Taxpayers who stand out tend to draw the attention of Internal Revenue Service auditors. Claim too much in interest, health expenses or charitable deductions, and it’s like waving that proverbial red flag in front of the tax man.
The agency knows, to the dollar, how much people at your income level typically write off for these categories. When you claim a higher-than-average amount, it doesn’t necessarily mean that you’re cheating, but it raises questions. You could be claiming a much higher medical deduction because your family had a horrible year, healthwise. And that over-the-top charitable write-off could just signify your extreme generosity.
WASHINGTON, Feb 9 (Reuters) – Tax filing season can be
painful, and not just when you owe the IRS money.
The process of collecting all of your information and
figuring out where to get help and how to file forms is
fraught, and the amount you spend getting your taxes done can
The Internal Revenue Service has some tried and true techniques for finding tax cheats. Sometimes the agency auditors look at the lifestyles of taxpayers. If you’ve got an upscale Beverly Hills zip code and a really low income, you might be hiding money. Or, you might be between films — not every suspicious return is masking fraud.
The tax agency also looks at all of the reports it receives about you. It matches those 1099 forms and makes sure you’re declaring all the income it knows you are receiving.
WASHINGTON (Reuters) – You probably understand that you should plow as much money as possible into your retirement accounts until the day you actually retire. But then what?
Once you hit retirement, you have to figure out how to live on that money for the rest of your life — and that can be scary. There are psychological hurdles to overcome.
Lately I’ve been thinking about retiring to Cleveland. Oh, sure, laugh, but hear me out.
Cleveland has (1) museums with parking by the front door; (2) a beautiful lake; (3) the Cleveland Clinic and other great health resources; and (4) a convenient airport. Oh, and one more thing: Cleveland has really cheap real estate. So I could take my Washington-Baltimore corridor housing money (median home value, $310,000) and trade it in for an average Cleveland house (median home value, $114,000). And THAT would give me almost $200,000 worth of cash that I could use to fly to Key West or Cozumel for the winters, even if I didn’t downsize my house.
WASHINGTON, Jan 26 (Reuters) – Here’s one key practice that
separates individual investors from the professionals: The pros
get report cards.
Investment managers who choose stocks, bonds and mutual
funds for a living are constantly being evaluated and given
performance scores. Are they getting superior (or at least
average) returns? Are they minimizing risks?
It’s typically cheaper to buy than to rent when the median home price is less than 15 times the current median annual rent. (In Trulia’s parlance that would be a price/rent ratio of 15.) Put another way, 15 years or less of stable rent payments would cover the purchase price of a house in the vast majority of the cities studied by Trulia.
WASHINGTON (Reuters) – Investors who rely on professional advice will not see any immediate impact from the Security and Exchange Commission’s weekend recommendations that brokers be subject to the same fiduciary standard as investment advisers.
That is because the study, written by staff and opposed by two of the SEC’s five commissioners, faces a long and uncertain road to implementation and enforcement. Even if the SEC were to impose the fiduciary standard on brokers, there is enough ambiguity in the recommendations to leave advisers and their clients confused about how it will play out with respect to commission-earning brokers.
WASHINGTON (Reuters) – Bob VanSickle was a lifelong New Jersey resident, but when he left after 52 years for what he calls “kinder, gentler” New Hampshire, he never looked back.
It wasn’t the warm fuzzies that won him over; it was the lower taxes on income, property and purchases.
It’s opening day on what could be a long tax reform season, with the House Ways and Means Committee holding its first hearings on the topic on Thursday. The witness list is somewhat stacked with reform advocates –- like Nina Olson, the national taxpayer advocate, and Kevin Hassett of the American Enterprise Institute –- and corporate types who are likely to say they’ve been beleaguered by tax complexity.
“It is clear that the tax code is too complex, too time-consuming and too costly,” said the committee chairman, Dave Camp, in announcing the hearing. The committee is encouraging anyone who wants to vent about the tax code to submit remarks through its website.