Tax Docket

According to an article from the Washington Post today, taxpayers spend 7.6 billion hours and nearly $140 Billion in order to comply with the Internal Revenue Code. This is reported a few days after the release of the President’s Economic Recovery Board’s report regarding the complexity of tax code. Evidence of the increased complexity of the code cited in the report is the enlargement of the Form 1040 (form used by individual taxpayers to file taxes) Instructions from 14 to pages to 44 pages and 15,000 changes to the code since 1986.

Here is a link to a calculator created by the Tax Foundation which will compute your 2011 income taxes under three different scenarios: (1) If Congress allows all Bust tax cuts to expire; (2) Congress Acts to extend Bush tax cuts through 2011; and (3) Congress enacts tax laws as suggested in President Obama’s budget.

On Wednesday, the Senate approved legislation which allows home buyers (first-time home buyers and home buyers purchasing home for primary residence) that signed contracts by April 30 to close by September 30 in order to still be eligible for the tax credit. The tax credit is $8,000 for first time home buyers and $6,500 for home buyers purchasing a home as their new primary residence. Congress has sent the bill to President Obama.

Reuters, Senate Agrees to Extend Home Tax Credit

New York Times, Home Buyers’ Tax Credit Extended

ABC News,Congress Approves Home Tax Credit Extension

In the Wall Stree Journal article, How the New Wealth Taxes Will Hit You, Laura Saunders analyzes the new health care legislation which imposed two new taxes on couples earning more than $250,000. Here is an excerpt:

The health-care bill that Congress passed in March contained two surprising new taxes to help pay for the changes: an extra 0.9% levy on wages for couples earning more than $250,000 ($200,000 for singles) and a new 3.8% tax on investment income on those same people (technically, people with “adjusted gross incomes” above those amounts).

Each tax signals a radical change in policy. For workers, the extra 0.9% levy puts a progressive element in what used to be a totally flat tax. The 3.8% tax on investment income also knocks down a longstanding wall by applying a “payroll” tax to unearned income. Until now, FICA taxes for Social Security and Medicare have applied only to wages, not investment income.

While many details remain unclear and the Internal Revenue Service hasn’t issued any guidance, here are preliminary answers to the most important questions taxpayers are asking.

Just before the next season of MTV’s The Jersey Shore premieres, one of the show’s cast member’s Snooki took some time to vent about the new federal health care law which imposes a tax on tanning beds. As reported by CNN’s Marquee Blog, Snooks, in the show’s 10 minute preview stated that,

“I don’t go tanning tanning anymore, because Obama put a 10 percent tax on tanning. I feel like he did that intentionally for us. McCain would never put a 10 percent tax on tanning. Because he’s pale and he would probably want to be tan.”

McCain responded via tweet “@Sn00ki u r right, I would never tax your tanning bed! Pres Obama’s tax/spend policy is quite The Situation but I do rec wearing sunscreen!”

Here is a previous post about the tanning tax Tax on Tans Coming Soon: Fist Pumps Will Remain Tax Free

24/7 Wall St. has posted an article which examines the net worth of all the American Presidents in terms of 2010 U.S. Dollars:

Because a number of presidents, particularly in the early 19th Century, made and lost huge fortunes in a matter of a few years, the number for each man is based on his net worth at its peak.

In the case of each president we have taken into account hard assets like land, estimated lifetime savings based on work history, inheritance, homes, and money paid for services, which include things as diverse as their salary as Collector of Customs at the Port of New York to membership on Fortune 500 boards. Royalties on books have also been taken into account, along with ownership of companies and yields from family estates.

The net worth of the presidents varies widely. George Washington was worth over half a billion in today’s dollars. Several presidents went bankrupt.

Beginning on page two of the article you will find a chart which includes the President’s name, estimated net worth, and historical points of interest.

In his Tax Foundation article Mark Robyn, addresses the uncertainty of the tax landscape in 2011:

Polls show that many Americans are anxious about their taxes and believe their payments are rising. At first glance this seems like a public misperception because tax policy at the end of the Bush administration and the beginning of the Obama administration has been dominated by a blizzard of tax cuts, most narrowly targeted at a few taxpayers but some broadly benefiting low- and middle-income people. But paradoxically, the people are right to be worried about high taxes. With federal deficits growing and the U.S. debt mounting to alarming levels, Congress will soon need to cut spending or raise taxes to shore up the long-term fiscal outlook.

In the article, Robyn calculates what typical tax returns will look like in 2011 under the tax policies that prevailed before the President Bush was elected, all Bush-era tax changes extended to 2011 (with no changes from President Obama), and combine Bush and Obama policies as outlined in the President’s 2011 budget.

Here is an example of table in the article. The table reveals the taxes owed (+ or -) on typical tax returns:

In IR 2010-64, the Internal Revenue Service recently issued a newly revised payroll tax form that most eligible employers can use to claim the special payroll tax exemption that applies to many new workers hired during 2010.

The Hiring Incentives to Restore Employment (HIRE) Act was designed to encourage employers to hire and retain new workers as well as create a payroll tax exemption and new hire retention credit. The bill was signed by President Obama on March 18.

Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of Social Security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits. The employee’s 6.2 percent share of Social Security tax and the employer and employee’s shares of Medicare tax still apply to all wages.

In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return.

Other Related IRS Resources:

Form 941

Form 941 Instructions

Answers to Frequently Asked Questions

Form W-11 - Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit

Here is a link to President Obama’s 2009 Financial Disclosure Form. If you scroll through to Schedule B Part II: Gifts, Reimbursements, and Travel Expenses you will see that the Obama Family Dog, Bo, was a gift valued at $1,600.

Vice-President Biden’s Financial Disclosure Form is also available here.

For those graduates that will not have the pleasure of hearing According to the President Obama (speaking at University of Michigan and Hampton University) or Alec Baldwin (spoke at New York University today) here are 5 celebrity commencement speeches you should watch. These are listed in no particular order.

1. Conan O’Brien’s 2000 Harvard Commencement Speech

2. Stephen Colbert’s 2006 Knox University Commencement Speech

3. Will Ferrell’s 2003 Harvard University Commencement Speech

4. Ellen DeGeneres’ 2009 Tulane University Commencement Speech

5. Ali G’s 2004 Harvard Commencement Speech