Archive for the ‘payroll tax cuts’ Category
Enacted in 2011, employees and self-employed people alike received a temporary 2% cut in their payroll taxes. Mired in Congress, the extension of this tax cut was given some odd treatment because the two sides of the aisle couldn’t agree on how to pay for it so for a while, there was just a two month extension. At the end of February, a full year extension was finally passed but as we get closer to the end of the year, it’s unclear what the fate of this tax cut is going to be.
If you’re an employee (of a company you don’t own), there’s not a lot you can do to plan. Either the cut will be extended and you’ll get or it won’t and you’ll see your pay check take a hair cut. For the self-employed who pay SE tax, you fate is about the same. If you’re an employee of your S-Corporation, there is a little bit you can do. In December, if the political winds are telling you that an extension isn’t going to pass, it might be a good time to push some salary (maybe a one time bonus or an advance) from 2013 into 2012. Other than that, this one is a big “wait and see.”
Here it is, January 15 and we’re about a quarter way through the two month payroll tax cut extension with no word as to whether it’s going to be extended or not. We have a lot of news on the Republican nominee for president and if you head over to C-Span, I’m not seeing much on the schedule other then….primary stuff. President Obama is talking about combining agencies in his latest move but I can’t find anything about extending the payroll tax through the end of the year.
When I searched for “payroll tax cut” on Google News, you can see what I get. There’s a story from Friday where John Boehner talked about circumventing the Tea Party contingent of his party to get the tax cut pushed through and it talks about a new round of talks “in the coming days.” Not sure what that means. There are also a few stories about that make it sound like we should be surprised the mortgage fees went up to pay for two month tax cut (this was part of the deal). Finally, this Washington Times piece talks about how most Congressman won’t even be back from their recess until later in the month and one of the quotes talk about the talks going down to the wire. The House starts back up with the Thursday and the Senate doesn’t return until January 23.
Good news for procrastinators out there. With it being Emancipation Day, tax returns won’t be due until Tuesday, April 17, 2012. Throw in the fact that this is also a leap year and it means you have a few extra days to get your tax return done this year. This is particularly cool for preparers and I know those extra days will come in handy.
In case you missed, I went into some of the changes on the new Form 1040, Schedule E. If you’re a renter, you won’t want to miss this.
Extenders is the word on the street over at Congress. With the lame and confusing two month payroll tax extension, Congress has that and a bunch of other things to take a look at preferably sooner rather then later. Here’s the rundown on what has to be decided.
Finally, if you’re a part time or even professional gambler, here’s a decent column on tax rules for gamblers.
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.
Yes, I know it’s Tuesday. but here’s what’s been in the news lately.
The infamous payroll tax cuts will go through another political vote today as the House is tying it to an oil pipeline deal that they know won’t pass the Senate or President Obama’s desk. My guess is it passes, the Senate nixes it but this is too political of a topic to let it slide. We’ll still be talking about this in two weeks but I think they’ll eventually get it done.
Taxgirl has a lot of good stuff this past week but I particularly liked her discussion on getting paid under the table. She goes into how a person can dispute their classification and a lot of the tax implications and she does it in typical taxgirl style (i.e. easy to understand and informative).
The IRS is looking at a real time tax system and they have hearings coming up on the subject. Basically they want to match everything up on your tax return with the source documents when it comes in so you have time to fix any discrepancies. Sounds like a solid system, but I have a feeling that, to go along with it, there will probably be more information reporting down the road.
Finally, last week some of the more left leaning states are looking to tax the wealthy even more. New York and California are both looking to raise marginal rates on their top earners. Be on the lookout for this kind of thing in your state.
Here’s some of the stuff that’s floating around the blogosphere.
The Wall Street Journal ran a few good pieces on charitable deductions. There’s one on the rules and then another on what to donate. They also did a piece on how to give alternative assets to charities. All three are worth reading especially if you plan on making a last minute gift to your favorite charity this year.
Both sides of the aisle are still trying to hash out a plan to extend the payroll tax cuts. It’s short on details but it looks like the democrats have come up with a potential compromise but at the same time, there’s some questioning as to how this could effect social security in general. Finally, there’s a good piece over at Taxgirl.com that talks about how the republicans are trying to link up the payroll tax cut to the approval of a gas pipeline.
The new Form 1099-K rules kick in beginning in 2012 and the IRS has put out a FAQ on the subject. If you use paypal or accept credit card payments, this is worth a read.
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