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PostHeaderIcon Monday Tax Bits – Happy New Year

It’s a new year so time to get serious.  I shouldn’t be going more then two weeks without posting and there’s no excuses.  Things will improve.  Anyway, here is what’s going on in the tax world.

We got the two month extension to the payroll tax cut but buried in there is a provision that stops people from front loading their salary to take advantage of the lower rate.  This recapture becomes moot if, as I expect, the tax cut is extended through the end of the year but for a solid explanation, I’ll send you over to Tax Girl.

Since we’re visiting Tax Girl, I’d also check out her piece on 11 life changing events.  If one of these applies, you should be talking to someone.

The IRS issued some guidance on the Savers Credit. Depending on your income level, taxpayers can get a dollar for dollar credit for contributing to a tax deferred savings account.  If you’re part of a 401k, you missed the contribution deadline but if you have an IRA, you can contribute up until April 17, 2012.

Also over at the IRS, Tax Preparers will need to start filing a due diligence checklist with every earned income credit claim.  This has been a major area of abuse in the past but the checklist is the one we’re used to, it just never had to go with the return.

In an interesting piece here, we learn where payroll taxes actually go.  This is pretty basic stuff but a good link to send someone new to the subject.