Educational Tax Credits for College Tuition

For most people paying tuition, the American Opportunity tax credit is the best of several choices. Other special breaks are also available for filers with education bills.

Paying for college? You may be able to claim a big tax break, even if you've never before qualified. That's because the Obama administration replaced an old break with a new and improved one but only for a limited time. To take advantage of it, you'll have to negotiate the often wacky world of tuition tax write-offs.

What are the breaks? Who gets them? And how can you best take advantage of them?

First you have to choose among a trio of tax credits and one tax deduction that offset your cost of tuition. Then you have to look at "income exclusions" for profits pulled out of savings to pay college bills and see if you can write off student loan interest.

Breaks for tuition
The latest and greatest of the college write-offs is the American Opportunity Tax Credit. This can reduce your tax or increase your refund by $2,500. To claim the full credit, you must have paid at least $3,000 in eligible college bills and you must meet some income restrictions.

Eligible bills include college tuition, fees and books for you, your spouse or a dependent. Also important for lower-income taxpayers, this break is partly refundable. What does that mean? Most breaks just give you back the tax that you paid through withholding. They typically stop benefiting you once your tax bill is reduced to zero.

Write-offs, exclusions
There are other special breaks for paying education bills that can be used in conjunction with these tuition credits.

For instance, if you take money out of a 529 savings plan, all the investment income (and the principal, of course) is tax free, as long as you use the money to pay for qualified education expenses. If you've already used up your tuition write-offs by claiming a credit against those expenses, don't worry. The 529 money gets tax-free treatment even if it's used to pay for room and board for a full-time student.

Tax Preparation Software

Doing your taxes can be so grueling that it's tempting to let software do the hard work, and simply accept the final result.

Be aware: Popular products such as TurboTax and H&R Block At Home can produce errors, particularly if customers use a feature that imports stock information from brokerage accounts. Tax professionals say filers should watch for common errors and know how to fix them.

The bottom lines the software is largely effective, but keeps in mind Ronald Reagan's Cold War-era advice, Trust but verify.

The stock-related errors can arise because of the way brokerages and financial institutions keep transaction records. Most firms can provide a stock's selling price and the date it was sold, but for a number of reasons, not all firms provide the purchase price.

That can lead to errors when the information is imported into tax software. Some taxpayers say the software has interpreted their empty data as a $0 cost price, leading to calculations that are way off.

The major brokerages and tax-software companies don't dispute the problem exists. But since brokerages aren't currently required to provide cost data, and software simply reflects the information it's given, it's up to filers to make sure the results of the import are accurate.

Brokerages don't always provide a cost basis because maintaining the figure can get tricky. Complications arise when a stock split, an investor reinvests dividends or the company gets acquired. So some brokerages leave that information blank.

But some customers say they didn't receive any error messages. Several caught the error on their own, and others found out only after receiving letters from the Internal Revenue Service.

If you suspect you had an error in previous tax returns, you can file an amended return. But don't wait too long amended returns must be filed within three years of the date of the original return or within two years of the date you paid the tax, whichever is later.

Tax Credits Advantages for Business

The Michigan Economic Development Corporation awarded more than $156.7 million in tax credits Thursday to fund 11 job-generating ventures across the state.

The tax credits will help 10 Michigan companies and back a brownfield redevelopment project, creating an estimated 17,321 new jobs and generating more than $804 million in new state investments, according to a statement released by Gov. Jennifer Granholm.

Projects include a Northville Township development facility that will supply materials for lithium-ion battery cells, solar shingle production at a Midland Dow Chemical Company and cell and battery manufacturing for electric and hybrid vehicles at a new Dow Kokam facility in Midland.

“Companies are choosing to invest and grow in Michigan because we are a great state in which to do business.” “From solar shingles and advanced batteries to boats and scrap-tire recycling, we are creating a diversified economy where firms across a wide spectrum of industries are finding success and growing new jobs.”

The new measure includes a payroll tax credit for businesses that hire unemployed workers, an extension of the federal Highway Trust Fund, expense deductions for small businesses, and an extension of the two-year Build America bond program to fund state and local infrastructure projects.

Job Bill With Tax Incentives

Hiring Incentive to Restore Employment Act (HIRE), passed three significant tax incentives for employers included in this bill. They are as follows:

Hiring Tax Incentives - Social Security requires employers to pay 6.2 percent payroll tax on employee wages. This tax ends once an employee receives $106,800 in wages. This is in addition to the 6.2 percent paid by employees for a combined total of 12.4 percent. Medicare adds another 2.9 percent combined tax to the employer and the employee. The projected legislation would exempt employers from paying their portion of Social Security tax of 6.2 percent on qualified employees who start employment after February 3, 2010 and before January 1, 2011. A qualified employee is defined as someone that has not been employed for more than 40 hours during the 60 days prior to commencement of employment. The new employee cannot replace a currently employed person (unless the current employee quit voluntarily or is terminated for cause.) This could potentially save employers up to $6,622 in payroll taxes ($106,800 x 6.2 percent) for each new hire. It should be noted that employers would concurrently lose their tax deduction for these payroll taxes, which could create a partial increase in income taxes.

Employee Retention Credit - Employers that hire a "qualified employee" and keep them employed for one year will be eligible for a $1,000 tax credit. This is in addition to the reduced payroll taxes paid for the employee. This credit would be available for each qualified employee hired. This credit would be taken on the employer's 2011 tax return.

Capital Expensing - In 2009, the tax code allowed small and mid-size businesses to take a tax deduction for capital purchases up to $250,000. This is often referred to as a Section 179 deduction. Under current legislation, this deduction declines to $125,000 in 2010. The Senate's bill would extend last years provisions and allow for up to $250,000 in capital expenditures to be treated as a deduction in 2010.

While this legislation has passed in the Senate, it still needs to be reconciled to the House's version of the jobs bill which was passed in December.

Senators Tax and Budget

The New York Senate has passed a resolution against delaying income tax refunds as a way to ease the state's financial pinch.

The measure Democrats and Republicans adopted by voice vote Tuesday follows Government suggestion to lower the cap on income-tax refunds paid out before March 31 from $1.75 billion to $1.25 billion. Budget officials say some refunds would be delayed by up to three weeks.

Normal refund processing takes 45 days, that money belongs to taxpayers and it's unacceptable for the state to keep it longer. Nonbinding Senate measure is meant to build support.

The Senate’s solution is to switch the obligation for paying the tax from buyers to sellers, technically transforming the “use tax” into a “sales tax.” Obviously, few online merchants are eager to increase the cost of what they sell by 8.25 percent, the state’s base rate, plus however much more local governments add to the rate where the buyers reside.

Warning! Tax Scam Alert

Have you ever been contacted by someone claiming to know a secret that will help you significantly reduce your tax bill or avoid paying taxes altogether? Have you ever received an e-mail from the IRS asking for personal information? If you've answered yes to either of these questions then you've probably had an encounter with a tax scam. We will look at seven common scams to help you avoid becoming a victim. Examining these scams will make you aware of what to look for if other scams come your way.

Impostor Web sites
The official IRS Web site is http://www.irs.gov/. Any other Web site claiming to be an official IRS Web site is a fake. Unfortunately, there are a lot of impostor sites out there, and many of them are engaged in identity theft. Some bogus sites are easy to spot for the seasoned Internet user because of their cheap appearance, but that same site may seem legitimate to someone who is less Internet savvy. Other sites may be difficult for even experienced users to sniff out, because they steal content from the real IRS Web site. To help all types of users, the IRS Web site has several pages dedicated to identifying fake IRS sites, including directions on how to report them.

E-mail Scams
E-mail scams are in a similar category. An e-mail scam may try to get your personal information by asking you to click on a link to a phony IRS site or another phishing site that will ask for personal information. E-mail can also contain damaging attachments that, if opened, can give hackers access to the personal information on your computer. The IRS does not initiate contact by e-mail, so if you receive an e-mail that appears to be from the IRS, you can assume it's a scam.Fake Tax Forms
One tax scam the IRS uncovered in 2008 involved a fake tax form purporting to be from a legitimate organization, the Taxpayer Advocate Service. This scam involved asking recipients for detailed personal financial information such as their bank account numbers, ATM PINs and credit card numbers, all in the name of getting tax refunds. In this case, the fake form arrived as an e-mail attachment. Just because this particular scam was uncovered doesn't mean that a similar one won't appear in your inbox or mailbox in the future, so be on the alert for any e-mail that requests person information.

Tax Protester Schemes
One longstanding tax scheme is the notion that you don't have to pay income taxes, because paying taxes and/or filing a return is "voluntary." The worst part is that if you are caught, not only will you owe back taxes, interest and penalties, you will also be fined an additional $5,000 penalty as outlined in IRS Notice 2007-30 for filing a "frivolous tax return" or failing to file based on a "frivolous position." The "voluntary" aspect of the tax code refers to the fact that it is up to individuals to calculate their tax liability and to arrange their finances in such a way as to legally minimize their tax liability. In other words, the government does not send out bills every April telling people how much they owe.

Fake Home Businesses
Some tax-scammers want to sign you up for a work-at-home business that they claim will allow you to take substantial deductions for personal expenses by turning them into legitimate business expenses. You would probably already identify most of these business setups as scams. For example, ads that say "Make $500 a week stuffing envelopes from your couch!" The scammers make money by selling you a kit that tells you how to make these supposedly legitimate deductions, or by selling you their tax preparation services.

America's VAT(Value Added Tax)

The gigantic deficits the Administration is projecting are appalling, and they provide a chilling look at our future America is hurtling towards a fiscal trap that is forcing us into the only option have to restore budgetary sanity A Value-Added Tax.

It's not an option Americans understand, or ever hear debated much. In fact, most folks probably never heard of it. And if they had, they probably wouldn't want it; since it's the bulwark of an economic system alien to the American model the social democratic economies of Europe.

But the sheer scale of the expected numbers makes it practically inevitable that the U.S. will soon adopt a big VAT. It's the only vehicle capable of raising the money to cover the gigantic projected increases in spending and deficits.

Briefly, a VAT resembles a sales tax passed in the end onto the consumer at the register. But the government collects most of the money during the stages of a product's manufacture. Since manufacturers are writing the checks, it's an extremely efficient, virtually fraud-free way to collect money.

But it's never gotten much support in the U.S. for two reasons. First, it's a regressive tax: Low-earning families pay a bigger portion of their incomes than the wealthy. And second, the VAT first introduced by a French civil servant in 1954 has fueled the rapid growth of government in France, Germany, and even Japan. In fact, no other country spends the kind of money were planning to spend without a VAT.

The government wants to see the legally signed XML customer's invoice that is accepted by both sides so that companies cannot cheat on the VAT. Therefore every single invoice and movement of goods, from either inside or outside the country, needs to be approved by the government before shipment. Government auditors have a quota and mine the database to fine companies for non-compliance. VAT countries are moving to this Brazilian NF-e model.

Intuit Tax Season Profit Revenues

Intuit Inc. is an American software company that develops financial and tax preparation software and related services for small businesses, accountants and individuals. It is incorporated in Delaware and headquartered in Mountain View, California.

Mountain View financial software maker Intuit said revenue in its most recent quarter was $837 million, up 8 percent from a year earlier.

"While it is still early in the year, we are confident in our ability to perform well in the second half and therefore are raising our revenue and earnings guidance for the year," Intuit CEO Brad Smith said in a statement.

Intuit's profit in the quarter ending Jan. 31 was $114 million, or 35 cents a share, up from $85 million a year earlier.

Intuit makes much of its revenue during tax season from its TurboTax software. So far this year, Intuit said, the number of TurboTax copies sold for filing federal tax returns is up 11 percent.

Intuit's results exceeded forecasts, and shares were up in after-hours trading. Excluding stock-based compensation costs, second-quarter earnings were 38 cents a share, Intuit said in a statement. Analysts projected 32 cents a share, the average of estimates compiled by Bloomberg.

Intuit is also benefiting from an improving U.S. economy as more people start their own businesses boosting demand for accounting and financial programs, such as Quick Books and Quicken. Federal unit sales of TurboTax, its main consumer product, rose 11 percent. The company makes most of its money in the second and third quarters, ahead of the April 15 U.S. tax filing deadline.

Intuit has acquired companies to help spread profit and revenue across more of the year.

Georgia's Hospital Tax Voiced

Georgia is a country in the Caucasus region of Eurasia. Situated at the juncture of Eastern Europe and Western Asia, it is bounded to the west by the Black Sea.

Dozens of health care professionals lined up to tell state lawmakers that a proposed tax on hospitals and health insurance plans is not the cure for Georgia's ailing budget.

The governor says the tax increase, which would impose a 1.6 percent fee on revenues from the hospitals and insurers, is needed to avoid steep cuts to Medicaid. Republican legislators have been cool to the idea, which is being fought by many in the health care industry, who call the plan a "sick tax" and say it would stretch already-strapped hospitals and hurt one of the few industries hiring and keeping Georgians employed.

Many are throwing their support behind another proposal that would boost the tax on cigarettes. Georgia last upped its cigarette tax in 2003, when Perdue pushed through a 25-cent-per-pack increase, earning criticism from some conservative anti-tax groups.

Several in the crowd Wednesday said the tobacco tax makes sense, especially since tobacco-related illnesses in the state account for hundreds of millions in Medicaid expenses, and Georgia's cigarette tax is the fifth lowest in the country.

Tax Time Headaches and Tax Saving Opportunities

IRS computers are rejecting retirees' 1040s. Working couples are facing unexpected bills. The stimulus created both traps and money saving opportunities on 2009 returns.

The big stimulus bill that Congress passed last year included a tax break called the "Making Work Pay" credit. As it turns out, a more accurate name would have been simply the "Making Work" credit.

Recently retired seniors and some who work part time are having their electronically filed returns claiming this credit rejected by the Internal Revenue Service's computers in large numbers. Why? The credit usually paid through lower tax withholding rates of $400 per worker (or $800 per couple) is supposed to be reduced by the also new $250 per person (or $500 per couple) "Economic Recovery Payment" sent to Social Security recipients and veterans on disability. Supposedly, the senior filers didn't accurately state whether they got the $250 payment when filling out the new Schedule M for the Making Work Pay credit.

Robert Meighan, a CPA and vice president of Turbo Tax, Intuit’s tax preparation software unit, reports that aside from mistakes seen every year, the $250 discrepancy is the most common reason customers' 2009 returns are being bounced back by IRS computers.

The two tax breaks were among a dozen new individual tax benefits Congress approved as part of the $787 billion stimulus bill last year. But now the massive package is creating tax time headaches and tax saving opportunities for millions of families.

House Revenue tax for wind energy

A legislative committee recommends approval of a tax on wind energy generation in Wyoming despite warnings from industry that it could slow development and increase power costs.

The House Revenue Committee voted Monday to reduce the proposed tax by two-thirds, from $3 to $1 per megawatt hour.

The committee amended the bill to delay imposition of the tax until 2012. The committee also specified that the state won't collect taxes on power generated by turbines during their first three years of operation.

County government representatives urged the committee to approve the tax, saying they face higher road maintenance costs because of wind projects.
The committee voted 6-3 to recommend approval of the bill, House Bill 101.

Expectations of India’s Tax Budget 2010

A lot of people are expecting a 'pleasant' Budget considering that India is expected to achieve eight per cent gross domestic product (GDP) growth against the estimated growth of 6.9 per cent, and growth estimates across the manufacturing, services and agriculture sectors are promising.

The world economy also appears to be on the verge of recovery. The time may seem appropriate to offer significant tax breaks. Among all this, the following are a few expectations of tax payers which the finance minister needs to suitably address.

Wish list of 'corporate tax payers'

1. Abolition of surcharge
2. Tax exemption to STPI units: Currently the exemption is only up to financial year 2010-11 which is causing undue hardship to operating units. This hardship can be avoided by bestowing the benefits over ten years of operation rather than restricting the same to a particular year.
3. Abolition of wealth tax
4. Extension of Dividend Distribution tax (DDT) credit to multilayered structures
5. Non levy of TDS on service tax portion of the payments
6. Enhancement on monetary limits in tax audit, TDS etc
7. Introduction of specific guidelines on 'Profit attribution' and 'Association of Persons'
8. Right of appeal against orders under section 197 should be made appealable before Commissioner of income tax (appeals) to grant further right of appeal to tax a payer which is not available currently.

Wish list of 'individual tax payers'

1. Increase in housing loan interest deduction
2. Increase in limit of deduction under Section 80C includes Provident fund, ELSS, LIC, Housing Loan repayment etc and the existing limit is Rs 1,00,000.
3. Increased in exempted allowance to salaried class or re-introduction of standard deduction
4. Extension of eligible investments in Section 54EC provides for exemption in capital gains if the same is invested in notified government bonds.

Students Scholarship into Tax Credit

Funding for the Michigan Promise program was eliminated for the current fiscal year because of the state's budget problems. That left 96,000 college students without a portion of the $4,000 scholarship they counted on to help pay this year's tuition bills.

The new plan, if approved by the Legislature, would cover the same students and future qualifiers only after they graduate from college and work in Michigan, at least part-time, for a year. The award would come in the form of a $4,000 refundable income tax credit.

The new, delayed grant format isn't likely to satisfy students who need the money now and had already qualified for it by doing well on standardized tests in high school.

"I think it's important they make well on the promise to those 96,000 students," said Ben Lazarus, a Central Michigan University student who has started a campaign to have the original scholarship plan reinstated.

Republicans are skeptical of Granholm's budget in general because it relies in part on tax increases, including an expansion of a slightly lowered state sales tax rate to cover many services. But some Republicans support the idea of using an income tax credit to reimburse students who aren't getting the money they had already earned through the Promise grant.

Tax Hike $1 a Pack Cigarette Tax

The poll, conducted by International Communications Research, found 60 percent of voters would support the tax to help struggling states and would prefer it over other tax increases or budget cuts.

"An increase in tobacco tax rates is not only sound public health policy but a smart and predictable way to help boost the economy and generate long-term health savings for states facing deepening budget deficits," said John Seffrin, chief executive of the American Cancer Society Cancer Action Network.

"We have irrefutable evidence that raising the tobacco tax lowers smoking rates among adults and deters millions of children from picking up their first cigarette,"
The report was released by the Cancer Action Network, the advocacy arm of the American Cancer Society, the Campaign for Tobacco-Free Kids, American Heart Association, American Lung Association and the Robert Wood Johnson Foundation.

All these non-profit groups have long supported taxing tobacco more as a way to discourage smoking.

The report, projects the revenue that each state could earn by increasing cigarette taxes, based on research that shows a 10 percent cigarette tax increase reduces total consumption by 4 percent.

It projects that a $1 a pack cigarette tax would prompt 1.2 million adult smokers to quit.
"In 2007, Texas increased its cigarette tax by $1 per pack from 41 cents to $1.41 per pack," the report reads. The next year, cigarette tax revenues nearly tripled from $523 million to $1.5 billion, despite a 21 percent decline in sales.

I.R.S Tax Transactions for Tax Shelters

The Internal Revenue Service would require large corporations to reveal basic information about their tax transactions, a surprise move intended to root out questionable or illegal tax shelters.

Under the plan, companies with assets of at least $10 million that also file broader disclosures with the Securities and Exchange Commission would be required each year to provide the I.R.S. with information about tax transactions that might be challenged by the agency.

The I.R.S. rule piggybacks a Financial Accounting and Standards Board regulation known as Fin 48, which addresses “accounting for uncertainty in income taxes,” and will affect most companies. They will be required to disclose what their total tax bill might be if the I.R.S. were to challenge any of their transactions and to provide short summaries of each one even if the transactions are not currently deemed illegal by the I.R.S.

Corporate tax lawyers and experts were stunned by the announcement.

“This is a massive, very important shift,” an accounting and tax expert in New York. “Corporations have treated audits as a game of ‘come see what you can find, we’re not going to volunteer stuff,’ and now the balance of power will shift to the I.R.S.”

The disclosure rule would not affect corporate filings until at least 2011, Douglas H. Shulman, the I.R.S. commissioner, said in an interview in New York at a meeting of the New York State Bar Association’s tax section.

The I.R.S. spends a quarter of its time in routine corporate audits simply trying to ferret out issues, “That is inefficient and a terrible waste of time,” and “The goal is simple: to cut down on the time it takes to find an issue and to complete an audit.”

India can play key role in global tax modification: OECD

India could play a leading role in the planned global task force on tax and development, being set up by OECD, a top official of the grouping has said.

The Organization for Economic Cooperation and Development (OCED), primarily a grouping of the rich nations, would be establishing a task force to mostly help the developing world benefit from the worldwide tax environment.

When asked about the proposed casual task force, the official said the membership would be around “20 to 30”.

“We will discuss New Delhi’s possible role with its administration to institute if it is interested... If India joined (the task force), they would take a leading role in distribution their experience and helping to attain objectives,” the official told PTI in an email statement from Paris.

According to the OECD, the task force would help in implementing a rational approach towards global tax matters, by appealing the developing nations and other key stakeholders including NGOs and businesses.

The official also noted priority of the task force will include developing a work programmed to help the developing nations benefit from new global environment in respect of tax evasion and improving simplicity in matters of banking and finance, among others.

Calculate new deductions at tax

It's time to break out the pencils and fire up the calculator. After all, your 2009 taxes will not prepare themselves.

This year there are several deductions that can make your return even larger. A lot of tax filers may qualify for a tax credit they never got before and there are extra deductions for home buyers and charitable contributions that can add to your refund.

The rush is on at the Houston Internal Revenue Service office. Tax payers are having grabbing forms, but they may be missing valuable deductions like the Earned Income Tax Credit, a deduction many may qualify for but few have heard about.

The Earned Income Tax Credit is for anyone making less than $50,000 a year and is designed to help low-income working families. This year more may be eligible for it.

"This year we recognize that some people may have lost their jobs last year and they may qualify for it this year, the EITC, and may not know about it,"

The IRS will offer free tax help for those who qualify for the EITC, but there are even more deductions to consider, like deducting sales tax paid on a new car purchase and that big home buyer deduction.

"Both dollar-wise and complexity-wise, the homebuyer tax credit is one of the biggest items this year. There have been three different versions of it and so most people will need some help sorting through it,"

First-time homebuyers can get an $8,000 deduction and current homeowners can get $6,500 in deductions on their 2009 taxes if they close on a house before the end of April.
If you donated to Haiti, don't forget to add that, too.

"It is possible to get a 2009 tax deduction for money you paid for Haiti relief in 2010,"

Tax-on free Shopping

As a visitor to Iceland, at any time you buy goods for more than 4,000 ISK in one shop, you are entitled to a partial tax refund. Participating shops usually display a Tax-Free Shopping sticker in the window.

How it works: When you buy the products in the shop you pay the complete price, but should ask for a "tax-free" form, which entitles you to a 15% refund on the goods you just bought. The money can be refunded at two places in the urban centre before you leave: at the Iceland Refund desk at the Reykjavik Tourist in sequence Centre on Adalstraeti or at the Global Refund desk at the Forex bank on Bankastraeti. You can also get your refund at Keflavik Airport when you depart.

If the amount of your refund is more than 5,000 ISK, you must have the cheque embossed by the Customs Authority Office at the airport. You may be asked to produce your purchases (with the exemption of woolen goods), so you should hold them as hand luggage.

Beverage industry tax on soft drinks

The soft drink industry has smothered a plan to tax sugared beverages a plan advocates said would have reduced obesity and helped finance health care reform.

Only months ago, public health advocates thought the tax would be a natural for congressional Democrats looking for revenue to fund expanded health insurance coverage. The soaring costs of treating ailments related to excess weight including diabetes and heart disease added urgency to the issue.

But the White House staff reviewing funding options never embraced the idea even after President Obama expressed interest last summer. A key congressional committee, after initially seeming receptive, ended up refusing to consider it. Several minority advocacy groups, including some committed to fighting obesity, lined up against the tax after years of receiving financial support from the industry.

Meanwhile, beverage lobbyists attacked some of the country's most distinguished nutrition scientists, accusing them of bias and distorting available evidence. The beverage industry also financed research that reached conclusions favorable to its position.

Germany accessed second batch of data on tax evaders

A new set of data with details of supposed tax evaders has reportedly been offered to German establishment in the southwestern state of Baden-Wuerttemberg.

Bertram Dornheim, a spokesman for the state's Finance Ministry, which was contacted by the informant contribution the new data, could not confirm how many Swiss accounts were involved, nor whether the informer had asked for a fee for the information.

But he did say that the informant had supplied establishment with samples of data on potential tax cheats last year and had now "supplied additional, substantial quantity of data."

He added that the "potentially very interesting" in order was currently being examined.

The Frankfurter Rundschau daily reported that the new disk restricted information on around 2,000 German investor holding accounts in Switzerland. The newspaper reported that many of the financial records were with Swiss lenders UBS and Credit Suisse.

The new data comes to light a day after the German administration said it would pay 2.5 million euros ($3.4 million) for a potentially stolen CD containing information on 1,500 investors with Swiss bank accounts.

Tax Refund Alert and Warning About Fraudsters

Its tax time and that means payday for many American workers expecting a tax refund. After a tough economic year, many cash-strapped taxpayers may be feeling a bit desperate and don’t want to wait longer than necessary to get their money. Unfortunately, this could drive consumers struggling to make ends meet to seek a refund anticipation loan.

Getting your tax refund quickly using a rapid refund loan has gotten harder for the second straight year. That may frustrate the customers who are turned down for these expensive short-term loans. But consumer advocates say its good news.

The number of refund anticipation loans available this tax season shrank after a major tax preparer was unable to find a suitable lender to back some of its loans. That loss will combine with tighter credit standards to limit how many people can get refund loans, which provide money to individuals in one or two days. Some see this as positive development because the loans are expensive and sold mostly to low- and moderate-income taxpayers who least can afford them.
''They're a complete rip-off,'' said Alan Strauss, a tax attorney and CPA in New York. ''Its like legalized loan sharking.''

Police say that fraudsters have contacted a number people by phone and told them they have paid excess tax and are eligible for a refund. The caller is then asked to provide their bank account details so that the refund can be deposited into it. Police are urging people never to give personal or financial details to unsolicited contacts.

“We advise members of the public who receive any such calls to never give financial details out over the phone without confirming that the caller is genuine”.
“We are treating these incidents as fraud and potential fraud.”

Anyone who is contacted about a council tax refund is advised not to release any details and to report the incident to police and the relevant council.

Why Tax is so complicated?

Why Tax is so complicated? Having waded through official procedure to access the correct information for our family tax tribute form… I hit an unseen wall. For some mysterious reason the tax office, regardless of being told twice, have not updated Hayley’s employment status which changed in 2007. So it was off the phone, contact Hayley, and queue again for an advisor…only to be told they wanted the correct hours she works. Why? Dear God why? I have the figures damn you!! Why? So off the phone, get in touch with Hayley and now, equipped with the necessary in order AGAIN, I am sitting idle back in a dreadfully long queue waiting for my 4th advisor of the day!

Why does it have to be so demanding? Why can’t we all just disburse a set figure according to salary and be complete with it? And how on earth does that alternative not as bright as myself cope with all of this? It is confusing at times!

But today’s irritating experience is as not anything compared to last week when satisfying out my own tax return. We give confidence the use of our online facility, state the HM Revenue and Customs, and so I began to do just that….only to discover, some instance into the procedure (and thus committed) that the free online service has a sordid small secret. Only some forms are provided, other necessary elements are left out. In order to right of entry these, such as the ‘ministers of religion’ form, one must use authority software from a list of registered providers….a snip at £25 minimum. Yes it would seem rip off Britain has learnt a new trick, from now on we are to pay for the freedom of filing our own tax returns. How charming!

Time for my Daily Mail caption……’what has happened to this nation?’ Far from life form a group of people built on Christian ideals, in which we look out for one another, we have turn out to be a nation of greed in which persons are more and more used as cash cows for large corporations.

Tax Benefits for Married Couples

Tax implications arise from the introduction of civil partnership. Attention to the fact that the tax system can require a single person to pay considerably more tax than a married couple that earns more, despite the high cost of living alone.

Now the tax advantage is also given to married couples with no dependent children and even married people who do not live together. The major beneficiaries of this anomaly are wealthy couples with no dependents.

This was unjust and that extending the tax benefits of marriage to civil partners would result in further disadvantageous treatment for singles.

The tax benefit to the “family unit” to recognize the cost of raising children and the social good of family life. In fact, the tax system barely recognizes families at all and only does so through a special tax credit for families headed by a single parent and a small credit for the stay-at-home spouse.

Believe that single people should be treated less favorably than married couples or civil partners where there are no dependent children involved. Proposed rates that were in effect in 2009 is 45% rate on all wealth above $3.5 million, or $7 million for married couples.

More tax on ATF to earn Rs 120 crore a year in Andhra

The new increase in the tax on aviation turbine fuel (ATF) from 4 to 16 per cent in Andhra Pradesh would fetch the state exchequer an extra Rs 120 crore a year. However, this might take away the benefit Hyderabad enjoyed because of its lower tax rates.

The new tax arrangement, which came into effect from February 1, will leave only Maharashtra (excluding Mumbai and Pune) and Rajasthan at 4 per cent.

In spite of the increase, the tax on ATF in the state is still amongst the lowly in the country. Whereas Delhi and Haryana charge 20 per cent tax each, Karnataka imposes 28 per cent, Mumbai and Pune 24 per cent, Tamil Nadu 29 per cent, Gujarat 30 per cent, while Bihar, Madhya Pradesh and Tamil Nadu charge 28 per cent tax each on ATF.

The standard tax on jet fuel is 26 per cent and annual turnover from its sale is around Rs 10,000 crore.

Former chief minister Y S Rajasekhara Reddy had in February 2008 summary the tax on ATF to 4 per cent, when the Hyderabad worldwide airport was launched, to make the city an aviation hub. Following this, many airlines complete Hyderabad their re-fuelling hub.

The state realized revenues in the range of Rs 37 crore-Rs 40 crore on explanation of this. Prior to February 2008, AP levied a 33 per cent tax and realised about Rs 300 crore per annum.

Earned Income Tax Credit on your Radar Screen

For millions of Americans filing their 2009 tax returns, things could be vastly different this year. The recession and the high unemployment rate have affected the tax situations for many people. As such, it's important this year that you research the tax deductions or credits you now may be eligible to receive.

For example, you may have previously earned too much to qualify for the Earned Income Tax Credit (EITC), which was created to help those who work but have modest incomes. Last year, nearly 24 million people received $50 billion in EITC benefits, the IRS reports, with an average credit of more than $2,000. The EITC is one of the federal government's largest anti-poverty programs.

Unfortunately, many more people now fall into this category. If this applies to you, don't overlook the EITC, which is a refundable credit -- meaning you can get money back even if you owe no tax or the credit is more than the amount of tax owed.

"The value of the credit is larger than ever before, particularly for families with three or more children," said David Williams, chief of electronic tax administration at the IRS. "Because you were earning more, this credit may not be on your radar screen."

Council demands tax benefits on gold investments

The World Gold Council (WGC) sees a better role for gold as an investment instrument for the purpose of tax saving in India, a press release as of the council said, quoting a senior official.

There are a number of ways of accessing the asset benefits of gold and it is time that the Indian government started considering it for the rider of income tax benefits, at least for working women and for the foundation level in the income tax brackets, Ajay Mitra, managing director, Indian sub continent, WGC was estimate in the release as saying.

In the light of the current global financial scenario, WGC sees renewed interest in investing in gold worldwide, the release said. In India too, the fundamental appetite to invest in gold to protect wealth has shown signs of growing, it said. Gold should play a more important role in the sustainable growth of the Indian economy and WGC welcomes the increasing stress on the government to enable this, Mitra added.

The release said that post the 1992 reforms in India, there have been no major moves to further liberalize the gold asset market and hence there needs to be a change to the rigid definition of gold in India.

Tax-Credit in Home Sales

Data on Existing Home Sales in December is released. The pending home sales data suggests a drop, in part due to the first-time buyer tax credit almost expiring, and the hangover caused by people rushing to buy in front of the deadline that was later extended. The consensus is for Sales to have dropped to an Annual rate of 6.00 million from November’s pace of 6.54 million. However, used home sales have little direct impact on economic growth.

Stocks climbed as an unexpected rise in pending-home sales and a surprise quarterly profit from builders lifted other stocks connected with the housing market, including Home Depot, while a forecast from United Parcel Service also boosted sentiment.

The dollar stayed down versus the euro and other major currencies after a report showed U.S. pending home sales rose 1%. The NAR index is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.

TurboTax Offers Free Online Tax Filing

If you are in the military or a low-income taxpayer, you can file for free by using Turbo Tax. According to Intuit, the software company that created Turbo Tax, they have offered free file in partnership with the IRS for the past decade. Twenty states, including Rhode Island, have created Free File Programs based upon the federal Free File Alliance model.

The following states qualify for the free file program: Alabama, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Michigan, Minnesota, Mississippi, Missouri, New York, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont, and West Virginia.

Who is eligible for free filing using Turbo Tax for the tax year 2009?
•All taxpayers eligible for the Earned Income Tax Credit.
•Active duty military with an adjusted gross income of $57,000 or less.
•All other taxpayers with an adjusted gross income of $31,000 or less.

In order to qualify to file your Federal and State taxes free, you must file at the same time. If you have already filed Federal taxes, you cannot qualify for free e-file.
To file online using Turbo Tax Free File, you can go directly to the Turbo Tax free file site turbotax.intuit.com/taxfreedom or www.irs.gov.