Sunday Silliness - Taxes :o)

Bucko's Bucks - 2011 Taxes?

Tax Day 2010 has come and gone, but it's never too early to start planning for the next tax year. Here is what is in store for 2011.


More Making Work Pay Credit. The credit, aimed at the middle class as part of the American Recovery and Reinvestment Act, provides taxpayers with a refundable tax credit of up to $400 for working individuals and up to $800 for married couples filing joint returns, so long as they otherwise qualify. As before, most taxpayers will see an adjustment in their withholding amounts in their paychecks throughout the year, resulting in a small increase in take-home pay; taxpayers will actually claim the credit on their 2010 tax returns.

No deduction for sales tax on the purchase of a new vehicle. The tax provision that allowed taxpayers to take the itemized deduction or increase in standard deduction for sales tax on the purchase of a new motor vehicle has expired.

No more state and local sales tax deduction. In 2009, taxpayers who itemized were able to deduct their state sales tax payments instead of deducting their state and local income taxes. This provision ended after December 31, 2009 -- although Congress could decide to extend it.

Roth IRA conversions. In 2010, the rules governing who can invest in a Roth are a bit different. The change, which was signed into law as part of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), allows anyone with an existing traditional IRA to convert to a Roth IRA -- regardless of their income -- for one year. The tax attributable for any such conversion will be paid in 2011 and 2012. The rules that otherwise govern establishing and making contributions to new Roth IRAs will not change.

Homebuyer's Tax Credit payback begins. For 2009, the first-time home buyer's credit was a flat out credit -- no repayment required. However, the first iteration of the bill, which was part of the Housing and Economic Recovery Act of 2008, required the repayment of the credit over a period of 15 years. For taxpayers who claimed the credit in 2008, repayment begins with the filing of their 2010 tax return.

No change in the gift tax exclusion. Inflation didn't move much at all from 2009 to 2010, which means that the annual gift-tax exclusion of $13,000 also won't change. For 2010, a U.S. taxpayer can give away $13,000 per person (to one person or a million different people -- the exclusion is unlimited) without any tax considerations.

No federal estate tax. When the federal estate tax was repealed -- for one year -- under the Economic Growth and Tax Relief Reconciliation Act of 2001, it was widely believed that Congress would tweak the law to avoid the repeal before we actually made it to 2010. However, in a stunning show of inaction (some are calling it "Congressional malpractice"), Congress has simply chosen to do nothing. The result? No federal estate tax for 2010. But don't get too comfortable: In 2011, the federal estate tax is reinstated with a lower personal exemption ($1 million) and a higher tax rate (55%) than in 2009.

Alternative Minimum Tax (AMT) exemption rollbacks. For 2009, the AMT exemption was $46,700 for individual taxpayers; $70,950 for married taxpayers filing jointly or for qualifying widow(er)s; and $35,475 if married filing separately. But for 2010, these exemption amounts will drop back to $33,750 for single taxpayers; $45,000 for married taxpayers filing jointly or for qualifying widower(s); and $22,500 if married filing separately in 2010. The scaled back exemption rate is expected to affect a whopping one in five taxpayers.

No change in the Medicare tax (yet). The health care reform bill pushed through a number of tax provisions affecting employers and individual taxpayers. Most of the changes, however, including an additional Medicare tax on higher-income individuals, won't kick in until 2013. There is no change for 2010.

Unemployment income tax breaks expire. For 2009, unemployed taxpayers who received related benefits could exclude up to $2,400 from their taxable income. Unless Congress votes to change the law for 2010, this tax benefit will no longer be available.

See full article from WalletPop

Lets Make Lemonade :o)

Thank you, Joann for the Lemonade Award!!

The icon symbolizes the old saying 'When life gives you lemons, make lemonade!' I'm honored, because this award is for blogs that show Great Attitude or Gratitude.

I do think I have a unique, if not warped, sense of humor, so to get a lemonade award seems very fitting :o) I could not think of a better day to post this award than Tax day, since I am still here, I hope this brings you a quiet chuckle.

The rules for this blog award are simple:

1. Put the logo on your post or blog.

2. Nominate at least 4 blogs (rules say 10, but hey, my blog, my rules) that show great attitude or gratitude.

3. Link your nominees within your post.

4. Let the nominees know they have received the award by leaving a comment on their blog.
If you read me, then you know you got the award, otherwise, ???

5. Share the love by linking back to the person you received the award from.

Wildcats Lair: To me, one of the funniest blogs I have come across, I am constantly amazed that he does not have more readers and commenter's. I will continue to plug him on a regular basis. One day, when he is filthy rich and in the stratosphere, maybe he will make me his publicist.

The Stupidsheet: Reading Jimmy gives you alternating moments of humor and things to think about. I have truly enjoyed his stories, antics, and series.

The Wisdom of the Distracted Mind: Dan is the master of the mundane struggles of life, with a definitely distracted view. Be warned, Dan tells it like he sees it, and is not for the touchy-feely crowd.

An Animal Rescuers Life: Jamie has a sweet soul, with a particular soft spot for animals. She is a mother of two, with her son being a very recent addition. I enjoy reading about her very down to earth challenges and observations, and hope you will also.

Pay Them Less?

Do not pass go, do not collect $1,900,000+

I have pondered whether President Obama's plan to tack those making more than $250K per year will make a difference. I recently read a Time Magazine article, and I can say that yes, it really will make a difference in reducing the deficit.

You see, overall, the top 0.1% of the income distribution in our country (in 2006, the most recent year data was available) was made up of 148,361 taxpayers who took home more than $1.9 million each. That does not seem like that many in a country with more than 250 million people, but these 148,361 people represent 11.6% of the personal income for our country. So, will raising taxes on these people make a difference, yes!

I am sure that they can do without the $100,000 of taxes. Heck, I could live nicely on the $100,000, let alone more than $1 million.

Big Three Bailout - Yes or No ???

There have been some discussion threads and entries about the pros and cons of assistance to the Big Three (This one for you Mark).

This got me thinking, at first blush, I am against a "bailout" (it is bad business planning and poor decision making, the company(s) do not deserve to be bailed out), and that is the fiscal conservative republican side of me. After all, if we bail out the auto industry, what is next, every struggling company will line up with the palms extended upwards (sometimes holding a bucket). Where do we draw the line?

Then there is the socially liberal side that looks at the impact to the people, the workers and families that were simply doing their jobs, and they may have to pay the ultimate price. How do we address that issue, do we bailout the companies, do we provide increased welfare and job training, do we do a packaged bankruptcy with government backing???

I can see, understand, and empathize with both perspectives. So, I decided to look at the business case perspective; what is better for the average taxpayer. Some facts/assumptions:

• One Million workers potentially impacted.
• Average weekly unemployment benefit is $359/week (assume 20 weeks)
• Assume average salary is $60K/year, and that workers will be out of work for a year.

What is the burden to the taxpayer if do not provide some assistance? The unemployment benefits will cost $7.18 Billion. The lost tax revenue, assuming a 25% rate, will cost $15 Billion in lost taxes. So, without even considering downstream costs to other local businesses that lose sales, and without considering job training and placement assistance, we are at a greater than $22 Billion impact if we do nothing.

So, I say that some assistance package is necessary, for the good of the impacted workers and their families, as well as for all tax payers. I think that some guarantees of repayment (so the assistance is more like a loan) and harsh realities for the executives (no bonuses, reduced pay) are definitely in order. Longer term, we need to consider reduction in manufacturing in other countries, retooling for renewable technology, and some union concessions are in order to ensure the viability of this industry in our country.

I think that whenever we are faced with such a dilemma, we need to run the numbers, figure out what the business case is, and make our decisions based on facts, not emotion. When the number of impacted employees is around a million, the numbers do not lie; when the numbers are in the thousands, it is much harder to make the case.