Tax Carnival Ecstasy – October 23, 2012

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Welcome to the October 23, 2012 edition of Tax Carnival Ecstasy. In this edition we start with Anisha from the NerdWallet who takes a look at oil companies and the taxes they pay. Bill Smith reviews H&R Block‘s small business tax software. Anna Deguzman looks over the Fiscal Cliff and how the two presidential candidates will handle the crisis. Finally we have four easy ways to save money on your taxes that you can implement before the year ends. Hope you get a chance to read all the posts here, bookmark for later, share on the social networks like Twitter and Facebook and follow the carnival in the future.

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Bill Smith presents File Your Taxes posted at 2010Taxes, saying, “When it comes to online tax filing security is the major issue. Many people may like the concept or many might look down, most of them may feel worried about putting their information all on the internet and doubt that is it actually safe and secure to submit your tax return this way.”

taxes

Bill Smith presents Gay Marriage Increases Federal Tax Headaches posted at 2008 Taxes, saying, “The advent of a new era in our nation’s history brings with it more than gay marriage acceptance; we are witnessing the dawn of a new era of federal tax headaches.”

Bill Smith
presents 2010 Tax Credits For Your Home posted at 2010 Tax, saying, “For those of you thinking of buying a new home but are not sure about the 2010 tax credits, maybe this will help you.”

[email protected]
presents Should oil companies pay higher taxes? Prof. Ho explains the economics of optimal taxation posted at NerdWallet, saying, “Should oil companies pay higher taxes? Prof. Ho teaches the economics of optimal taxes for the purpose of reducing the federal deficit.”

Bill Smith presents Tips to Get TurboTax Discounts posted at 2009 Tax, saying, “Turbotax software comes in various different versions like Premier, Deluxe, etc. Turbo tax software is used to prepare both State & Federal Income Tax Returns.”

Bill Smith
presents How to get online tax refunds with H&R Block? posted at 2008 Taxes, saying, “Nowadays there are many tax filing programs available online, but even today most of the people think twice while filing their income tax returns using these online programs.”

Bill Smith
presents H&R Block- Small Business Tax Software Review posted at 2009 Taxes, saying, “H&R Block is one of the best tax preparation software used worldwide. Today more than 500 million clients mainly in Australia, the U.S., and Canada use H&R block.”

[email protected] Obama vs. Romney vs. The Fiscal Cliff posted at NerdWallet Blog – Credit Card Watch, saying, “What change will the impending “fiscal cliff” bring? The nerds weigh in on the issue and the roles the presidential candidates could play.”

tips

Bill Smith presents FreeTaxUSA- Prepare your Taxes Yourself posted at 2011 Taxes, saying, “There are several tax preparation programs available online. Let’s begin with a very simple and a detailed review.”

John Schmoll presents 4 Simple Ways to Save Money on Taxes Before Year End posted at Frugal Rules, saying, “Tax season is quickly approaching us. Don’t fall behind and wait til the last minute to prepare for it. There are numerous things you can do now to help save you money and give less to Uncle Sam.”
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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Personal Tax Planning

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A lot of money is “lost” through taxes, and personal tax planning ensures that a person gets the most out of their finances while paying less tax. At the end of the day one will be sure of saving up quite some amount of money and hence securing their finances.  There are ways that one can plan their finances in order for them to minimize the amount of taxes that they are to pay. There are a few ways in which one can achieve this and they include the
reduction of one’s income, increasing deductions and making use of tax credits.

The reduction of income

One of the most important elements that will determine the taxes on one’s income is the Adjusted Gross income. This element plays a very important role in finance. One needs to realize that the higher one gets in terms of their income, the higher the tax they are to pay. With AGI it simply means that you need to add up all your income and subtract any
adjustments. The examples of the adjustments made to your income include making contributions towards retirement plans including the 401(k) and other similar plans. The adjustments will ensure that your income is lower hence lowering
your tax.

Increasing tax deductions

The best way to ensure that a person is increasing ones taxable deductions is by itemizing the deductions. These include the state taxes, mortgage interest and gifts to charity. Once you keep track of the itemized deductions it is important to compare the expenses to the standardized deduction. This will largely depend on the number of dependents one has. The more the dependents the higher the standard reduction one is expected to have. This is one of the strategies that used in reducing the amount of income that is subject to being taxed.

Tax Credits

Tax credits can work to reduce one’s taxes. Some of the people illegible for tax credits include college students who get tax credit for their first two years and for those that commit to taking a lifetime tax credit. The course one takes does not really matter. One can also reduce taxes by avoiding making withdrawals from their retirement plan. This will
ensure that the tax bill is lowered on your finances.

One can also increase their withholding which will keep of any owing. Through this one is to get a larger refund as compared to what would have been taken from their paycheck during the year.

Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.

Chris Christie and Taxes At 10% Realistic Or Rediculous

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A ten percent income tax for every citizen in New Jersey is Governor Chris Christie‘s plan. His belief is that to change the present economic crisis requires a radical approach to income taxes. A fiscal conservative he proposing to cut the state’s spending at the same time he is promoting income tax cuts.

Christie views himself as an economic visionary who is willing to take tough actions to pull his state out of its economic quagmire. His speaking engagements on radio, television, and at town hall meetings make him appear as a current Republican candidate for president, but his goal is the 2016 election. He is confident his plan will work for New Jersey and the Nation. In California, Illinois, and New York, Democratic governors are taking an opposite approach to his plan. They are raising taxes for all citizens and making sure the upper-class proportionally pay an equal share of their taxes. These Democratic governors want to lower the deficits in their states. Borrowing on empty bank accounts will only create more debt. States cannot be competitive if their economic standing is low and they have no money for their states infrastructure and basic needs.

Tax policies, which put on increased burden a state’s ability to be economically solvent are seen by many leaders as unrealistic. His plan which borrows from a bankrupt account may not be what New Jersey needs. His plan is radical, but similar to elective surgery the people of his state may want a second opinion.

 

 

What are Our Income Taxes Used For?

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No one likes to pay taxes. In fact, you may even wonder where your hard earned money goes. It’s especially upsetting to hear that government money was used to fund some insane research, like whether or not mice like cheese. Regardless, you have to pay them. Still, it helps to know where that money goes. This April, maybe you’ll be a bit more at ease knowing that your tax dollars are actually be used for some pretty amazing things.

How Are Federal Income Taxes Used?

It may surprise you, because our military gets paid so little, but over 50% of our federal tax dollars in 2009 went towards our current military members, veterans and the current wars that we’re fighting. This includes the costs of weapons, housing, etc. The rest of our tax dollars are spent on human resources (education, medical), general government (government officials’ salaries) and physical resources (agriculture). The government includes Social Security in their figures. However, many point out that Social Security is collected separately from federal income taxes and is thus a trust fund. When we think of what the government does individually with our income tax dollars, defense and wages for government employees eat up a large chunk of our income taxes, but it’s important to remember that our taxes cover the costs of thousands of expenses. While our government does spend money on unwise decisions, it also spends money on Pell grants for college students, food for needy families and other important expenses.

How Are State Income Taxes Used?

State income taxes may be used differently in different states. However, many states use state income taxes to pay for education, government officials’ salaries, police forces, EMTs, health and social services and even public transportation. What a state uses it’s money on will depend on what the state’s government determines needs the most help. However, not all states have state income taxes. States like Tennessee only charge federal income taxes, but have a much steeper sales tax than states that do have an income tax.

While paying federal and state income taxes may not be ideal, chances are these taxes have paid for something in your life. It may have been the schools you attended or the roads you drive on. Either way, income taxes are a necessary evil. After all, if we were given the chance to pay for these items, instead of being forced to, chances are many people wouldn’t shell out their own money willingly.

About the Author: Manuel Phyfe is a volunteer with an organization that helps senior citizens find free tax support. He finds that many are angry at tax time not because they have to file a return, but because they don’t understand where their money has gone.

How to Avoid Meeting the Inheritance Tax Threshold

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Did you know that whenever anyone dies, the money and the property which is left to the beneficiaries are subject to an inheritance tax? This tax is usually 40% of anything above the threshold, which in the UK at the moment is £325,000.

However, if you are like most people you will not want to see a large chunk of your inheritance go towards taxes. Luckily, there are ways that you can avoid meeting the inheritance tax threshold and not have to pay. Effectively planning your inheritance can save your family hundreds of thousands of pounds.

As house prices have increased over the years but the inheritance tax threshold has not, more people than ever have been liable to pay it. To avoid this, you will need to split up your estate in your will so that you can make sure that each of your loved ones inherits an amount which is under the threshold.

Leaving Money to Your Spouse or Civil Partner

Did you know that if you leave your money to your spouse or civil partner, they will be exempt from paying inheritance tax on any of it? This can be a way for you to pass along your estate without having to worry about meeting the inheritance tax threshold. In the future when your partner dies, the estate will be subject to an inheritance tax threshold again, but the threshold will be higher at $650,000.

Setting up a Trust

Many people place their money in a trust fund in order to avoid paying inheritance tax. Although this was a very popular method in the past, the HMRC has become aware of this practice and has been cracking down on using trusts for this purpose. However, you still might be able to exempt your money from inheritance tax in some cases, such as trusts for someone who is disabled or certain trusts for your children. To make sense of the complicated rules and restrictions, you should talk to someone who specializes in these types of trusts.

Give it Away

One of the simplest ways of protecting your assets from inheritance tax is by giving your estate away in the form of gifts. Any money that you give to your benefactors is exempt from inheritance tax as long as you continue living for more than 7 years after giving the gift. You will also be able to give away £3,000 per year of your assets, and this will be exempted from your inheritance tax threshold. This concession allows parents and grandparents to give money to their children without fear of exceeding the inheritance tax threshold down the line.

These are just a few ways that you can deal with the inheritance tax threshold and make sure that more of your worldly possessions get passed along to your loved ones.

Simon Grant produced this content on behalf of Access Legal solicitors, whose site has pkenty of advice on the subject of making a will.

Ensuring Charitable Contributions are made to Qualifying Organizations

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The Internal Revenue Service (IRS) grants organization eligibility in receiving donations and giving them a tax-deductible status.  Qualified organizations meet requirements upon obtaining the status that allows taxpayers to claim charitable deductions.  You may ask the organization about their status in which they should be able to provide you with details.  There is also a listed publication (IRS Publication 78) available through the IRS that lists qualifying organizations.

The most common way in determining if the organization is qualified is to review organization types.  There are 5 general types of organizations that will have an assigned status such as a 501(c)(3) or other similar that makes the organization qualify:

Community foundations, trusts and organizations organized with specific purposes including religious, charitable, educational, literary, scientific, animal/human cruelty and sports related organizations.

  1. Organizations for war veterans including posts, trusts, foundations and auxiliaries organized in the United States.
  2. Many fraternal societies in relation to organization types mentioned in number 1 may be consider a qualify organization.
  3. Cemetery nonprofits and cooperation’s.
  4. A political subdivision or Indian tribe government that performs government actions. This may include donations made to the police department toward a reward in solving a crime or an organization that collects voluntary contributions for the social security trust fund.

Examples of organizations include church ministries, temples, charitable organizations such as the Red Cross, nonprofit educational groups such as the Boy/Girls Scouts, medical research organizations, public parks and civil defense organizations.  The IRS provides detailed information on contributions made to organizations outside the United States. Donations made are usually listed as an itemized deduction on your federal income tax form.  There are limitations based on your income of how much you can claim.  It is a good idea to obtain a receipt or documentation from the organization to use upon filing.  Many organizations do this automatically upon receiving your donation.

If your donation is goods or property, the value is determined based on fair market value when the donation was made.  If you volunteered a certain number of hours, they may also count as a deduction as long as they work performed was with a qualifying organization and you have proper documentation that shows logged hours. It is important to understand the value of charitable donations since the amount you contributed may vary from the amount you report in the form.  Many charities will mention what the tax deductible portion of your donation will be.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to umbrella companies .