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You may or may not have seen this news, yet, but mid-year student loan interest rates resets for Stafford Loans could hit a lot of people during a time when our economy is still recovering. Neither political party wants to see it happen. However, the question is what change will they make to offset keeping the rates lower? They would have to do something if they are going to keep the rates low. One thing they discussed this past week was reducing the tax breaks for S Corporation owners. That would just shift the hit from people with student loan interest to business owners and is not something I want to see. For the time being, the Republicans are blocking that move. It will be interesting to see where this heads.
National Nurses United has announced that on Friday May 18, thousands of nurses from across the country will join together and hold a large march and rally to greet the G-8 summit of world leaders in Chicago. These nurses will also be joined by healthcare, labor and other community activists.
NNU has organized this event in hopes of convincing world leaders to adopt a financial transaction tax (FIT) on major trading by banks and other financial institutions to raise revenue need for revitalizing the economic health of the U.S and other G-8 nations.
The G-8 (Group of Eight) is a group of eight highly industrialized nations consisting of France, Germany, Italy, Great Britain, Japan, U.S, Canada, and Russia. The group holds a yearly meeting, the G-8 Summit, to discuss issues such as economic growth and crisis management, security, energy and terrorism on a global level.
In the past, NNU has sponsored large actions calling on Congress to adopt the FIT tax on Wall Street that the organization says could raise about $350 billion every year, and be sued to create jobs and fund healthcare, education, and housing.
Similarly, international labor, environmental, anti-poverty, and other non-governmental organizations have increased pressure on global leaders to adopt FIT. It seems that Europe is progressing towards the adopting of this tax as the French president and cabinet have proposed on enacting a national FIT within a few months.
The nurses at NNU believe that the FIT on Wall Street is a fair and effective way to raise funds for the nation and a good strategy to boost the economy.
Anyone who is going through college or has a child attending college knows how expensive getting a higher education can be. With tuition, fees, and books expenses rising every year, paying for college can get pretty overwhelming. Luckily, Uncle Sam realizes this and wants to help Americans lessen this burden by offering two tax credits to reduce their tax bill.
The first credit is the American opportunity credit. This credit takes off $2,500 from your tax liability. Also, up to 40% of this credit is refundable, which means you could get up to $1,000 back if you don’t owe any taxes.
To qualify for the American opportunity credit, you had to have incurred the expenses during the first four years of college and had to have been enrolled for at least half-time for each semester. There are also income limits on who can claim this credit. If you are a single filer you can earn up to $80,000 ($160,000 for married filing jointly) to still be eligible to take the credit.
The second credit is the Lifetime learning credit. This credit allows for a nonrefundable 20% tax credit for up to $10,000 of qualified educational expenses. Unlike the American opportunity credit, this credit may be claimed for an unlimited number of years, and you don’t have to enroll for at least half-time every semester.
To use the Lifetime credit, your modified Adjusted Gross Income must be less than $51,000 for single or $102,000 for joint filers.
For both credits, you must pay the tuition and fees for yourself, your spouse or your dependant. These credits may be claimed by either the parent or the student, but never both. Also, if the student meets the requirements to claim both of the credits, then you must choose only one.
Paying for college can get really expensive really fast. Fortunately, our government recognizes the value of higher education and offers tax reliefs in the form of these two credits. So, if you had any college expenses last year, consider looking into the American opportunity and the Lifetime learning credit to see if you qualify to take these deductions and reduce your tax bill.
Barclays PLC has revealed that it is facing up to 500 million pounds, in taxes from the British Treasury resulting from tax evasive methods. The bank insists that it was using these “tax-efficient” loopholes in good faith and that they complied with the British tax code.
The U.K Treasury said that Barclay used two “highly abusive” methods to reduce its tax bill. The first method involved buying back debt at less than face value to avoid taxes on profits. The second method involved generating tax credits on income even though no tax had been paid in the first place.
The British government is now seeking more than half a billion pounds, or $800 million, to cover for the unpaid taxes. The bank, however, believes that this will not affect its profits materially, nor will it require amendment to its preliminary results released on February 10.
It seems like during tax season there is a new set of vocabulary flying around and much of it might go over some people’s heads. Here are some tax terms that are worth learning that will help you get through tax season.
AGI
AGI or Adjusted Gross Income is the income you have earned after you have factored in certain deduction, credits and business expenses.
Credit vs. Deduction
A tax deduction reduces your taxable income amount. For example, if you have a $1,000 deduction on a $50,000 income, your taxable income is $49,000 after taking the deduction. Unlike a deduction, however, a tax credit directly reduces your tax bill. So, if you owe $7,000 in taxes and have a $1,000 tax credit, your tax bill will be reduced to $6,000.
Standard deduction vs. Itemized Deduction
All taxpayers are offered a standard deduction regardless of their tax status. The standard deduction is a set amount which changes based on your filing status and the rate of inflation. If you choose to itemize your deductions, you list all of your qualified expenses and deduct them from your AGI. You are not allowed to claim the standard deduction and itemize, instead you pick the higher of the two amounts.
Exemption
Anyone who relies on your income for basic needs can be claimed as an exemption. Usually you claim yourself, spouse and/or children as exemptions. After you have figured out your AGI, each exemption is applied to that amount to calculate your taxable income.
Withholding
The IRS requires employers to withhold a certain portion of your check throughout the year to ensure that you can pay your tax bill at the end of the year. Once you complete your taxes, this amount is applied to your bill to determine if you either owe more or are entitled to a refund.
If you are a homeowner then you enjoy several tax benefits that non-homeowners don’t. Below are some tax savings you can take advantage of if you are a property holder.
Mortgage Points
When you set up a mortgage plan, you are charged points by the lender. Each of these points represents one percent of your mortgage amount, and for every point you pay, you can deduct that amount for tax purposes.
Real Estate Taxes
Real estate taxes, or property taxes, are fully deductible from your Federal tax returns. The benefit of this deduction is that it is not a one-time tax deduction but on-going benefit of owning a home. You are able to deduct the property taxes for each tax year that you own the home.
Seller Costs
If you sold your house in 2011 then you are able to deduct the selling costs on your tax return for that year. Some of these costs include real estate agent commission, marketing fees and fees the seller is responsible for paying when the buyer sets up a new mortgage.
Mortgage Interest
Generally, the mortgage interest you pay is fully tax deductible. This deduction especially comes in handy during the first few years of the mortgage when the majority of your payment is interest.
Owning a home comes with several benefits. One of these benefits is the ability to write-off certain costs that come along with homeownership from your yearly tax returns, which could result in huge tax savings.
The American Mustache Institute is planning the “Million Mustache March” on April Fool’s Day in hopes of getting the “STACHE Act” pass. On President’s Day, the group rallied outside the U.S capitol calling Congress to pass the act that will provide a tax deduction to Americans with mustaches.
AMI chairman Aaron Perlut argues that the group has increased mustache growth in the country, subsequently increasing “good looks” by 38 percent. He also suggests that maintaining these “good looks” can get costly from purchasing facial grooming products like beard and mustache trimmers and facial hair dyes. Perlut uses this claim to justify the passing of the”STACHE Act”, which will give mustached Americans a $250 annual tax credit.
The “Million Mustache March”, which will start at the White House and end at Capitol Hill, will be an event for mustaches, fun and charity. The organization has won the support of tax giant H&R Block, who has agreed to make a donation to Millions From One, a charity that provides clean drinking water to people in need by purchasing equipment and developing infrastructure.
The organization has also held similar events in the past, while raising money for charity groups supporting cancer research, children and adults with disabilities. So, whether or not AMI will succeed in its mission to get a tax deduction for mustached American is left up to Congress, but at least the group is doing good and giving back to the community along the way.
The IRS has over $1 billion in unclaimed refunds for one million people who did not file their 2008 tax return. The agency estimates that over half of these refunds are $637 or more.
Some of these people didn’t file their 2008 return because they had too little income, even though they had taxes withheld or made quarterly estimated payments.
If you were part of the group who didn’t file in 2008, then there are a couple things to keep in mind regarding your potential refund collection.
First, the law provides most taxpayers with a three year window of opportunity for claiming a refund if they did not file. The 2008 window will close on April 17, 2012.
And second, the IRS may hold the refund check if the taxpayer did not file returns for 2009 and 2010. Also, the refund may be applied towards any amount to the agency, or it may be used to offset unpaid child support or past due federal debts such as student loans.
So, there is still time left to file your 2008 tax return if you haven’t already done so. And with the IRS holding a billion dollars worth of refunds for a million taxpayers, you might even get a check from the agency in the mail.
Some procrastinators may be relieved to know that the IRS will actually file a tax return for you if you don’t get around to doing it yourself. If the agency finds out that you had reportable income but never filed a return, then the agency steps in and prepares what it calls a “substitute for a return”, or a ghost return, for you. However, the price of having the IRS prepare a ghost return for you can be very high.
When the agency files a substitute return for you, it uses data only from the income side, meaning it doesn’t include items that might offset that income. The IRS works from W-2 reports provided by employers and reports of payments to self-employed people from companies that used their services. It also uses data from financial institutions about interest and dividends paid, and reports from brokers about any assets sold. The IRS then utilizes information derived from these sources and calculates your taxable income.
While the agency works hard to find out about what taxable income you had for the year, it does not put nearly as much effort in to figuring out what exemptions and deductions you may have been able to take. For example, the agency will not factor in exemptions for any dependants, deductions for mortgage interest or a big charitable contribution. It will treat you as a single person, even though you could have filed jointly.
It may seem like that the IRS is being too harsh towards people that have not filed. However, it is important to consider that the IRS gives procrastinators several warnings before filing the substitute return, which it uses as a last resort. Typically the ghost return isn’t prepared until at least a year has gone by since the due date for the actual return. The IRS also gives non-filers one last chance to correct their return. If the individual files what they should have in the first place, the IRS adjusts their account accordingly. This allows the taxpayer to take exemptions and deductions they were eligible for, and possibly be able to collect a refund.
So if you do end up getting a ghost return in the mail, then it is extremely important that you take action. If you fail to respond even after a substitute return has been filed, the IRS can retaliate by placing a levy on your paycheck until the bill is paid off, or by freezing your bank accounts or putting liens on your homes.
Everyone knows that overconsumption of sugar can lead to severe health problems, but now, some researchers are suggesting that sugar can be as harmful as alcohol and tobacco and should be regulated by putting a tax on it.
Sugar affects your blood pressure, metabolism and liver just like alcohol. It can also suppress the hormones in our bodies that let us know we have eaten enough, leading to overeating and craving even more sugar.
The average American today consumes about 43,800 more calories from sugar than in 1977. Sugar has also related to the 35 million deaths that occur worldwide each year from diabetes, heart disease and cancer.
Advocates of the sugar tax claim that value-added taxes and sales taxes on alcohol and tobacco discourage people from consuming these products, and the same could be done to reduce sales of products with high sugar volume. While opponents say that sugar is not a toxin and should not be taxed along alcohol and tobacco.
So while the government could raise a lot of revenue and awareness from the sugar tax, it is easy to say that the general public’s reaction to such tax would not be sugar coated.
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