The President Plans to Double Tax Rates for the Wealthy
President Obama is planning to tax income from capital gains as ordinary income. This will increase the top tax rate to 39.6 percent. These changes are meant to raise taxes of up to 1.4 trillion from top earners over the next decade.
Couples earning more than 200,000 annually will be required to treat income from dividends as ordinary income. According to the president, this would raise 206.4 billion dollars over the next decade.
According to Gene Sperling, the country cannot afford to lose 206.4 billion dollars on its revenue budget by offering lower tax rates and tax cuts to top earners.
The president plans to increase the top tax rate to 39.6 percent by next year from the prevailing top rate of 35 percent. Capital gains would be taxed at a top rate of 20 percent from the prevailing 15 percent.
As part of his healthcare law, the president plans to increase the unearned income tax rate by 3.8 percent for couples earning at least 200,000 annually. Experts predict that in the next financial year, some taxpayers will have to pay federal taxes amounting to 43.4 percent on their dividends. This is almost an increase of 300 percent of what they are currently paying.
These proposals would return tax rates to pre-2003 levels. Proponents of these changes claim that it will promote a more efficient and just allocation of capital.
Generally, the president intends to reduce tax deficit on 2012 taxes by taxing the wealthy.
President Obama recently stated in a speech that the government does not need to continue offering tax cuts to individuals who are already doing very well.
For taxpayers who are planning on e-filing there is no need to worry about choosing the Simplest tax form because the software program chooses the tax form that you will need. However when opting to file the old fashioned way you can still manage this simply by choosing the tax form that matches your situation. A fast and easy way to get the paper forms and the needed instructions is to go online and visit the Internal Revenue Service website at www.irs.gov. It is also possible to obtain forms from an IRS office in the city that you live in. There are also places in the city such as a library or post office that will have the forms available.
Some rules to think about when deciding which form to use and which one will be the simplest tax form to file. You will need to use tax form 1040 EZ when your status of filing is single or married and filing together or when taxable income is under 100,000 dollars. This form will also need to be used when you have interest income that is 1,500 dollars or less, or if no dependents will be claimed by you.
For some taxpayers the Simplest tax form to use will be the 1040 A when income that is taxable is under 100,000 dollars or if they claim specific tax credits or have capital gain distributions. This is also the tax form to use when claiming adjustments for IRA contributions or for student loan interest.
When unable to use the 1040 EZ form as the simplest tax form, it will more than likely be required to file using the 1040. Some reasons taxpayers must use this form is because their taxable income is 100,000 dollars or over or when taxpayers are reporting self employment income. If a taxpayer has made money from selling their property, they must file this form. A 1040 form must also be filed when the taxpayer is claiming itemized deductions.
Interested taxpayers can obtain fast and simple access to the IRS forms when needed and learn more about e-filing and learn which form is the simplest tax form to use while visiting the IRS site at www.irs.gov. Tax forms are accessible any time, all day long every day of the week. These forms are normally available online long before they are obtainable as paper forms. To view the tax products or download forms, go to the website and choose the option publications and forms.
If you sell your house there are certain benefits that you may get from the Internal Revenue Service (IRS). Here are a few tax tips for consultants and you on how to benefit.
If you have used the home for two out of the last five years, you can exclude 250,000 dollars from your income, the capital gain is tax free. But you may not exclude the gain if you already did so on another house in the last 5 years.
You must report all gains that cannot be excluded under the $250,000 limit. And if there is a loss on the sale of the home, you cannot deduct it. Sorry.
There are worksheets that help you determine whether you made a gain or loss on the sale. These can be found in IRS publication 523, on the IRS.gov website.
Having more than one house limits you to excluding gains from the sale of your main house only. This is the house that you usually spend most of your time in. Vacation homes cannot excluded from capital gains tax.
First time home-buyers are required to repay the credit if they do not use the property as their primary residence for more than 36 months after getting a home-buyer credit. The details should be filed with your tax returns using form 5405 the year you stopped using the house as your primary residence.
Be sure to let the IRS and the United States Postal Service know about any changes in address so that you do not lose correspondence and refunds from them.
The IRS publication for selling your home, 523, can be found on their website www.IRS.gov or call 800-TAX-FORM (800-829-3676) to receive a copy.