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Latest in Taxes: How Much Should You Pay Your Tax Preparer? ---- Beware! Dirty Dozen Tax Scams

You know the saying, nothing is certain but death and taxes. Well, we can't help you with the first one, but here you'll find all the latest tax planning news, advice and calculators you need to help you with the second.

Learn how to maximize the money you keep in your pocket without setting off red flags to the IRS.

Stay on top of today's top tax news and take advantage of expert advice.

IRS tries to collect 4-cents in back taxes at car wash

Kelly Phillips Erb Mar 20th 2010 @ 10:00AM EST Filed Under: Tax

We all know that times are tough. As a result, the IRS has made collections -- and audits -- a priority in an effort to put more revenue in the Treasury.

How much of a priority? So much so that the IRS sent a couple of agents to Harv's Metro Carwash in Sacramento, California, to collect back taxes ... of 4 cents.

According to the owner, Aaron Zeff, the IRS agents showed up last week demanding payment. When Zeff took a look at the letter, he noted the amount: "I looked at the letter and I couldn't believe what I saw. The number was astonishing. Four cents."

Of course, that was the original amount owed. Over time, together with failure to file penalties and interest, the amount at issue had grown to $202.35. And the IRS wanted to be paid.

According to Zeff's attorney, Ashley West, Zeff knew nothing about the back taxes. West claims that they only learned about the delinquent debt this week.

Zeff claims that he had notice that he owed nothing as of last year. He says, "I have a letter from the IRS just from October of (last) year, stating that my returns have been filed and my tax balance is zero."

Of course, Zeff's experience is far from normal. In the large majority of cases, the IRS doesn't show up on your doorstep. In most cases, if you owe money to the IRS, you'll receive a notice advising you of the amount and your right to appeal. If you ignore the notice, the IRS may take further steps to collect, including placing a lien on your real property or garnishing your wages.

What exactly inspired the IRS to stop by Harv's hasn't been made public. The IRS doesn't comment on private collection matters. But Zeff has his own idea: "The good men and women of the IRS said, 'Let's go down to Harv's car wash and get our car washed.' "

What you need to know about the dreaded Alternative Minimum Tax

Kelly Phillips Erb Mar 19th 2010 @ 8:45AM EST Filed Under: Tax, Tax - AMT, Tax - Basics

The Alternative Minimum Tax (AMT) was introduced in 1969 as a way to ensure that extremely high-income taxpayers paid their fair share. For the 1967 tax year, just before the tax was first enacted, 155 taxpayers with incomes of more than $200,000 (indexed for inflation, that's roughly $1.3 million today) didn't pay a dime in federal income tax. Of those 155 taxpayers, 20 were considered millionaires, with incomes that would be valued at more than $5.9 million in today's dollars.

But something strange happened with the AMT. The government never indexed the tax for inflation, meaning it started affecting a growing number of people as wages and other earnings kept pace with inflation. Additionally, a number of traditionally "high wage earner" tax preference items, like stock options, became more popular with middle class taxpayers. By 1970, more than 19,000 taxpayers were affected by the tax.

Continue reading What you need to know about the dreaded Alternative Minimum Tax

Amazon feud with states over sales tax turning ugly

Tom Barlow Mar 18th 2010 @ 4:30PM EST Filed Under: Tax

The tentacles of Amazon are long, and many states that are suffering tax income shortfalls are itching to squeeze some money out of their state residents' online purchases from the behemoth. The problem isn't with the law, most of the time, but with the collection, and Amazon is caught between the desire to maintain its present structure and the desire to keep this price advantage. A bill under consideration in Connecticut that would require Amazon to collect sales tax on purchases by that state's residents has the company threatening to drop Connecticut partners from its site.

What's the issue here? The most common Amazon transaction, where you buy an item from its inventory, is pretty straight-forward. Amazon collects sales tax from buyers in those states where it has a physical presence: Kentucky, North Dakota, and Washington, as well as New York.

Continue reading Amazon feud with states over sales tax turning ugly

How will we pay for health care reform? An increase in Medicare tax

Kelly Phillips Erb Mar 18th 2010 @ 3:15PM EST Filed Under: Tax, Health

As the House prepares for a vote on health care reform, the overwhelming question is how to pay the estimated $940 billion price tag on the plan. The obvious -- but not so politically popular -- answer is to raise taxes. Even better? Raise taxes so taxpayers don't notice it as much by including it in mandatory withholding.

That explains why the current proposal in the House under HR 3590 would add an increase in the form of payroll taxes. The bill, as it stands currently, would add .9% to the Medicare payroll tax to those individual taxpayers earning over $200,000 ($250,000 for married couples filing joint tax returns). That would bring the total tax rate to 2.35%.

Continue reading How will we pay for health care reform? An increase in Medicare tax

Michigan man scams state, governor for $9 million tax break

Tom Barlow Mar 18th 2010 @ 2:30PM EST Filed Under: Tax, Fraud, Tax - Advice

Michigan is desperate to find jobs for its unemployed, perhaps overly so, if the tax break given to Richard Allen Short is any indication. Short shared the podium with Gov. Jennifer Granolm recently to announce that his company was receiving a $9.1 million tax break to help him hire 765 people to carry out his plan to make green energy and waste-handling equipment that he would ship to needy villagers in Africa.

The problem, according to the Detroit Free Press, is that Short is a notorious con man who has spend years in jail for embezzling, a fact uncovered in a quick Internet search by a process server in Flint. Patrick Clawson uncovered Short's sordid past, which included embezzling $21,000 to buy his girl an engagement ring and having a woman pose as his wife to qualify for a $73,000 loan. He still owns $96,000 in court-mandated restitution.

Continue reading Michigan man scams state, governor for $9 million tax break

Cadillac tax: Is health insurance a luxury?

Kelly Phillips Erb Mar 18th 2010 @ 2:15PM EST Filed Under: Tax, Health, Insurance - Health Insurance

One of the most controversial pieces of the current health care reform bill is the introduction of the so-called "Cadillac tax" -- an excise tax on premium insurance plans that would be used to offset the estimated $940 billion price tag for health care reform.

The term "Cadillac tax" was coined after the idea was introduced as part of President Clinton's health care proposal in the 1990s. The tax targets high dollar insurance plans provided by employers that are thought to be a luxury when compared to most insurance plans.

Continue reading Cadillac tax: Is health insurance a luxury?

IRS warns of 'Dirty Dozen' tax scams

Geoff Williams Mar 17th 2010 @ 4:00PM EST Filed Under: Tax, Tax - Advice

Don't say they didn't warn you. The IRS just issued its annual "Dirty Dozen" Tax Scams report, a list of frequently-used frauds that cheat honest taxpayers out of hundreds or even thousands of dollars each year.

While there may be a long history of tax cheats, there's also a solid record of con artists that prey on those who are trying to do right by Uncle Sam. Among some of this year's chart toppers are hiding offshore accounts and tax preparer fraud.

"Taxpayers should be aware of anyone peddling scams that seem too good to be true," said IRS Commissioner Doug Shulman in the announcement. The agency warned that taxpayers who fall prey to such scams will be on the hook for unpaid taxes, plus interest and fees, and could even face jail time.

So without any further adieu, here's the "Dirty Dozen" tax scams to avoid when filing your taxes this year.

Continue reading IRS warns of 'Dirty Dozen' tax scams

Tax coupons for discounts are yours to claim

Josh Smith Mar 17th 2010 @ 9:00AM EST Filed Under: Bargains, Tax, Technology, Tax - Online

In a world where the only things that are certain are death and taxes, it's good to know that there a plenty of online coupons to help you save with the latter. Regardless of whether you do your own taxes or hire a professional, there are lots and lots of tax time savings that will help you keep more cash in your bank.

CouponShack.com shares several coupons that make doing your own taxes cheaper -- whether you're filing online or purchasing software to prepare taxes on your computer.

Continue reading Tax coupons for discounts are yours to claim

How much should you pay your tax preparer?

Ron Dicker Mar 16th 2010 @ 2:00PM EST Filed Under: Tax, Tax - Advice

Even though you're nearing the home stretch for getting your taxes done, that doesn't mean you should pay a preparer too much.

These fee averages supplied by the National Society of Accountants can serve as a guideline for hiring the person you're going to have to pay once Uncle Sam finishes with you.

Continue reading How much should you pay your tax preparer?

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