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Monday, January 31, 2011

Does Geography Matter

In the graph you see Latitude - how far from the equator a country is - on the Y-axis. The color shows if a country is landlocked or not.

Low income is more common among countries situated close to the equator. At present, there are no high-income, landlocked countries close to the equator.



Here is the link.  Click 'Play.'

Thursday, January 27, 2011

Social Security Drained By 2037

Social Security fund will be drained by 2037
The program has been supported by a 6.2 percent payroll tax paid by both workers and employers. In December, Congress passed a one-year tax cut for workers, to 4.2 percent. The lost revenue is to be repaid to Social Security from general revenue funds, meaning it will add to the growing national debt..........


http://www.google.com/hostednews/ap/article/ALeqM5gAU2-jtPEDCH3pZrhjdQPpJUg1ww?docId=a9fb321a8efc41699a672b960d4096b4

Tuesday, January 25, 2011

Check On Refund With Smartphone

The IRS unveiled a smartphone app Monday that will let taxpayers check the status of their tax refunds and get other information about their tax returns. The app, IRS2Go, can be downloaded for free on iPhones and Androids, the IRS said.


http://www.usatoday.com/money/perfi/taxes/2011-01-24-smatphone-app-tax-refund-status_N.htm

Friday, January 21, 2011

When to Sell First or Second Home at Substantial Gain

The Tax Relief Act of 2010 imposes a Medicare surtax of 3.8% on certain kinds of income after 2012.  The tax is levied on 'investment income' of married taxpayers with modified adjusted gross incomes (MAGI) exceeding $250,000 ($200,000 for singles; $125,000 for married filing separately).  The sale of a second home is 'investment income' for these purposes, as is the gain on sale of primary residence when it exceeds $500,000 for married filing jointly ($250,000 single).  So if a substantial gain is anticipated on a first or second home, selling before 2012 will avoid the 3.8% Medicare tax.  The imposition of taxes with future effective dates can be changed before the dates are reached.

Wednesday, January 19, 2011

SkyDrive

In the following post I commented that Microsoft's first attempt at web applications was not yet mature enough for general use:

http://taxtechcpa.blogspot.com/2011/01/software-from-2010-that-impacts-2011.html

However, it seems that if you have a Windows Live login, that 25gigs of space on SkyDrive is made available.  Once something is on SkyDrive, storage is then "in the cloud," so access is available with an Internet connection.  I've begun experimenting with the usage of documents on SkyDrive.  So far I've saved a couple of photos, a Word2010 document, and a PDF document to my SkyDrive.

The photos can be viewed as a slide show.  It doesn't appear (there is a lot I haven't yet learned) that photos can be printed directly from the SkyDrive, but they can be downloaded and printed locally.

http://cid-ddea0edec0ceebce.photos.live.com/self.aspx/Gene%5E4s%20Test%20Allbun/DSC02286.JPG

The Word document can be edited via a browser.  This seemingly means that users don't have to have similar version of Word (or even have Word) to work on a SkyDrive document.

http://cid-ddea0edec0ceebce.office.live.com/view.aspx/.Documents/Prescott%20DNA%20Project02.docx

The PDF document, similar to photos, can be downloaded and viewed and printed with local Acrobat reader.

http://cid-ddea0edec0ceebce.office.live.com/self.aspx/.Documents/Cooper%5E_2010%5E_FINAL.pdf

Microsoft prefers that I used Messenger and other Microsoft tools.  However, I am merely using SkyDrive for offline (cloud based) storage.  It works, and the price is right :-)

Monday, January 17, 2011

Gift Taxes

For gifts made in 2010, the 2010 Tax Relief Act provides that gift tax is computed using a rate schedule having a top tax rate of 35 percent and an applicable exclusion amount of $1 million. For gifts made after 2010, the gift tax is reunified with the estate tax with a top gift tax rate of 35 percent and an applicable exclusion amount of $5 million.
COMMENT 
A previous act deunified the gift and estate taxes. The 2010 Tax Relief Act reunifies the gift and estate taxes for gifts made after December 31, 2010.
Donors of lifetime gifts continue to be able to apply the annual gift tax exclusion before having to use part of their applicable exclusion amount. For 2010 and 2011, that inflation-adjusted annual exclusion amount is $13,000 per donee (married couples may continue to “split” their gift and may make combined gifts of $26,000 to each donee).

Generation Skipping Tax (GST)

The 2010 Tax Relief Act provides a $5 million exemption amount for 2010 (equal to the applicable exclusion amount for estate tax purposes) with a GST tax rate of zero percent for 2010. For transfers made after 2010, the GST tax rate would be equal to the highest estate and gift tax rate in effect for the year (35 percent for 2011 and 2012). The 2010 Tax Relief Act also extends certain technical provisions under a previous act affecting the GST tax.

Friday, January 14, 2011

When Should You Start Receiving Social Security?

Don Farmer's, likely the most widely utilized teacher of tax by tax professionals, favorite answer to this, and all other tax questions, is IT DEPENDS!  There have been articles written that advocate a more certain answer .... one that applies to most people in most circumstances.  However, due to the diversity in both people and circumstances, Don's answer is more correct.  Here are some of the things the answer depends upon:

.  If it is likely that one will not live beyond age 77, then starting at age 62 can result in more cash receipts IF, earned income after 62 does not significantly reduce cash receipts between ages 62 and 77.  That one statement contains two ifs.  The first if can seldom be answered definitively but according to uniform life expectancy tables, a healthy person aged 62 can expect to live to 85.5.  The second if is based on rules that currently state that after earned income exceeds $14,160 that benefits received are reduced $1 for each $2 earned income exceeds the threshold until AFTER age 62 through age 65.

.  If a person needs the cash flow now (can't wait until later) to survive, then now can trump later even when later may mean more over time.

There is a lot of mind-boggling information at www.ssa.gov.

Thursday, January 13, 2011

The Search for a Clearer Voice

Smart phones are great at a lot of things, with one exception: Typing on a touch screen or a downsized keyboard is still frustrating compared to a full-size computer keyboard. That's probably why Google says that, even before the release of its new personalized Voice Search app for Android in mid-December, one in four mobile searches were already input by voice rather than from a keyboard.  Full article:

http://www.technologyreview.com/blog/guest/26242/

Whether Google's voice effort becomes broadly accepted, or some other technology surfaces, as smart phones continue the march toward the most frequently used communicating device by people of all ages, some method of improved interface becomes necessary.

Wednesday, January 12, 2011

Alternative Minimum Tax (AMT)

The Tax Act of 2010 includes a 'patch' for AMT for 2010 and 2011:

.  For 2010, the AMT exemption amounts will be $47,450 for unmarried individuals and $72,450 for married individuals filing jointly.

.  For 2011, the amounts will be $48,450 and $74,450 respectively.

Tuesday, January 11, 2011

Software (from 2010) That Impacts 2011

.  Windows 7 - it works
.  Office 2010 - major leap over Office 2003; improvements over Office 2007 (file compatibility with 2007 maintained).  Significant changes for Outlook users.
.  Office Essentials for the Web still not mature enough (this is Microsoft's attempt at cloud computing).
.  Windows XP expired April 2010 with extended support ending in 2012.

Saturday, January 08, 2011

Some Limits On Home Mortgage Interest Deductions

In most cases, all home mortgage interest is deductible.  Whether it is deductible depends on the date the taxpayer took out the mortgage, the amount of the mortgage, and the use of the proceeds.

There are 3 categories that all residential home mortgages fit:

. Mortgages prior to October 14, 1987
. Mortgages since October 13, 1987
. Home equity debt

Not many existing mortgages now fit into the first category.  The second category requires that the proceeds be used to buy, build, or improve the taxpayer's home and ONLY if total is $1 million or less ($500,000 or less if married filing separately).  For the third category, the proceeds can be spent for ANYTHING but ONLY for mortgages that total $100,000 or less ($50,000 or less if married filing separately) AND do not exceed the fair market value of the property reduced by any debt fitting the first two categories.

The limits for the second and third categories apply to the combined mortgages on taxpayers' main home and second home.

Friday, January 07, 2011

Home Mortgage Interest For Married Taxpayers

If taxpayers are married and file a joint return, their qualified home(s) can be owned either jointly or by only one spouse.

For marrieds filing separately, where the spouses own more than one home, each can take into account only one home as a qualified home.  However, if both consent in writing, then one spouse can take both the main home and a second home into account.

Thursday, January 06, 2011

IRS Extends Tax-Filing Deadline to April 18



WASHINGTON, D.C. (JANUARY 5, 2011)

The Internal Revenue Service has opened the 2011 tax season by announcing that taxpayers have until April 18 to file their tax returns as a result of a Washington, D.C., holiday.

Doug Shulman
Taxpayers will have until Monday, April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns.
The IRS expects to receive more than 140 million individual tax returns this year, with most of those being filed by the April 18 deadline. The IRS reminded taxpayers impacted by recent tax law changes that using e-file is the best way to ensure accurate tax returns and get faster refunds.
The IRS also cautioned taxpayers with foreign accounts to properly report income from these accounts and file the appropriate forms on time to avoid stiff penalties.
“The IRS has made important strides at stopping tax avoidance using offshore accounts,” said IRS Commissioner Doug Shulman in a statement. “We continue to focus on offshore tax compliance and people with offshore accounts need to pay taxes on income from those accounts.”
In addition, the IRS reminded tax professionals preparing returns for a fee that this is the first year that they must have a Preparer Tax Identification Number. Tax return preparers should register immediately using the new PTIN sign-up system available throughwww.IRS.gov/taxpros.
For most taxpayers, the 2011 tax-filing season starts on schedule. However, tax law changes enacted by Congress and signed by President Obama in December mean some people need to wait until mid- to late February to file their tax returns in order to give the IRS time to reprogram its processing systems.
Some taxpayers – including those who itemize deductions on Form 1040 Schedule A – will need to wait to file. This includes taxpayers impacted by any of three tax provisions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act Of 2010 enacted Dec. 17. Those who need to wait to file include:
•  Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.
•  Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.
•  Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.
In addition to extending those tax deductions for 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act also extended those deductions for 2011 and a number of other tax deductions and credits for 2011 and 2012 such as the American Opportunity Tax Credit and the modified Child Tax Credit, which help families pay for college and other child-related expenses. The Act also provides various job creation and investment incentives including 100 percent expensing and a two-percent payroll tax reduction for 2011. Those changes have no effect on the 2011 filing season.
The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the recent tax law changes. In the interim, taxpayers affected by these tax law changes can start working on their tax returns, but they should not submit their returns until IRS systems are ready to process the new tax law changes. Additional information will be available at www.IRS.gov.
For taxpayers who must wait before filing, the delay affects both paper filers and electronic filers. The IRS urges taxpayers to use e-file instead of paper tax forms to minimize confusion over the recent tax law changes and ensure accurate tax returns.
Except for those facing a delay, the IRS will begin accepting e-file and Free File returns on Jan. 14. Additional details about e-file and Free File will be announced later this month.
The IRS is also continuing to focus on taxpayer service. Taxpayers with questions should check the IRS website at www.IRS.gov, call our toll-free number or visit a taxpayer assistance center.
This is also the first filing season that tax packages will not be mailed to individuals or businesses. There are still many options for taxpayers to get paper forms and instructions if they need them. In recent years, fewer and fewer taxpayers received these mailings. Last year, only 8 percent of individuals who filed tax returns received tax packages in the mail. Taxpayers can still get any forms and instructions they need online at www.IRS.gov, or they can visit local IRS offices or participating libraries and post offices.
In addition, individuals making $49,000 or less can use the Volunteer Income Tax Assistance program for free tax preparation and, in many cases, free electronic filing. Individuals age 60 and older can take advantage of free tax counseling and basic income tax preparation through Tax Counseling for the Elderly.
IRS Free File provides options for free brand-name tax software or online fillable forms plus free electronic filing. Everyone can use Free File to prepare a federal tax return. Taxpayers who make $58,000 or less can choose from approximately 20 commercial software providers. There’s no income limit for Free File Fillable Forms, the electronic version of IRS paper forms, which also includes free e-filing.
Once taxpayers file their federal return, they can track the status of their refunds by using the “Where's My Refund?” tool, located on the front page of www.IRS.gov. Taxpayers can generally get information about their refunds 72 hours after the IRS acknowledges receipt of their e-filed returns, or three to four weeks after mailing a paper return.
Taxpayers need to provide the following information from their tax returns: (1) Social Security Number or Individual Taxpayer Identification Number, (2) filing status, and (3) the exact whole dollar amount of your anticipated refund. If the U.S. Postal Service returns the taxpayer’s refund to the IRS, the individual may be able to use “Where’s My Refund?” to change the address the IRS has on file, online.
Also, taxpayers may complete a Form 8822, Change of Address, and send it to the address shown on the form. They may download Form 8822 from www.IRS.gov or order it by calling 800-TAX-FORM. Generally, taxpayers can file an online claim for a replacement check if more than 28 days have passed since the IRS mailed their refund.

Tuesday, January 04, 2011

USB 3.0

Where USB 2.0 took 7.5 minutes, USB 3.0 takes 15 seconds.  Nevertheless it is prudent to make sure you have 2.0 backwards compatibility with 3.0.  The speed differential means lots of additional things are now practical via USB, such as real-time, perpetual backup to an external 3.0 hard drive.  As thumb drives continue to increase in capacity, and utilized for a greater variety of functions, it becomes increasingly important to encrypt USB devices.  There is some evidence that as external, USB based, hard drives proliferate, that failure rates are increasing.

Monday, January 03, 2011

Windows 7

For those, currently most PC users, who are using Windows XP systems, immediate consideration should be given to move to Windows 7.  For many, because of hardware requirements, that will involve new systems.  For those purchasing new systems during 2011 anyway, Windows 7 is apt to be the default installed operating system.  Some understanding of 32bit vs 64bit systems is necessary for prudent purchasing.  For starters, 32bit systems can address 4GB of total memory space; 64bit systems can address 128GB of total memory space.  For systems operated as Virtual Machines, more RAM will always be needed.  Increasingly, for those who utilize a PC solely for Internet Access and communications, the current and coming generations of smartphones may be enough.  Macs continue to gain market share although they still are a significant minority in business based systems.

Today, it is the time and effort "cost" of installing and configuring that is most relevant, due to increasing diminishment of  hardware costs.  So some consideration should be given to reducing the frequency of upgrades.