Supreme Court Ruling Will Affect Taxes

How will the healthcare ruling by the Supreme Court affect taxes?

The individual mandate is not the only thing about the Affordable Care Act. There are tax changes to consider. Because of the three day hearing about the ACA, here at TaxVox, I believe it is time to ponder some of the revenue provisions.

Provisions in the law allow for tax cuts as well as increases. Unless the whole thing is thrown out, these tax changes would likely remain.

If it can be considered a tax at all, the only one would be the mandate penalty for not purchasing insurance. The Supreme Court will have to decide if this is a penalty or a tax.

Included in the ACA are some very important tax cuts; credits for helping small businesses that purchase insurance for their workers. You may not realize that they are there, as over $1 million has been paid by the NFIB to challenge the ACA.

The NFIB will more than likely think that those subsidies should be thrown out if the Supreme Court rejects any of the key parts of the reform.

There are some tax increases in the new law, including an excise tax for high value health plans that are sponsored by the employer. That would begin in 2018 and make it harder to take itemized deductions on their medical costs.

There are a couple of other tax increases of note. The first tax increase of the bill is a .9% increase for higher income workers in the medicare wage tax. This is for supporting the health system for seniors. The second increase, sometimes referred to as a Medicare surtax, is a 3.8% high income tax on households that enjoy income from investments and non-wage sources.

These new taxes, according to a Tax Policy Center study, would increase taxes on those households earning between $500,000 – $1,000,000 by about $4,600 and those earning $1 million+ by $41,000. Those making $250,000+ ($125,000 single) will also be affected.

It would not be wise, then, to forget these tax changes. We may not have seen the end of the tax code modifications.

Turbo Tax Presents Overlooked Tax Deductions

TurboTax recently listed some common overlooked tax deductions that tax payers should consider when filing their taxes. Some of the often forgotten tax deductions included property taxes, the Child Care Credit, the Earned Income Tax Credit (EITC), and refinancing points. As long as you itemize your tax deductions, you should consider claiming the deductions that apply to your situation.

Property Taxes

The standard deduction can be enhanced if you pay property taxes during the year and do not itemize your deductions on Schedule A. Add an additional $500 to the standard deduction for both 2008 taxes and 2009 taxes.… Read more at 2010 Tax.

TurboTax recently listed some common overlooked tax deductions that tax payers should consider when filing their taxes. Some of the often forgotten tax deductions included property taxes, the Child Care Credit, the Earned Income Tax Credit (EITC), and refinancing points. As long as you itemize your tax deductions, you should consider claiming the deductions that apply to your situation.

Property Taxes

The standard deduction can be enhanced if you pay property taxes during the year and do not itemize your deductions on Schedule A. Add an additional $500 to the standard deduction for both 2008 taxes and 2009 taxes.

Child Care Credit

Make sure to claim child tax credits up to $6,000 when you work have your children in child care. Often an employer will provide a plan that will pay for child care pre-tax but not up to the $6,000 limit. If this is the case, take the extra amount up to the limit on your tax return.

Earned Income Tax Credit

Lower to middle income tax payers can claim the Earned Income Tax Credit and receive a tax refund greater than the taxes they paid during the tax year. Many miss out on the tax credit as they do not realize it is available to them. If your income has changed during the past year, make sure to study the EITC to see if you qualify. The tax credit varies depending on your income, filing status and family size. If you find that you are eligible, amend your past returns to claim this very generous tax credit.

Refinancing Points

If you purchased a home during the past tax year and paid mortgage origination points, you can claim all the points when you file your taxes and obtain a very good tax deduction. If you refinanced your home and paid points, you can claim the points you paid as a tax deduction spread out over the life of the loan.

Income That is Not Taxed!

Income That is Not Taxed!

While preparing your taxes this year you might notice that some forms of income are not taxed at all while other kinds of income are only partially taxed. You can save thousands of dollars in taxes each year by having non-taxable income compared to taxable income. The IRS has provided a list of incomes that are not taxed.

Included in the list of non-taxable income is adoption expense reimbursements, cash rebates for manufacturers, child support that you received, welfare, gifts, inheritance, compensatory damage awards, workers compensation, and meals and lodging reimbursed by your employer.

Examples … Read more at 2010 Tax.

Income That is Not Taxed!

While preparing your taxes this year you might notice that some forms of income are not taxed at all while other kinds of income are only partially taxed. You can save thousands of dollars in taxes each year by having non-taxable income compared to taxable income. The IRS has provided a list of incomes that are not taxed.

Included in the list of non-taxable income is adoption expense reimbursements, cash rebates for manufacturers, child support that you received, welfare, gifts, inheritance, compensatory damage awards, workers compensation, and meals and lodging reimbursed by your employer.

Examples of income that is partially taxed or taxed based on the circumstances are life insurance, college scholarships, college grants, and non-cash income. Non-cash items are taxable to the fair market value of the items exchanged in a barter situation. Sometimes income tax is avoided through the exchange of items instead of paying for services, but this is not a legal form of non-taxable income.

For more examples of income that is not taxable, take a look at IRS Publication 525 on the IRS website.

Try TurboTax 2009 or Tax Act 2009 Free Today!

Income Tax Returns: Top 7 Reasons For Filing Them On Time

Income Tax Returns: Top 7 Reasons For Filing Them On Time

The top 7 reasons why you should not be late to file your income tax returns are discussed here.

(i) To avoid penalties for late filing

Delinquent taxes attract substantial penalties. These are in addition to the interest due for you.

(ii) To receive a better service from the accountant

The accountant will be able to begin your tax preparations sooner, if you can get all your paper work done earlier. Moreover, you can find lot of opportunities to implement strategies for saving on your taxes. But if … Read more at 2010 Tax.

Income Tax Returns: Top 7 Reasons For Filing Them On Time

The top 7 reasons why you should not be late to file your income tax returns are discussed here.

(i) To avoid penalties for late filing

Delinquent taxes attract substantial penalties. These are in addition to the interest due for you.

(ii) To receive a better service from the accountant

The accountant will be able to begin your tax preparations sooner, if you can get all your paper work done earlier. Moreover, you can find lot of opportunities to implement strategies for saving on your taxes. But if you are already late, then your accountant won’t be much help to you regarding this. Suppose there are some profits in your corporation subject to huge penalties; in such cases for late filing, the accountant might be hesitant retaining those profits.

(iii) To avoid criminal charges

In cases of not filing tax returns for many years, there may be criminal charges against you including tax evasion.

(iv) To prevent bankruptcy

In general, people who are unable to file tax returns regularly have poor business management. They are not up to date with their own accounting and bookkeeping; they just think that they know their financial position and how they’re performing. It’s the beginning of a financial calamity.

(v) To have a better relation with the tax authorities

The people who continuously file late come into the notice of the department of taxation. Disobedience might lead to audits, forcefully collecting taxes, or other legal activities. Moreover, in case you have a clean history of compliance and cooperation with the income tax department, then at times of need the tax department won’t hesitate to give extraordinary consideration to your matter and provide leniency.

(vi) To obtain finance

If you are unable to show your proper income portfolio, then it becomes difficult for you to obtain financing. The assessment notices provided by the tax department give more assurance to the banks regarding your income claims. Moreover, if you are not filing your present income tax returns, then how is it possible to know about your hidden tax liabilities? What is your own record-keeping state? Without good financial information, how are you running your business? In case you are asking for a loan, the bank might hesitate to offer it under these circumstances.

(vii) To lighten stress and worry

Most people feel guilty about filing the tax returns late. They are actually afraid of getting contacted by the tax authorities, auditing, seizing of properties, criminal prosecution, interests and penalties, etc. Whatever be the actual situation, these worries might worsen the matter. So file your income tax returns in a timely manner and save yourself some unwanted stress and worry.