The old quote, “Nothing is certain but death and taxes” is especially true of property taxes. Apparently, some towns in the United States continue to show rising property taxes, even when homeowners are struggling with a recession and the average house price in 2009 has decreased. Yet, there are mechanisms in place that make hiking property taxes appealing for local governments, when other forms of revenue are unavailable.

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As tax season begins, many are starting to feel the pressure and stress of filing. Every year, it seems like tax rules that we use to determine our tax liabilities on our current salaries gets harder and harder to decipher. Luckily, the I.R.S, or Internal Revenue Service, is available to answer any and all of your questions. They do realize that it can be a burden on regular folk and are available to answer questions, but many professionals agree that obtaining a good tax representative is the best way to get through each tax season. These experts are trained on the tax code and any new items that arise every year. If you simply work and have no investments and rent your home, you may be able to do your own taxes, but there are situations where you may have to file 5 or more forms and this is where an expert can really be worth the expense.
Some of the more common questions involve things that most of never really think about. When we die, who pays our taxes? Usually the estate, but it is always best to contact the I.R.S. about certain circumstances that we do not understand. Also, most people have questions regarding past due balances and how they affect their upcoming refunds. If you owe back-taxes or are on a payment plan, the I.R.S. will apply any new refunds to the amount owed. If you are planning something with ytour refund money, be wary of this as you may never see any of it if you still owe from years past. The I.R.S. is flexible and you can either file for a 6 month extension to save up to pay your liability. Payment plans are also available to those who cannot afford their tax debt. They have flexible payment terms and will give you ample time to pay them what you owe.
There are many circumstances where you should consult with a tax expert to make sure you are doing the right thing. If you are honest and have made mistakes, the I.R.S. will work with you to rectify any of those and give you ample opportunity to rectify the situation. They are aware that people make mistakes and are not out there to get you, but to simply enforce the tax code.

Interest rates are low, and if you have enough equity to sell your property at break-even or for a profit, the homebuyer’s credit may be enticing you put your house up for sale. House market predictions show that home prices are rebounding in certain areas, and so the bottom of the housing market may be close, if not already over. If you are looking to upgrade, you will want to buy when prices are low and rates are high, but also when you have enough equity to jump to a new place. Before you do, realize that there are some restrictions and conditions you have to meet to take advantage of the homebuyer’s credit. For one, you or your spouse will have had to have lived in your existing home, as a primary residence, for five out of the last eight years. There are income limitations and some other restrictions, but for the most part, the average homeowner stands a good chance of qualifying for this one-of-a-kind offer that is unlikely to repeat itself within their lifetime. (more…)

They say that the only certainties in life are taxes and death. While we do dread paying our taxes every year, it’s something that we should become accustomed to as this money goes to good community causes, such as the roads we drive on and government programs that help the less fortunate. Although we will always have some debate related to the amount of taxes we pay due to our ongoing employment, we do know they are inevitable to keep the country running effectively. Elected officials, from Senators to Governors, are paid with our taxes. We also pay sales tax on the goods and services we buy and use every day, because we have to give the state and local governments money to help sustain the way we live. This money goes to local schools and libraries and helps the less fortunate in our immediate area.

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The formula for how much money you need to sock away for retirement is 80% of your pre-tax net income. This takes into account the fact that your living expenses decline when you don’t work, from transportation to wardrobe and eating out. However, what isn’t mentioned in this formula is that taxes are supposed to drop too, giving you a bit of a tax break from tax-deferred retirement accounts. When you were working, you might have been in a 28% tax bracket, but upon retirement, you may end up lowering that tax bracket due to a lower income. If you have planned for the same income though, you may find that’s not the case. To get the most bang for your buck in retirement, it becomes even more important to pick a strategy that includes reducing your tax burden. (more…)

If you haven’t jumped on the electronic filing bandwagon yet - that is, filing your taxes online in a paper-free way - then there are many good reasons to do so:

• You get your return faster - it can be as quick as two weeks, whereas the minimum time for a paper-based return is six weeks.
• You avoid mailing problems like your return getting lost in the mail, your tax check getting stolen, or any other kinds of delays. And you skip the line at the post office.
• You can do the filing at any time of day (or night).
• You avoid many mathematical errors because the e-filing software will pick up discrepancies; similarly, you don’t have to rely on data entry operators at the tax office to input your data correctly.
• You save paper and printing costs, and help the environment as well as yourself.
• You’re less likely to miss deductible items if you follow question by question formats in tax filing software.

While some people still are unsure about the security of sending this kind of personal information online, in reality, it’s probably safer than having pieces of paper everywhere with the same information on. Try e-filing for this year at least and see if you like it better.

credit: jm3

Unless you’ve got an extension, you’ve probably filed your tax return for 2008. Like many Americans, you might have missed out on some deductions simply because you weren’t aware of them – it’s a complicated system! So take a look at this list and keep in mind that some of these deductions might be available for you when you next file a return.

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If the value of your property has fallen, you’d expect that your property tax bill might fall too, right? Unfortunately this is usually not automatically the case but it certainly pays to check into how much property tax you really should be paying, because you might end up saving up to 20%.

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credit: Paul Keleher

Scary stuff from a recent CNN report about the inevitability that taxes will rise: Janice Revell from the Money Magazine is sure that taxes have been cut too much, too quickly and historical analysis makes it look like this is a situation that can’t last. She thinks proof is there even as recently as 1980 when tax rates for the top tax brackets were double what they are today. (more…)

Celebrities don’t like to pay taxes anymore than the rest of us do. And just like us, they have to pay up when they get caught trying to keep money out of the taxman’s hands.

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