“A
tax expert
is anyone who can read five pages of tax law without crying,
or ten pages without laughing.” - Jim
Borne, humorist and author, Wall Street Journal
This month
we focus on taxes – the only appropriate topic
given the time of year. The quote above is a sad but true
representation of our complex tax code. Recently it seems that
we have had a new tax act almost each year. While in many cases
the changes have provided for tax relief, they exponentially
increased the tax code’s complexity. For an idea of how
much more complex the Federal Tax laws have become, glance at
the standard federal tax publication of CCH Inc. This year’s
edition has a record 60,044 pages over 25 volumes - up from “only”19,500
pages in 1974! Questions anyone?
These days
it is rare to find a situation where someone does not need
to be using either a professional tax person or one of the
popular tax software programs developed in recent years. Not
to do so only increases the likelihood of mistakes that either
cost you money or that will generate a “friendly” letter
from the IRS.
So, what
is a person to do in the midst of headache and complexity? When
it comes to tax planning focus on three key areas – the
action step from each will be dependent on your particular situation.
Planning – Typically, planning, or the
thought of it, happens on April 14th at which point it’s
too late to take advantage of most tax saving opportunities from
the previous year. If this profile fits you, then
after filing your return make the next step to look ahead to
the remainder of the current year for possible tax benefits. This
may mean either doing some personal homework or having a qualified
financial professional review your situation.
Compliance – In the tax world, compliance
is another word for “filing your return or extension” as
required by the IRS. We all know that April 15th is the
deadline, but what many people don’t know is that you can
request an extension from the IRS to give you more time to gather
information and complete your return. For more information
on extending your deadline click here (http://moneycentral.msn.com/content/Taxes/Preparationtips/P33273.asp)
Awareness – Ever heard of the AMT tax?
Did you know that many of the tax breaks you enjoy today could
be gone in 2010? While it is impossible to keep up with
all the changes in the tax code itself, it is important to stay
informed of specific issues that could affect you in the future
and looking for planning opportunities to minimize the impact
of potential changes. In addition if you don’t like
the this mess that we call our tax code, maybe it’s time
to let your elected representatives know how you feel and what
you think needs to be done.
Which tax
area needs your attention? The planning tips, articles
and resources in this newsletter give a starting point for being
proactive with your taxes and hopefully saving money in the process.
Warmest Regards,
Jeff Chinery
Director – National Planning Group
Planning
Tips
Last minute options and considerations
If you
are looking to squeeze in any tax planning under the wire, this
article may give some helpful ideas.
Getting
a big refund or writing a big check?
Even
though it may seem like you have found money you didn’t
know you had, any money received back via tax refund is like
an interest free loan you gave to the IRS. Conversely if you
wrote a big check with your tax return you would probably like
to avoid experiencing that pain again and save future penalties. Although
not completely attainable, your goal should be to receive nothing
or owe nothing when it comes to filing your tax return. By
spending a little time on tax planning, you can make the necessary
adjustments to get you closer to this target. Learn
more at kiplinger.com...
Tax
Scams
Tax
scams are on the rise. Many individuals and organizations
promise lower tax bills usually in return for a subscription
to their service or for a fee to buy their product. The
old adage that “if it sounds too good to be true, it probably
is” certainly applies here, so be careful what advice you
follow. This
information from the IRS can help you avoid
some of these questionable programs.
Relevant
Articles/Information
Don’t
let the tax code sunset on you
Many
of the tax changes we now enjoy as a result of the 2001 tax cuts
are set to expire in 2010. learn
more...
Is
the blob coming to get you?
Like
the proverbial blob from outer space, the Alternative Minimum
Tax (AMT) gobbles up more taxpayers every year. learn
more...
How
do I get involved in changing the system?
Our
disclaimer at the bottom especially holds true here. We
are not advocating any particular tax system or political perspective,
but rather challenging you to become an informed citizen. Noted
below are some links to organizations that are working to change
the tax system for the better. In addition, search on the
internet to explore advocacy groups and associations committed
to developing a better tax system.
National
Taxpayers Union
Americans
for Fair Taxation
Americans
for Tax Reform
In
the News
Social
Security
Over
the last few years there has been more and more talk of
the looming Social Security crisis – the potential “bankruptcy” of
the system. At the end of February, Alan Greenspan brought
the issue to the forefront by suggesting the need for benefit
cuts for future retirees. Of course, this did not
make him a very popular person, but it is an issue that will
only become more prevalent and will eventually affect many of
us. The articles below can give you an overview of some
of the current conversation (controversy?) around this issue.
Greenspan
Urges: Fix Social Security
Saving
Social Security
Providing
Social Security Benefits in the Future: A Review of the Social
Security System and Plans to Reform It
Medicare,
Social Security need big changes for young to benefit
