The U.S. Corporate Tax Rate

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Is the U.S. Corporate Tax Rate the Highest in the World?

There is a popular belief that the current corporate tax rate in the country is very high, and a reduction of the prevailing rate will stimulate investments which will have a wide range of positive effects on the economy. Those who support this theory are referring to the current rate which stands at 39.1% (the highest in the industrialized world). According to proponents, this income tax rate is putting U.S. corporations at a competitive disadvantage. But is there more to the story?

Income Tax rates by Country based on OECD 2005...

Income Tax rates by Country based on OECD 2005 data. “OECD Tax Database”. Organisation for Economic Co-operation and Development . . Retrieved 2007-01-30 . (Photo credit: Wikipedia)

The truth is that US companies pay the highest corporate tax rate, but the vast majority of them have perfected the art of not paying it. According to official government records, the amount of corporate tax collected by the government has reduced significantly over the years. The ratio of the corporate tax paid to the total pre-tax profit earned by US corporations is the lowest in history.

A recent report by the CTJ (Citizens for Tax Justice) had some shocking revelations. The organization analyzed the federal income taxes and pre-tax profits of 288 Fortune 500 corporations that recorded huge profits for the five years leading up to the year 2012. The following are some of the findings:

While the federal corporate tax rate stands at 35%, the 288 most profitable companies only paid a tax rate of 19.4% over the 5-year period. What is more shocking is that General Electric, Boeing, Verizon and Priceline.com did not pay any federal income tax over this period. 93 corporations (33.3% of those analyzed) paid a tax rate of less than 10% over this 5-year period.
Of the 288 Fortune 500 firms, 111 paid at most zero percent taxes for at least one year during this five year period. What’s interesting is that these corporations had a pre-tax profit of $227 billion, but paid no taxes. Whatever, the corporate tax rate in the country, the big companies usually find ways of paying less than they are required to.

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Looking At The TurboTax Redesign

Screenshot: Intuit's Customer Community

Screenshot: Intuit’s Customer Community (Photo credit: miss_rogue)

If you’ve used TurboTax before, then you should expect some changes this time around. Recently, Intuit’s tax software has become a little confusing. The user interface didn’t exactly welcome simplicity and efficiency. Sometimes, users would get frustrated by looping links and other problems. Such issues could easily hurt a person while preparing their taxes using the software. Intuit finally listened to customers’ concerns and made changes to the popular tax preparation software.

For TurboTax 2014, filing taxes now looks a lot smoother and easier to navigate. A complete redesign of the user interface has been undertaken and completed. Intuit stated a desire to lessen the time required to complete a return. With that in mind, the software now takes better advantage of prior year returns. TurboTax now analyzes that information and focuses upon each person’s typical tax situation. Returns are partially filled out before a person even starts their return.

While using the software, your tax liability indicator changes with each tax question. In the past, there were no real explanations for the changes. TurboTax 2014 now explains why these calculations affect your tax liability. New guides help explain various tax law changes, including Obamacare. Of course, each modification is designed to make things more simple and efficient for filing taxes and filing back taxes. Intuit has returned power to taxpayers by allowing them to complete their taxes with ease.

In the end, the company focused upon the right things for TurboTax 2014. Filing taxes is now much easier because prior returns are utilized to create a custom experience for each taxpayer. Plus, the competition hasn’t made similar bounds forward. Therefore, Intuit still offers the best tax preparation software around. Nobody needs to spend a fortune on tax preparation because Turbo Tax offers every tool a person needs to succeed each year.

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Tax Changes For The Wealthy

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2013 and 2014 taxes may be different for the wealthy due to several new tax implementations. The top tax rate may be steeper, and the actual percentage may depend upon what is included. People may be surprised by the changes, and this may be the ideal time to let TurboTax 2013 guide you through efficient tax preparation.

Income inequality continues to be a major political issue, and things like extending jobless benefits, raising the minimum wage, and imposing changes that affect the top tax rate are central to addressing this issue. Some of the newer taxes include changes to capital gains taxes, and 2013 is the first year that taxpayers will feel the impact. New payroll and Medicare taxes may effect wealthy taxpayers starting in 2013, and the increases may net $87 billion over the next decade.

The 2013 tax filing season will begin on January 31st, but wealthier individuals may already see differences in their withholding going forward. The law is applied unevenly, and this may result in withholding for some people, exemptions in some cases, and larger tax refunds for others.

Changes involving capital gains, interest, dividends, and other types of investments may increase tax bills, but income after taxes may decrease by a small percentage. The percentage may not seem like much, but losing this share of income may seem substantial. You may not know where your income will place you in terms of the current tax rate changes, but TurboTax 2013 may give you the important answers you need.

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IRS Forms To File Back Taxes

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IRS Forms To File Back Taxes

Even if one is certain there are no mistakes in the forms when following federal tax procedures, a little shiver goes down a taxpayers spine at the very thought of a letter arriving from the IRS. The Internal Revenue Service blundered recently when the office sent penalty notices to business owners who had requested an extension in filing tax return Form 5500 to file back taxes. An error in programming caused the mistake regarding the required Form 5558, the Application for an Extension of Time to File Certain Employee Plan Returns, before filing Form 5500. Normally, taxpayers are penalized if the Form 5500 is late or unfinished. However, the notice to those taxpayers who filed the proper forms in the right order received the penalty notice, CP 283, Penalty Charged on Your 5500 Return.

Legal research

Legal research (Photo credit: gwilmore (I HATE THE NEW LAYOUT!))

A letter of explanation concerning the inaccuracy was instituted November 8th to IRS employees. Citizens received a penalty notice before the Form 5558 had an opportunity to post to the accounts. Therefore, letters of explanation were prepared while telephone assistors and tax examiners were instructed to apologize to callers. Penalties were removed in all cases, up to five if the caller was a person with multiple plans or clients. If the person was responsible for more than 5 accounts, they were requested to solicit their abatement in writing. The Internal Revenue Service accepted responsibility for the penalty notice to the taxpayers and the charges were removed. It seems filing back taxes can be simple most of the time, but one small computer error can create a fiasco of work.

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700 IRS Workers Owe Millions In Back Taxes

700 IRS Workers Owe Millions In Back Taxes

A report released Wednesday has revealed that nearly seven hundred IRS employees (about five percent of the ninety-thousand Internal Revenue Service contracted workers) owe a combined $5.4 million in back taxes.

The report says that it is the responsibility of the IRS to make sure contractors are current and do not need to file back taxes. Incidentally, most of these workers are not enrolled in payment plans, despite the fact that this should make them ineligible for employment by the IRS.

The IRS is the only federal agency that requires its employees, including contractors, to comply with federal tax statutes, which means they must file on time and enroll in a payment plan if they are not completely paid up.

The report did say that the IRS is thorough in checking for compliance with new hires, but needs to improve on its monitoring of its workers’ adherence to federal tax laws throughout their employment.

As of June 2012, six-hundred and ninety-one IRS contract workers owed taxes that were not paid when due; three-hundred and fifty-two of them were not enrolled in a payment plan. This brings the delinquency rate to two point six percent. In 2011, by contrast, the average delinquency rate for all federal workers, including retirees, was at three point two percent. At the time, the Treasury Department reported the lowest rate, at one point one percent.

The IRS has stated that it will begin reviewing cases of delinquent taxes, as well as to take additional action “as necessary,” although what this means is still up in the air.

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Tax Carnival Ecstasy – October 22, 2013

Finance - Financial injection - Finance

Finance – Financial injection – Finance (Photo credit: @Doug88888)

Welcome to the October 22, 2013 edition of Tax Carnival Ecstasy. Bill Smith starts this edition with an article on making your financial troubles a thing of the past. John Schmoll takes a look at the stock market and your approach with uncertainty in the markets. And if you are looking for a way to retire 15 years earlier, Justin has a post on his site Root of Good. Hope you share and like this carnival in addition to read all the articles we have for you.

attorney finder presents Where To Go To Find A Immigration Lawyer If You Have Been Accused Of A Crime posted at Immigration Attorney Finder, saying, “Understand who your Immigration Attorney is before you hire him. Know his history. The fact that a Immigration Attorney passed the bar does not by itself make him a good immigration attorney. Don’t choose the very first lawyer you find. Be certain you research properly, since there might be bad consequences if you don’t do that! Talk to people you know and form a good picture of what a lawyer is like before you retain him or her.”

deductions

Bill Smith presents Make Your Individual Financial Troubles A Thing Of the Past With This Useful Info posted at 2011 Tax, saying, “Numerous individuals discover their finances have become one of the most stressful and confusing elements of their adult lives.”

retirement

John Schmoll presents Has an Uncertain Stock Market Derailed Your Investing Plan? posted at Frugal Rules, saying, “If you’ve been following the news the past few weeks it has made it difficult to know what to do with your investment portfolio. The fact is there is always something going on in the news and the best thing is to focus on your investing goals and continue to work on building wealth and growing your retirement portfolio.”

Justin @ Root of Good presents A Simple Way to Retire 15 Years Earlier posted at Root of Good, saying, “Justin at Root of Good illustrates the huge impact of lower spending and higher savings. By increasing savings from 10% of income to 30% of income, aspiring early retirees can knock 15 years off their retirement date.”

John Schmoll presents OptionsXpress Review: An Online Brokerage Worth Looking At posted at Frugal Rules, saying, “Investing in the stock market is vital to building wealth and with the variety of options available of where to invest it can be confusing. Choosing a good brokerage that has good offering and low fees can be a great way to help grow your retirement portfolio and get your investing on the right foot.”

John Schmoll presents Reasons Why You Should Start Investing For The Long Run posted at Frugal Rules, saying, “Many people want to go for the quick buck when it comes to investing. However, a long term approach in generally best if you’re looking to build wealth and grow a decent retirement portfolio that will last.”

taxes

Dr. Gavin R. Putland presents Maximalist ‘fiscal devaluations’ for Greece and Australia posted at The world according to GRP, saying, “Don’t let the name fool you: ‘fiscal devaluation’ is about creating jobs by reducing the tax wedge between the cost of labor for employers and the benefit for employees.”

tips

Bill Smith presents Tech Startup Funding Options – Captured Technology posted at Captured Technology, saying, “Getting tech startup funding is always a challenge and many techpreneurs often find themselves shutting down their businesses before they even get a chance to commercialize their ideas.”

Bill Smith presents Near 52 Weeks High Stocks posted at FastSwings.com – Steve Patterson, saying, “A company’s stock, which has been consistently high over a period of time is what investors prefer.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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