2011 Taxes to 2024 Taxes

Tag: United State

  • Did You Know That The United States Will Soon Have The Highest Corporate Taxes?

    Believe it or not, the United States is about to have the highest corporate taxes of any other industrialized country. Right now, only Japan has a higher corporate tax rate than the United States. However, that is all about to change very soon.

    In less than a week, Japan will be reducing its corporate tax rate to 36.8 percent, while the United States will continue to have corporate taxes of 39.2 percent. This is calculated by combining the current business tax rate of 35 percent with average state taxes of 4.2 percent. It is a curious state of affairs, especially considering that the United States attempts to be an attractive market for corporations.

    In addition to Japan, many other countries including China, Russia, Germany, and Canada have lowered their corporate taxes, in response to the current global economic climate. Americans could truly benefit from a reduction of the corporate tax rate. Many companies are unable to provide high pay rates, raises, or bonuses for their employees because of the exorbitant corporate taxes that they have to pay.

    The United States prides itself on being first in many things. It is unfortunate that we now must add ‘First in corporate tax rates’ to our list of attributes. Hopefully, President Obama and the other Democrats in office will see reason and reduce our corporate taxes, so American workers can once again go to work with the hopes of receiving fair pay rates, raises, and bonuses.

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  • The Supreme Court Decision On Healthcare Will Affect Taxes

    The nation waits for the Supreme Court to announce the ruling about health-care. Many wonder how their ruling will change taxes?

    Not only does the Supreme Court decide about the Affordable Care Act, but also taxes. How will their judgement change taxes?

    The law must include tax cuts and increases. Even if the individual mandate is eliminated, the taxes would go on. Unless the Supreme Court eliminates the entire healthcare bill.

    The mandate tax will be the punishment people would owe for not buying insurance. The High Court must decide whether it is considered a penalty or a tax.

    There are important ACA tax cuts for small businesses that will help with purchasing insurance for their workers. There was over a million dollars spent on lawyers and fees to challenge the healthcare law by the NFIB.

    Is it practical to have the subsidy if the Court overthrows the key elements of the reform? It is a sure thing that the NFIB will agree.

    The law contains many tax increases, that includes the excise tax on top-value, employer-sponsored healthcare plans which will start in 2018. There is be a provision that will make it harder for people to itemize medical costs.

    There are a couple of other tax increases. The first increase is a .9% Medicare tax for those making above a certain threshold. This money would finance the elder care health system. The other is the 3.8% tax that households who have non-traditional income will have to bear. Some feel this is a surtax and the real purpose is to bankroll part of the cost of the ACA.

    The Supreme Court decision may hit upper income families hard. In 2013, the two levies would hike taxes on households making $500,000 to $1 million, their taxes would increase by $4,600. For those making more than a million they would pay $41,000 in taxes.

    Even for lower income families, there will be a tax. Married couples making over $250,000 combined, and single taxpayers making $125,000 will face a brand new tax. Households needing to pay these taxes over the next decade are going to double in number, because inflation is not taken into account. It will reach 4.6% from the 2.4% that it is now.

    These tax provision should not be forgotten, even if the Supreme Court leaves them untouched. I think we shall hear about them again.

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  • 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.

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  • Unusual Tax Deductions Can Be Risky

    Should you take a risk on tax deductions? My answer would be no. The turbo tax software site says the same thing. I am not one to take such risks. However, others have dared to boldly go where no tax payer has gone before.

    One group of accountants in Minnesota decided to take a survey to compile a list of unique and strange tax deductions. It is a good thing their accountant talked them out of claiming such things or else they would get an angry letter from the IRS.

    It is amazing what some people try to list as deductions. One handyman in Minnesota though they could take a $25000 deduction for the miles he traveled back and forth to work. Their business revenue is $10000. An accountant in the Minnesota CPA group who gave the surveys had a client with a huge amount of  expenses on  a luxury vehicle. They thought the tax deduction was legal though they resided in another state. One client wanted to list a city official as a dependent because they paid the salary.

    Some people think you can claim a spouse. According to the turbo tax website, you can get a deduction for a dependent spouse if you file jointly. You cannot claim former spouses as one person tried to do. It is also  a good idea not to inflate charitable donations. Odd deductions can get you audited by the IRS. The ironic thing is you can claim some strange deductions according to turbo tax.

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  • Know Your Tax Responsibilities on Insurance

    When purchasing life insurance, it is important to consider all of the circumstances that could affect the amount of money needed by beneficiaries. One issue everyone should consider is taxation. Many people wonder if they have to pay taxes on life insurance. Many people assume that all proceeds from life insurance are tax-exempt, but the truth is actually more complicated.
    Death benefits of a life insurance policy, in general, are free from federal income tax when distributed by the insurance company to a named beneficiary or multiple beneficiaries. In other words, when a husband dies, his wife usually does not have to pay taxes on the money she receives from the insurance company as payment. If the husband has a $100,000 life insurance policy, the wife does not have to pay federal income taxes on that $100,000.

    Things begin to get more complicated if the husband, before his death, instructs the insurance company to pay that $100,000 in installments of, say, $20,000. The insurance company will distribute the money as instructed. The money on deposit will earn interest, which is taxable. The principle is not taxed, no matter how it is distributed.

    Another complication occurs when the owner of an insurance policy transfers ownership to another person or party before his death, for money or other consideration of value. The benefits paid to the beneficiary in this case could be considered taxable income. This should be discussed with a tax professional before completing such a transaction.

    Anyone purchasing life insurance should know that life insurance policies may be subject to federal estate tax (not income tax) if the deceased has an ownership interest in the policy. If the insured person has any control over the policy, including the right to cancel it, borrow against it or change the beneficiary, that person is considered to own the policy. When the owner of the policy dies, the proceeds may be subject to federal estate tax. In most cases, if the beneficiary is the spouse, estate tax is not assessed on the insurance benefits. However, these taxes may be assessed when the spouse dies. This issue should be discussed with a professional during estate planning.

    It may seem unreasonable that any insurance benefit should be taxed. As stated, life insurance proceeds paid to a beneficiary are usually not subject to federal income tax. Other tax situations may arise and should be discussed with a qualified professional.

    But what about the question of insurance being taxed? With the value of employee health benefits appearing on the 2011 Form W-2, many people worry that their health insurance is being taxed. This is not the case. The health benefits information is printed on the W-2 for informational purposes only.

    However, in 2018, insurers will pay a 40% tax on the portion of “Cadillac” health plans sponsored by employers that exceeds $10,200 for individuals or $27,500 for families. Insurers are likely to pass the higher costs along to employers. Employers will likely pass the costs to employees or reduce coverage to slip under the tax threshold. For now medical insurance benefits, like life insurance benefits, are not subject to federal income tax.

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  • Pay Your Taxes On Unemployment Insurance Benefits

    When filing your 2012 taxes, make sure you pay taxes on your unemployment insurance benefits.

    While the rate of unemployment may be reducing, there are still millions of people who are unemployed. Sadly, these individuals also have to pay taxes on their unemployment insurance benefits.

    If you are unemployed and you collected unemployment insurance benefits last year, you must pay taxes on it. After calculating your tax incidence, you will be surprised at the amount of tax you owe the government, unless you requested the federal government to withhold taxes.

    The VP of TurboTax, Bob Meighan says that people still think that unemployment benefits are not taxable. While that might have been the case in 2009, congress reviewed that provision.

    However, when filing your returns, you will find yourself in the lowest tax bracket because of your low income. In fact, you might also find yourself qualifying for several tax breaks.

    Terry Lemons, I.R.S. spokesman says the agency encourages taxpayers to take advantage of things like earned income credit when they lose their jobs.

    He also said that the agency encourages individuals to file their returns even if they do not have the money to pay their taxes. In such cases, taxpayers can benefit from installment agreements to pay their taxes.

    Many households in the U.S are still recovering from the Great Recession of 2007 – 2009. According to government statistics, more than 13 million who are not employed have stopped looking for jobs because companies have not yet started recruiting new workers.

    Fortunately, those who spent the better part of 2011 can get tax breaks on 2012 taxes.

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