Tax Carnival Ecstasy – July 30, 2013

Cover of Book, The Art of Investing in America.
Cover of Book, The Art of Investing in America. (Photo credit: Wikipedia)

Welcome to the July 30, 2013 edition of Tax Carnival Ecstasy. We start this edition with some short term financial goals by Viveka on the blog ‘My Journey to Millions’. John Schmoll takes a look at investing in the stock market and the level of difficulty that you face when you invest for retirement. And finally Bill Smith looks at annuities as investments and the tax implications of investing in them. Hope you like all the articles, bookmark our carnival, like on Facebook, tweet the link and come back real soon.

David presents Quick Way to Save Money on Booking a Hotel Reservation posted at Financial Nerd, saying, “Interesting Way I saved money by booking a hotel reservation”

viveka presents Top 15 Most Popular Coupon Websites posted at Top 15 Most Popular Music Websites, saying, “Here are the 15 Most Popular Coupon Websites ranked by a combination of constantly updated traffic statistics.”

deductions

viveka presents Short Term Financial Goals posted at My Journey to Millions, saying, “Short Term Financial Goals – My Journey to Millions”

filing

viveka presents The Detroit Bankruptcy Should Teach You that Nothing is Guaranteed with your Finances posted at My Journey to Millions, saying, “Detroit\’s recent bankruptcy should teach you something about risk and your personal finances and retirement. Real possibility of reduction in pension and trimming of bonds”

viveka presents Dividend Investment Portfolio Archives posted at My Journey to Millions, saying, “Dividend Investment Portfolio Archives – My Journey to Millions”

retirement

John Schmoll presents Is Investing in the Stock Market Really That Easy? posted at Frugal Rules, saying, “Many are overwhelmed when it comes to investing in the stock market. With a little homework and due diligence it can actually be simplified quite a bit and can lead to more efficient investing for long term needs like retirement.”

viveka presents Will I ever Lose my 401k? posted at My Journey to Millions.

tips

Bill Smith presents Are Annuities a Good Investment posted at 2011 Tax, saying, “There are two different types of annuities: deferred annuities and immediate annuities. The type of annuity you choose depends on how soon you expect to receive payments.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Who Can I Claim as a Dependent on My Tax Return?

Anyone who has ever filed taxes knows how important it is to qualify for as many tax credits, breaks, and deductions as possible. One way to lower your tax obligation and secure a bigger refund is to claim all the dependents that you can. Fortunately for you, the definition of dependent encompasses more than just your young children; dependent qualification guidelines are broken into two categories – qualifying children and qualifying relatives – and if you are the responsible caretaker in any of a number of given situations, then you may be able to claim even more dependents. Who can you claim on your tax return as a dependent? The IRS is very specific about just that. Here are the details:

Qualifying children. There are four conditions your children must meet if they are to qualify as your dependents. First off, they must be your natural or adopted children, your children by way of marriage (step-children), your foster children, your brothers and/or sisters, your nieces and/or nephews, or your grandchildren. Secondly, you must established that the dependent lived with you for at least one half of the tax year you are claiming for. Third, the dependent must meet certain age requirements as follows: eighteen or younger for the entire year, 24 or younger and a full-time student for at least five months out of the year, or any age and permanently and totally disabled. Finally, qualifying children need to have been over 50% financially supported by you during the tax year you are claiming the credit.

Tie-breakers. In the occasion that more than one person tries to claim a dependent child, the IRS will use the following factors for the tie-breaker: the claimant must be a parent; the claimant must be the one who provided more financial support over the course of the year; the dependent must have lived with the claimant for the majority of the year. Finally, if both claimants meet all of those qualifications, then the claimant with the highest incomes will be the one allowed to claim the dependent. This might result in you having to issue an IRS extension 2010 or 2011 form (1040X), depending on the time it takes the process to resolve.

Qualifying relatives. In some circumstances, you cannot claim a qualifying child, but may be able to instead claim a qualifying relative. The guidelines for qualifying a relative as a dependent are as follows: the dependent cannot be a qualified child of another claimant, the dependent must be related to you in certain ways and must have spent at least one half of the year with you, the dependent must be a United States citizen, and you must have financially supported the dependent for at least one half of the year.

As you can see, claiming dependents on your tax return is not as simple as it seems. Follow these guidelines to determine how many dependents you can claim this year.

About the Author: Nolan Cangey works as a tax accountant and spends a great deal of time interviewing his new clients to better understand what they do and how they can benefit from different tax credits and their dependents.

New Jersey Residents Look For Lower Tax Assessments

The Sfarras in Teaneck disputed the tax assessment on their home last year, which helped the value fall by almost 12%. This let them save almost a grand a year in property taxes. Dorthy Monooopli also did something similar, reducing the value on her home by 30k.

These are only a few of the people who are trying to get lower tax assessments due to the falling prices of real estate over the last few years. As the filing date for tax appeals gets closer, many people are trying to file the proper documents.

William Dressel, in charge of of the League of Municipalities, says that that such efforts are lowering the amount of property taxes that a town gets, which might reduce the services citizens get because of lack of funds.

A common strategy is for towns is to do an area wide assessment of real estate, so everything is in line with current market values. This makes it more difficult for homeowners to dispute the value of their homes.

Home prices have fallen about 20% since the housing bubble. However, an appeal is not guaranteed. Towns determine the value by using a ratio that takes into account the current state of the economy.

The city of Teaneck has a current tax ratio of near 104 percent. This means that lower tax assessments are possible, because the assessment is more than the real value. If a home was valued at $100,000, it would only be worth $96,000.

A Recent Poll Shows Popularity Of The Millionare Tax

Most people agree with President Obama’s plan to require millionaires to put a significant amount of their income toward their 2012 taxes. However, the same people would prefer to see a cut in spending rather than a millionaire tax to help balance the federal budget. These results come from an Associated Press-GfK Poll.

The survey shows that Obama’s millionaire tax plan has a lot of support. However, his plan has not changed people’s opinions on how to bring down the budget deficit. United States deficits have been larger than $1 trillion dollars a year. Sixty-five percent of the people polled agreed with President Obama’s plan to tax millionaires at a rate equal to 30 percent of their income. According to the poll, only 26 percent of those surveyed were against the idea.

Interestingly, 56 percent of those polled preferred spending cuts rather than hikes in 2012 taxes to fix the budget. Thirty-one percent of those polled preferred tax hikes. This same question was asked a year ago, and the response changed only slightly.

The poll further showed that the majority of people have a more favorable view of Democrats than they do of Republicans. This should be good news for President Obama as we enter election season. According to the poll, 54 percent of those surveyed gave the Democrats good ratings and 46 percent of those surveyed gave Republicans favorable ratings.

Although Obama has little chance of having his proposal passed by Congress during the campaign season, it serves as a Democratic rallying cry. It also shows a stark contrast between Democrats and Republicans who would like to lower the tax rate for millionaires. It will be interesting to see how these issues are approached during the election.