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Haiti Donations in Early 2010 OK For Claiming On 2009 Returns

Posted by Administrator on Feb-1-2010

The IRS announced a new tax relief for people who contributed to providing earthquake relief in Haiti. It allows contributors to get the tax advantage of the donation for their 2009 claim rather than waiting a year for the benefit.

According to the irs.gov website, only cash contributions made after January 11, 2010 and before March 1, 2010 will qualify. All cash donations made after March 1, 2010 will only be eligible to be claimed for the 2010 tax year.

To gain the benefit, you must itemize your tax deductions using Schedule A. For more information, please visit the IRS website at irs.gov.

Jan
01

A Year-long Gift from the U.S. Government

Posted by bry

As part of the tax bill signed by the President last month, quite a large number of American taxpayers will see a discount on their payroll taxes.  Social Security taxes are usually 6.2 percent of an employee’s wages, up to $106,800.  Thanks to President Obama and the bill, in 2011, employees are only liable for a 4.2 percent contribution toward Social Security, rather than the 6.2 percent.  This should be a relief on most taxpayers, at least for the short term.

For the self-employed this break will not affect the employer contribution to Social Security.  This means you will still be liable for a 6.2 percent employer contribution.  You would still qualify for the employee discount of 4.2 percent.  Your combined contribution would drop from 12.4 percent to 10.4 percent.

Turning this short-term relief into a long-term benefit is up to the taxpayer.  Think about putting that money into your mortgage principal, retirement, or to pay-down those student loans that have been haunting you.

Dec
12

Filing Taxes for Dummies

Posted by mir

For many of us, the task of filing your taxes is a daunting and scary one.  I for one really dislike everything that goes into filing taxes and do whatever I can to make the process go as smoothly as possible.  For other people out there like me, there are two different routes you could take.  One is to hire someone to do all the work and hope they do it right, or find an easy to use program that will help you file taxes on your own.

If you choose to hire someone, make sure they will pay all penalties and interest to the IRS for any mistakes they make.  I would recommend you use a referral from a friend or colleague.  At least that way you’d have some personal reference regarding their quality and integrity.

If you are brave and want to do it on your own, find reliable tax software that will take you step by step through the process.  Make sure to use all the free online resources available, including the IRS website, free tax calculators, retirement calculators and 401(k) calculators.  If you take your time and do your homework, tax season will be a breeze.

Oct
20

2010 Tax Bracket Breakdown

Posted by Administrator

Currently the United States uses a graduated income tax method, which, in its simplest terms, means that the more money you make the greater percent of it you will pay in taxes. It’s always a good idea to be aware of which tax bracket you fall into based on your income.  (And it’s also kind of a fun thing to know about those pesky neighbors the Jones.’)

For those couples who are married filing jointly, it can be very important to consider before deciding if both spouses will work full time.  If the difference in added income moves you to a higher tax bracket, once you combine it with child care costs etc, the second income can be entirely consumed by exterior and unanticipated costs.  So, for those who need to know, and those who just like to know, the following is the breakdown for how much of your income will be due as taxes, as of 2010.

Tax Rate Single Filers Married Filing Jointly Married Filing Separately Head of Household
10 % Up to 8,375 Up to 16,750 Up to 8,375 Up to  11,950
15 % 8, 376 – 34,000 16,751 – 68,000 8, 376 – 34,000 11,951- 45,550
25 % 34,001 – 82,400 68,001- 137,300 34,001 – 68,650 45,551 – 117,650
28 % 82, 401 – 171,850 137,301 – 209,250 68,651 – 104,625 117,651 – 190,550
33 % 171,851 – 373,650 209,251 – 373, 650 104,626- 186,825 190,551 – 373,650
35 % 373,651 or More 373,651 or More 186,826 or More 373,651 or More
Mar
21

How Was The IRS Formed?

Posted by Administrator

16th-amend.jpgBelieve it or not, the roots of the IRS go all the way back to the years of the Civil War. In the year 1862 President Lincoln and The United States Congress created a new government position.

It was called “Commissioner or Internal Revenue”. The position was created in mainly in order establish and enforce an income tax to fund the war itself.

A decade down the road, this income tax was repealed. Although Congress re-established the income tax in the 1890’s, the Supreme Court quickly declared it unconstitutional.

However, the 16th amendment, which was ratified in 1913, gave Congress the power to create and enforce an income tax once again. This is the year in which the first 1040 was printed.

For anyone who made between $3,000 and $500,000 . . . the applied tax rate was 1%. Anybody who made more than $500,000 was taxed about 7%.

(A copy of the 16th amendment can be seen to the right.)