All Entries in the "Taxes" Category

Careful If You Relocate - State Budget Shortfalls Mean Higher State Taxes

41 states could go bankrupt by 2009-2010 - the table below shows which are the worst.

As state governments scramble to stay above water - cutting both unneeded and needed services - the local legislatures grapple with ways to increase revenue.

And you know what that means. More taxes for all of us.

No more wondering what I’ll be doing with that $600 federal tax rebate check.

What the federal government giveth, the state government taketh away.

I don’t quite understand why every bank and their grandmother’s bank is getting TARP funds - while the states are left holding the bag.

More than 10 states are considering major tax increases, reports the Wall Street Journal.  These include “Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin.  California and New York lawmakers already have agreed on multibillion-dollar tax increases that went into effect earlier this year.”

State taxes come in many forms beyond income tax.  Depending on where you live, and what your vices are, you could be nickled and dimed out quite a few dollars.  Here’s some of the taxes being considered for increases in various states.

Cost of living taxes

• Sales tax
• Fuel tax
• Property taxes
• Personal taxes, such as excise tax, and fees for registering your car or boat.
• Reductions of personal exemptions and standard deductions, medical/dental exemptions, and federal income tax deductions.

Target taxes

• Retirement taxes
• Military retirement taxes
• Estate Taxes

Vice taxes

• Cigarette tax
• Alcohol tax
• Gambling tax

What you can do

• Contact your local legislature.  Here’s how.
• Reduce or quit a vice.  Bummer.
• If you’re considering relocating either for job or retirement, you’ll want to take into account the tax burden you’ll be expected to handle at the new location.  Is it higher or lower than where you live now?  Here’s a list of per capita tax burdens by state:

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Take Advantage of the $8000 First-Time Home Buyer Tax Credit

U.S. News published The New First-Time Home Buyer Tax Credit- 7 Things You Need to Know this morning.  Here’s their list:

1. The specs: The tax credit is equivalent to 10 percent of the purchase price of the home–which must be a principal residence–but is capped at $8,000. It applies only to first-time home buyers, who are defined as buyers that haven’t owned principal residences for three years before making the purchase. The tax credit, however, is subject to income limitations. A single buyer would need an adjusted gross income of $75,000 or less to be eligible for the full credit (For married couples it’s $150,000.) Those who make more may qualify for partial credits.

[For more details, check out First-Time Home Buyer Tax Credit: 6 Things to Know.]

2. 2009 buyers: The credit only applies to those who buy a home on or after Jan. 1 and before Dec. 1, 2009. That means anyone who bought a home last year is out of luck. But Richard Moody, the chief economist at Mission Residential, says a more significant shortcoming of the tax credit is that it won’t help 2010 buyers. Moody argues that the biggest factor keeping people from buying homes these days is the weakening labor market. In other words, as long as Americans are worried they could lose their jobs they won’t buy homes, he says. “I don’t expect to see any appreciable improvement in the labor market until sometime next year at the earliest,” he says. “[As a result], I think this [tax credit] is going to expire before a lot of people feel confident to go out and make this purchase.”

3. $15,000 letdown: The tax credit is much smaller than a similar $15,000 measure that was included in the Senate’s version of the stimulus bill. The $15,000 tax credit was scrapped during negotiations between the House of Representatives and the Senate. “We would have liked to have seen [a bigger tax credit],” says Tom Kunz, the president and CEO of Century 21 Real Estate. “But $8,000 is still $8,000.”

4. No payback: The good news for prospective homebuyers is that unlike a previously-enacted $7,500 tax credit, this one doesn’t have to be repaid. That makes the credit much more attractive from a would-be buyer’s prospective, says Keith Gumbinger of HSH Associates. “[It's a] more traditional sort of incentive,” he says.

5. One of many: With home prices declining and job losses rising, the tax credit is just one of many factors to consider when deciding whether or not to buy a home, says Mike Larson of Weiss Research. “It should factor into your decision, but it shouldn’t drive your decision,” he says. The trend of property values in a local market, the buyer’s job security, and the number of years the buyer plans on living in the house are more important. “This [tax credit] can help, but those are the real things that are going to be a fundamental driver,” Larson says.

6. Market impact: Gumbinger expects the measure to have only a modest impact on the housing market. That’s because it can’t do anything to address the weakening labor market, falling consumer confidence, or tightening lending standards that are working to prevent many would-be buyers from entering the market. “It certainly helps to serve an audience which can [already] participate in the market,” Gumbinger says. “But it doesn’t do anything to help to develop demand from those borrowers who are at the fringes–or far away from the fringes–of participating.”

7. Part of a bigger effort: Nicolas Retsinas, the director of Harvard University’s Joint Center for Housing Studies, says the tax credit should be perceived as one component of a broader effort to revive the housing market and the economy. The economic stimulus package is designed to bolster the labor market, and the Obama administration’s new housing plan will attempt to limit foreclosures. “If those two make a difference, then this could be an added stimulus,” Retsinas says. “But again, it’s tough to buck the erosion of jobs and the foreclosure market.”

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Federal Government Spending = Pork Spending? You Decide.

OK, I guess you all know I really like this Obama guy.

Here’s another reason why I really like him.

This website:

Recovery.gov

Here I can find out where the billions of tax dollars dropped on the

American Recovery and Reinvestment Act

are going.

Skeptics will claim that Recovery.gov is blatant “pull the will over our eyes” propaganda.

Could be.

There’s definitely spin doctors at work, I’ll give all you McCain lovers that.

BUT

I’m glad it’s there.

I’ll read it.

And I’ll breathe easier.

I like where my tax dollars are being spent.

What if You Could Choose How the Government Spent Your Tax Payments?

How about you?  What do you want your hard earned tax dollars spent on?

My biggest complaint with paying taxes is that I don’t want to be footing the bill for certain government projects.  I want to pay my fair share - could be considered a left winger, sheesh, almost a friggin’ socialist, by my conservative friends.

I just don’t want to finance “my fair share” of things like the war in Iraq, nuclear energy funding, or oil drilling.

At breakfast this morning, my spouse and I got to talking about how great this would be.  We thought it’d be interesting to see how others felt about it.

I know I’d feel a whole lot better about paying my taxes if I were designating where the money went.

How about you?

Where would you like your hard earned tax dollars to go?

If I get enough responses, I’ll summarize them in a future post.

Here’s where I want my tax dollars going:

• public education and health care
• social security
• jobs
• maintaining our infrastructure
• alternative energy development - eliminating oil dependence
• research in medicine -and in other projects that improve the quality of life on our planet
• reducing global starvation
• improving global health
• building a sustainable planet by fighting the war against pollution and global warming
• developing global relations with other countries
• supporting the arts
• World Peace.

Feel free to also list where you wouldn’t like your tax money going, too.

photo credit: PicApp

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Turbo Tax Bill of Rights: 9 Things You Need to Know

Starting to freak about your taxes yet?  Brush up on the legalities by checking out  The Turbo Tax Bill of Rights.

Written by financial gurus Ken and Daria Dolan,  it’ll get you up to speed on the latest and greatest legal changes for 2009.

While you’re at it, check out the Dolans.com website.  It’s tagline is Money Made Simple.  Their writing is clear and concise, and they cover a wide variety of personal finance topics.

Free File Your Taxes at the IRS Website

If your adjusted gross income for 2008 was less than $56,000, you can use Free File at the IRS website to process and file your federal tax return.

For those of you filing the 1040EZ only, but making over 56,000, Turbo Tax offers free software: Link. They also offer free electronic filing (e-file) if you need to purchase one of their other software packages. The Deluxe meets most people’s needs, but read the fine print to be sure.

Filing your taxes can be a cumbersome, expensive, and sometimes mystifying task. If you are having someone else do it for you (cha- ching! BIG dollars), or are currently doing it on paper on your own, I would encourage you to check out the latest in Tax Software. I am only personally familiar with Turbo Tax, but have found that it takes much of the pain out of filing both my federal and state return.

This is a revised version of a similar post from last January.

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Don’t Forget Your Green Tax Break

The IRS offers tax deductions for going green. You’ll need to file a standard 1040 form to take advantage of this benefit. Some states also offer substantial savings.

Below are links to explanations of these deductions for 2007.

Around the Home
Federal:
$$$- The IRS lists all eligible home improvements.
$$$- If you purchased Energy Star Appliances, you can deduct some of their cost.
$$$- All alternative energy purchases made for your home are tax deductible.

State: State deductions vary widely. This link will help you determine your specific state’s benefits.

Cars
Here’s the federal link. and the state link.

By taking advantage of these opportunities for savings, you can greatly reduce the “going green” impact on your budget. And, if you’re like me, you’ll sleep a little more soundly knowing you’re contributing to a better world for our children.

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Free Tax Filing Software Through the IRS

If your adjusted gross income for 2007 was less than $54,000, you can use Free File at the IRS website to process and file your federal tax return at no charge.

For those of you filing the 1040EZ only, but making over 54,000, Turbo Tax offers free software: Link. They also offer free electronic filing (e-file) if you need to purchase one of their other software packages. The Deluxe meets most people’s needs, but read the fine print to be sure.

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