Your G-String Money Is Safe in Texas

As reported by TaxGirl, a Texas tax that would impose a $5 fee to frequenters of strip clubs has been shot down.

Well, well, well... whatdoyahknow. That's a shocker!

What is going on with the tax system lately? First the crack tax and now this? Is it me or does it seem that we're getting away from the primary function of taxes: to help pay for our national infrastructure and operational expenses. When did a "tax" become an obligational fee to benefit some human rights platform??

I'm sorry, but I think we're abusing the term "tax" here. And I hate to say it, but the plastic bag "tax" is walking the same line.

Don't force me to fund causes I don't agree with.

Wait... I guess maybe these are taxes then...

Who To Vote For? Just Press Enter

The TaxProf has some pretty cool things on his blog sometimes. This time he's found a tool created by Ted Frank of American Enterprise Institute. Being a tool-lover (no snickers please), I immediately latched on to this.

Basically what it does is calculate the taxes you can expect to pay based on McCain or Obama's tax policy. You can download the tool here.

Nothing speaks to people more than dollars and cents, which is why this spreadsheet should have such wide appeal. However, I wish he had added Hillary in there. I'm guessing that Mr. Frank chose McCain and Obama since they seem to have the best chance of winning the nomination, but Hillary and Obama are still duking it out. It would've been nice to compare the Democrats against each other. But oh well...

Keep up the good work!
~The Good Tax Helper

What is a Flat Tax?

The BeanCounter Blog has done a great job summarizing the main points expressed in a Flat Tax.

The main theme is that instead of paying for taxes out of your pay stub and then settling up at the end of the year, taxes would be applied to you as you spend. This means an additional tax on everything you buy. The rate being thrown around is 30% in addition to any sales tax. But opponents say that the percentage will probably be closer to 40. Shocking huh? 40%?

But really when it comes down to it the Flat Tax doesn't do anything new Those sneakers cost you more than the sticker price and sales tax you paid because you're paying with after tax money. So, those $75 shoes cost you the sales tax, the state tax (if you have it), and then the federal tax out of your paycheck. So you're paying 30-40% anyway. To me, it seems that the Flat Tax will just shift this tax around so that instead of being split between point of sale and pay stub, everything will be at point of sale.

But don't worry. This plan has as much hope as universal health care does. In essence it's a moot point and although it makes a nice platform, it's an unrealistic goal. And what's a goal if it can never be attained? A pipe dream...

Do I Have to File Taxes- The 2nd Coming

We previously blogged about whether or not you need to file your tax return. This question is always a loaded one than necessarily has a long string of questions closely attached. Luckily I've found a post this years by Gina at Gina's Tax Articles that has a nice little list of the filing "thresholds." This list is a little longer and more detailed than the one we offered, so I figured it warranted a post.

So, based on these lists you should know if you have to file. But now how will you file? Check out my earlier post on your filing choices.

Identity Theft And Your Taxes

We blogged earlier about the seven most common tax fears that prevent people from filing. One was a fear of having your personal info stolen. While, being someone who knows the tax system, this seems silly, it is a real concern in today's world. I know I've had personal experience with identity theft and it's no fun. I shredded everything with my name on it for months... and I still do to a degree today.

But we talk about taxes here at Tax Facts. So, how does Identity Theft relate to taxes? Jim over at IRSMind is currently doing a 4 part series on Identity Theft and taxes. I'd like to apply the "Tax Facts" mantra and put what he wrote into explicitly clear English to understand I.D. theft's tax ramifications.

Identity theft is the number one fraud concern in the United States today and causes a myriad of immediate problems such as emptied bank accounts, bounced checks, illegitimate credit card charges, credit report problems, and more. However, one item that may not show up for years, but will last for years, is the effect I.D. theft has on your taxes.

How the Problem Begins

Each year your employer(s) and financial institutions send all of your W-2 and 1099 forms, along with other tax documents, to both you and the IRS. The IRS matches all these forms to you by your social security number. Social security numbers are key, for they allow the matching of forms to people. Herein lies the problem. If someone is working under your social security number, their tax documents will be matched to you, along with your legitimate tax documents. Therefore, not only will your actual income will be reported as yours, but the identity thief’s will too.

When you file your return at the end of the year, the IRS processes it. They will run it through their system to make sure that you reported all the W-2 and 1099 income they have on file. If you’re a victim of identity theft, you’ll have tax documents that are left off your return (the I.D. thief’s forms) and red flags will be waved. The IRS usually takes about 12-18 months to notice the omission, but when they do you’ll receive a CP 2000 letter as notification of the discrepancy.

What This Means to You

Money and time. Essentially it becomes your word against the IRS’ and you start playing private detective to clear up the mess. While you are cleaning up the mess, the IRS will most likely asses you, which is assigning taxes, interest, and fees owed on the underreported income, and then start the collection process. At this point you are faced with an uphill battle of removing the assessment while the IRS has the right to forcefully take your money by filing tax liens and levying your wages and bank accounts.

How You Can Fix It

In short, fixing identify theft requires a proactive approach and proof by documentation. When you are a victim of identity theft, filing a police report is a necessity. Most people do not file a police report because they focus on the immediate problems—clearing up their bank account or credit card issues. However, documenting the incident and retaining these documents is also a must incase of future problems. But what do you do once you are assessed erroneous taxes?

• Contact the IRS immediately- the contact information on your audit letter or CP 2000 will tell you who to contact
• Get a copy of what has been reported to the IRS under your social security number (i.e. your “IRP document”)
• Review the document for discrepancies and contact the employers/contractors/payers for a correction to their Forms- make sure they notify the IRS
• If you cannot get the payer to correct the form, show proof that this income could not be yours: bank statements, police report, proof of identity theft in other areas (credit cards, etc.), and affidavits from your employer stating where you worked- and the timesheets
• Consider changing your social security number if the SSA permits
• Contact the Federal Trade Commission and file a complaint, use this as evidence for your tax problem
• Report the tax fraud to the IRS immediately after you have discovered it

Ultimately, you may want to contact a tax professional that knows how to work within the IRS system to resolve your problem. Resolving tax disputes is a time-consuming process that can cause a lot of pain and suffering- especially if you do not anticipate what could happen to you.

Free Money in '08?

Well, nothings really free. There's no free lunch remember? But although it comes from somewhere, the important point is that it comes to your wallet.

The specifics

In order to stimulate a waning economy, the government is proposing a tax rebate. The rebate is being issued in hopes that people will spend the money and breathe some life into the economy. Whether this happens or not or whether an actual plan is decided on remains to be seen. But let's get to what the rebate means to you.


Senate Version

$500 per Individual
$1,000 per Joint return
$300 per Child
And there is no limit on income


Congress Version

$600 per Individual
$1,200 per Joint return
$300 per Child
Limitations: Filers must have more than $300 in Adjusted Gross Income and there will be a 5 cent deduction in the rebate per $1 over an AGI of 75K for individuals and $150K for joint filers.


**And if you have tax debt, don't get excited. That rebate money goes to the government!**


But It's January!

If you're worried the Senate and House won't get their act together until it's too late, don't worry. In 2001 when this was done Bush signed the dotted line and 4 months later the checks was given out--this would mean if the bill is signed during February, the money would come out in June. Not that bad...



Additional Resources...

Is a Tax Rebate Coming Your Way??

Bush Calls For 'Direct and Rapid Stimulus'

Tax Rebates: Where's Your Check?

Don't Forget: Freedom Ain't Really Free

If you think freedom is free, you obviously don't understand the tax system. Don't be embarrassed. Before I started in the tax industry I didn't put much thought into the relation between taxes and being able to do what I wanted. The idea just didn't cross my mind. But after taking part and listening to countless calls about how the tax system is unjust, corrupt, counter-American, (enter expletive), (enter expletive), and on and on, it hit me--freedom ain't free and we as a nation don't seem to either understand or respect that.

Oliver Wendell Holmes Jr., an American jurist in the early part on the 20th Century, put it perfectly when he said, "Taxes are what we pay for civilized society." But by being born into a country with automatic Freedom of Speech and the Right to Bear Arms, we grow up assuming it's just another part of our US Citizenry; we take it for granted as free. I mean, you can't take the First Amendment to a cashier at Walmart and purchase it. Adding to the problem is that you don't feel a tax burden until you start to make an income. These facts distance the relationship between the right we have and the taxes we pay. So, it's easy to see why paying taxes seems like such an imposition.

Additionally, we tend to attribute tax money to tangible things bought, like the $5,000 government pen and ill-planned city road. So of course we're going to be sore about shelling out our hard earned money for this garbage. Who would be happy about paying for that? But, once again, these gripes allow us to distract ourselves from seeing the rights we enjoy as expenses as well.

What I'm saying here is not a defense of the tax system, per se. I hate paying taxes just like the next person and I disagree with funding government overspending and frivolous spending just like anyone else would. But I can't get totally down on taxes. As a woman, I like being able to exit my home in whatever I please, go wherever I want, and have no one to answer to. I like being able to vote. And I like the ability to blog that the Freedom of Speech allows me. And it's with these things I remind myself why taxes are important.

In one of my college's Philosophy of Law classes we discussed that “individuals entering into society must give up a share of liberty to preserve the rest." You may think of your ability to reject paying taxes as one of these "given up" liberties. And you should not be allowed to forget it. The tax system may need reform. The IRS may have a greater jurisdiction than it should. But to basically say that you should not be required to pay any taxes is ridiculous. All too often we expect something for nothing. Freedom is not one of those things that come without a price tag. And for something so inherently valuable, we shouldn't expect it to.

Do I have to File Taxes?

2 certainties in life: death and taxes. Everyone must pay taxes, however, whether you have to file a tax return is not always so certain. So who Must File?

Whether you have to file a tax return depends, in part, on your age, filing status, and gross income.

** If you are single and under the age of 65 and your gross income was at least $8,450

** If you are an individual who may be claimed as a dependent on another person's return, you are subject to specific filing requirements.

** You must file a tax return if you received any amount of advance earned income credit payments from your employer during the year

** You must file if you owe any taxes, such as social security tax and Medicare tax on tips or group life insurance, alternative minimum tax, tax on qualified retirement plans including an IRA, or other tax-favored account, tax from recapture of an education credit, investment credit, low income housing credit, federal mortgage subsidy, qualified electric vehicle credit, or the native American employment credit.
** Generally, you must file a tax return if you are a nonresident alien with income from sources in the United States. Even if you are not required to file a tax return, file a return if you are due a refund.

** You had net earnings from self-employment of at least $400.
** You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social
security and Medicare taxes.

There is also other criteria that could obligate a taxpayer to file a tax return. If you question whether you should file a tax return, please review "Filing Requirements---Do You Have to File?" at the following link: http://www.irs.gov/pub/irs-pdf/i1040.pdf