By Jeanne Sahadi, CNNMoney.com senior writer
On Thursday August 27, 2009, 1:44 pm EDT
A $9 trillion federal deficit over 10 years may be too hard to comprehend. But this part is easy: Such unwieldy amounts of debt could have an impact on Americans' bottom line one way or the other -- if not tomorrow, then the day after.
comprehend = kkt. 1 memahami, mengerti. Some theories are difficult to c. Ada teori-teori yang sukar dipahami. 2 terdiri dari, meliputi. Indonesia comprehends many islands Indonesia terdiri dari banyak pulau.
The U.S. government has been spending a great deal more than it has been taking in, and it is on track to do so well beyond the next 10 years. It has been borrowing money to make all that spending possible and it has to pay the money back with interest. How, you ask? By borrowing more.
has been spending: present perfect continous: to show that something started in the past and has continued up until now
The solution is straightforward if unpleasant: Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow, lawmakers will have to raise taxes and cut spending.
The more the country lives on a credit card, the more it makes itself beholden to the demands of its creditors -- many of which are overseas. The danger is that buyers of U.S. debt could become concerned that the country is running too high a balance. If so, they will demand higher interest rates -- thereby making the country's debt problem worse -- or they'll put their money elsewhere.
At that point, things would get ugly.
"Taxes would rise to levels that would make a Scandinavian revolt. And the government would not be able to provide anything but the most basic public services. We would no longer be a great power (or even a mediocre one), and the social safety net would evaporate," tax policy expert and Syracuse University professor Len Burman wrote in a recent op-ed cheerfully titled "Catastrophic Budget Failure."
ugly = ks. 1 jelek, buruk. u. face muka yang jelek. 2 berbahaya, parah (wound). 3 Inf.: tak pantas, kurang ajar, kasar (of a statement or action). u. duckling seorang gadis yang buruk rupanya sewaktu kecil tapi setelah dewasa menjadi molek.
revolt = kb. pemberontakan. -kki. 1 memberontak (against terhadap). 2 berrevolusi. 3 bangkit (against menentang). -revolting ks. memuakkan, menjijikkan.
mediocre = ks. sedang-sedang, cukupan.
evavorate = kkt. menguapkan. Heat evaporates water Panas menguapkan air. -kki. menguap. Water evaporates Air menguap. -evaporated ks. yang di uapkan
catastrophic = ks. yang merupakan bencana besar.
That's why acting sooner rather than later makes sense. But acting too soon could cause its own set of problems since the economy is only beginning to lick its wounds from a punishing recession. Economists and tax experts, no matter their ideological position, agree raising taxes when the economy is down is self-defeating.
But as the economy finds a solid footing, the hard choices will have to be made.
lick = kb. 1 jilatan. 2 Inf.: sedikit. -kkt. 1 menjilat (a stamp). 2 Inf.: memecahkan (a problem). 3 Inf.: memukul. 4 Inf.: mengalahkan, mengatasi, mencukur. -licking kb. Inf.: 1 pukulan. 2 Inf.: kekalahan.
wound = kb. luka. bullet w. luka kena tembakan. -kkt. melukai.
defeat = kb. 1 kekalahan. 2 penaklukan. -kkt. 1 mengalahkan, menggulingkan (the enemy). 2 menggagalkan(a motion). 3 Sport : menundukkan.
"We need to do this in stages at the right time," said David Walker, former U.S. comptroller general, in a CNNMoney.com video.
Right now there is a lot of talk, but not a lot of planning, about how to address the situation.
address = kb., 1 alamat. 2 amanat, pidato 3 berbicara, menegur. 4 memanggil, menyapa, menyebut.
In fact, President Obama is pledging to keep taxes low for most people.
For example, Obama has proposed keeping in place the 2001 and 2003 tax cuts for families making less than $250,000 (under $200,000 for individuals). The cuts are scheduled to expire in 2011.
A number of temporary tax relief measures, including the patch to protect the middle class from the Alternative Minimum Tax, are set to expire even sooner. And Obama has said he would like to keep many of those measures in place as well.
Experts say that's not going to cut it.
"Taxes are going up and they're going up for a lot more people than those making more than $250,000. Why? Math. The numbers don't come close to working," Walker said.
patch = kb. 1 Auto.: tambalan. 2 potongan kecil (over an eye). 3 bidang kecil tanah. 4 potong. -kkt. menambal, menempeli. patch-up ks. seada-adanya. p. up job pekerjaan/ tambalsulam seada-adanya.
For instance, the president's proposal to raise taxes only on high-income families would raise an additional $600 billion over 10 years, said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center.
That's not a lot when the government is staring at a 10-year deficit of $9 trillion. A 10-year deficit of that magnitude means the debt held by the public -- the accumulation of all annual deficits over the decades -- would reach 82% of gross domestic product come 2019. That's double the 41% recorded in 2008.
instance = kb. 1 hal. 2 contoh. for i. misalnya, umpamanya.
When lawmakers do decide to act, they will need to do more than just tinker with tax rates, according to Williams.
Tax experts have been calling for fundamental tax reform to make the system less complex. Plus, Williams said, Congress will likely need to seek out a new source of revenue beyond the income tax. One idea that has been talked about increasingly is a value-added tax, which is a tax on goods and services at every stage of production up to the point of sale.
seek = kkt. (sought) 1 mencari (a job, book). 2 meminta. 3 mencoba. -kki. dicari, diketemukan.
A multi-pronged approach may work best because "no piece by itself is enough," Williams said. "There's a really big hole to fill and [lawmakers] are just talking about dollops."
prong = kb. 1 gigi garpu. 2 cabang (of antler).
Minggu, 30 Agustus 2009
Rabu, 06 Mei 2009
Let Obama Help Pay for Home Upgrades
by AnnaMaria Andriotis (Author Archive)
Updated on April 30, 2009.
Making energy-efficient home improvements will not only help cut your cooling costs this summer, but can also provide a sizable break on your tax bill come tax season.
Thanks to the stimulus package, which passed in February, consumers can receive tax credits for up to 30% of the cost to make energy-efficiency improvements to their home, like adding insulation or new windows. The maximum $1,500 credit (one-time only) is a significant jump from the $500 offered in years past and will be available through 2010. (Many of the previous credits expired at the end of 2007.)
Both the tax and the energy savings could really add up, especially considering that the average household spends $1,000 a year on heating and cooling costs, says Ronnie Kweller, spokeswoman for the Alliance to Save Energy.
Still many of these purchases – like central air conditioners and a new Energy Star-rated roof – are so expensive that consumers must weigh the upfront costs with potential savings (often, installation costs won't count toward the credit either). Keep in mind that you won't be receiving that 30% tax credit for months after the project is probably complete. And, in some cases, such moves may not be worth it. Ideally, you want to replace the roof, A/C unit or insulation when they can no longer offer any savings on your cooling and heating bills and that usually happens when they reach the end of their lifespan, says Kweller.
Knowing which products qualify for the new tax credits can also be tricky. For example, previous tax credits were doled out to consumers who purchased Energy Star windows. After June 1, not every Energy Star-certified window qualifies, and the ones that do adhere to stricter eligibility requirements.
Here are four home improvements that can help you cut your summer energy costs and get Uncle Sam to pick up part of the tab:
Adding Insulation
Insulation is the cheapest home improvement that qualifies for the tax credits, says Karen Schneider, spokeswoman for Energy Star. And by installing it you could save up to 20% on your energy bills.
For the new insulation to qualify, it must meet the 2009 International Energy Conservation Code (check product labeling or call the manufacturer) and carry a two-year warranty (or be expected to last five years). Insulation at Home Depot and Lowe’s costs $10 (for a 32-foot roll) and $56 (for a 119-square foot roll), respectively.
If your home is less than five years old, you won't need new insulation, says Schneider. If your home is older, measure the thickness of the insulation in your attic. Insulation is measured in R-values, which stands for thermal resistance. It should range between R-30 and R-60 (for the northern parts of the country), she says. Every three to five R-values typically equal an inch of insulation, so R-30 could range between six and 10 inches, according to the Alliance to Save Energy. Also check the insulation in your crawl space or basement.
Click here for directions on installing insulation. Or hire a professional contractor, but installation won’t count toward the tax credit.
Purchasing New Windows and Doors
Before, tax credits for windows and doors were capped at $200. Now you can get up to $1,500. But that's only if those doors and windows meet certain criteria.
Windows, doors and skylights need a label from the National Fenestration Rating Council (NFRC) that says their U-factor – a measure of how well they’ll insulate the home from heat – is no more than 0.30. The label also needs to list a Solar Heat Gain Coefficient (SHGC), which measures how much of the sun’s heat penetrates into the home, of no more than 0.30.
Still, qualifying windows are expensive, with most ranging from $270 to $1,100, says Susan Roeder, spokeswoman for Andersen Windows and Doors, a window and door manufacturer based in Bayport, Minn. Doors can start at around $840 and go as high as $2,500.
Storm windows and doors can also qualify. The storm window's manufacturer certification statement lists the type of exterior windows, including single pane or clear glass, which it can be combined with to be eligible for the credit. Storm doors need to accompany a tax-credit-eligible wooden door without exceeding a combined U-factor of 0.30.
Installing Air Conditioners
Energy Star estimates the retail price and installation of a five-ton central air conditioner at more than $1,700. That’s hardly cheap, but luckily these systems only need to be replaced once every 10 to 12 years, says Schneider.
To qualify, central air conditioners need a Seasonal Energy Efficiency Ratio (SEER), which measures the efficiency of central air, of at least 16 and an Energy Efficiency Rating (EER), which tracks how it operates once the outdoor temperature reaches 95 degrees, of at least 13.
For a list of qualified A/Cs, click here.
Replacing the Roof
Assuming your roof is around 15 years old, replacing it with a metal or asphalt roof that meets Energy Star requirements will help keep your home cool by reflecting the sun’s heat -- especially if you live in a warm location, says Schneider.
This is a pricey project, however, running around $200 to $300 per square, says John New, a salesman at American Building Components, a manufacturer of metal roofing in Nicholasville, Ky. For a 25-square roof – a common size – it will cost $5,000 to $7,500.
But once you hit $5,000 you'll be eligible for the full $1,500 tax credit, says Schneider.
(Corrected April 28, 2009: As originally published, we stated the price of metal roofs using square feet. The correct measurement is in squares. One square equals 100 square feet.)
Updated on April 30, 2009.
Making energy-efficient home improvements will not only help cut your cooling costs this summer, but can also provide a sizable break on your tax bill come tax season.
Thanks to the stimulus package, which passed in February, consumers can receive tax credits for up to 30% of the cost to make energy-efficiency improvements to their home, like adding insulation or new windows. The maximum $1,500 credit (one-time only) is a significant jump from the $500 offered in years past and will be available through 2010. (Many of the previous credits expired at the end of 2007.)
Both the tax and the energy savings could really add up, especially considering that the average household spends $1,000 a year on heating and cooling costs, says Ronnie Kweller, spokeswoman for the Alliance to Save Energy.
Still many of these purchases – like central air conditioners and a new Energy Star-rated roof – are so expensive that consumers must weigh the upfront costs with potential savings (often, installation costs won't count toward the credit either). Keep in mind that you won't be receiving that 30% tax credit for months after the project is probably complete. And, in some cases, such moves may not be worth it. Ideally, you want to replace the roof, A/C unit or insulation when they can no longer offer any savings on your cooling and heating bills and that usually happens when they reach the end of their lifespan, says Kweller.
Knowing which products qualify for the new tax credits can also be tricky. For example, previous tax credits were doled out to consumers who purchased Energy Star windows. After June 1, not every Energy Star-certified window qualifies, and the ones that do adhere to stricter eligibility requirements.
Here are four home improvements that can help you cut your summer energy costs and get Uncle Sam to pick up part of the tab:
Adding Insulation
Insulation is the cheapest home improvement that qualifies for the tax credits, says Karen Schneider, spokeswoman for Energy Star. And by installing it you could save up to 20% on your energy bills.
For the new insulation to qualify, it must meet the 2009 International Energy Conservation Code (check product labeling or call the manufacturer) and carry a two-year warranty (or be expected to last five years). Insulation at Home Depot and Lowe’s costs $10 (for a 32-foot roll) and $56 (for a 119-square foot roll), respectively.
If your home is less than five years old, you won't need new insulation, says Schneider. If your home is older, measure the thickness of the insulation in your attic. Insulation is measured in R-values, which stands for thermal resistance. It should range between R-30 and R-60 (for the northern parts of the country), she says. Every three to five R-values typically equal an inch of insulation, so R-30 could range between six and 10 inches, according to the Alliance to Save Energy. Also check the insulation in your crawl space or basement.
Click here for directions on installing insulation. Or hire a professional contractor, but installation won’t count toward the tax credit.
Purchasing New Windows and Doors
Before, tax credits for windows and doors were capped at $200. Now you can get up to $1,500. But that's only if those doors and windows meet certain criteria.
Windows, doors and skylights need a label from the National Fenestration Rating Council (NFRC) that says their U-factor – a measure of how well they’ll insulate the home from heat – is no more than 0.30. The label also needs to list a Solar Heat Gain Coefficient (SHGC), which measures how much of the sun’s heat penetrates into the home, of no more than 0.30.
Still, qualifying windows are expensive, with most ranging from $270 to $1,100, says Susan Roeder, spokeswoman for Andersen Windows and Doors, a window and door manufacturer based in Bayport, Minn. Doors can start at around $840 and go as high as $2,500.
Storm windows and doors can also qualify. The storm window's manufacturer certification statement lists the type of exterior windows, including single pane or clear glass, which it can be combined with to be eligible for the credit. Storm doors need to accompany a tax-credit-eligible wooden door without exceeding a combined U-factor of 0.30.
Installing Air Conditioners
Energy Star estimates the retail price and installation of a five-ton central air conditioner at more than $1,700. That’s hardly cheap, but luckily these systems only need to be replaced once every 10 to 12 years, says Schneider.
To qualify, central air conditioners need a Seasonal Energy Efficiency Ratio (SEER), which measures the efficiency of central air, of at least 16 and an Energy Efficiency Rating (EER), which tracks how it operates once the outdoor temperature reaches 95 degrees, of at least 13.
For a list of qualified A/Cs, click here.
Replacing the Roof
Assuming your roof is around 15 years old, replacing it with a metal or asphalt roof that meets Energy Star requirements will help keep your home cool by reflecting the sun’s heat -- especially if you live in a warm location, says Schneider.
This is a pricey project, however, running around $200 to $300 per square, says John New, a salesman at American Building Components, a manufacturer of metal roofing in Nicholasville, Ky. For a 25-square roof – a common size – it will cost $5,000 to $7,500.
But once you hit $5,000 you'll be eligible for the full $1,500 tax credit, says Schneider.
(Corrected April 28, 2009: As originally published, we stated the price of metal roofs using square feet. The correct measurement is in squares. One square equals 100 square feet.)
Minggu, 26 April 2009
10 Things the IRS Won't Tell You
by Jason KephartFriday, March 20, 2009provided by smartmoney.com
1. "Like it or not, you may need help with your taxes."
When Cindy Hockenberry and her husband sent in a tax-penalty payment in 2007, they knew there was a chance their math might not jibe with the IRS's. When that turned out to be true and the amount was much higher than expected, they decided to dispute it. Fortunately for them, Hockenberry's a pro. As tax research coordinator at the National Association of Tax Professionals, she spotted a glitch in the IRS's calculation; after visiting the local IRS office, the agency admitted its mistake and lowered the penalty. "There's no way the average taxpayer would have noticed," she says.
jibe = kki. bersesuaian, cocok (with dengan). The two stories do not j. Kedua cerita itu tidak cocok satu sama lain.
dispute = kb. perselisihan, percekcokan. -kkt. membantah. to d. with memperselisihkan, memperdebatkan.
spotted = berbintik
admit = kkt. (admitted) 1 mengakui.2 mengaku.3 menerima 4 memuat (dpt memberikan tempat) 5 mengenal. 6 berlaku utk.
As recently as 2000, less than half of all taxpayers were using a preparer. Today 80 percent use software or a tax pro, "because they're scared of making a mistake," says Nina Olson, the National Taxpayer Advocate. "That's a sign the system's too complex." A pro may not be necessary for basic returns that include just a W-2 and, say, mortgage interest; in those cases, TurboTax will do. However, if you've made a lot of market moves or run a side business, consider a preparer. (You can find one at www.natptax.com; expect to pay $150 to $200 per return.)
Form W2: Wage and Tax Statement
2. "You don't have to be rich to get audited."
The IRS's job is to enforce the tax laws enacted by Congress and to collect what's due. Its primary weapon? The audit, whose use has more than doubled since 2000, to surpass 1 percent of all returns, according to the Transactional Records Access Clearinghouse, a Syracuse University data-research organization. The increase can be attributed to the rising number of so-called correspondence audits -- those done through the mail asking for specific information rather than, say, investigating your whole return, says Susan Long, codirector of the organization. "It's more efficient."
enacted = kkt. 1 membuat, menjadikan. to e. a law menjadikan undang-undang, mengundangkan. 2 memainkan, memerankan. to e. a role (in a play, film) memainkan peranan.
surpass = kkt. melebihi, melampaui, mengungguli. to s. one expectations melebihi dari apa yang kita harapkan. -surpassing ks. jauh melebihi yang lain-lain.
attribute = kb. 1 sifat.2 perlengkapan, benda yg khusus berh. dng pangkat, kedudukan, lambang.-kkt. 1 mempertalikan. 2 menghubungkan.
One way to get the IRS's audit sensors tingling is to claim deductions much higher than are typical for your income level. We'd share them with you, but the IRS keeps that information under wraps. What's more clear: Big charitable donations have been getting a much closer look, says Bob Meighan, VP of TurboTax. "It's been an area of abuse for a while," he says. To protect yourself, get a receipt for any donation you plan on deducting. And keep those receipts for seven years -- unless it suspects you of outright fraud, that's how far back the IRS will go with an audit.
tingling = perasaan geli
wrap = kb. selendang. -kkt. (wrapped) 1 membungkus (a package). 2 membelitkan, melilitkan. wrapping paper kertas pembungkus. -wrappings kb., j. bahan pembungkus.
outright = ks. 1 yang sama sekali palsu. o. lie kebohongan yang sama sekali palsu. 2 secara ikhlas. o. gift hadiah secara ikhlas. -kk. sekaligus, seketika itu. to pay o. membayar seketika itu.
3. "Fear is often our best weapon."
The threat of an audit is enough to send many folks scurrying to their tax preparer, and no wonder. "With audits, you're assumed guilty until proven otherwise," says Long. It's this fear, coupled with the complexity of the system, that causes some to overpay their taxes by not taking deductions they're entitled to, according to experts. A study by the Government Accountability Office found that 2.2 million people a year overpay, by an average of $438. "Americans are leaving a lot of money on the table," says Roni Deutch, a Sacramento-based tax attorney.
threat = kb. ancaman. There's the t. of snow Ada ancaman (turunnya/jatuhnya) salju. t. on o's life ancaman akan dibunuh.
folk = kb. rakyat, bangsa. Inf.: folks j. 1 sanak saudara, pamili. 2 orang - orang. f. song lagu rakyat. f. tales dongeng-dongeng rakyat.
scurrying = berjalan cepat
entitled =yang diberi hak/judul
The GAO report listed mortgage interest, personal property tax, and state and local income tax as the main deductions not being taken. But there are more. Net market losses can be deducted up to $3,000, and if you lost more, you can roll it over into the next year. (Note: To claim a loss now, you need to have sold the stock last year.) You can also deduct things like tax-prep software, a résumé service and IRA fees if they total more than 2 percent of your adjusted gross income. Bottom line: "Take every legitimate tax break out there," says Kay Bell, a tax expert at Bankrate.com. "Just make sure you can justify it."
4. "The AMT is our ATM."
When the alternative minimum tax was introduced in 1969, it affected only a handful of taxpayers with high income and big deductions. But by 2010, it will hit 87 percent of married couples with income between $75,000 and $100,000. That's not what it was designed to do; the AMT was meant to force big earners with lots of deductions to pay their fair share. Now it "brings in a group of taxpayers the IRS has no problem with," says Olson. "The AMT has run its course." The problem is, the AMT hasn't been updated to account for inflation. Instead, Congress has been adjusting exemption criteria on a yearly basis. "It's just a Band-Aid," says Hockenberry.
The Band-Aid in this year's stimulus plan reduces the number of taxpayers subject to the AMT to 4.4 million -- it would've been 30 million, according to the Tax Policy Center. But if you're living in a high-tax state or married with two or more kids, you might find as you calculate both your regular return along with the AMT -- form 6251, which taxpayers are responsible for -- that you could be liable for the latter. Confused? The IRS offers AMT assistance at www.irs.gov; click on "Online Services."
5. "Just because we billed you doesn't mean you owe us money."
Receiving a CP2000, also known as a correspondence audit, sure sounds scary, but in most cases, you don't actually owe any more money. Not that the IRS will make that clear -- it's likely billing you because of a discrepancy on a certain deduction or reported income; then it's up to you to prove otherwise. But as the number of these audits have risen, up 176 percent since 2000, the chance for error goes up as well. The IRS says 98 percent of the audits it sends out require clarification, not payment, but Charlotte Ogorek, an Illinois-based enrolled agent, thinks it's more like 85 percent.
Even if the charge is unfounded, to appeal it could cost you anywhere from $500 to $4,000, depending on how long it takes, says Bill Wandel, a licensed taxpayer rep at JK Harris. If you plan to challenge a CP2000, contact your local taxpayer advocate from the IRS (go to www.irs.gov/advocate to find yours), who will provide advice and representation free. If it turns out you need even more expertise, contact a tax lawyer or an enrolled agent (a professional licensed by the IRS to represent taxpayers in front of the IRS). Find one at www.naea.org.
6. "If you don't pay, we'll sic a collection agency on you."
If you thought dealing with the IRS was bad, wait till you're past due on a payment and get turned over to one of the two private collection agencies the IRS taps to help collect its money. Since 2005, the IRS has been assigning delinquent taxpayer accounts to either Pioneer Credit Recovery or the CBE group of Iowa -- much like any other business or lender. "These are federal taxes," says Olson, the National Taxpayer Advocate. "The IRS should be collecting them." The retention of these private agencies costs $7.65 million annually, yet when the IRS works these cases instead, "it's three times more productive," Olson says. (A spokesperson for Pioneer Credit Recovery and CBE says the issue isn't who can do the work more efficiently; it's whether these taxes would be collected at all without the private collection agencies.)
If the IRS puts a private collection agency on your case, Olson says the first thing to do is to request that your case be turned back over to the IRS. The reason: IRS collectors have the authority to offer you a compromise settlement, something the private agencies aren't authorized to do.
7. "Want to go green? We'll help pay."
Tucked into last year's unprecedented $700 billion bailout plan was some pork that even a vegan could love. Congress not only added an extension of the eco-friendly Energy Policy Act of 2005, which was set to expire at the end of 2007, but it also sweetened the pot for homeowners looking to green up their homes.
Want to grab some energy from the sun? Starting in 2009, a number of energy-saving steps will garner tax breaks for green consumers. Installing a photovoltaic system for solar energy, for example, will net you a tax credit worth 30 percent of the total cost; at www.solar-estimate.org you can find out the price and potential savings of installing a system in your neighborhood. Or if you're gung-ho for wind energy, you'll get up to $4,000 or 30 percent of the cost of installing a small home windmill system to generate energy. Check out the National Renewable Energy Laboratory's "In My Backyard" tool at its Web site to see how much energy you can expect to get from a windmill. For homeowners who aren't looking to go quite that green, there will be a $500 onetime credit for installing energy-efficient windows, insulation or a central air system.
8. "April 15 isn't necessarily a hard deadline."
If you're one of the 112 million taxpayers who receive a refund every year rather than owing more, you have a lot more flexibility around the standard Apr. 15 deadline than you might think. Feeling rushed this year? By filling out IRS form 4868, which you can find online, you can buy yourself a no-questions-asked six-month extension on filing your taxes. And you can file the form requesting your extension as late as Apr. 15 without incurring any penalties. The only catch -- and it's significant for some: If you do owe any taxes, then you must still pay those by the 15th.
How do you know if you're going to owe taxes this year? If your life is basically the same year to year, then your refund is pretty much on autopilot, says Bell. But any big changes -- such as a large increase in salary, unexpected commission or year-end bonus, or having a child go from dependent to independent -- could potentially swing you into the loss column. So when in doubt, do the math in advance, or check with a tax pro to see if there's anything you should be worried about.
9. "We may be a government agency, but that doesn't mean your data's safe."
One things you may not be thinking about as you file your taxes this year is that the documents you're sending off to the IRS contain virtually every piece of information an identity thief would ever need to drive your credit, and your sanity, into the ground. And considering that data breaches are on the rise -- up 47 percent in 2008 from 2007, according to nonprofit Identity Theft Resource Center -- protecting your information, which includes your Social Security number and home address, should be paramount. But a recent report by the Treasury Inspector General for Tax Administration (TIGTA), an independent IRS oversight organization, casts some doubt on the agency's ability to protect your information. For example, TIGTA says two new systems the IRS is implementing to manage taxpayer accounts and account data were "deployed with known security vulnerabilities in the controls over sensitive data protection, disaster recovery and system access."
Alarming as this information is, it's hardly a new problem at the IRS, says J. Russell George, inspector general for TIGTA. "We've seen this before when they implement a new system. The organization's unwillingness to change its behavior is potentially harmful to taxpayers," he says. (The IRS had no comment.)
10. "We may still have your refund."
Waiting on a refund? Typically, it takes three to six weeks to get your money back from Uncle Sam, depending on whether you e-filed or sent your paper return through snail mail. Either way, the IRS does a pretty good job, by and large, of getting refund checks out to taxpayers in a timely manner. But the agency's record is hardly perfect: Every year a fraction of refunds -- belonging to more than 100,000 taxpayers, and with an average due of $988 -- never get to their destination.
What's the problem? According to the IRS, these undelivered refunds are mainly due to issues regarding the accuracy of a taxpayer's mailing address or direct-deposit information. For example, people move and don't leave a forwarding address, handwritten returns may be illegible, or the direct-deposit routing number may be off by a digit or two. If you haven't received your tax return in a reasonable amount of time, check out the IRS's "Where's My Refund?" tool on its Web site.
1. "Like it or not, you may need help with your taxes."
When Cindy Hockenberry and her husband sent in a tax-penalty payment in 2007, they knew there was a chance their math might not jibe with the IRS's. When that turned out to be true and the amount was much higher than expected, they decided to dispute it. Fortunately for them, Hockenberry's a pro. As tax research coordinator at the National Association of Tax Professionals, she spotted a glitch in the IRS's calculation; after visiting the local IRS office, the agency admitted its mistake and lowered the penalty. "There's no way the average taxpayer would have noticed," she says.
jibe = kki. bersesuaian, cocok (with dengan). The two stories do not j. Kedua cerita itu tidak cocok satu sama lain.
dispute = kb. perselisihan, percekcokan. -kkt. membantah. to d. with memperselisihkan, memperdebatkan.
spotted = berbintik
admit = kkt. (admitted) 1 mengakui.2 mengaku.3 menerima 4 memuat (dpt memberikan tempat) 5 mengenal. 6 berlaku utk.
As recently as 2000, less than half of all taxpayers were using a preparer. Today 80 percent use software or a tax pro, "because they're scared of making a mistake," says Nina Olson, the National Taxpayer Advocate. "That's a sign the system's too complex." A pro may not be necessary for basic returns that include just a W-2 and, say, mortgage interest; in those cases, TurboTax will do. However, if you've made a lot of market moves or run a side business, consider a preparer. (You can find one at www.natptax.com; expect to pay $150 to $200 per return.)
Form W2: Wage and Tax Statement
2. "You don't have to be rich to get audited."
The IRS's job is to enforce the tax laws enacted by Congress and to collect what's due. Its primary weapon? The audit, whose use has more than doubled since 2000, to surpass 1 percent of all returns, according to the Transactional Records Access Clearinghouse, a Syracuse University data-research organization. The increase can be attributed to the rising number of so-called correspondence audits -- those done through the mail asking for specific information rather than, say, investigating your whole return, says Susan Long, codirector of the organization. "It's more efficient."
enacted = kkt. 1 membuat, menjadikan. to e. a law menjadikan undang-undang, mengundangkan. 2 memainkan, memerankan. to e. a role (in a play, film) memainkan peranan.
surpass = kkt. melebihi, melampaui, mengungguli. to s. one expectations melebihi dari apa yang kita harapkan. -surpassing ks. jauh melebihi yang lain-lain.
attribute = kb. 1 sifat.2 perlengkapan, benda yg khusus berh. dng pangkat, kedudukan, lambang.-kkt. 1 mempertalikan. 2 menghubungkan.
One way to get the IRS's audit sensors tingling is to claim deductions much higher than are typical for your income level. We'd share them with you, but the IRS keeps that information under wraps. What's more clear: Big charitable donations have been getting a much closer look, says Bob Meighan, VP of TurboTax. "It's been an area of abuse for a while," he says. To protect yourself, get a receipt for any donation you plan on deducting. And keep those receipts for seven years -- unless it suspects you of outright fraud, that's how far back the IRS will go with an audit.
tingling = perasaan geli
wrap = kb. selendang. -kkt. (wrapped) 1 membungkus (a package). 2 membelitkan, melilitkan. wrapping paper kertas pembungkus. -wrappings kb., j. bahan pembungkus.
outright = ks. 1 yang sama sekali palsu. o. lie kebohongan yang sama sekali palsu. 2 secara ikhlas. o. gift hadiah secara ikhlas. -kk. sekaligus, seketika itu. to pay o. membayar seketika itu.
3. "Fear is often our best weapon."
The threat of an audit is enough to send many folks scurrying to their tax preparer, and no wonder. "With audits, you're assumed guilty until proven otherwise," says Long. It's this fear, coupled with the complexity of the system, that causes some to overpay their taxes by not taking deductions they're entitled to, according to experts. A study by the Government Accountability Office found that 2.2 million people a year overpay, by an average of $438. "Americans are leaving a lot of money on the table," says Roni Deutch, a Sacramento-based tax attorney.
threat = kb. ancaman. There's the t. of snow Ada ancaman (turunnya/jatuhnya) salju. t. on o's life ancaman akan dibunuh.
folk = kb. rakyat, bangsa. Inf.: folks j. 1 sanak saudara, pamili. 2 orang - orang. f. song lagu rakyat. f. tales dongeng-dongeng rakyat.
scurrying = berjalan cepat
entitled =yang diberi hak/judul
The GAO report listed mortgage interest, personal property tax, and state and local income tax as the main deductions not being taken. But there are more. Net market losses can be deducted up to $3,000, and if you lost more, you can roll it over into the next year. (Note: To claim a loss now, you need to have sold the stock last year.) You can also deduct things like tax-prep software, a résumé service and IRA fees if they total more than 2 percent of your adjusted gross income. Bottom line: "Take every legitimate tax break out there," says Kay Bell, a tax expert at Bankrate.com. "Just make sure you can justify it."
4. "The AMT is our ATM."
When the alternative minimum tax was introduced in 1969, it affected only a handful of taxpayers with high income and big deductions. But by 2010, it will hit 87 percent of married couples with income between $75,000 and $100,000. That's not what it was designed to do; the AMT was meant to force big earners with lots of deductions to pay their fair share. Now it "brings in a group of taxpayers the IRS has no problem with," says Olson. "The AMT has run its course." The problem is, the AMT hasn't been updated to account for inflation. Instead, Congress has been adjusting exemption criteria on a yearly basis. "It's just a Band-Aid," says Hockenberry.
The Band-Aid in this year's stimulus plan reduces the number of taxpayers subject to the AMT to 4.4 million -- it would've been 30 million, according to the Tax Policy Center. But if you're living in a high-tax state or married with two or more kids, you might find as you calculate both your regular return along with the AMT -- form 6251, which taxpayers are responsible for -- that you could be liable for the latter. Confused? The IRS offers AMT assistance at www.irs.gov; click on "Online Services."
5. "Just because we billed you doesn't mean you owe us money."
Receiving a CP2000, also known as a correspondence audit, sure sounds scary, but in most cases, you don't actually owe any more money. Not that the IRS will make that clear -- it's likely billing you because of a discrepancy on a certain deduction or reported income; then it's up to you to prove otherwise. But as the number of these audits have risen, up 176 percent since 2000, the chance for error goes up as well. The IRS says 98 percent of the audits it sends out require clarification, not payment, but Charlotte Ogorek, an Illinois-based enrolled agent, thinks it's more like 85 percent.
Even if the charge is unfounded, to appeal it could cost you anywhere from $500 to $4,000, depending on how long it takes, says Bill Wandel, a licensed taxpayer rep at JK Harris. If you plan to challenge a CP2000, contact your local taxpayer advocate from the IRS (go to www.irs.gov/advocate to find yours), who will provide advice and representation free. If it turns out you need even more expertise, contact a tax lawyer or an enrolled agent (a professional licensed by the IRS to represent taxpayers in front of the IRS). Find one at www.naea.org.
6. "If you don't pay, we'll sic a collection agency on you."
If you thought dealing with the IRS was bad, wait till you're past due on a payment and get turned over to one of the two private collection agencies the IRS taps to help collect its money. Since 2005, the IRS has been assigning delinquent taxpayer accounts to either Pioneer Credit Recovery or the CBE group of Iowa -- much like any other business or lender. "These are federal taxes," says Olson, the National Taxpayer Advocate. "The IRS should be collecting them." The retention of these private agencies costs $7.65 million annually, yet when the IRS works these cases instead, "it's three times more productive," Olson says. (A spokesperson for Pioneer Credit Recovery and CBE says the issue isn't who can do the work more efficiently; it's whether these taxes would be collected at all without the private collection agencies.)
If the IRS puts a private collection agency on your case, Olson says the first thing to do is to request that your case be turned back over to the IRS. The reason: IRS collectors have the authority to offer you a compromise settlement, something the private agencies aren't authorized to do.
7. "Want to go green? We'll help pay."
Tucked into last year's unprecedented $700 billion bailout plan was some pork that even a vegan could love. Congress not only added an extension of the eco-friendly Energy Policy Act of 2005, which was set to expire at the end of 2007, but it also sweetened the pot for homeowners looking to green up their homes.
Want to grab some energy from the sun? Starting in 2009, a number of energy-saving steps will garner tax breaks for green consumers. Installing a photovoltaic system for solar energy, for example, will net you a tax credit worth 30 percent of the total cost; at www.solar-estimate.org you can find out the price and potential savings of installing a system in your neighborhood. Or if you're gung-ho for wind energy, you'll get up to $4,000 or 30 percent of the cost of installing a small home windmill system to generate energy. Check out the National Renewable Energy Laboratory's "In My Backyard" tool at its Web site to see how much energy you can expect to get from a windmill. For homeowners who aren't looking to go quite that green, there will be a $500 onetime credit for installing energy-efficient windows, insulation or a central air system.
8. "April 15 isn't necessarily a hard deadline."
If you're one of the 112 million taxpayers who receive a refund every year rather than owing more, you have a lot more flexibility around the standard Apr. 15 deadline than you might think. Feeling rushed this year? By filling out IRS form 4868, which you can find online, you can buy yourself a no-questions-asked six-month extension on filing your taxes. And you can file the form requesting your extension as late as Apr. 15 without incurring any penalties. The only catch -- and it's significant for some: If you do owe any taxes, then you must still pay those by the 15th.
How do you know if you're going to owe taxes this year? If your life is basically the same year to year, then your refund is pretty much on autopilot, says Bell. But any big changes -- such as a large increase in salary, unexpected commission or year-end bonus, or having a child go from dependent to independent -- could potentially swing you into the loss column. So when in doubt, do the math in advance, or check with a tax pro to see if there's anything you should be worried about.
9. "We may be a government agency, but that doesn't mean your data's safe."
One things you may not be thinking about as you file your taxes this year is that the documents you're sending off to the IRS contain virtually every piece of information an identity thief would ever need to drive your credit, and your sanity, into the ground. And considering that data breaches are on the rise -- up 47 percent in 2008 from 2007, according to nonprofit Identity Theft Resource Center -- protecting your information, which includes your Social Security number and home address, should be paramount. But a recent report by the Treasury Inspector General for Tax Administration (TIGTA), an independent IRS oversight organization, casts some doubt on the agency's ability to protect your information. For example, TIGTA says two new systems the IRS is implementing to manage taxpayer accounts and account data were "deployed with known security vulnerabilities in the controls over sensitive data protection, disaster recovery and system access."
Alarming as this information is, it's hardly a new problem at the IRS, says J. Russell George, inspector general for TIGTA. "We've seen this before when they implement a new system. The organization's unwillingness to change its behavior is potentially harmful to taxpayers," he says. (The IRS had no comment.)
10. "We may still have your refund."
Waiting on a refund? Typically, it takes three to six weeks to get your money back from Uncle Sam, depending on whether you e-filed or sent your paper return through snail mail. Either way, the IRS does a pretty good job, by and large, of getting refund checks out to taxpayers in a timely manner. But the agency's record is hardly perfect: Every year a fraction of refunds -- belonging to more than 100,000 taxpayers, and with an average due of $988 -- never get to their destination.
What's the problem? According to the IRS, these undelivered refunds are mainly due to issues regarding the accuracy of a taxpayer's mailing address or direct-deposit information. For example, people move and don't leave a forwarding address, handwritten returns may be illegible, or the direct-deposit routing number may be off by a digit or two. If you haven't received your tax return in a reasonable amount of time, check out the IRS's "Where's My Refund?" tool on its Web site.
Rabu, 22 April 2009
Big Brother and Your Taxes
by Ben Stein
Posted on Monday, April 20, 2009, 12:00AM
Here is a scary story for you.
Recently a friend of mine, who lives in a city in Northern California, called me, extremely upset. She said she had just received a letter from the California Franchise Tax Board, the ruthless entity that collects taxes in sunny California.
Franchise = kb. 1 (voting) hak suara. 2 hak, monopoli.
upset = 1 menggangu, merusak (nerves, plans). 2 menumbangkan (a dish or pan). 3 Sport: mengalahkan. 4 mengacaukan.
ruthless = ks. zalim, kejam, bengis.
sunny = 1 cerah (of a day). 2 gembira, riang (disposition). 3 yang mendapat banyak cahaya matahari (of a room).
The letter referenced her 2006 taxes, asking her how she had the means to buy a certain very expensive car she owns. She was asked to document how she had the money for it and why they saw no sign of that income on her 2006 return.
reference = kb. 1 surat keterangan, rekomdasi. 2 referansi.
return = kb. 1 kembalinya. 2 hasil. 3 keuntungan, laba (for o's money on o's investment). 4 kedatangan kembali, pemulangan. 5 (tax) formulir pajak penghasilan. -ks. kembali. -kkt. 1 mengembalikan (a book, compliment). 2 membalas (s.o's love).
The fact is that the woman in question was in a serious car accident in late 2005. Her prior car was totaled. So she got a lump sum insurance payment of about $30,000. Rather imprudently, she used that money as the down payment on an extremely pricey car -- the sort of car she really does not have enough income to afford.
imprudently = dengan tidak bijaksana
pricey = mahal
afford = kkt.1 menghasilkan,memberi-(kan).2 kuat, mampu.3 boleh.4 mengadakan, membuka, memberi.
That's her problem, and she will deal with it.
The scary part is that the California Franchise Tax Board knew what kind of car she bought and how much she paid for it, and they could and did compare those numbers with her earlier years' income.
The Servant Becomes the Master
This shows that information by taxing authorities has gone way past where it should be. The whole incident reminded me of the beginning of ‘Terminator', when we learn that, at a certain stage, machines become self-conscious and have the will to take over the earth. The servant becomes the master. And since the master is a machine, it has no feelings other than the will to control.
conscious = ks. 1 sadar. He was c. after his fall Dia sadar sesudah ia jatuh. 2 disengaja. to tell a c. lie berdusta dengan sengaja.
If the taxing authority knows what kind of car a taxpayer has and how much it cost to buy, what's next? Can the state match up our credit card purchases with our social security numbers and then keep a total of how much we have spent in 2009? Can the IRS or the Franchise Tax Board then have a program that figures that if we spent X, especially on Y and Z items, then we must have had an income of A? Can it then send us a letter demanding to know why we did not pay tax on amount A?
figure = kb. 1 bentuk badan. 2 bilangan, angka. 3 jumlah, bilangan. 4 tokoh. 5 gambar. 6 harga. -figures j. ilmu hitung. -kkt. 1 menghitung, menjumlahkan. 2membayangkan. -kki. 1 berhitung. 2 Inf.: kira. 3 terdapat, tertera. -figured ks. bergambar.
More frightening, the taxing authority can slap liens on taxpayers, and sometimes the taxpayers don't learn about it until later. Can the IRS or the state authority compute what their machines "think" we owe, and then simply debit that amount from our bank or brokerage accounts? If there is not enough there to pay what they figure we owe, can they put liens on our homes and garnish our wages?
frightening = menakutkan
slap = kb. tamparan, tempeleng. -kkt. (lapped) 1 menampar (s.o.). 2 menjatuhkan (a fine on s.o.). 3 membantingkan (food on a table). to s.around memukuli. to s. down menampik. slap-happy ks. puyeng, suka pening, miring otak.
lien = kb. hak gadai. because of the l. on it karena telah digadaikan.
garnish = kb. hiasan (for food). -kkt. menghias.
If the IRS really gets rolling, can they get an instantaneous, automated look at our checking accounts? Can they compute what the machines think we owe by the checks plus the credit cards, and then attach our wages or our bank accounts until we pay?
rolling = kb. (meng)gelinding(nya) (of a ball). ks. 1 berbukit-bukit (country). 2 berombak-ombak, melandai (fields). 3 yang berombak (besar) (sea).
Soulless Machines
Our government, to some people, appears to be a fair-minded, careful body. And many bureaucrats do fit that description, although many do not. But what happens when soulless machines take over the tasks of tax gathering?
Soulless = tanpa jiwa
appear = kki 1 kelihatan. 2 menghadap. 3 muncul 4 terbit. 5 bermain. 6 nampak, tampak, kelihatan. 7 tampil, muncul.
careful = ks. (ber-)hati-hati. -carefully kk. 1 dengan hati-hati. 2 dengan teliti.
fit = kb. 1 serangan tiba-tiba. 2 pas. -ks. 1 pantas, patut, layak. 2 sehat. 3 dapat, siap. 4 baik. -kk. to see f. memutuskan. -kkt. (fit atau fitted) 1 cocok dengan. 2 mencocokkan / menyusun kembali. 3 menjadikan. fitings kb., j. benda-benda, perabot.
gathering = pengumpulan
Then we humans have to gather our records and try to fight back as well as we can. How long until we go into an audit and don't even talk to a human being but instead have a machine scan our documents and then instantaneously give us an answer?
The answer, of course, will always be "pay up."
At present, only the top echelons of wage earners pay any meaningful amount of tax. But once the collection process is fully computerized, what is to stop the IRS or the states from collecting at least a few ounces of flesh from everyone?
ounce = kb. ons. to sell by the o. menjual per ons.
flesh = kb. daging. to put on f. bertambah gemuk. -kkt. to f. out meluaskan, menyempurnakan. -flesh-colored ks. berwarna seperti daging. flesh-eating ks. yang makan daging. f. wound luka enteng.
The future liabilities of the government -- thanks to wild overspending by both the Democrats and Republicans -- are almost incomprehensibly large. The needs of the states are critical right now. What is to stop the politicians from making machines our oppressors to squeeze out every dime they can from us?
oppressors = penindas
squeeze = kb. 1 tekanan. 2 tiruan. 3 pemerasan. -kkt. 1 memeras (money from s.o., fruit). 2 memencetr, meremas (a kitten). 3 menyelipkan. 4 memeluk, mendekap (a child in o's arms). -kki. diperas.
dime = kb. sepicis, uang picisan. a d. a dozen banyak dan mudah didapat. d. store toko murah yang menjual barang dengan harga beberapa sen keatas.
A Plea for Privacy
And what about some minimal amount of privacy? I am happy to pay my taxes. I like the fact that some of what I pay goes to the military and police and firefighters. But I don't want the government to know all the details of my life, which is what they are clearly on the way to knowing.
Plea = kb. 1 permohonan, permintaan. 2 Law : pembelaan, dalih.
For years now, I have been hearing that we need a very large sales tax instead of an income tax, and I have pooh-poohed the idea as being too regressive. But now that I see where the income tax system is going, I am eager for a fresh look at a national sales tax, which would stop the government from prying into our lives.
pooh = kseru. cih, bah. -kkt. pooh-pooh tak mengindahkan.
eager = ks. ingin sekali, hasrat. to be e. to go ingin sekali pergi. Inf.: e beaver orang yang rajin sekali. -eagerly kk. dengan tak sabar, dengan keinginan yang amat besar.
prying = kkt. (pried) membongkar, membuka dengan keras, mengumpil (top off a box). -kki. to p. into 1 mencampur-campuri (other's affairs). 2 menyelidiki (a matter). 3 pengintip, mengintai.
Taxes are a basic part of life, and we all have to pay our fair share. But Big Brother is a lot closer than we think, via the tax system, and I don't like that one bit.
closer = semakin dekat
bit = kb. 1 kekang, gurdi. 2 sedikit. 3 agak. 4 lih BITE. b. by b. sedikit demi sedikit. not a b. sedikitpun tidak. bits and pieces potong-potong, kepingan.
Posted on Monday, April 20, 2009, 12:00AM
Here is a scary story for you.
Recently a friend of mine, who lives in a city in Northern California, called me, extremely upset. She said she had just received a letter from the California Franchise Tax Board, the ruthless entity that collects taxes in sunny California.
Franchise = kb. 1 (voting) hak suara. 2 hak, monopoli.
upset = 1 menggangu, merusak (nerves, plans). 2 menumbangkan (a dish or pan). 3 Sport: mengalahkan. 4 mengacaukan.
ruthless = ks. zalim, kejam, bengis.
sunny = 1 cerah (of a day). 2 gembira, riang (disposition). 3 yang mendapat banyak cahaya matahari (of a room).
The letter referenced her 2006 taxes, asking her how she had the means to buy a certain very expensive car she owns. She was asked to document how she had the money for it and why they saw no sign of that income on her 2006 return.
reference = kb. 1 surat keterangan, rekomdasi. 2 referansi.
return = kb. 1 kembalinya. 2 hasil. 3 keuntungan, laba (for o's money on o's investment). 4 kedatangan kembali, pemulangan. 5 (tax) formulir pajak penghasilan. -ks. kembali. -kkt. 1 mengembalikan (a book, compliment). 2 membalas (s.o's love).
The fact is that the woman in question was in a serious car accident in late 2005. Her prior car was totaled. So she got a lump sum insurance payment of about $30,000. Rather imprudently, she used that money as the down payment on an extremely pricey car -- the sort of car she really does not have enough income to afford.
imprudently = dengan tidak bijaksana
pricey = mahal
afford = kkt.1 menghasilkan,memberi-(kan).2 kuat, mampu.3 boleh.4 mengadakan, membuka, memberi.
That's her problem, and she will deal with it.
The scary part is that the California Franchise Tax Board knew what kind of car she bought and how much she paid for it, and they could and did compare those numbers with her earlier years' income.
The Servant Becomes the Master
This shows that information by taxing authorities has gone way past where it should be. The whole incident reminded me of the beginning of ‘Terminator', when we learn that, at a certain stage, machines become self-conscious and have the will to take over the earth. The servant becomes the master. And since the master is a machine, it has no feelings other than the will to control.
conscious = ks. 1 sadar. He was c. after his fall Dia sadar sesudah ia jatuh. 2 disengaja. to tell a c. lie berdusta dengan sengaja.
If the taxing authority knows what kind of car a taxpayer has and how much it cost to buy, what's next? Can the state match up our credit card purchases with our social security numbers and then keep a total of how much we have spent in 2009? Can the IRS or the Franchise Tax Board then have a program that figures that if we spent X, especially on Y and Z items, then we must have had an income of A? Can it then send us a letter demanding to know why we did not pay tax on amount A?
figure = kb. 1 bentuk badan. 2 bilangan, angka. 3 jumlah, bilangan. 4 tokoh. 5 gambar. 6 harga. -figures j. ilmu hitung. -kkt. 1 menghitung, menjumlahkan. 2membayangkan. -kki. 1 berhitung. 2 Inf.: kira. 3 terdapat, tertera. -figured ks. bergambar.
More frightening, the taxing authority can slap liens on taxpayers, and sometimes the taxpayers don't learn about it until later. Can the IRS or the state authority compute what their machines "think" we owe, and then simply debit that amount from our bank or brokerage accounts? If there is not enough there to pay what they figure we owe, can they put liens on our homes and garnish our wages?
frightening = menakutkan
slap = kb. tamparan, tempeleng. -kkt. (lapped) 1 menampar (s.o.). 2 menjatuhkan (a fine on s.o.). 3 membantingkan (food on a table). to s.around memukuli. to s. down menampik. slap-happy ks. puyeng, suka pening, miring otak.
lien = kb. hak gadai. because of the l. on it karena telah digadaikan.
garnish = kb. hiasan (for food). -kkt. menghias.
If the IRS really gets rolling, can they get an instantaneous, automated look at our checking accounts? Can they compute what the machines think we owe by the checks plus the credit cards, and then attach our wages or our bank accounts until we pay?
rolling = kb. (meng)gelinding(nya) (of a ball). ks. 1 berbukit-bukit (country). 2 berombak-ombak, melandai (fields). 3 yang berombak (besar) (sea).
Soulless Machines
Our government, to some people, appears to be a fair-minded, careful body. And many bureaucrats do fit that description, although many do not. But what happens when soulless machines take over the tasks of tax gathering?
Soulless = tanpa jiwa
appear = kki 1 kelihatan. 2 menghadap. 3 muncul 4 terbit. 5 bermain. 6 nampak, tampak, kelihatan. 7 tampil, muncul.
careful = ks. (ber-)hati-hati. -carefully kk. 1 dengan hati-hati. 2 dengan teliti.
fit = kb. 1 serangan tiba-tiba. 2 pas. -ks. 1 pantas, patut, layak. 2 sehat. 3 dapat, siap. 4 baik. -kk. to see f. memutuskan. -kkt. (fit atau fitted) 1 cocok dengan. 2 mencocokkan / menyusun kembali. 3 menjadikan. fitings kb., j. benda-benda, perabot.
gathering = pengumpulan
Then we humans have to gather our records and try to fight back as well as we can. How long until we go into an audit and don't even talk to a human being but instead have a machine scan our documents and then instantaneously give us an answer?
The answer, of course, will always be "pay up."
At present, only the top echelons of wage earners pay any meaningful amount of tax. But once the collection process is fully computerized, what is to stop the IRS or the states from collecting at least a few ounces of flesh from everyone?
ounce = kb. ons. to sell by the o. menjual per ons.
flesh = kb. daging. to put on f. bertambah gemuk. -kkt. to f. out meluaskan, menyempurnakan. -flesh-colored ks. berwarna seperti daging. flesh-eating ks. yang makan daging. f. wound luka enteng.
The future liabilities of the government -- thanks to wild overspending by both the Democrats and Republicans -- are almost incomprehensibly large. The needs of the states are critical right now. What is to stop the politicians from making machines our oppressors to squeeze out every dime they can from us?
oppressors = penindas
squeeze = kb. 1 tekanan. 2 tiruan. 3 pemerasan. -kkt. 1 memeras (money from s.o., fruit). 2 memencetr, meremas (a kitten). 3 menyelipkan. 4 memeluk, mendekap (a child in o's arms). -kki. diperas.
dime = kb. sepicis, uang picisan. a d. a dozen banyak dan mudah didapat. d. store toko murah yang menjual barang dengan harga beberapa sen keatas.
A Plea for Privacy
And what about some minimal amount of privacy? I am happy to pay my taxes. I like the fact that some of what I pay goes to the military and police and firefighters. But I don't want the government to know all the details of my life, which is what they are clearly on the way to knowing.
Plea = kb. 1 permohonan, permintaan. 2 Law : pembelaan, dalih.
For years now, I have been hearing that we need a very large sales tax instead of an income tax, and I have pooh-poohed the idea as being too regressive. But now that I see where the income tax system is going, I am eager for a fresh look at a national sales tax, which would stop the government from prying into our lives.
pooh = kseru. cih, bah. -kkt. pooh-pooh tak mengindahkan.
eager = ks. ingin sekali, hasrat. to be e. to go ingin sekali pergi. Inf.: e beaver orang yang rajin sekali. -eagerly kk. dengan tak sabar, dengan keinginan yang amat besar.
prying = kkt. (pried) membongkar, membuka dengan keras, mengumpil (top off a box). -kki. to p. into 1 mencampur-campuri (other's affairs). 2 menyelidiki (a matter). 3 pengintip, mengintai.
Taxes are a basic part of life, and we all have to pay our fair share. But Big Brother is a lot closer than we think, via the tax system, and I don't like that one bit.
closer = semakin dekat
bit = kb. 1 kekang, gurdi. 2 sedikit. 3 agak. 4 lih BITE. b. by b. sedikit demi sedikit. not a b. sedikitpun tidak. bits and pieces potong-potong, kepingan.
Kamis, 16 April 2009
Top Tax Tips for Younger Filers
by Anya Kamenetz
Posted on Wednesday, March 12, 2008, 12:00AM
Filing your taxes is kind of like going to the dentist: It may not be fun, but dealing with it is part of being a grownup. So with Tax Day one short month away, I turned to an expert for advice aimed especially at us younger and newer filers. Kay Bell is a Texas-based journalist who has covered tax tips for Bankrate.com since 1999 (check out their 2008 tax guide here).
She also writes one of the most readable and entertaining tax blogs on the Web: Don't Mess With Taxes.
readable = menarik
Here are Kay's and my top tax tips for GenDebt.
1.) Take the easy way out.
Put your technology skills to work. Online filing can be fast and cheap -- even free. "Tax prep software has gotten better every year," says Bell. If you make less than $54,000 per year, you can use the IRS Free File site directly.
Or you can try the free version of the TaxACT program.
You might also be able to get a free version of TurboTax or H&R Block's Tax Cut software. Check with your bank or financial institution to see if they have any deals.
2.) But not too EZ.
Bell says one of the biggest mistakes young filers make is going straight for the one-page 1040EZ form.
"A lot of young people might have student loans, and they can deduct the interest, but not on the 1040EZ," she says. "They need to use a 1040A or the long 1040."
3.) Be a savvy student.
About that student loan interest deduction: Those who earn less than $65,000 a year can take up to $2,500 off their adjusted gross income for the interest (not the principal) paid annually on student loans. This counts for both federal and private student loans. If you're still enrolled in a qualified higher education institution, you can also claim a HOPE tax credit for up to $1,650 for your tuition and fees.
Importantly, Bell notes, these are "above-the-line" deductions, meaning you don't have to itemize them (break them down, rather than taking the standard deduction) to claim them.
savvy = cerdas
4.) Adjusting to the working world? Adjust your income.
Another surprising above-the-line deduction: the expenses for your first big move and first job.
"Let's say you got out of college at Ohio State, and you're moving to take a job offer down in Atlanta," says Bell. "Be sure to keep a record of your U-Haul and moving expenses." All of this can be written off on the 1040 Long Form only.
After your first job, you can deduct job-hunting expenses like resume prep when you look for another position in the same field, but you have to itemize to take these deductions.
5.) Online tools can help the self-employed.
Lots of younger workers are starting out as freelance, permalance, or independent contractors. If you're getting paid on a 1099 instead of a W-2, you need to fill out a Schedule C form to itemize your business expenses.
Here, take your time and be thorough. For example, don't forget home-office expenses -- you can deduct a proportion of your rent, Internet, and utilities if you work from home (although your work area should be exclusively delineated and reserved for work).
thorough = seksama
delineated = digambarkan
Also, you can deduct your premiums if you buy your own health insurance -- which you should!
Online tools can help you keep organized when it comes to all of these deductions, which is extremely important. "People end up cheating themselves," says Bell. "They have a lot of expenses and they're not remembering them, and it's awful hard to reconstruct things."
cheating = menipu
awful = kejam
As a freelance writer, I've been dealing with this since I first filed taxes. This year, I went through my online GCalendar month by month to remember all the dates where I incurred business-related travel or entertainment expenses (e.g., lunch with an interview subject). My Amazon account showed what books I'd bought for research, and my cell phone bills served as a log, allowing me to figure out the percentage of calls that were made to business-related numbers.
incurred = yang terjadi
log = mencatatkan dalam buku harian.
Kay also suggests using online mapping tools to reconstruct your mileage if you drove anywhere for work. Of course, you should be able to back up every deduction with a receipt.
Another important thing to remember: If you are a freelancer and taxes are not being taken out of your paychecks, you must file estimated tax payments each quarter. If not, "you're technically in violation of tax law," says Bell. Eep.
In online tool that can help you with this task is the Electronic Federal Tax Payment System.
6.) Get the maximum benefit out of your benefits.
If you read this column, you already know the long-term reasons to fund your tax-sheltered retirement account. If it's a Roth IRA or Roth 401(k), you still have to pay taxes on your contributions (with the advantage of taking the money out tax-free when you retire). But if your employer offers a regular 401(k), those contributions will reduce your tax liability.
Another employer-provided tax benefit that Bell says people often overlook is a flexible spending account for medical expenses. Put, say, $500 into it for your co-pays and dental deductibles -- even over-the-counter medications -- and you can take that amount off your taxable income.
sheltered = yang dinaungi
7.) Know when to get extra help.
There are certain times when younger filers should seek help from a human being, whether at a storefront chain like H&R Block or Jackson Hewitt, or with a qualified CPA. You may want to do this if you've started your own business, sold some property, or have a large amount of investments, all things that will make your tax filing more complicated. Or, says Bell, "if you're just too danged busy and you're going to be rushed. You never want to get in a rush when you're doing your taxes."
8.) Beware the refund.
Everyone knows that a fat refund is your reward for going through the mind-numbing process of tax filing, right? Well, think again. A "refund" just means you let the government hold on to too much of your income all year, like giving them an interest-free loan.
"If you find you're getting a large refund, go to your human resources office and fill out a new W-4," says Bell. "You want to have just as close to what you're going to owe taken out as possible."
Another refund pitfall: If you walk into a tax-prep chain, watch out for any refund anticipation loans they offer. They'll cost you a bundle in the long run.
Beware = hati2
bundle = berkas
9.) Get your stimulus payment.
Finally, this year there's yet another cash incentive to file -- your economic stimulus payment of $300 to $600, scheduled to go out in May and based on your 2007 return. The IRS is encouraging even those whose incomes are too low to need to file to go ahead and do it this year.
While the $150 billion stimulus package is supposed to get Americans to go out and spend their refunds, a better option for many members of Generation Debt is to -- yes -- pay off debt or invest the money.
encouraging = menganjurkan,
Top Tax Tips for Younger Filers
Posted on Wednesday, March 12, 2008, 12:00AM
Filing your taxes is kind of like going to the dentist: It may not be fun, but dealing with it is part of being a grownup. So with Tax Day one short month away, I turned to an expert for advice aimed especially at us younger and newer filers. Kay Bell is a Texas-based journalist who has covered tax tips for Bankrate.com since 1999 (check out their 2008 tax guide here).
She also writes one of the most readable and entertaining tax blogs on the Web: Don't Mess With Taxes.
readable = menarik
Here are Kay's and my top tax tips for GenDebt.
1.) Take the easy way out.
Put your technology skills to work. Online filing can be fast and cheap -- even free. "Tax prep software has gotten better every year," says Bell. If you make less than $54,000 per year, you can use the IRS Free File site directly.
Or you can try the free version of the TaxACT program.
You might also be able to get a free version of TurboTax or H&R Block's Tax Cut software. Check with your bank or financial institution to see if they have any deals.
2.) But not too EZ.
Bell says one of the biggest mistakes young filers make is going straight for the one-page 1040EZ form.
"A lot of young people might have student loans, and they can deduct the interest, but not on the 1040EZ," she says. "They need to use a 1040A or the long 1040."
3.) Be a savvy student.
About that student loan interest deduction: Those who earn less than $65,000 a year can take up to $2,500 off their adjusted gross income for the interest (not the principal) paid annually on student loans. This counts for both federal and private student loans. If you're still enrolled in a qualified higher education institution, you can also claim a HOPE tax credit for up to $1,650 for your tuition and fees.
Importantly, Bell notes, these are "above-the-line" deductions, meaning you don't have to itemize them (break them down, rather than taking the standard deduction) to claim them.
savvy = cerdas
4.) Adjusting to the working world? Adjust your income.
Another surprising above-the-line deduction: the expenses for your first big move and first job.
"Let's say you got out of college at Ohio State, and you're moving to take a job offer down in Atlanta," says Bell. "Be sure to keep a record of your U-Haul and moving expenses." All of this can be written off on the 1040 Long Form only.
After your first job, you can deduct job-hunting expenses like resume prep when you look for another position in the same field, but you have to itemize to take these deductions.
5.) Online tools can help the self-employed.
Lots of younger workers are starting out as freelance, permalance, or independent contractors. If you're getting paid on a 1099 instead of a W-2, you need to fill out a Schedule C form to itemize your business expenses.
Here, take your time and be thorough. For example, don't forget home-office expenses -- you can deduct a proportion of your rent, Internet, and utilities if you work from home (although your work area should be exclusively delineated and reserved for work).
thorough = seksama
delineated = digambarkan
Also, you can deduct your premiums if you buy your own health insurance -- which you should!
Online tools can help you keep organized when it comes to all of these deductions, which is extremely important. "People end up cheating themselves," says Bell. "They have a lot of expenses and they're not remembering them, and it's awful hard to reconstruct things."
cheating = menipu
awful = kejam
As a freelance writer, I've been dealing with this since I first filed taxes. This year, I went through my online GCalendar month by month to remember all the dates where I incurred business-related travel or entertainment expenses (e.g., lunch with an interview subject). My Amazon account showed what books I'd bought for research, and my cell phone bills served as a log, allowing me to figure out the percentage of calls that were made to business-related numbers.
incurred = yang terjadi
log = mencatatkan dalam buku harian.
Kay also suggests using online mapping tools to reconstruct your mileage if you drove anywhere for work. Of course, you should be able to back up every deduction with a receipt.
Another important thing to remember: If you are a freelancer and taxes are not being taken out of your paychecks, you must file estimated tax payments each quarter. If not, "you're technically in violation of tax law," says Bell. Eep.
In online tool that can help you with this task is the Electronic Federal Tax Payment System.
6.) Get the maximum benefit out of your benefits.
If you read this column, you already know the long-term reasons to fund your tax-sheltered retirement account. If it's a Roth IRA or Roth 401(k), you still have to pay taxes on your contributions (with the advantage of taking the money out tax-free when you retire). But if your employer offers a regular 401(k), those contributions will reduce your tax liability.
Another employer-provided tax benefit that Bell says people often overlook is a flexible spending account for medical expenses. Put, say, $500 into it for your co-pays and dental deductibles -- even over-the-counter medications -- and you can take that amount off your taxable income.
sheltered = yang dinaungi
7.) Know when to get extra help.
There are certain times when younger filers should seek help from a human being, whether at a storefront chain like H&R Block or Jackson Hewitt, or with a qualified CPA. You may want to do this if you've started your own business, sold some property, or have a large amount of investments, all things that will make your tax filing more complicated. Or, says Bell, "if you're just too danged busy and you're going to be rushed. You never want to get in a rush when you're doing your taxes."
8.) Beware the refund.
Everyone knows that a fat refund is your reward for going through the mind-numbing process of tax filing, right? Well, think again. A "refund" just means you let the government hold on to too much of your income all year, like giving them an interest-free loan.
"If you find you're getting a large refund, go to your human resources office and fill out a new W-4," says Bell. "You want to have just as close to what you're going to owe taken out as possible."
Another refund pitfall: If you walk into a tax-prep chain, watch out for any refund anticipation loans they offer. They'll cost you a bundle in the long run.
Beware = hati2
bundle = berkas
9.) Get your stimulus payment.
Finally, this year there's yet another cash incentive to file -- your economic stimulus payment of $300 to $600, scheduled to go out in May and based on your 2007 return. The IRS is encouraging even those whose incomes are too low to need to file to go ahead and do it this year.
While the $150 billion stimulus package is supposed to get Americans to go out and spend their refunds, a better option for many members of Generation Debt is to -- yes -- pay off debt or invest the money.
encouraging = menganjurkan,
Top Tax Tips for Younger Filers
Kamis, 26 Februari 2009
Overlooked Tax Deductions for Last-Minute Filers
Posted on Wednesday, April 2, 2008, 12:00AM
At this time of year, many people fear not finishing their tax returns on time, or getting hit with a big bill they can't cover. My worry is the tax code itself -- the thing is so big, so complex, with such a random assortment of deductions and credits, that I'm sure I'm missing something.
Overlooked = yang dilewatkan
assortment = bermacam-macam / sortiran
For instance, when my husband and I switched accountants a few years ago, the new one asked if we put money away for college. I told her we contributed to 529 college savings accounts in New York. She told me our previous accountant hadn't taken the state tax deduction we were entitled to on our prior-year return.
entitled = yang diberi hak/judul
Tax Yourself on Deductions
The roughly one-third of Americans who itemize their returns typically know about the big deductions -- mortgage interest, charitable giving, qualified retirement-related contributions. But there are a whole host of other categories that many people overlook.
roughly = dengan kasar
I use a professional for fear that I'm not maximizing my deductions (and the fact that my husband and I both run our own businesses), and an estimated 40 million people rely on tax software. If you don't use either -- or if your tax preparer makes minimal inquiries about your finances -- here are some questions to ask yourself so you don't miss opportunities to reduce your 2007 tax bill:
• Did you refinance your mortgage last year?
Any "points" you paid to reduce your mortgage interest rate are deductible, along with your mortgage interest. Did you pay a prepayment penalty to get out of your old mortgage? That may be deductible as well.
If you purchased a new home, don't forget to look at your closing statement and deduct the real estate taxes paid at closing and any points on your mortgage.
• Did you have a major medical problem in 2007?
The IRS allows you to deduct medical expenses that surpass 7.5 percent of your adjusted gross income. That sounds like a lot -- someone making $60,000 could deduct any expenses beyond $4,500. But the IRS has an extensive list of what qualifies as medical expenses.
Health insurance premiums you pay out of pocket, co-pays, prescriptions, and lodging for medical purposes (up to $50 per person) are all deductible, as are therapies to stop smoking. In addition, if you had to drive to the doctor's office, an X-ray facility, physical therapy, or a medical supply store to pick up crutches or a wheelchair, you can deduct the miles you drove, parking, tolls, and the like. Even a portion of your insurance premiums for long-term care can be deducted.
prescriptions = resep obat
lodging = penginapan
pick up = mengambil
crutch = kb. tongkat ketiak. 2 penolong. 3 penyokong, penopang.
• Do you work at home, and have an office that's exclusively devoted to work?
If so, you can deduct a percentage of your rent or mortgage, utilities, homeowner's insurance, and maintenance for the room. Just make sure it's your primary office, and doesn't double as a guest suite on weekends, says New York CPA Eliot Lebenhart.
devote = kkt. 1 mencurahkan. 2 bertekun. 3 menyediakan. to be devoted to sayang akan adiknya yang perempuan.
"You have to have the production of your income take place there," Lebenhart explains. "I do a lot of work in the entertainment businesses, and I don't deduct it because my clients are usually just doing record-keeping there, they're not performing or modeling in the home." Also, if your employer provides a space for you at work and the home office is merely for convenience, don't take the deduction, he says.
Lebenhart says states are becoming aggressive about auditing on home offices so they don't miss out on revenue. New York managed to collect income tax from an employee who worked and lived in Tennessee (he telecommuted and was only in his New York office 30 days during the year). It also collected state income tax from a college professor who taught a day or two in the state but otherwise worked at home in Connecticut.
taught = yang diajar
• Did you pay any bills related to education for yourself or dependents?
You can deduct up to $2,500 of the interest on a student loan. Depending on your income, you can take advantage of the Hope Credit for qualified expenses for the first two years of undergraduate education or the Lifetime Learning Credit from sophomore year through graduate school. (You can't claim both simultaneously.)
Your state may offer additional tax benefits related to educational expenses.
• Did you pay for child care for a kid under age 13 while you worked full-time?
You can deduct expenses up to $3,000 related to a babysitter, day care center (including after-care services at your child's school), and summer day camp.
• Did you buy a car or boat in 2007?
The IRS allows taxpayers to deduct either their state income tax or sales tax, whichever is higher. (Clearly the big winners here are residents of the nine states that collect no income tax, such as Nevada and Florida.) To figure out if the sales tax deduction makes more sense than deducting state income tax, check out this tool.
• Did you make home improvements to boost energy efficiency in 2007?
The IRS offers a $500 credit to property owners who upgraded windows, doors, roofs, insulation, HVAC equipment, and non-solar water heaters last year. (This IRS provision has expired, so you had to do the work in 2007; you can still get credit on next year's return for solar water heaters and panels installed in 2008, however.)
The More the Merrier
The IRS also has a plethora of "Miscellaneous Deductions," including many work-related expenses that aren't reimbursed by your employer. You can claim only the amount of these expenses that total more than 2 percent of your adjusted gross income:
plethora = kb. kebanyakan, berlebih-lebihan. a p. books buku-buku yang kebanyakan.
• Did you search for a new job in your field?
Even if you were unsuccessful in your quest, you can deduct expenses for the phone, travel, employment agency and job counseling, resume preparation, copies, and postage. (You can't take this deduction if you're searching for your first job out of college or are changing careers.)
quest = kb. 1 penyelidikan. 2 pencarian. the q. for knowledge mencari ilmu pengetahuan. to go in q. of s.o. pergi mencari seseorang.
• Did you have to travel or buy work-related clothing or supplies?
You can deduct expenses related to travel that your employer does not reimburse (even those related to getting a passport). You can also take depreciation on a cell phone or home computer your employer requires for work-related needs.
Subscriptions to industry publications and professional journals, and legal fees related to doing or keeping your job (such as a contract negotiation), are also deductible.
So are union dues, uniforms, protective gear, tools, equipment, or other work-related clothing and supplies. (Watch out on uniforms -- a nurse's uniform can be deducted, but not something adaptable for other uses like a formal white shirt and black pants required to work as a waiter.)
union = kb. penyatuan, perpaduan. u. of hydrogen and oxygen perpaduan hidrogen dan oksigen. 2 serikat sekerja. 3 koperasi. 4 (wedlock) perkawinan.
due = kb. hak. She never asks for more than her d. Dia tak pernah meminta lebih daripada haknya. -dues j. iuran. -ks. seharusnya
• Did you pay for job-related continuing education?
"You can take this deduction if it helps you maintain your position, but not if it's to get you a new position," says Lebenhart.
For instance, an accountant who wants to take the CPA exam can't deduct the cost of the review course. But once he becomes a CPA, he can deduct the cost of continuing education required to maintain his CPA certification.
A Word on Documentation
Be sure to hang onto the receipts related to tax deductions for at least three years. If you already filed and missed a hefty deduction, you have three years to file an amended return.
hang onto = menggantung/kan ke
hefty = kokoh / kuat
Artikel ini ditulis oleh Laura Rowley, yang ditulis di http://finance.yahoo.com/expert/article/moneyhappy/74755
At this time of year, many people fear not finishing their tax returns on time, or getting hit with a big bill they can't cover. My worry is the tax code itself -- the thing is so big, so complex, with such a random assortment of deductions and credits, that I'm sure I'm missing something.
Overlooked = yang dilewatkan
assortment = bermacam-macam / sortiran
For instance, when my husband and I switched accountants a few years ago, the new one asked if we put money away for college. I told her we contributed to 529 college savings accounts in New York. She told me our previous accountant hadn't taken the state tax deduction we were entitled to on our prior-year return.
entitled = yang diberi hak/judul
Tax Yourself on Deductions
The roughly one-third of Americans who itemize their returns typically know about the big deductions -- mortgage interest, charitable giving, qualified retirement-related contributions. But there are a whole host of other categories that many people overlook.
roughly = dengan kasar
I use a professional for fear that I'm not maximizing my deductions (and the fact that my husband and I both run our own businesses), and an estimated 40 million people rely on tax software. If you don't use either -- or if your tax preparer makes minimal inquiries about your finances -- here are some questions to ask yourself so you don't miss opportunities to reduce your 2007 tax bill:
• Did you refinance your mortgage last year?
Any "points" you paid to reduce your mortgage interest rate are deductible, along with your mortgage interest. Did you pay a prepayment penalty to get out of your old mortgage? That may be deductible as well.
If you purchased a new home, don't forget to look at your closing statement and deduct the real estate taxes paid at closing and any points on your mortgage.
• Did you have a major medical problem in 2007?
The IRS allows you to deduct medical expenses that surpass 7.5 percent of your adjusted gross income. That sounds like a lot -- someone making $60,000 could deduct any expenses beyond $4,500. But the IRS has an extensive list of what qualifies as medical expenses.
Health insurance premiums you pay out of pocket, co-pays, prescriptions, and lodging for medical purposes (up to $50 per person) are all deductible, as are therapies to stop smoking. In addition, if you had to drive to the doctor's office, an X-ray facility, physical therapy, or a medical supply store to pick up crutches or a wheelchair, you can deduct the miles you drove, parking, tolls, and the like. Even a portion of your insurance premiums for long-term care can be deducted.
prescriptions = resep obat
lodging = penginapan
pick up = mengambil
crutch = kb. tongkat ketiak. 2 penolong. 3 penyokong, penopang.
• Do you work at home, and have an office that's exclusively devoted to work?
If so, you can deduct a percentage of your rent or mortgage, utilities, homeowner's insurance, and maintenance for the room. Just make sure it's your primary office, and doesn't double as a guest suite on weekends, says New York CPA Eliot Lebenhart.
devote = kkt. 1 mencurahkan. 2 bertekun. 3 menyediakan. to be devoted to sayang akan adiknya yang perempuan.
"You have to have the production of your income take place there," Lebenhart explains. "I do a lot of work in the entertainment businesses, and I don't deduct it because my clients are usually just doing record-keeping there, they're not performing or modeling in the home." Also, if your employer provides a space for you at work and the home office is merely for convenience, don't take the deduction, he says.
Lebenhart says states are becoming aggressive about auditing on home offices so they don't miss out on revenue. New York managed to collect income tax from an employee who worked and lived in Tennessee (he telecommuted and was only in his New York office 30 days during the year). It also collected state income tax from a college professor who taught a day or two in the state but otherwise worked at home in Connecticut.
taught = yang diajar
• Did you pay any bills related to education for yourself or dependents?
You can deduct up to $2,500 of the interest on a student loan. Depending on your income, you can take advantage of the Hope Credit for qualified expenses for the first two years of undergraduate education or the Lifetime Learning Credit from sophomore year through graduate school. (You can't claim both simultaneously.)
Your state may offer additional tax benefits related to educational expenses.
• Did you pay for child care for a kid under age 13 while you worked full-time?
You can deduct expenses up to $3,000 related to a babysitter, day care center (including after-care services at your child's school), and summer day camp.
• Did you buy a car or boat in 2007?
The IRS allows taxpayers to deduct either their state income tax or sales tax, whichever is higher. (Clearly the big winners here are residents of the nine states that collect no income tax, such as Nevada and Florida.) To figure out if the sales tax deduction makes more sense than deducting state income tax, check out this tool.
• Did you make home improvements to boost energy efficiency in 2007?
The IRS offers a $500 credit to property owners who upgraded windows, doors, roofs, insulation, HVAC equipment, and non-solar water heaters last year. (This IRS provision has expired, so you had to do the work in 2007; you can still get credit on next year's return for solar water heaters and panels installed in 2008, however.)
The More the Merrier
The IRS also has a plethora of "Miscellaneous Deductions," including many work-related expenses that aren't reimbursed by your employer. You can claim only the amount of these expenses that total more than 2 percent of your adjusted gross income:
plethora = kb. kebanyakan, berlebih-lebihan. a p. books buku-buku yang kebanyakan.
• Did you search for a new job in your field?
Even if you were unsuccessful in your quest, you can deduct expenses for the phone, travel, employment agency and job counseling, resume preparation, copies, and postage. (You can't take this deduction if you're searching for your first job out of college or are changing careers.)
quest = kb. 1 penyelidikan. 2 pencarian. the q. for knowledge mencari ilmu pengetahuan. to go in q. of s.o. pergi mencari seseorang.
• Did you have to travel or buy work-related clothing or supplies?
You can deduct expenses related to travel that your employer does not reimburse (even those related to getting a passport). You can also take depreciation on a cell phone or home computer your employer requires for work-related needs.
Subscriptions to industry publications and professional journals, and legal fees related to doing or keeping your job (such as a contract negotiation), are also deductible.
So are union dues, uniforms, protective gear, tools, equipment, or other work-related clothing and supplies. (Watch out on uniforms -- a nurse's uniform can be deducted, but not something adaptable for other uses like a formal white shirt and black pants required to work as a waiter.)
union = kb. penyatuan, perpaduan. u. of hydrogen and oxygen perpaduan hidrogen dan oksigen. 2 serikat sekerja. 3 koperasi. 4 (wedlock) perkawinan.
due = kb. hak. She never asks for more than her d. Dia tak pernah meminta lebih daripada haknya. -dues j. iuran. -ks. seharusnya
• Did you pay for job-related continuing education?
"You can take this deduction if it helps you maintain your position, but not if it's to get you a new position," says Lebenhart.
For instance, an accountant who wants to take the CPA exam can't deduct the cost of the review course. But once he becomes a CPA, he can deduct the cost of continuing education required to maintain his CPA certification.
A Word on Documentation
Be sure to hang onto the receipts related to tax deductions for at least three years. If you already filed and missed a hefty deduction, you have three years to file an amended return.
hang onto = menggantung/kan ke
hefty = kokoh / kuat
Artikel ini ditulis oleh Laura Rowley, yang ditulis di http://finance.yahoo.com/expert/article/moneyhappy/74755
Senin, 23 Februari 2009
Alternative Minimum Tax (AMT) - Part I
copy paste ini seperti biasa dari http://finance.yahoo.com/how-to-guide/taxes/136786
Sebenarnya, ingin sekali saya menejemahkan ke dalam bahasa indonesia, mungkin bisa, tetapi saya akan tertawa membacanya.
The AMT was originally devised to help prevent high income filers from avoiding tax altogether through the clever use of various deductions. The AMT effectively takes back some of the tax breaks allowed for regular tax purposes. The only way to really tell if you are "caught" in the AMT is to determine your regular tax liability, then your AMT liability and see which is higher. In true IRS spirit, the higher liability is the one you pay.
devised = difikirkan
Topics
The AMT -- An Overview
Computing Alternative Minimum Tax on Form 6251
Adjustments for AMT
Standard Deduction and Personal Exemptions Not Allowed
Certain Itemized Deductions Disallowed for AMT Purposes
Mortgage Interest
Taxes
Medical Expenses
Miscellaneous Deductions
Investment Interest
Incentive Stock Option (ISO)
Other Adjustments
1
The AMT -- An Overview
The AMT is an additional tax that you may owe if for regular tax purposes you claimed:
Itemized deductions, such as taxes, interest on home equity loans used for nonresidential purposes, medical expenses, and miscellaneous job and investment expenses.
Certain tax-exempt interest, accelerated depreciation, and incentive stock option benefits.
A substantial number of exemptions for dependents.
There are no specific tests to determine whether or not you are liable for AMT. You must first figure your regular income tax and then see whether tax benefit items must be added back to taxable income to figure alternative minimum taxable income, on which the AMT is figured. If after claiming the AMT exemption and applying the AMT rates of 26% and 28% the tentative alternative minimum tax exceeds your regular income tax, the excess is your AMT liability, which is added to the regular tax on your return. In other words, your tax liability for the year will be the greater of your regular tax or your AMT.
AMT liability is figured on Form 6251 and is attached to Form 1040. If you file Form 1040A, AMT liability, if any, is figured on a worksheet and the AMT is entered on the line for total tax on Form 1040A.
2
Computing
You use Form 6251 to compute AMT liability,if any.
AMT adjustments and preferences are generally added back to regular taxable income to calculate alternative minimum taxable income (AMTI). The items that most commonly get added back to income when calculating AMTI are personal exemptions, state and local taxes, and miscellaneous itemized deductions.
AMTI is reduced by the allowable AMT exemption. Subject to the phaseout rule, the exemption for 2008 is $46,200 if single or head of household, $69,950 if married filing jointly or qualifying widow(er), or $34,975 if married filing separately.
After reducing AMTI by the allowable exemption, a 26% AMT rate generally applies to the first $175,000 of AMT income ($87,500 if married filing separately), and a 28% rate applies to any balance of the AMT income. However, if you had net capital gains that qualify for reduced capital gains rates, you apply the same capital gains rate for AMT purposes as for regular income tax purposes.
The resulting tax, less any AMT foreign tax credit, is the tentative AMT, which applies only to the extent it exceeds your regular income tax. For this purpose, regular income tax is the tax on your taxable income, without taking into account personal credits (such as the child tax credit or education credits), minus any special averaging tax on a lump-sum distribution or any regular foreign tax credit. The excess of tentative AMT over this regular tax, if any, is the AMT liability that you must report as an additional tax on Line 45 of Form 1040.
3
Adjustments for AMT
The starting point for figuring AMT is your adjusted gross income from Form 1040. This amount will generally be increased by adjustments on Form 6251. The adjustments are outlined in each section below. Back to top
4
Standard Deduction and Personal Exemptions Not Allowed
If you claimed the standard deduction for regular tax purposes, the deduction is disregarded when figuring AMT liability. You also must disregard the personal exemptions claimed for regular tax purposes. Back to top
5
Certain Itemized Deductions Disallowed for AMT Purposes
Some key itemized deductions claimed on Schedule A are disallowed or reduced when figuring alternative minimum taxable income (AMTI) on Form 6251. For example, no AMT deduction is allowed for state and local income (or, if elected, sales) taxes, real property taxes, or personal property taxes, or for foreign income or real property taxes. Also not allowed for AMT purposes are miscellaneous itemized deductions that were allowed on Schedule A after application of the 2% AGI floor. A smaller deduction for medical expenses is allowed for AMT than for regular tax purposes. The deduction for interest on home equity mortgage loans may have to be reduced. Investment interest may have to be refigured for AMT.
On the other hand, if some of your itemized deductions were disallowed on Schedule A by the 3% reduction rule for taxpayers with adjusted gross income over $159,950 ($79,975 if married filing separately), the disallowed amount is entered as a negative adjustment to AMTI. Back to top
6
Mortgage Interest
Less interest may be deductible for AMT purposes than for regular tax purposes. If an interest deduction is claimed on Schedule A for debt that does not qualify under the AMT rules, that interest is added back as an adjustment on Form 6251.
No AMT adjustment is required for home mortgage interest paid on a debt incurred to buy, construct, or substantially rehabilitate your principal residence or qualifying second residence. The residence may be a house, apartment, cooperative apartment, condominium, or mobile home not used on a transient basis. Nor is an adjustment required for interest on a debt incurred before July 1, 1982, provided that the mortgage was secured at the time it was taken out by your principal residence or any other home used by you or a family member. Back to top
7
Taxes
State, local, and foreign taxes deducted on Schedule A must be added back to income in figuring AMT. If in 2008 you received a refund of taxes deducted in a prior year and the refund is reported as income on your 2008 Form 1040, you enter the refund on Form 6251 (Line 8) as a negative adjustment in figuring alternative minimum taxable income. Back to top
8
Medical Expenses
If medical expenses in excess of the 7.5% AGI floor are deducted for regular tax purposes, you must add back to income on Form 6251 the smaller of the allowable medical deduction from Schedule A or 2.5% of adjusted gross income. This adjustment is to allow medical expenses as an AMT deduction only to the extent that they exceed 10% of AGI. Back to top
9
Miscellaneous Deductions
In figuring alternative minimum taxable income (AMTI), you may not deduct miscellaneous itemized deductions in excess of 2% of adjusted gross income that you claim on Schedule A. These include unreimbursed job expenses, tax preparation fees, and contingent legal fees paid to recover taxable damages in employment or personal legal actions. Back to top
10
Investment Interest
If for regular tax purposes you claimed an itemized deduction (Schedule A) for investment interest on Form 4952, you must complete a second Form 4952 to determine if your allowable deduction for AMT is more or less than the itemized deduction, taking into account AMT adjustments and preferences. The difference between the regular tax deduction and the allowable AMT deduction is entered on Form 6251 as a positive adjustment if the regular tax deduction is more, or as a negative adjustment if the AMT amount is more. For example, if you paid interest on a home equity loan whose proceeds were invested in stocks or bonds, that interest is not treated as investment interest on Form 4952 when figuring the itemized deduction for regular tax purposes, but it is included as investment interest on the second Form 4952 used to figure the allowable AMT amount. Back to top
11
Incentive Stock Option (ISO)
For regular tax purposes, you are not taxed when you exercise an incentive stock option (ISO). However, the exercise of an ISO can result in a substantial AMT liability. You generally must increase AMT income by including on Form 6251 the excess, if any, of:1. The fair market value of the stock acquired through exercise of the option (determined without regard to any lapse restriction) when your rights in the acquired stock first become transferable or when these rights are no longer subject to a substantial risk of forfeiture, over2. The amount you paid for the stock, including any amount you paid for the ISO used to acquire the stock.Note: If you acquire stock by exercising an ISO and you dispose of that stock in the same year, the tax treatment under the regular tax and the AMT is the same. No AMT adjustment is required. If you exercised ISOs in the past and have an unused minimum tax credit, there is a refundable credit for 2008 for a portion of this old credit. The credit rules are explained on Form 8801. Back to top
12
Other Adjustments
Adjustments must also be made for:
MACRS depreciation
Mining exploration and development costs
Circulation costs
Long-term contracts
Amortization of certified pollution control facilities
Research and experimental expenditures
Passive tax-shelter farm losses
Passive losses from nonfarming activitiesBack to top
Summary
The AMT effectively takes back some of the tax breaks allowed for regular tax purposes.
There are no specific tests to determine whether or not you are liable for AMT. You must first figure your regular income tax and then see whether tax benefit items must be added back to taxable income to figure alternative minimum taxable income, on which the AMT is figured.
AMT adjustments and preferences are generally added back to regular taxable income to calculate alternative minimum taxable income (AMTI). The items that most commonly get added back to income when calculating AMTI are personal exemptions, state and local taxes, and miscellaneous itemized deductions.
Sebenarnya, ingin sekali saya menejemahkan ke dalam bahasa indonesia, mungkin bisa, tetapi saya akan tertawa membacanya.
The AMT was originally devised to help prevent high income filers from avoiding tax altogether through the clever use of various deductions. The AMT effectively takes back some of the tax breaks allowed for regular tax purposes. The only way to really tell if you are "caught" in the AMT is to determine your regular tax liability, then your AMT liability and see which is higher. In true IRS spirit, the higher liability is the one you pay.
devised = difikirkan
Topics
The AMT -- An Overview
Computing Alternative Minimum Tax on Form 6251
Adjustments for AMT
Standard Deduction and Personal Exemptions Not Allowed
Certain Itemized Deductions Disallowed for AMT Purposes
Mortgage Interest
Taxes
Medical Expenses
Miscellaneous Deductions
Investment Interest
Incentive Stock Option (ISO)
Other Adjustments
1
The AMT -- An Overview
The AMT is an additional tax that you may owe if for regular tax purposes you claimed:
Itemized deductions, such as taxes, interest on home equity loans used for nonresidential purposes, medical expenses, and miscellaneous job and investment expenses.
Certain tax-exempt interest, accelerated depreciation, and incentive stock option benefits.
A substantial number of exemptions for dependents.
There are no specific tests to determine whether or not you are liable for AMT. You must first figure your regular income tax and then see whether tax benefit items must be added back to taxable income to figure alternative minimum taxable income, on which the AMT is figured. If after claiming the AMT exemption and applying the AMT rates of 26% and 28% the tentative alternative minimum tax exceeds your regular income tax, the excess is your AMT liability, which is added to the regular tax on your return. In other words, your tax liability for the year will be the greater of your regular tax or your AMT.
AMT liability is figured on Form 6251 and is attached to Form 1040. If you file Form 1040A, AMT liability, if any, is figured on a worksheet and the AMT is entered on the line for total tax on Form 1040A.
2
Computing
You use Form 6251 to compute AMT liability,if any.
AMT adjustments and preferences are generally added back to regular taxable income to calculate alternative minimum taxable income (AMTI). The items that most commonly get added back to income when calculating AMTI are personal exemptions, state and local taxes, and miscellaneous itemized deductions.
AMTI is reduced by the allowable AMT exemption. Subject to the phaseout rule, the exemption for 2008 is $46,200 if single or head of household, $69,950 if married filing jointly or qualifying widow(er), or $34,975 if married filing separately.
After reducing AMTI by the allowable exemption, a 26% AMT rate generally applies to the first $175,000 of AMT income ($87,500 if married filing separately), and a 28% rate applies to any balance of the AMT income. However, if you had net capital gains that qualify for reduced capital gains rates, you apply the same capital gains rate for AMT purposes as for regular income tax purposes.
The resulting tax, less any AMT foreign tax credit, is the tentative AMT, which applies only to the extent it exceeds your regular income tax. For this purpose, regular income tax is the tax on your taxable income, without taking into account personal credits (such as the child tax credit or education credits), minus any special averaging tax on a lump-sum distribution or any regular foreign tax credit. The excess of tentative AMT over this regular tax, if any, is the AMT liability that you must report as an additional tax on Line 45 of Form 1040.
3
Adjustments for AMT
The starting point for figuring AMT is your adjusted gross income from Form 1040. This amount will generally be increased by adjustments on Form 6251. The adjustments are outlined in each section below. Back to top
4
Standard Deduction and Personal Exemptions Not Allowed
If you claimed the standard deduction for regular tax purposes, the deduction is disregarded when figuring AMT liability. You also must disregard the personal exemptions claimed for regular tax purposes. Back to top
5
Certain Itemized Deductions Disallowed for AMT Purposes
Some key itemized deductions claimed on Schedule A are disallowed or reduced when figuring alternative minimum taxable income (AMTI) on Form 6251. For example, no AMT deduction is allowed for state and local income (or, if elected, sales) taxes, real property taxes, or personal property taxes, or for foreign income or real property taxes. Also not allowed for AMT purposes are miscellaneous itemized deductions that were allowed on Schedule A after application of the 2% AGI floor. A smaller deduction for medical expenses is allowed for AMT than for regular tax purposes. The deduction for interest on home equity mortgage loans may have to be reduced. Investment interest may have to be refigured for AMT.
On the other hand, if some of your itemized deductions were disallowed on Schedule A by the 3% reduction rule for taxpayers with adjusted gross income over $159,950 ($79,975 if married filing separately), the disallowed amount is entered as a negative adjustment to AMTI. Back to top
6
Mortgage Interest
Less interest may be deductible for AMT purposes than for regular tax purposes. If an interest deduction is claimed on Schedule A for debt that does not qualify under the AMT rules, that interest is added back as an adjustment on Form 6251.
No AMT adjustment is required for home mortgage interest paid on a debt incurred to buy, construct, or substantially rehabilitate your principal residence or qualifying second residence. The residence may be a house, apartment, cooperative apartment, condominium, or mobile home not used on a transient basis. Nor is an adjustment required for interest on a debt incurred before July 1, 1982, provided that the mortgage was secured at the time it was taken out by your principal residence or any other home used by you or a family member. Back to top
7
Taxes
State, local, and foreign taxes deducted on Schedule A must be added back to income in figuring AMT. If in 2008 you received a refund of taxes deducted in a prior year and the refund is reported as income on your 2008 Form 1040, you enter the refund on Form 6251 (Line 8) as a negative adjustment in figuring alternative minimum taxable income. Back to top
8
Medical Expenses
If medical expenses in excess of the 7.5% AGI floor are deducted for regular tax purposes, you must add back to income on Form 6251 the smaller of the allowable medical deduction from Schedule A or 2.5% of adjusted gross income. This adjustment is to allow medical expenses as an AMT deduction only to the extent that they exceed 10% of AGI. Back to top
9
Miscellaneous Deductions
In figuring alternative minimum taxable income (AMTI), you may not deduct miscellaneous itemized deductions in excess of 2% of adjusted gross income that you claim on Schedule A. These include unreimbursed job expenses, tax preparation fees, and contingent legal fees paid to recover taxable damages in employment or personal legal actions. Back to top
10
Investment Interest
If for regular tax purposes you claimed an itemized deduction (Schedule A) for investment interest on Form 4952, you must complete a second Form 4952 to determine if your allowable deduction for AMT is more or less than the itemized deduction, taking into account AMT adjustments and preferences. The difference between the regular tax deduction and the allowable AMT deduction is entered on Form 6251 as a positive adjustment if the regular tax deduction is more, or as a negative adjustment if the AMT amount is more. For example, if you paid interest on a home equity loan whose proceeds were invested in stocks or bonds, that interest is not treated as investment interest on Form 4952 when figuring the itemized deduction for regular tax purposes, but it is included as investment interest on the second Form 4952 used to figure the allowable AMT amount. Back to top
11
Incentive Stock Option (ISO)
For regular tax purposes, you are not taxed when you exercise an incentive stock option (ISO). However, the exercise of an ISO can result in a substantial AMT liability. You generally must increase AMT income by including on Form 6251 the excess, if any, of:1. The fair market value of the stock acquired through exercise of the option (determined without regard to any lapse restriction) when your rights in the acquired stock first become transferable or when these rights are no longer subject to a substantial risk of forfeiture, over2. The amount you paid for the stock, including any amount you paid for the ISO used to acquire the stock.Note: If you acquire stock by exercising an ISO and you dispose of that stock in the same year, the tax treatment under the regular tax and the AMT is the same. No AMT adjustment is required. If you exercised ISOs in the past and have an unused minimum tax credit, there is a refundable credit for 2008 for a portion of this old credit. The credit rules are explained on Form 8801. Back to top
12
Other Adjustments
Adjustments must also be made for:
MACRS depreciation
Mining exploration and development costs
Circulation costs
Long-term contracts
Amortization of certified pollution control facilities
Research and experimental expenditures
Passive tax-shelter farm losses
Passive losses from nonfarming activitiesBack to top
Summary
The AMT effectively takes back some of the tax breaks allowed for regular tax purposes.
There are no specific tests to determine whether or not you are liable for AMT. You must first figure your regular income tax and then see whether tax benefit items must be added back to taxable income to figure alternative minimum taxable income, on which the AMT is figured.
AMT adjustments and preferences are generally added back to regular taxable income to calculate alternative minimum taxable income (AMTI). The items that most commonly get added back to income when calculating AMTI are personal exemptions, state and local taxes, and miscellaneous itemized deductions.
Stimulating Work
by Andrea CoombesTuesday, February 17, 2009provided by marketwatch
Taxpayers may need to plan ahead for breaks in stimulus bill.
If you ever needed a reason to sit down and do some tax planning, the new $787 billion fiscal stimulus bill -- including some $300 billion in tax breaks -- is a good one.
Jika tax cut = potongan pajak, tax relief = pembebasan pajak, tax break sangat aneh jika diartikan pajak retakan?
From an earlier-than-usual red flag on who might fall into the alternative minimum tax this year to a new question on paycheck withholding, the bill President Obama signed Tuesday should prompt taxpayers to consider how best to lower their taxes in the year ahead.
Of course, there are some straight-up tax breaks that don't necessarily require much tax planning per se.
Unemployed people will find their first $2,400 of benefits is untaxed, and they may qualify for reduced health-insurance premiums through their former employer's group plan, or Cobra.
There's the $8,000 tax credit for first-time home buyers who buy between Jan. 1 and Dec. 1, 2009 -- this credit doesn't have to be paid back, unlike the $7,500 perk available in 2008
But there is one aspect of the home-purchase credit that could require planning: You can claim the credit on your 2008 taxes, even if you bought the house in 2009, according to Mark Luscombe, a principal analyst with CCH Inc., a Riverwoods, Ill., tax publisher and unit of Wolters Kluwer.
"There may need to be a little IRS instruction in that regard because the [2008] forms and instructions probably don't at present contemplate an $8,000 credit," he said. "But it is fairly clear that making that election will not change the 2009 purchase to a 2008 purchase." The home-buyer credit starts to phase out for taxpayers with adjusted gross income above $75,000 for single filers and $150,000 for joint filers, according to CCH.
Then, there's the above-the-line deduction for sales tax paid to buy a new car in 2009. You can only deduct the tax on the purchase price up to $49,500. Luscombe warns that taxpayers shouldn't take both this deduction and the itemized deduction for state sales tax. This deduction on a car purchase phases out at AGI of $125,000 for single files and $250,000 for joint returns. According to CCH, the new-car credit is only for vehicles bought on or after the law's effective date.
AMT Relief
Thanks to the stimulus bill, taxpayers now know the precise alternative-minimum tax exemption amounts earlier than usual. For the past few years, Congress has waited until year's end to pass the "patch" that prevents more taxpayers falling into this parallel tax system. The exemption reduces the amount of income taxed at the AMT rate.
Knowing the 2009 exemption amounts now -- $70,950 for joint filers and $46,700 for single and head-of-household filers -- gives taxpayers more time to run scenarios to see where their tax bill is likely to fall, and figure out how to lower that bill. (Absent a patch this year, those figures would have gone back down to just $45,000 for couples filing jointly and $33,750 for individuals, according to CCH.)
"This expected bit of tax help probably won't have a very stimulative effect, but it will lessen uncertainty and help people plan their tax moves earlier in the year," Luscombe said.
"As a result of the AMT exemption amounts going up, fewer people should be subject to the AMT," said Greg Rosica, tax partner at Ernst & Young LLP, in a conference call with reporters Friday.
Credit for Workers
Those taxpayers eligible for the "make work pay" credit -- up to $400 for single workers and $800 for couples -- may want to assess their withholding before this credit starts showing up in their paychecks.
The credit, available in 2009 and 2010, was trimmed to $400 per worker per year, from a draft stimulus bill's $500 payout.
The credit begins to phase out for single filers with adjusted gross income of $75,000 and married-filing-joint filers with AGI of $150,000. The credit isn't available to taxpayers with AGI topping $95,000 for single filers and $190,000 for joint filers, according to CCH.
It's still uncertain exactly how the credit will be paid out. While some tax experts say employers will automatically adjust workers' paychecks, others say that's not so.
"There's supposed to be a choice between having it as a credit on your tax return or having it deducted from your payroll taxes," Luscombe said. "I would think the employee would have to make some input on that regard, rather than having the employer automatically start the deduction. Some people have suggested maybe a revised W-4 would have to be submitted [to] reflect the employee's choice."
That means workers will need to decide whether they want the money in their paycheck or as a tax refund later. Given the variability of individual's tax situations, some taxpayers could find the credit leads to a larger-than-expected refund come tax time in April 2010 -- or a bill for money owed (if, say, a couple's overall income picture means they're not eligible for a credit but a spouse received one anyway).
Meanwhile, some fixed-income people -- including those who receive Social Security, railroad retirement benefits and veterans' benefits -- will get a one-time $250 payment, a decrease from $300 in an earlier draft of the bill.
Child and Education Breaks
Got kids? If you're a lower-income taxpayer, you may benefit from the expanded child tax credit. This refundable credit, worth up to $1,000 per child, now starts kicking in on income of $3,000 and up, compared to current law of $8,500 and higher, according to CCH. Lower-income taxpayers also get the benefit of an expanded earned income tax credit.
Meanwhile, more higher-income taxpayers get access to the valuable Hope college-education credit, expanded to $2,500, up form $1,800 currently, and renamed under the stimulus bill to the American Opportunity Tax Credit.
"It's figured as 100% of eligible expenses to $2,000 plus 25% of expenses above $2,000, so someone with total eligible expenses of $4,000 or more would reach the maximum amount," according to a press release by CCH.
The credit phases out when adjusted gross income hits $80,000 for single filers or $160,000 for joint filers. That means more people are eligible: Under current law, the Hope credit phase-out in 2009 starts at $50,000 for single filers and $100,000 for married filers.
Breaks for the Bus Ride
Mass-transit commuters get a bigger benefit, too. Right now you can pay some of your commuting costs with pre-tax dollars -- if your employer offers this perk. The stimulus bill raises the maximum dollar amount eligible under this perk to $230 for transit passes and van pooling, up from $120, according to CCH. The change brings up the transit limit to match the $230 already allowed for parking costs.
Business Breaks
The stimulus bill reduces the required estimated tax payments people in business must make for 2009. "It does not eliminate any of the tax you have to pay," Rosica said. "You're still responsible for your full tax bill come tax filing time for 2009, but it does allow more of a conservation of cash throughout the year."
And there are more perks for small businesses in the bill, including an extension of the current Section 179 expense and the bonus depreciation provisions.
That other stimulus bill in 2008 increased the Section 179 expense deduction to $250,000 from $128,000, and offered 50% bonus depreciation, allowing certain businesses to immediately write off one-half of the cost of a capital expense. This stimulus bill allows those perks in 2009 as well.
Small firms also benefit from the net operating loss carry-back provision, which allows them to use existing losses to offset taxes paid on profits in previous years. Already, firms could do that for the two most recent years, but the stimulus bill expands that to five years.
While early drafts of the stimulus plan offered that break to all companies, the final bill limits it to those with $15 million or less in gross revenue.
That's a big hit to bigger companies who were hoping to collect some quick cash to invest back into their firms, said Clint Stretch, managing principal of tax policy at Deloitte Tax.
And some say lawmakers might have missed a chance to stimulate greater business activity.
"Our best estimate is that taxpayers with less than $15 million of gross receipts are 98% of all corporations, but only 5% of taxable income, so Congress has covered most corporations, but not the ones who account for 95% of corporate tax activity," Stretch said in an email message Friday.
Andrea Coombes is an assistant personal finance editor for MarketWatch, based in San Francisco.
Copyrighted, MarketWatch. All rights reserved. Republication or redistribution of MarketWatch content is expressly prohibited without the prior written consent of MarketWatch. MarketWatch shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Taxpayers may need to plan ahead for breaks in stimulus bill.
If you ever needed a reason to sit down and do some tax planning, the new $787 billion fiscal stimulus bill -- including some $300 billion in tax breaks -- is a good one.
Jika tax cut = potongan pajak, tax relief = pembebasan pajak, tax break sangat aneh jika diartikan pajak retakan?
From an earlier-than-usual red flag on who might fall into the alternative minimum tax this year to a new question on paycheck withholding, the bill President Obama signed Tuesday should prompt taxpayers to consider how best to lower their taxes in the year ahead.
Of course, there are some straight-up tax breaks that don't necessarily require much tax planning per se.
Unemployed people will find their first $2,400 of benefits is untaxed, and they may qualify for reduced health-insurance premiums through their former employer's group plan, or Cobra.
There's the $8,000 tax credit for first-time home buyers who buy between Jan. 1 and Dec. 1, 2009 -- this credit doesn't have to be paid back, unlike the $7,500 perk available in 2008
But there is one aspect of the home-purchase credit that could require planning: You can claim the credit on your 2008 taxes, even if you bought the house in 2009, according to Mark Luscombe, a principal analyst with CCH Inc., a Riverwoods, Ill., tax publisher and unit of Wolters Kluwer.
"There may need to be a little IRS instruction in that regard because the [2008] forms and instructions probably don't at present contemplate an $8,000 credit," he said. "But it is fairly clear that making that election will not change the 2009 purchase to a 2008 purchase." The home-buyer credit starts to phase out for taxpayers with adjusted gross income above $75,000 for single filers and $150,000 for joint filers, according to CCH.
Then, there's the above-the-line deduction for sales tax paid to buy a new car in 2009. You can only deduct the tax on the purchase price up to $49,500. Luscombe warns that taxpayers shouldn't take both this deduction and the itemized deduction for state sales tax. This deduction on a car purchase phases out at AGI of $125,000 for single files and $250,000 for joint returns. According to CCH, the new-car credit is only for vehicles bought on or after the law's effective date.
AMT Relief
Thanks to the stimulus bill, taxpayers now know the precise alternative-minimum tax exemption amounts earlier than usual. For the past few years, Congress has waited until year's end to pass the "patch" that prevents more taxpayers falling into this parallel tax system. The exemption reduces the amount of income taxed at the AMT rate.
Knowing the 2009 exemption amounts now -- $70,950 for joint filers and $46,700 for single and head-of-household filers -- gives taxpayers more time to run scenarios to see where their tax bill is likely to fall, and figure out how to lower that bill. (Absent a patch this year, those figures would have gone back down to just $45,000 for couples filing jointly and $33,750 for individuals, according to CCH.)
"This expected bit of tax help probably won't have a very stimulative effect, but it will lessen uncertainty and help people plan their tax moves earlier in the year," Luscombe said.
"As a result of the AMT exemption amounts going up, fewer people should be subject to the AMT," said Greg Rosica, tax partner at Ernst & Young LLP, in a conference call with reporters Friday.
Credit for Workers
Those taxpayers eligible for the "make work pay" credit -- up to $400 for single workers and $800 for couples -- may want to assess their withholding before this credit starts showing up in their paychecks.
The credit, available in 2009 and 2010, was trimmed to $400 per worker per year, from a draft stimulus bill's $500 payout.
The credit begins to phase out for single filers with adjusted gross income of $75,000 and married-filing-joint filers with AGI of $150,000. The credit isn't available to taxpayers with AGI topping $95,000 for single filers and $190,000 for joint filers, according to CCH.
It's still uncertain exactly how the credit will be paid out. While some tax experts say employers will automatically adjust workers' paychecks, others say that's not so.
"There's supposed to be a choice between having it as a credit on your tax return or having it deducted from your payroll taxes," Luscombe said. "I would think the employee would have to make some input on that regard, rather than having the employer automatically start the deduction. Some people have suggested maybe a revised W-4 would have to be submitted [to] reflect the employee's choice."
That means workers will need to decide whether they want the money in their paycheck or as a tax refund later. Given the variability of individual's tax situations, some taxpayers could find the credit leads to a larger-than-expected refund come tax time in April 2010 -- or a bill for money owed (if, say, a couple's overall income picture means they're not eligible for a credit but a spouse received one anyway).
Meanwhile, some fixed-income people -- including those who receive Social Security, railroad retirement benefits and veterans' benefits -- will get a one-time $250 payment, a decrease from $300 in an earlier draft of the bill.
Child and Education Breaks
Got kids? If you're a lower-income taxpayer, you may benefit from the expanded child tax credit. This refundable credit, worth up to $1,000 per child, now starts kicking in on income of $3,000 and up, compared to current law of $8,500 and higher, according to CCH. Lower-income taxpayers also get the benefit of an expanded earned income tax credit.
Meanwhile, more higher-income taxpayers get access to the valuable Hope college-education credit, expanded to $2,500, up form $1,800 currently, and renamed under the stimulus bill to the American Opportunity Tax Credit.
"It's figured as 100% of eligible expenses to $2,000 plus 25% of expenses above $2,000, so someone with total eligible expenses of $4,000 or more would reach the maximum amount," according to a press release by CCH.
The credit phases out when adjusted gross income hits $80,000 for single filers or $160,000 for joint filers. That means more people are eligible: Under current law, the Hope credit phase-out in 2009 starts at $50,000 for single filers and $100,000 for married filers.
Breaks for the Bus Ride
Mass-transit commuters get a bigger benefit, too. Right now you can pay some of your commuting costs with pre-tax dollars -- if your employer offers this perk. The stimulus bill raises the maximum dollar amount eligible under this perk to $230 for transit passes and van pooling, up from $120, according to CCH. The change brings up the transit limit to match the $230 already allowed for parking costs.
Business Breaks
The stimulus bill reduces the required estimated tax payments people in business must make for 2009. "It does not eliminate any of the tax you have to pay," Rosica said. "You're still responsible for your full tax bill come tax filing time for 2009, but it does allow more of a conservation of cash throughout the year."
And there are more perks for small businesses in the bill, including an extension of the current Section 179 expense and the bonus depreciation provisions.
That other stimulus bill in 2008 increased the Section 179 expense deduction to $250,000 from $128,000, and offered 50% bonus depreciation, allowing certain businesses to immediately write off one-half of the cost of a capital expense. This stimulus bill allows those perks in 2009 as well.
Small firms also benefit from the net operating loss carry-back provision, which allows them to use existing losses to offset taxes paid on profits in previous years. Already, firms could do that for the two most recent years, but the stimulus bill expands that to five years.
While early drafts of the stimulus plan offered that break to all companies, the final bill limits it to those with $15 million or less in gross revenue.
That's a big hit to bigger companies who were hoping to collect some quick cash to invest back into their firms, said Clint Stretch, managing principal of tax policy at Deloitte Tax.
And some say lawmakers might have missed a chance to stimulate greater business activity.
"Our best estimate is that taxpayers with less than $15 million of gross receipts are 98% of all corporations, but only 5% of taxable income, so Congress has covered most corporations, but not the ones who account for 95% of corporate tax activity," Stretch said in an email message Friday.
Andrea Coombes is an assistant personal finance editor for MarketWatch, based in San Francisco.
Copyrighted, MarketWatch. All rights reserved. Republication or redistribution of MarketWatch content is expressly prohibited without the prior written consent of MarketWatch. MarketWatch shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Minggu, 22 Februari 2009
Common Tax Credits
Saya fikir, saya benar2 tidak ada kerjaan meng copy paste segala sesuatu pajak di luar negeri. berikut ini cp dari http://finance.yahoo.com/how-to-guide/taxes/137106
Ingin sekali saya menterjemahkannya dan mengcomparenya dengan pajak di Indonesia, tapi ada daya english skill belum sampai. mudah2an suatu ketika bisa menterjemahkannya.
After you determine your income tax liability, you may be able to reduce that liability by claiming one or more tax credits. Most personal tax credits are allowed to the full extent of your regular tax liability and alternative minimum tax. But it is important to note that they do not create a refund if they exceed your tax liability. Nonrefundable credits include the child tax credit, dependent care credit, adoption credit, education credits, retirement savings credit, credit for the elderly and disabled, mortgage interest credit, and D.C. first-time homebuyer credit. Refundable credits include the additional child tax credit, the earned income credit, the health coverage credit, and the long-term unused minimum tax credit. If the credit exceeds your tax liability, you will receive a refund for the excess.
Topics
Child Tax Credit for Children Under Age 17
Child and Dependent Care Credit
Adoption Credit
Residential Alternative Energy Tax Credits
Tax Credit for Hybrid Vehicles
Long-Term Unused Minimum Tax Credit
Credit for Retirement Plan Savers
Children Under Age 17
For 2008, you generally may claim a tax credit of $1,000 for each qualifying child who is under age 17 at the end of 2008. To figure the exact amount of your credit, however, you must complete the "Child Tax Credit Worksheet" in the IRS instructions to Form 1040 or 1040A to determine if the credit is limited by your tax liability. Even if the credit does exceed your tax liability, part or all of the credit may be refundable as an additional credit on Form 8812 if your earned income for 2008 exceeds $8,500 or you have three or more children.
The credit may also be limited if your adjusted gross income (AGI) exceeds the $55,000, $75,000, or $110,000 phase-out threshold for your filing status. If your AGI exceeds the threshold, the IRS instructions direct you to the worksheet in Publication 972, where the phase-out rules and other credit limitations are applied. Back to top
2
Child and Dependent Care Credit
Did you hire someone to care for your children or other dependents while you work? If so, you may qualify for a tax credit for the expenses. You may claim the credit even if you work part time. The credit is generally available to the extent you have earnings from employment. If your employer has a plan qualifying you for tax-free child care, and if you are covered, you may be unable to claim a tax credit.
The credit is claimed on Form 2441 if you file Form 1040, or on Form 1040A, Schedule 2. The size of the credit depends on the amount of your care expenses, number of dependents, and income. Depending on your adjusted gross income, the credit is 20% to 35% of up to $3,000 of care expenses for one dependent and up to $6,000 of expenses for two or more dependents. The minimum credit percentage of 20% applies if your adjusted gross income exceeds $43,000. Back to top
The Adoption Credit
tax credit of up to $11,650 may be available on your 2008 return for the qualifying costs of adopting a child under age 18, or a person who is physically and mentally incapable of self-care. The credit is phased out ratably for those with modified adjusted gross income between $174,730 and $214,730.
The credit is claimed on Form 8839. If you paid qualifying adoption costs in 2008 but the adoption was not final at the end of the year, the credit may not be claimed on your 2008 return.
If your employer pays your adoption expenses through a qualifying plan, you are able to exclude this money from your income, subject to rules similar to that of the credit. If you receive employer adoption benefits that are less than your qualifying adoption expenses, you may be able to claim the credit on Form 8839.
4
Residential Alternative Energy Tax Credits
The installation of solar panels and certain other alternative energy property to your main home may entitle you to a tax credit of 30% of the cost, with a top credit of $2,000.
Note: After 2008, the dollar limit is removed. Back to top
5
Tax Credit for Hybrid Vehicles
The alternative motor vehicle credit includes credits for hybrid vehicles purchased in 2008. The amount of the credit depends on the vehicle's fuel economy and the projected lifetime fuel savings and is fixed by the IRS. The maximum hybrid vehicle credit under the law is $3,400, but thus far, the highest certification has been $3,150.
How to qualify for the hybrid credit: Only the original purchaser of a new qualifying hybrid vehicle may claim the hybrid vehicle credit. If you lease a qualifying vehicle, only the leasing company (and not you) may claim the credit.
The hybrid vehicle credit is subject to phaseout on a manufacturer-by-manufacturer basis.
Once a manufacturer sells its 60,000th hybrid vehicle after 2005 (all models), the tax credit for any of that manufacturer's certified hybrids is reduced as follows: For the second and third calendar quarters after the quarter in which the 60,000th qualifying vehicle is sold, you may claim 50% of the credit. For the fourth and fifth calendar quarters, you may claim 25% of the credit; no credit is allowed after the fifth quarter. For example, Toyota (which includes Lexus) vehicles no longer qualify for a tax credit.
The credit for qualifying vehicles is claimed on Form 8910. Back to top
6
Long-Term Unused Minimum Tax Credit
Employees who exercise incentive stock options do not report income for regular tax purposes. However, the spread between the exercise (strike) price and stock price is an adjustment for the alternative minimum tax (AMT). Unfortunately, some individuals exercised options when the stock price was high, only to sell when the price declined, suffering an economic loss while still paying significant AMT tax.
For 2008, such individuals may claim a refundable credit. The long-term unused minimum tax credit is claimed on Form 8801. Back to top
7
Credit for Retirement Plan Savers
Those who contribute to a 401(k) plan or an IRA may gain a second tax break (in addition to the salary deferral for the 401(k) contribution or the deduction for the IRA contribution) -- a tax credit. The credit is claimed on Form 8880. The maximum credit is 50% of a contribution up to $2,000, for a top credit of $1,000.
The top credit applies only to those with modified adjusted gross income (MAGI) below a set amount. Those with slightly higher incomes may qualify for a 20% or 10% credit. No credit that can be claimed by MAGI is higher than $26,500 for singles, $39,750 for heads of households, and $53,000 for joint filers.
The credit is claimed on Form 8880. Back to top
Summary
For 2008, you generally may claim a tax credit of $1,000 for each qualifying child who is under age 17 at the end of 2008.
If you hire someone to care for your children or other dependents while you work you may qualify for a tax credit for the expenses.
A tax credit of up to $11,650 may be available on your 2008 return for the qualifying costs of adopting a child under age 18.
Making certain alternative energy improvements to your home may entitle you to a tax credit.
The alternative motor vehicle credit includes credits for buying hybrid vehicles.
Those who paid alternative minimum tax in prior years because of exercising incentive stock options may be eligible for a refundable tax credit.
Savers who put money into a 401(k), IRA or other similar plan may qualify for a tax credit.
Ingin sekali saya menterjemahkannya dan mengcomparenya dengan pajak di Indonesia, tapi ada daya english skill belum sampai. mudah2an suatu ketika bisa menterjemahkannya.
After you determine your income tax liability, you may be able to reduce that liability by claiming one or more tax credits. Most personal tax credits are allowed to the full extent of your regular tax liability and alternative minimum tax. But it is important to note that they do not create a refund if they exceed your tax liability. Nonrefundable credits include the child tax credit, dependent care credit, adoption credit, education credits, retirement savings credit, credit for the elderly and disabled, mortgage interest credit, and D.C. first-time homebuyer credit. Refundable credits include the additional child tax credit, the earned income credit, the health coverage credit, and the long-term unused minimum tax credit. If the credit exceeds your tax liability, you will receive a refund for the excess.
Topics
Child Tax Credit for Children Under Age 17
Child and Dependent Care Credit
Adoption Credit
Residential Alternative Energy Tax Credits
Tax Credit for Hybrid Vehicles
Long-Term Unused Minimum Tax Credit
Credit for Retirement Plan Savers
Children Under Age 17
For 2008, you generally may claim a tax credit of $1,000 for each qualifying child who is under age 17 at the end of 2008. To figure the exact amount of your credit, however, you must complete the "Child Tax Credit Worksheet" in the IRS instructions to Form 1040 or 1040A to determine if the credit is limited by your tax liability. Even if the credit does exceed your tax liability, part or all of the credit may be refundable as an additional credit on Form 8812 if your earned income for 2008 exceeds $8,500 or you have three or more children.
The credit may also be limited if your adjusted gross income (AGI) exceeds the $55,000, $75,000, or $110,000 phase-out threshold for your filing status. If your AGI exceeds the threshold, the IRS instructions direct you to the worksheet in Publication 972, where the phase-out rules and other credit limitations are applied. Back to top
2
Child and Dependent Care Credit
Did you hire someone to care for your children or other dependents while you work? If so, you may qualify for a tax credit for the expenses. You may claim the credit even if you work part time. The credit is generally available to the extent you have earnings from employment. If your employer has a plan qualifying you for tax-free child care, and if you are covered, you may be unable to claim a tax credit.
The credit is claimed on Form 2441 if you file Form 1040, or on Form 1040A, Schedule 2. The size of the credit depends on the amount of your care expenses, number of dependents, and income. Depending on your adjusted gross income, the credit is 20% to 35% of up to $3,000 of care expenses for one dependent and up to $6,000 of expenses for two or more dependents. The minimum credit percentage of 20% applies if your adjusted gross income exceeds $43,000. Back to top
The Adoption Credit
tax credit of up to $11,650 may be available on your 2008 return for the qualifying costs of adopting a child under age 18, or a person who is physically and mentally incapable of self-care. The credit is phased out ratably for those with modified adjusted gross income between $174,730 and $214,730.
The credit is claimed on Form 8839. If you paid qualifying adoption costs in 2008 but the adoption was not final at the end of the year, the credit may not be claimed on your 2008 return.
If your employer pays your adoption expenses through a qualifying plan, you are able to exclude this money from your income, subject to rules similar to that of the credit. If you receive employer adoption benefits that are less than your qualifying adoption expenses, you may be able to claim the credit on Form 8839.
4
Residential Alternative Energy Tax Credits
The installation of solar panels and certain other alternative energy property to your main home may entitle you to a tax credit of 30% of the cost, with a top credit of $2,000.
Note: After 2008, the dollar limit is removed. Back to top
5
Tax Credit for Hybrid Vehicles
The alternative motor vehicle credit includes credits for hybrid vehicles purchased in 2008. The amount of the credit depends on the vehicle's fuel economy and the projected lifetime fuel savings and is fixed by the IRS. The maximum hybrid vehicle credit under the law is $3,400, but thus far, the highest certification has been $3,150.
How to qualify for the hybrid credit: Only the original purchaser of a new qualifying hybrid vehicle may claim the hybrid vehicle credit. If you lease a qualifying vehicle, only the leasing company (and not you) may claim the credit.
The hybrid vehicle credit is subject to phaseout on a manufacturer-by-manufacturer basis.
Once a manufacturer sells its 60,000th hybrid vehicle after 2005 (all models), the tax credit for any of that manufacturer's certified hybrids is reduced as follows: For the second and third calendar quarters after the quarter in which the 60,000th qualifying vehicle is sold, you may claim 50% of the credit. For the fourth and fifth calendar quarters, you may claim 25% of the credit; no credit is allowed after the fifth quarter. For example, Toyota (which includes Lexus) vehicles no longer qualify for a tax credit.
The credit for qualifying vehicles is claimed on Form 8910. Back to top
6
Long-Term Unused Minimum Tax Credit
Employees who exercise incentive stock options do not report income for regular tax purposes. However, the spread between the exercise (strike) price and stock price is an adjustment for the alternative minimum tax (AMT). Unfortunately, some individuals exercised options when the stock price was high, only to sell when the price declined, suffering an economic loss while still paying significant AMT tax.
For 2008, such individuals may claim a refundable credit. The long-term unused minimum tax credit is claimed on Form 8801. Back to top
7
Credit for Retirement Plan Savers
Those who contribute to a 401(k) plan or an IRA may gain a second tax break (in addition to the salary deferral for the 401(k) contribution or the deduction for the IRA contribution) -- a tax credit. The credit is claimed on Form 8880. The maximum credit is 50% of a contribution up to $2,000, for a top credit of $1,000.
The top credit applies only to those with modified adjusted gross income (MAGI) below a set amount. Those with slightly higher incomes may qualify for a 20% or 10% credit. No credit that can be claimed by MAGI is higher than $26,500 for singles, $39,750 for heads of households, and $53,000 for joint filers.
The credit is claimed on Form 8880. Back to top
Summary
For 2008, you generally may claim a tax credit of $1,000 for each qualifying child who is under age 17 at the end of 2008.
If you hire someone to care for your children or other dependents while you work you may qualify for a tax credit for the expenses.
A tax credit of up to $11,650 may be available on your 2008 return for the qualifying costs of adopting a child under age 18.
Making certain alternative energy improvements to your home may entitle you to a tax credit.
The alternative motor vehicle credit includes credits for buying hybrid vehicles.
Those who paid alternative minimum tax in prior years because of exercising incentive stock options may be eligible for a refundable tax credit.
Savers who put money into a 401(k), IRA or other similar plan may qualify for a tax credit.
A Dozen Tips for Older Taxpayers
Berikut in copy paste dari http://finance.yahoo.com/news/A-Dozen-Tips-for-Older-usnews-14360288.html
- Friday February 13, 2009, 3:31 pm EST
Although the government's stimulus program will provide tax relief in 2009, older taxpayers won't get any breaks on their 2008 returns. And after a year of wrenching losses on investments and falling home prices, the memory of 2008 may be particularly bitter at tax time. Still, the goal remains to pay as little tax as possible, so U.S. News asked H&R Block tax expert Gil Charney, principal tax researcher at the company's Tax Institute, some of this year's commonly asked tax questions. Topics include IRAs and 401(k)s, Social Security, Medicare drugs, estate taxes, long-term care insurance, home deductions, charitable contributions and divorce.
tax relief artinya pembebasan pajak, adalagi istilah lain seperti tax cut yang artinya pemotongan pajak,
wrenching artinya kunic inggris, pilinan,, maksudnya apa.., saya ga ngerti.
bitter = pahit
divorce = perceraian
Q: The government has relaxed mandatory minimum withdrawals from IRAs for taxpayers who turn 70½ in 2009. Is there anything I should do with my 2008 tax returns to prepare for this change in 2009?
A: Since the new law affects 2009's required minimum distributions (NYSE: RMD - News) only, there is no action or decision that can be made to affect 2008's return. However, here are a few comments about this new law: a) If a taxpayer turned 70½ in 2008, he or she would be required to take a distribution for 2008. The deadline for which is April 1, 2009. The taxpayer still needs to take this distribution. Even though the distribution is taken in 2009, it is a required distribution for 2008. To avoid penalties, taxpayers should take the distribution; b) Required minimum distributions are still optional. If taxpayers need to take a distribution for living expenses, they can take any amount desired. Even if the required distribution is waived for 2009, any non-Roth distribution is still taxable; c) There is no "catch-up" or double minimum distribution requirement in 2010. However, for taxpayers who turn 70½ in 2009, the 2010 RMD will still need to be distributed by Dec. 31, 2010.
Q: I participate in the Medicare Part D prescription drug program, but am totally confused about how to handle drug expenses on my tax return, particularly the so-called "doughnut hole." Can you help me out?
A. The "doughnut hole" has no specific tax implications. However, once taxpayers reach the doughnut hole in Medicare Part D, they must pay out-of-pocket costs for prescriptions, which are tax deductible. All out-of-pocket costs for prescriptions, whether part of a deductible, co-pay, or full prescription costs while in the doughnut hole, are qualified medical expenses that may be deducted to the extent all medical expenses exceed 7.5 percent of the taxpayer's adjusted gross income. In addition to out-of-pocket costs for Medicare Part D, premiums paid for Medicare Part B and Part C (Medicare Advantage) also are deductible. If taxpayers applied for Medicare Part B at age 65 or after disability, they can deduct the monthly premiums. (Note: Normally, Medicare Part B premiums are not paid directly by the taxpayer but are withheld from his Social Security benefits. The amount withheld is shown on the taxpayer's Form SSA-1099, box 3. If the taxpayer is preparing his own return, he should not forget to include these expenses as a medical deduction.
Q: I'm 64 and drawing down Social Security; my full retirement age is 66. Can you explain how I should handle taxes on any outside income I earn?
A. There are two issues when drawing Social Security before full retirement age. The first issue is the effect of outside income on Social Security benefits. Income earned above a certain threshold will reduce Social Security benefits if the taxpayer is under his full retirement age. The second issue is the taxability of those benefits. Benefits for taxpayers who are under full retirement age and collecting Social Security are reduced by $1 for every $2 earned over a certain limit, which is $13,560 in 2008. For example, if a 62-year-old taxpayer receiving Social Security benefits earns $17,000 at a part-time job and has Social Security benefits of $10,000, the Social Security benefits would be reduced by $1,720 (17,000 - $13,560 ÷ 2 = $1,720). Thus, he would receive only $8,280 ($10,000 - $1,720). In addition, a portion of a taxpayer's Social Security benefits is taxed if the taxpayer's income is above a certain "base amount" (which varies according to filing status). Significant outside income could cause as much as 85 percent of Social Security benefits to be taxed. If taxpayers' income is high enough for their Social Security benefits to be taxed, income tax can be withheld from the payments by filing a Form W-4V. Otherwise, the taxpayers may have to make estimated tax payments.
Q: I understand that the rules for estate taxation may be changing. Can you review the possible scenarios and tell me whether there's anything I should be doing now to get ready for these possible changes?
A. In 2009, the estate tax exclusion is $3.5 million, which means estates in excess of this amount may be subject to the estate tax. However, even if the "gross estate" is larger than this amount, there may not be any estate tax paid. The estate tax exclusion is scheduled for repeal in 2010, which means the estate for anyone who dies in 2010 will not be taxed, regardless of size. In 2011, the exclusion is reduced to $1 million, the same amount in place in 2002. There were about 38,000 estate tax returns filed in 2007, compared to about 138 million Form 1040s in 2006. Although the number of people affected by the estate tax is relatively small, the stakes could be high for them. When compared to the highest individual income tax bracket of 36 percent, the estate tax rate is 45 percent. There are ways to minimize the estate tax, such as making lifetime gifts to children and grandchildren (at or below the annual exclusion of $13,000 per year per person in 2009); using irrevocable trusts to transfer assets-- and control of those assets--to a taxable entity outside the gross estate, and, creating an irrevocable life insurance trust so that the trust receives any life insurance proceeds which could inflate an estate's total value. Anyone with significant assets should consult an attorney competent in estate planning. Not only are the laws complex, but a mistake also can be extremely expensive.
Q: Some friends of mine say they've been told that getting divorced may save them a lot of money in taxes. Is this true for older couples, and under what circumstances?
A. Divorces between elderly couples offer no special tax benefits. In the past, some elderly couples may have used divorce as a tactic to allocate assets to the healthy spouse so that the sick spouse could qualify for Medicaid. However, the Deficit Reduction Act of 2005 disregarded such asset transfers as acceptable tactics to qualify for Medicaid. Again, this is not a tax benefit, but older couples who think this is a viable option should consult an elder-care attorney before seeking a divorce, which creates far more complex issues and often unfavorable results. In some unusual situations, couples may have advantages by filing separate returns (CDNX: MFS.V - News) instead of a joint return (MFJ). For example, if one spouse has high medical bills and a low AGI and the other spouse does not, the spouse with the high medical bills may be able to claim more of a medical deduction because of the 7.5 percent-of-AGI floor. But by filing as MFS, other tax credits and deductions are unavailable or reduced. Married couples can use tax preparation software (or a tax professional) to determine which filing status is best.
Q: I can no longer afford to write checks out to my favorite charities. Is it still possible for me to contribute directly from my IRA?
A. Taxpayers over 70½ may direct a transfer up to $100,000 from their IRAs directly to a qualified charitable organization. This option expires at the end of 2009. Although no charitable deduction may be claimed for such a contribution, the transfer is tax-free to the IRA owner because the transfer is not a distribution.
Q: I'm in my upper 60s but I do not have long-term care insurance. The premiums are just too expensive for me with my limited income. However, I can afford even less the services of a long-term care facility, since that would wipe me out financially. Are there any tax benefits to owning a long-term care policy that might help subsidize the premiums?
A. Long-term care premiums are deductible as a medical expense (subject to the 7.5 percent-of-AGI floor), although there are limits to the deduction based on the taxpayer's age. For example, a taxpayer between ages 61 and 70 may deduct as much as $3,080 in 2008 ($3,180 in 2009). A couple filing a joint return can deduct as much as $6,160 in 2008, if each spouse pays premiums on qualified long-term care policies. Payments in excess of any LTC benefits may be deducted as medical expenses.
Q: I am 72 and retired, disabled and living only on Social Security retirement and disability. These benefits are only $14,000 per year. Are there any special tax benefits I might qualify for?
A. There is a credit for the elderly or the disabled, although few qualify for this credit because the income limit typically results in a very low or no tax liability. Since a credit reduces tax liability dollar for dollar, there is no tax benefit if there is already no tax liability before the credit is computed. If you had no other income, your tax liability would be zero; so while you could qualify for the credit, there would be no real tax benefit for you. There is more information in the IRS' Publication 524, Credit for the Elderly or the Disabled.
Q: I'm in my upper 50s and several years away from retirement, especially in these tough economic times. Can I take a hardship distribution from my 401(k) to help pay for my daughter's tuition? Since the money would be used for tuition, wouldn't I avoid any penalties?
A. No. Your 401(k) may be a lot lower now and college tuition is a good "investment" for your daughter's future, but there is no exception to the 10 percent penalty on early distributions from a 401(k) plan. Even if your employer's plan allows hardship distributions, your distribution is taxable and subject to the 10 percent penalty. If the plan allows, you can to borrow from your 401(k) account with no tax consequence. However, if you cannot repay the loan (which may become immediately due if you are laid off), the loan is considered a distribution and the entire amount becomes taxable and subject to penalty if you are under age 59?.
Q: I am in my mid-70s and would like to make sure my grandchildren's college costs are covered as much as I can afford. Are there any special tax benefits available to me?
A. One possibility might be for you to contribute to (or establish) Section 529 accounts for your children. These tax-advantaged accounts allow distributions that are tax-free if used for "qualified" education expenses, such as tuition, fees, and room and board. You can contribute to their accounts as gifts. You also can "front load" a 529 account. Normally, if you give more than $13,000 to one individual during the year, you need to file a gift tax return on the excess over the $13,000 annual exclusion, which has gift tax implications. However, you may contribute as much as the annual exclusion for five years in a single contribution (if you have the funds to do this)--or $65,000--without any gift tax implications. Finally, if you have a grandchild already attending college, you may pay that individual's college tuition without any dollar limit if you pay the institution directly. If you give the funds to your grandchild to pay tuition or if you are reimbursing the tuition already paid, this option is not available. In this case, you would need to file a gift tax return on the amount over the annual exclusion of $13,000.
Q: I'm 72 and relatively healthy, and I might have to get a part-time job to supplement my income. I have been taking required minimum distributions (RMDs) from my IRA for a few years. Do I have to continue taking them if I go back to work, even part-time?
A. Even though you have "earned income," you must continue taking RMDs (except for 2009, when the requirement was waived). You cannot contribute to an IRA once you reach age 70½, so if you return to work, there is no tax effect on your situation.
Q: Are there any home tax deductions we could take? We're a retired couple with a home and mortgage that's been paid off. However, we still pay real estate taxes on the house and property taxes on our car. We don't itemize on our taxes.
A. Taxpayers in their 60s or 70s with a home and no mortgage often find they cannot itemize their deductions because they don't have enough deductions to make it worthwhile itemizing. However, a new law now allows taxpayers who pay real estate taxes to increase the amount of their standard deduction by the amount of real estate taxes paid, up to $1,000 for a couple filing a joint return. The new law applies only to real estate taxes, not the property taxes paid on your car.
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