Author Archives: Steve

The Discretion of the President to Plan Cuts Under Debate

The Discretion of the President to Plan Cuts Under Debate

President Barack Obama has been pretty vocal about the effect that automatic budget cuts are going to have. These warnings are getting increasingly ominous from the President and the Congressional Republicans are preparing to counter these warnings as far as possible. Basically the Congressional Republicans are looking to aid the administration with more flexibility and that too in instituting the 85 billion dollars worth of cuts. They believe and have said that this one proposal could actually serve the vital purpose of shielding the most important programs. This should be done while the political fallout is shifted to the White House.

English: In January 2009, President of the Uni...

English: In January 2009, President of the United States of America, George W. Bush invited then President-Elect Barack Obama and former Presidents George H.W. Bush, Bill Clinton, and Jimmy Carter for a Meeting and Lunch at The White House. Photo taken in the Oval Office at The White House. (Photo credit: Wikipedia)

This plan is undoubtedly facing extreme opposition from the administration. The administration has declared that it isn’t really planning to do much to soften the blows that have come upon the domestic and military programs. However, what’s worth the consideration is the fact that this is leading to apparent racks in the Democrats’ camp. This is essentially because it’s the lawmakers from the states who’re literally standing face to face with the deepest cuts. Now, this obviously goes on to say much as there are high chances that the Democrats might also be prepared to go along with the Republicans, simply so that they can manage to avoid arbitrary cuts to military programs as well as social services.

With the nation reeling under debt and that’s easily reflected with the increasing number of sign ups for programs like online debt consolidation, this political turmoil over the cuts seems literally unwanted. There’s hardly much time left until “sequestration” makes its way. Basically, the across the board cuts also known as sequestration have been scheduled to commence. It’s not surprising that the administration officials are not taking to this favorably and they’re still talking about the consequences to come in alarming terms. This is in spite of the fact that there was hardly any evidence of hardcore negotiations with the lawmakers such that a deal could be reached to avoid them altogether.

In spite of all this, a South Carolina Republican, Senator Lindsay Graham gave the impression of advancing the debate on Monday. He being a leading defense hawk expressed that this is actually the ideal opportunity to carry out the big deal. He said that he was willing to raise revenue of around 600 billion dollars provided the Democrats would be willing to reform entitlements. He believes that they can then fix sequestration together.

The secretary of homeland security, Janet Napolitano expressed that the automatic cuts would leave the country not so very well guarded. In fact, she also believes that this can actually leave the nation ill-equipped to meet terrorist threats. This is obviously going to turn into an inconvenience for millions of travelers too. There came further warnings from the interior secretary, Ken Salazar. He warned about campgrounds closing down and firefighting efforts being scaled back. He also spoke about lesser seasonal workers who’ll be hired.

Ms. Napolitano opines that there’s always a threat looming large. Though they plan to do everything they can to minimize the risk involved, yet it’s a fact that the sequester makes things really very tough.

It’s a known fact that efforts are being made to shift the responsibility completely to President Barack Obama and to cushion the attacks by the White House. Now, what’s important is the fact that Republicans were supposed to unveil legislation on Tuesday and they said that this would literally alleviate their biggest concerns. This measure is supposed to be effective because it’ll allow for agencies and departments to amass programs that had long since been proved to be ineffective. This is almost like a measure to prove that there were functions like say critic federal functions as well as air traffic control and meat inspection that had been spared.

Now, if the Congress happens to grant the White House the authority to protect the air traffic controllers and other such patrol agents, then the administration’s carefully devised plan is bound to lose impetus.

Details On Obtaining Prior Year Tax Information From The IRS

Obtaining Prior Year Tax Information

The ability to get prior year tax information from the IRS is virtually a guarantee due to the fact that the IRS is required to keep tax returns on file for seven years. As with most actions related to the IRS there is a form that is required to fill out in order to obtain prior tax information. This is Form 4506 that can be found by completing a simple form search on the IRS website. The IRS will not provide prior tax information without filling out a hard copy of Form 4506.

Seal of the United States Internal Revenue Ser...

Seal of the United States Internal Revenue Service. The design is the same as the Treasury seal with an IRS inscription. (Photo credit: Wikipedia)

The form is self explanatory and should be filled out to include the exact information from the tax return of the prior year. At the very least, the name and social security number should match as well as the spousal information if the return was filed jointly. Additional information should include the prior year tax form such as Form 1040, 1040A, or 1040EZ. Form 4506 can be completed regardless of a recent divorce without spousal consent.  One of the final requests on the form is to fill out the prior year tax information being requested such as 12/31/2012.

The required fee for Form 4506 as of 2012 is $57 in the form of check or money order payable to the US Treasury that is required when mailing the form to the appropriate IRS office. However, tax filers that used Turbo Tax 2013 have the distinct advantage of obtaining prior year tax information at no cost. This free service is included with the use of Turbo Tax 2013 Basic, Deluxe, Premier, Home & Business, or Freedom Edition. Even greater is the use of the online edition of Turbo Tax 2013 that will automatically look up prior year tax information for a user to view or print.

U.S. tax reform – Effect of decrease in the tax code’s bias for debt

The much awaited tax reform has at last arrived to reduce the tax code’s bias for debt. As per the recent announcements, the U.S. corporate tax rate may reduce to 25% from 35%. The non-financial corporations will be allowed a deduction of nearly 65% of their gross interest expense, whereas the financial corporations will be allowed a deduction of up to 79%. Some special rules and regulations have also been implemented for the corporations who have stated a malfunction in the tax purposes.

Interest Rates

Interest Rates (Photo credit: 401(K) 2013)

According to various financial experts, the general strategy is to reduce the corporate tax while restraining the interest rate deduction. This strategy may be helpful in reducing the tax code’s bias for debt. Consequently, the investments projects may get more lucrative for U.S. in the near future.

Debates are on regarding whether the situation will really improve or not. Doubts have been raised whether the tax code’s bias for debt will actually be modified or not. Well, there are justified reasons behind these doubts and debates. The reduction of tax code’s bias has both benefactors and oppositions. If the bias gets corrected, then it may be helpful for numerous debt finances. On the contrary, some organizations which were used to take advantage of this bias may face serious hike in the tax burden. They may encounter difficulties to pay off taxes.

However, the evaluation of the tax reform proposal must not be done by judging only individual interests. If the tax reform may help in overcoming the economic obstacles in U.S., then it should be received positively. It’s being assumed that the tax deductions may lead to efficient distribution of resources. Many corporations may avoid issuing debts because of interest rate deduction. This will ensure that the organizations will not make financial decisions due to tax purposes. Rather, the decisions will be influenced by economic reasons. This may be beneficial for an overall economic growth in U.S.

As per some financial analysts, the application of interest cap to the pre-existing debt is not an excellent idea. To make the reformation successful a few other steps must also be taken by the U.S. government. If the tax reformation permits grandfathering of accessible debts, then the corporations may rush for issuing long-maturity debts. The rush to pay off taxes must be reduced too. For the reduction of the rush the U.S. government must take some fortified step. Only then the corporate taxes may be controlled and the reformation may turn out to be really effective.

There are arguments regarding what should be the nature of tax reformation. Many financial experts believe that the interest cap must be applied only to the net interest expenses and not to the gross interest expenses. This opinion has faced much criticism. The application of interest cap to the net interest expenses may raise the amount of revenue. As per the reports of the Congressional Research Service, the reduction in the corporate taxes may reach the 15% notch.

The restriction of net interest rate deduction may even increase the effective marginal tax rates on the vital debt-financed investments. So it’s better to concentrate on applying the interest cap on net interest expenses rather than targeting gross interest expenses.

The U.S. tax reforms may have reduced the tax code’s bias for debt but it’s not yet clear how effective this is going to be. Unless the tax reforms turn out to be completely revenue-neutral, it can’t be effective enough.

How To Organize Your Tax Records

How To Organize Your Tax Records

Learning how to organize your tax records can save you stress and time when it is time to file your taxes.  Start the year with an organization system so you know where all of your records are when it is time to file your taxes.  If you aren’t sure what records you need, here is a general guide that is suitable for most people.

Income

Your employer will issue a W-2 with your income and tax information for the year.  You should also include interest statements from investment accounts and any 1099s that you may receive for work done the previous year.

English: Same as :File:2010 Receipts & Expendi...

English: Same as :File:2010 Receipts & Expenditures.PNG, but slightly improved. Bar chart comparing estimates for United States federal government total receipts and expenditures in fiscal year 2010. (Photo credit: Wikipedia)

Medical Expenses

File receipts for all medical expenses and your out-of-pocket health expenses.

Donations

Keep all receipts for cash donations made from the previous year.  You can also deduct non-cash donations made to a charitable organization.

Real Estate

If you own your home or other real estate, keep all interest statements and tax assessments.

Child Care

If your children are in day care for all or part of the year, keep a copy of your receipts for payment.

Student Loans

The interest you pay monthly on a federal student loans is tax deductible.

Letters from the IRS

If you receive any letters from the IRS, keep these in your file.

Previous Tax Forms

Keep all previous tax forms for future years.

Other Receipts

Keep all receipts that you may need for a deduction.  You may not need them, but it is better to have them in case you do. If you plan on itemizing your deductions, keep all receipts for taxes you paid, medical expenses, interest you paid, charitable donations, loss due to theft, job expenses and other receipts you think may qualify for a deduction.

If you plan to itemize your deductions, it will be a lot easier for you if you keep these receipts organized throughout the year.

If you do not have a lot of paperwork each year, you can store them in one file.  However, if you have a lot of receipts or other tax papers, you should organize them by type to make your free tax filing 2012 easier and quicker.

For most people, a simple paper organizer that holds several files is sufficient to organize tax information.  Use a separate file for each type of paperwork, and file receipts and information as soon as you get them.  Keeping paperwork organized and not letting it pile up is important to stay organized, so file your paperwork as soon as your get it or once a month as needed.

How To Free File Online Using The IRS Website

How To Free File Online Using The IRS Website

Many taxpayers are using free file online programs that are based on popular tax software programs like the TurboTax 2013 programs. The free file online program is offered directly by the IRS on their website. It is available to all taxpayers, but different taxpayers can access different portions of the program based on their income and other factors.

The IRS free file online program connects taxpayers with participating software companies like TurboTax 2013. Taxpayers can choose between a range of software programs including the TurboTax 2013 Freedom edition. Once the taxpayer has selected a software company, they can get started on their returns.

English: YOU ARE FREE TO USE THIS FILE

English: YOU ARE FREE TO USE THIS FILE (Photo credit: Wikipedia)

Taxpayers who have an adjusted gross income of $57,000 or less can file using the free program. Taxpayers who earn more than that amount cannot use the free software programs. However, they can download free file online forms. These forms are primarily for people who enjoy doing their own taxes. Using these forms, these taxpayers can prepare and file their own taxes online. However, these taxpayers do not get the extra assistance that is offered to people who can take advantage of programs like the TurboTax 2013 software programs.

Before they get started with the program, taxpayers need to prepare themselves. They will need to have copies of their last year’s tax return, copies of their W-2s, 1099s, and any other information that they will need for their taxes. For instance, taxpayers who plan to itemize their deductions may want copies of their charitable deductions or information on how much interest they have paid to their mortgage company throughout the year.

Before starting, taxpayers should also estimate their adjusted gross income. If you have not had any significant changes to your income over the last year, you should be able to estimate your adjustable gross income using last year’s tax return. Once you have determined whether or not your adjusted gross income is more or less than $57,000, you will know which program you are allowed to use. About 70% of all taxpayers have adjusted gross incomes of less than $57,000 so the chances are high that you will qualify to file free online.

Once you have completed the tax preparation work, you can submit your return electronically with the click of a few buttons. If you qualify for a tax refund, you can elect to have it mailed to you in a paper check, or you can have it electronically deposited into your bank account. Electronic deposits are typically the fastest way to get your returns, and you may see your refund within three weeks or less of your filing date. If you owe taxes, you can also make your payments electronically.

The free file online program is perfect for many taxpayers. However, taxpayers with unique situations may simply want to use some of the low cost software offered by a company like TurboTax 2013. This is especially true for people who own their own businesses or who need to file an extension.

Free Online Options To File Your Taxes

Free Online Options To File Your Taxes

Filing your taxes on time can be a very long and time consuming process if you do not have a clue of what you are doing. However, you can make this process as easy as possible by simply choosing to file online with TurboTax or TaxAct. If neither of these tax filing options is ideal based on your personal needs, you should consider using H&R Block Home edition which also receives good reviews.

TaxACT Logo (Photo credit: Wikipedia)

It is important that you consider your free online options to file your taxes prior to deciding which would be able to best meet your needs. There is no one solution that is going to work for every person, you may find one service to be very useful, but your brother may enjoy the layout of another service. Typically, this decision is very much about personal preference and the company that you are most comfortable with. However, they are very different when it comes to guiding you through the process of filing. TurboTax makes the tax filing process easy by guiding your every step through a return, they make the steps easy by providing simple explanations that you can understand. As a result of this approach, TurboTax is great for those that want to save time, it is a quick solution that can help you get your taxes completed easily.

When it comes to time involved with filing your taxes, the H&R Block solution would be the slowest. There are no in depth explanations and this can mean that you would spend a lot more time to get through the filing process. The TaxAct solution is going to fall in the middle, it will save you money and make your taxes easier to do while limiting your stress.