and these large tax cuts contribute substantially to the increasing deficit.

Best Guess. The bigger the tax bill, the more likely it will fail. From the standpoint of the budget deficit, if Congress is not able to agree on a tax bill in 2010, then the Bush tax cuts will expire at the end of 2010 and in 2011 and thereafter, there will be a huge increase in projected federal revenue. Unless there is a substantial decrease in the rate of increase in federal spending and a boom in the economy, the Bush tax cuts can not be sustained. Members of Congress can point out that they voted against the proposed tax increase bill. My best guess, based upon years in politics, is that no major tax bill will pass this year and the Bush tax cuts will expire at the end of the year.

Action Item. Whether the President’s proposals pass or the Bush tax cuts expire, you will be paying a lot more taxes in the future. If you have capital gains or income over which you have the option to be taxed in 2010, it may be a good bet to pay taxes now, rather than later. This is completely different from the usual advice that it is best to postpone paying taxes. Contact us and we will assemble your team of advisors to implement a tax strategy designed around your needs.

Each year, a great number of tax payers have found out that they can be able to get rid of the trepidation these tax payers usually link with taxes. This good riddance of tax hassles can be done by means of taking advantage of income tax software, which can be easily found online. Some websites provide for the most excellent and effective tax preparation software, which tax payers can avail at a price that is reasonable. Because of this software, tax payers definitely can save the money they would have to spend for hiring a professional tax preparer when they file federal and state taxes online. And also they get back more in refunds. This will surely make an electronic file tax return sound so good, which most people who tried this would agree. For you to simply file your income tax return online, just surf the internet and try out all the available tax prep software, which are widely comprehensive and very affordable. Read the important information on this online software or ask assistance from people who tried this.

During the early 2006, the IRS or Internal Revenue Service had released and promulgated to the general public the accurate results of a deliberate study of the country’s 2001 taxing cycle which made known some of the frightening scenarios with reference to the Americans’ compliance and adherence with taxation rules and regulations. Based on this three-year research study, the American people went amiss of paying their taxes – and paying their taxes on time – by an enormous $345 billion during that year. This amount, widely known as the ‘tax gap’, stands for the discrepancy between what these taxpayers were obliged to pay and what they in point of fact paid on time. Underpaying, under-reporting or not filing at all has left a multitude of taxpayers in grave debt to the IRS, which maybe brought out of ignorance or merely confusion about the tax laws. With the aid of the online professional tax software, many of these American people can now have negotiated the perplexities of their returns with no problem and have avoided unnecessary fines and penalties for non-payment of taxes or evasion.

Amusingly, the research study further disclosed that taxpayers were much more to be expected to be in compliance of taxation laws when taking advantage of the assistance of online tax return software. By means of taking advantage of affordable and convenient free online income tax software, one can do away with the peril of under-reporting one’s earnings or one’s taxes, with bringing upon to oneself the wrath of the IRS and notching up hundreds, and even thousands, of dollars in interest and penalties on unpaid taxes. The online professional tax software makes it really trouble-free for you to precisely report earnings and trace all the essential information from year to year for regular tax compliance. As a response to the tax gap result of the research study, the Internal Revenue Service (IRS) gave a boost to its enforcement budget in 2005 – the year which the case study was entirely completed – strongly enabling the agency to carry out 1.2 million audits during that year, as compared to less than one million in the preceding year.

You should not have to be in this tax hassle situation. As much as possible, stay away from unnecessary audits and prevent the anxiety of filing season with the help of our online professional tax preparation software. Carefully peruse on useful money saving tips, and also information and changes in taxation in relation to programs which can absolutely make filing uncomplicated and hassle-free.

If you need to file your taxes and you are looking into free tax filing services you should be sure that there are some hidden costs involved most of the time. While many services boast a lack of hidden costs, it is almost inevitable that you will pay something, though the service claimed to be free. The fact of the matter is that many services claim to be free, but then you will pay to file the returns electronically; therefore the services are not free at all!

The way that online free online tax filing services get away with calling their services free is that they say that the service is free; you simply have to pay a convenience fee as well as the price of filing electronically. What this means is that you can end up walking away from your free tax preparation with a bill for $50 or more. This really isn’t a bad deal, but when you think that you are getting something for free it can be quite a shock to receive a bill for this dollar amount.

There are cheaper tax service options out there, but generally if you want to have your taxes done right you will need to pay a bit. Other than the actual hidden costs of convenience and electronic filing, you should be aware that many tax service options that say that they are free don’t charge you, but you lose money because the system is not able to pick up all of the deductions that you may be able to take. This takes money out of your pocket. Many people end up owing money to the IRS when they use these services when they could have had a refund if they had used a different service or done their taxes on their own.

The hidden costs of free online tax preparation services can cost tax payers quite a bit of money. This is why you should be assure free tax providers really know what are they doing and will go to bat for you looking for deductions that will save you money, and perhaps get a great refund for you. Ask about the systems that they use and also ask for credentials before you accept the supposedly free help from someone. The saying that says “you get what you pay for” applies to free tax filing services as well as other things.

Between January 1st and April 15th, everyone adult living in the United States is required to file their taxes, both federal and state. Generally, when the ads start airing at the beginning of the year, people don’t really act on it. The stretch run begins around mid-March, when it finally dawns on people that the deadline is fast approaching.

In that period of time, all the advantages of e-filing really show. Everyone knows that thanks to the advances in software, when filing your taxes electronically you’re pretty much being guided from start to finish, are alerted to possible mistakes in your return, and receive your tax return faster. There is this huge benefit to e-filing that makes it almost priceless: the ability to file from home or from the office.

This is extremely helpful when the deadline is approaching. Instead of worrying where you’re going to find a tax preparer, you can sit home or at your office and get your return ready in a couple hours. In the past, with the deadline looming, a lot of preparers used to prey on people’s desperation to charge exorbitant fees to file their returns, and scammers offered bogus services to make some quick money. There’s no need to risk that with online filing.

The Free File Alliance allows eligible tax payers to file state and federal taxes for free through software companies who have partnered with the IRS. This free option makes a snap of preparing returns and receiving your refund in as little as ten days if you opt to receive your refund via direct deposit to a savings or checking account.

The programs guide you through the entire process, asking you questions so that your information gets entered in the right place on the correct forms. Instead of you having to figure out what formulas apply to what situation, the software just calculates it for you and matches everything. Plus when you’re done, you also receive a notification that the IRS has indeed received your return.

This initiative (the Free File Alliance) is designed specifically for people in the lower tax brackets, but everyone can check to see whether or not they’re available for it. There’s a schedule to apply and find out.

This tax season, avoid the stress of filing late, or having someone overcharge you for something you can probably get done for free. Take advantage of free e-filing and be on the safe side, knowing that you can file your taxes anytime, anywhere, and have the complete assurance that it’s been filed accurately and delivered to the IRS.