Surprise! Having a “free check” for folks by requiring them to file when they don’t normally have to file isn’t quite as simple as you’d think.
The IRS has announced that more than 25% of eligible seniors have not filed tax returns for 2007. This means that those seniors will not receive a rebate check
So yes, the IRS is going to spend more money sending out another mailing to advise seniors to file. Nice, huh?
Yes, I sound a little bitter. It’s not that I don’t want folks to get their checks. It’s because this economic stimulus package has been a disaster from start to finish - full of mixed messages, IRS mistakes and misinformation from the administration.
And now, we get the price tag. In addition to the $168 billion in “free money” being mailed to taxpayers (which will clearly be made up in later years), the costs of administering the economic stimulus package may reach close to a billion dollars.
IRS initially received $202 million to carry out the economic stimulus legislation - the cost, as mentioned before, of all of the ads in the Super Bowl.
The Social Security Administration received a supplemental of $31 million and Financial Management Service (which manages the Offset Program) received $64 million.
Add that to the reallocation of hundreds of IRS collections staff to answering taxpayer telephone calls - estimated by the IRS to be $565 million in foregone enforcement revenue. These costs are in addition to the significant reduction in IRS’s telephone service, which has been overwhelmed (by a factor of 6) by calls about rebate checks - the costs of the resulting reallocations have not yet been reported.
Add in more “publicity” for the programs as noted above - the initial (non-targeted) mailings cost $42 million. And the costs keeps rising.
I’ll tell you what’s being stimulated - clearly disguised government pork.
The Great Blog Off is winding down here on the east coast! It has been such a blast! I have enjoyed the chance to interact more with my readers and spend the day talking tax.
I have a lot of folks to thank for helping pull this event together. Here are just a few:
- The management team at b5media. Specifically, I want to thank CJ, Jeremy, Shai, Darren and Tris for being so supportive. I tend to have wacky ideas like this - and b5media is definitely one of those environments that encourages this thinking out of the box.
- Rachel, the PR maven, at b5media for helping me get things together.
- Arieanna Schweber, CE at the Entertainment Channel, for really rising to the challenge and chasing this idea. She even created contests for The Great Blog Off over at her channel.
- My fellow CEs who helped me promote the event.
- My twitter friends for helping out with publicity and guest posts.
- Joe Coakley and Mariel Cabral at Accion for getting the infrastructure together for the site and providing me with lots of info about Accion. If you haven’t already trekked over to Accion to make a donation, I’d encourage you to do so. They’ll keep the b5media donation page up for another day or so - after that time, you can always go to the home page.
- Finally, my fabulous group of bloggers… As you may know, I’m the Channel Editor for the Business Channel. The bloggers at my channel are just wonderful, wonderful folks. They work so hard, they care about this company and what happens to each other, and they are so knowledgeable and passionate about their subjects. To do this Blog Off, they volunteered hours and hours (and hours) of their own time. I am so proud of each of them that took the time to participate - even if they could only manage a link to their fellow bloggers. Thanks guys. Muah! You are terrific!
Hey taxgirl,
I love your site and I read it every chance I get. This is not the kind of stuff I would read normally but I like it. Can you name other web sites that you read? I’m not interested in technical stuff.
Taxgirl says:
First of all, thanks so much for reading! I am so glad that you like the site.
Hmm. This is a tough question. I read a lot of great tax blogs. I’m going to list a few of my favorites… I hope that you don’t consider this list all inclusive - Google around and see what you like.
I really enjoy the funny Kay Bell at Don’t Mess With Taxes - though her judgment when it comes to football is seriously impaired (Go Eagles!).
You’ll get straight talk from Robert Flach at the Wandering Tax Pro - which I appreciate.
Joe Kristan at Roth & Company, PC, is witty and knowledgeable - he’s tops on my RSS reader.
Prof James Maule has a great ability on Mauled Again to delve deeply into the meat of tax and still keep it interesting. Follow along for primers on tax law.
Joel Schoenmeyer at Death and Taxes can be pretty specific - but if you’re looking for well written commentary on gift and estates tax, you’ll be glad that you stopped by.
And I know that you said that you didn’t want technical, but I can’t not mention TaxProf Blog. Give it a peek.
I hate doing lists because inevitably, someone gets left out. So if you’re great and I left you off - my apologies!
Check out my sidebar for other great blog links - tax and nontax.
I’d love to hear your favorites, too. Let me know who you read!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
Hi Kelly,
Is it true that is you owe back child support then you will not receive the tax stimulus?
Thanks,
Taxgirl says:
More or less.
That’s kind of a loaded question because it depends on a few factors… The IRS can withhold stimulus payments up to the amount owed for federal liabilities or state liabilities when the state participates in the Offset program. Child support is among the liabilities that qualify - but only for documented past due obligations.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
I live and bought a car in NJ for $30,000 and paid $2,100 in sales tax. After two years sold the car to a neighbor for $20,000. When he transferred the title he had to pay $1,400 in sales tax. Is this double taxation?
Taxgirl says:
I’m afraid not but it is understandable why you’d think so.
Usually sales that are classified as “resales” are exempt from a second sales tax. An example is that merchandise - let’s use a block of wood as an example - which is purchased specifically to be resold is exempt at the first sale (usually by providing a wholesalers certificate or other proof of resale).
As a rule of thumb, if an item which is sold a “second” time has been modified, it is subject to sales tax. Using the example of the block of wood, if I use the wood to make a table or carve a sculpture, I’ve modified the wood and it becomes subject to sales tax.
In most states (remember that sales tax is state specific), your used car is considered a modified sales item and is subject to sales tax. If you were a Ford dealer, the result would not be the same - Ford would not pay sales tax on a car that it purchases and subsequently sells to the consumer, though sales tax would be imposed on the final sale. Ford does this by providing the manufacturer with proof of exemption. Individuals not engaged in retail as a business are not generally entitled to the same.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
Who is behind Accion? You can find out more from watching this video:
As mentioned in the video, the driving force behind Accion is microfinance. To learn more about microfinance, you can read this article in the Economist, Poor people, rich returns or the Forbes commentary piece, Microfinance at the Crossroads.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
My son wants to know when he’ll have to file for taxes, he started mowing lawns this summer and is getting paid $25 per yard.
Taxgirl says:
Wow, I feel old. I used to get paid $10/yard for biggish yards in the country. *sigh*
Whether your son will have to file and pay depends on a lot of things. The two most important issues are his age and exactly how many of those yards he mows (his income).
The so-called “kiddie tax” is a term to describe when a child may be taxed at his or her parents’ rate. It has been around for about 20 years now.
Here’s how it works: for 2008, children under 19 and full-time students under 24 with earned income which is less than to half of support may have up to $1,700 in unearned income, meaning income such as dividends and interest on investments (not wages) before the kiddie tax kicks in. The first $850 is exempt from taxation and the next $850 is taxed at the child’s income tax rate.
But. Unearned income over $1,700, tax is computed at the parent’s tax rate. Earned income (wages or pay for, say, mowing the grass) is taxed at the child’s tax rate.
If your child has unearned income of $8500, that income can be included on a parent’s return. Otherwise, the child should file an individual return (see the exemptions from tax above).
Before you rush to include your child’s income on your personal return, don’t forget that this would add to your own adjusted gross income. While you may consider it the same pile of money for purposes of paying the tax, it can subject you to phase-outs or other limits.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
I just recently (December 2007) became a US Resident, I have been illegal before that, since 2002. This year will be my first year filing taxes. And I do not know how to go about it. Or what info should I have handy. Any suggestions? I did worked before I became a US Resident and was paid cash. I got my work permit in October ‘07 and then I started working at Costco. But before Costco I do not have any record of work. I did go to college for 3 years so I have the 1099’s for those years.
Any suggestions, ideas or what paperwork should I gather, let me know.
thank you so much.
Taxgirl says:
This is a great question - not just for first-time filers but for all folks who will file a tax return…
Here’s what you should have handy when preparing your return (or visiting a tax preparer):
Driver’s License or other ID
Social Security number
Social Security number, birthdays and full names of any dependents
Your prior year federal and state income tax returns
Copies of 1040-V or other documentation for estimated taxes paid
Proof of payment of other state or local taxes paid
Proof of payment of foreign taxes
Forms W-2
Forms 1099-MISC
Schedules K-1
Other Forms 1099 (INT, DIV, G, SSA, B, etc.)
Forms 1098 (for mortgage, tuition and student loans)
List of Income Not Reported on 1099 or other form
Year End Brokerage or Bank Statements
Retirement Account Summary
Form W-2G for Lottery or Gambling Winnings
List of Lottery or Gambling Losses
Documentation of Alimony Paid or Received
Documentation of Charitable Gifts (cash and non-cash)
Child Care Provider Name, Address and Tax ID number
Receipts or List of Medical Expenses
Receipts of List of Job Expenses
Settlement Sheet for Sales of Real Estate
Receipt for Real Estate Taxes paid, if not on 1098
Of course, some of these may not apply to you. It’s better to have too much information than too little - a good tax preparer (or software) will ask you for what’s needed as you go along.
If you’re filing on your own (without a tax preparer), I would recommend purchasing some software. It just makes life easier - and cuts down on the likelihood of math errors.
If you will not itemize, you’ll file a form 1040-EZ in most cases. If you are itemizing, most likely you’ll file a form 1040 with accompanying schedules. You can find some more information about forms 1040 and forms 1040-EZ here.
Anything my colleagues would like to add?
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
Haven’t received rebate check and can find no place to contact regarding its status. IRS site is no help. Is there a phone number which will get me somewhere? Thanks.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.
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