Social Security Benefits And The Payroll Tax Cut

Social Security is a government benefit countless people depend on.  This is true for those who have already retired, are approaching retirement, or are just starting out in the work force.  Those who are fully retired depend on Social Security payments to help sustain their livelihood.  Unfortunately, future generations may not have this luxury.

The price of living continues to rise as incomes and Social Security benefits remains relatively the same.  This means the general population will need to find other ways of supplementing their bank accounts.  In the future, the framework of Social Security may resemble a combination of a 401(K) plan and a safety net for those in need.

Another factor which influences Social Security is commonly known as the payroll tax cut.  The payroll tax cut was passed in the year 2010.  For lower wage-earners, the tax cut does not make that much of a difference when it comes to take home pay.  Individuals who earn considerably more do notice a difference.  Congress recently extended the tax cut which, as usual, causes conflicting views in the political world as well as the general public.

Politics tends to be a topic where a lot of varying laws are involved that are not fully understood.  People have a tendency to hypothesize and evaluate when all of the facts are not clearly understood.  The topic of Social Security benefits is one that hits home with nearly everyone.  This is part of the reason why so much attention is given to the payroll tax cut.

Capital Gains Ignorance Leads To Catastrophic Losses

The IRS regards almost every asset you use or own for business or personal reasons as a capital asset. Such items include your personal residence in addition to any furniture or stocks and bonds held in your own name. Net profit or loss from the sale of such commodities is either a capital gain or loss.

All capital gains must be accurately and fully reported on federal tax returns.

Deductible capital losses are limited to investment property.

Capital gains and losses may be categorized as either “short-term” or “long-term.”

Applicable net capital gain taxes are typically lower than other taxable income rates. Maximum 2001 tax year tax rates for most individuals is 15%. Low-income individuals’ tax liability may be as low as 0 % on all or part of net gain. Special capital gains categories may attract tax liabilities of 25 to 28 percent.

Capital losses which exceed capital gains are deductible to offset other income such as salaries or wages. Annual deductible amounts are limited to $1,500 and $3,000, depending on your filing status.

If net capital losses exceed the allowable annual deductible amounts, you may rollover part of the unclaimed sum by deducting it on the next year’s tax return. The IRS will then regard it as though it was actually incurred during that tax year.

Form 8949 – Sales and Other Capital Asset Dispositions will be required to compute capital losses and gains. Taxpayers must list all details of capital asset disposition on this form and transfer the net figure to Form 1040 Schedule D.

Best iPhone Apps to Help You with Your Taxes

Once again it’s the most boring and stressful season of all: tax season. When you’re preparing your own taxes, it can be quite tedious, but it must be done. Kudos to those of you who don’t rely on a tax professional and attempt to DIY. But everyone might benefit from a little help, and you don’t have to go it alone. If you have an iPhone, there are lots of great apps that will help you through the process so you can get your taxes done quickly and correctly (the first time). Here are the best iPhone apps to help you with your taxes.

TurboTax SnapTax
If you have a very simple tax return to file, this app will help you do it quickly and easily from your iPhone. There’s never been a better way to file if you have no dependents, don’t own a home, have only one form of income, and made less than $100,000 last year. If you fit those qualifications, download this app and be done with your taxes in minutes. Just take a picture of your W-2, answer a few simple questions, and e-file instantly. E-filing costs just $19.99, but downloading the app is free.

TaxCaster by TurboTax
Another excellent, free app from TurboTax, the TaxCaster will help you predict the amount of your refund. You’ll enter information about yourself and your income, such as your filing status, dependents, withholding, compensation, donations, your home, and more. When you’re finished, it will provide you with a dollar-amount estimate of your refund. While it won’t do your taxes for you and isn’t guaranteed to be exact, it’s a great way to get an idea of what you can expect from your taxes this year.

MyTaxRefund by TurboTax
The third awesome tax app from TurboTax is MyTaxRefund. If you e-filed your taxes this year, it will help you track the status of your return. It’s free, and you’re not required to have e-filed through TurboTax to be able to use it. You can check on the progress of your Federal and State e-filed returns with ease, anytime and anywhere.

Dictionary of Tax Terms
When you’re preparing your own taxes, you’re bound to run into a few mystery terms that you just don’t fully understand. This app costs $0.99, and it will define for you more than 600 tax terms. It’s searchable, you can save the entries you need to remember, and it works entirely offline.

Calculator
There are lots of calculator apps, but the 99-cent “Calculator” is the best way to go. It has an attractive interface, and it’s easy to use. It includes a variety of scientific functions for all your calculating needs. As you do your taxes this year, it’s essential to have a good calculator on hand, and this is one for you.

EITC Calculator
Did you know you could earn up to $5,751 back with the Earned Income Tax Credit (EITC)? This free app will help you determine if you qualify for an EITC. You’ll simply answer a few basic questions, such as your marital status and income, and this app will estimate how much you might qualify for.

 

Carl Schmidt is an experienced tax professional who shares his personal finance tips with you as a hobby. To keep his writing clear, he uses the world’s number one grammar checker.

How to Choose a Tax Professional

Your taxes are very important, and they’re something you don’t want to screw up. If you don’t feel comfortable doing them yourself, you’ll want to hire a tax professional to do them for you. Hiring someone to do your taxes can be costly, but it can also save you lots of time and headaches, and it can help you maximize your return. It’s incredibly important to hire someone who is both trustworthy and knowledgeable. Here are some tips on how to choose a tax professional.

Types of Professionals
There are two types of tax professionals that are usually best: enrolled agents (EA) and certified public accountants (CPA). Enrolled agents are licensed by the IRS, and they’re required to constantly continue their tax education. Certified public accountants are licensed through state exams and have met education requirements. It’s a good idea to go with either an enrolled agent or a certified public accountant. These tax professionals will be listed with either the American Institute of Certified Public Accountants (AICPA) or the National Association of Enrolled Agents (NAEA).

Tax Preparation Chains
There are also lots of tax preparation chain offices that can help you prepare your returns, such as H&R Block and Jackson Hewitt. While they may be much cheaper than hiring an EA or CPA, you get what you pay for. Tax chains often use seasonal employees that have been quickly trained. They’re just not as reliable as other trustworthy professionals. If you have a very simple return, you might consider getting it prepared by a chain. However, remember that you’re ultimately responsible for your own return.

Referrals
Check out the AICPA or NAEA for directories of tax professionals near you. Or, ask around for referrals from your trusted friends, family, and co-workers. Lots of people you know may have someone they’ve been using for years that they’ll be happy to suggest to you. Whenever you get a referral, be sure to still ask important questions and check on their certifications and qualifications.

Background Checking
You’ll want to thoroughly check out any tax professional before you hire them. Your money and your taxes are incredibly important to you, so you want to take care when entrusting anyone else with them. You can perform a background check, and check with the Better Business Bureau to make sure your professional has never been accused of fraud or anything criminal. Ask them for their Preparer Tax Identification Number, and check their certifications with either the AICPA or NAEA. Finally, ask them for some references and follow through with contacting them.

Compatibility
You want to make sure a tax professional is compatible with your own personality. Do you feel comfortable with that person doing your taxes? Also, find out how they run their business, such as how and when they can be reached, and what services they perform. Hiring a CPA or EA may be costly, so make sure you know exactly how you’ll be charged. Ask them what happens if your tax return ends up being audited, because you’ll want someone who will represent you. Most importantly, make sure your tax professional is experienced with the type of taxes you need prepared, and find someone who will work with you to find the best outcome for you.

K. Villareal is a personal financial counselor. To make sure her clients understand her advice, she always uses a grammar checker.