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Monthly Archives: February 2009
A study of the recovery plan shows most households will qualify for a tax break. Boost for some could be worth several hundred to several thousand dollars.
Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.
The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand.
The law, which President Obama signed on Tuesday, contains a range of tax breaks for individuals. Those likely to affect the greatest number of households are the new Making Work Pay credit worth up to $400 ($800 for joint filers); a patch to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax; and expansions of the earned income tax credit and the child tax credit for low-income families.
There are also breaks that address specific situations: a new credit for first-time home buyers, a sales tax deduction for car buyers and a new credit to help pay for college tuition. For people receiving unemployment benefits, the first $2,400 will be tax free.
On Saturday, Obama said the government had already taken action on the broadest of the law’s cuts — the Making Work Pay.
The Treasury Department has told employers to reduce the amount of taxes withheld from paychecks by April 1. Treasury estimates that a typical family will begin taking home about $65 more per month, according to Obama.
“Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans,” Obama said in his weekly video and radio address.
In addition, the economic recovery plan contains a host of tax breaks for small businesses.
The Tax Policy Center used a representative sampling of all tax filers and non-filers, including information on their income, their spending and their demographics. And then they applied the various tax provisions for which those in the sample pool qualify.
Some Tax-Saving Scenarios
A single person with no children making between $20,000 and $30,000 would see a 12.5% reduction in his or her tax liability for an annual savings of $453. The same person making between $50,000 and $75,000 would see a 4.6% drop, or $626.
Tax Savings
How households may fare under the economic recovery plan.
Income Avg. Tax Savings Drop in Tax Bite
Under $19K $476 -95%
$19K-$38K $652 -22%
$38K-$66K $781 -9%
$66K-$112K $1,301 -7.5%
$112K-$161K $2,549 -8.3%
$161K-$227K $3,883 -8.3%
$227K-$603K $5,133 -5.7%
$2.8M plus $39,350 -1.4%
Source: The Tax Policy Center
At the upper income ranges, someone with income between $100,000 and $200,000 would see a 2.1% drop, which translates into $706.
With or without kids, a married couple filing jointly making between $50,000 and $75,000 could see a 10.5% drop for a savings of $991. Those making between $75,000 and $100,000 would see their tax liability go down 9.1%, or $1,457.
Couples with very high incomes — between $200,000 to $500,000 — could see a 7.5% decline in their tax bill, or $5,645.
Households with children, regardless of the parent’s marital status, would see savings on their tax bill averaging 9.7% of their tax liability, or $1,975.
When You’ll See Savings
The first tax credit filers will enjoy is the Making Work Pay credit, which will show up in increments in people’s paychecks starting in April.
In some instances, such as with the first time home buyer’s tax credit, the money can be claimed on one’s 2008 tax return if the home purchase occurs between Jan. 1 and before Nov. 30 of this year.
But in many cases, a household won’t see some of their stimulus savings until they file their 2009 returns, which they can’t do until 2010.
Of course what filers’ save on their federal taxes under stimulus may be muted by the fact that their cities and states — facing steep budget shortfalls that will be lessened but not eliminated by stimulus funding — may end up raising taxes and fees.
Question: How do I request a copy of my tax return for last year?
Answer: If you need an exact copy of a previously filed and processed return and all attachments (including Form W-2 (PDF)), you must complete Form 4506 (PDF), Request for Copy of Tax Return, and mail it to the IRS.
Use the address provided in the instructions to the form.
Submit a check or money order for $57, per tax year, made payable to the “United States Treasury.”
Copies are generally available for returns filed in the current and past 6 years.
In cases where an exact copy of the return is not needed, tax return and transcripts may be ordered.
The tax return transcript shows most line items contained on the return as it was originally filed, including any accompanying forms and schedules.
In most cases, a tax return transcript will meet the requirements for lending institutions for mortgage verification purposes.
The transcript can be ordered by completing a Form 4506-T (PDF) or calling 800-829-1040 and following the prompts in the recorded message.
There is no charge for the transcript and you should receive it in 10 business days from the time we receive your request.
Tax return transcripts are generally available for the current and past three years.
If you need a statement of your tax account which shows changes that you or the IRS made after the original return was filed, you must request a “Tax Account Transcript.”
This transcript shows basic data including marital status, type of return filed, adjusted gross income, taxable income, payments and adjustments made on your account.
Tax return and account transcripts are generally available for the current and past 3 years.
Form 4506-T (PDF) can also be used to get proof from the IRS that you did not file a tax return for a particular tax year.
Forms can be downloaded at irs.gov/forms/pubs or ordered by calling 800-829-3676.
Refund Inquiries
Question: What is a split refund?
Answer: A split refund lets you divide your refund, in any proportion you want, and direct deposit the funds in up to three different accounts with U.S. financial institutions.
Form 8888 (PDF), Direct Deposit of Refund to More Than One Account
In case you were wondering…..
Question: Can a person receive a tax refund if they are currently in a payment plan for prior year’s federal taxes?
Answer: As a condition of your agreement, any refund due you in a future year will be applied against the amount you owe.
Continue making your installment agreement payments as scheduled because your refund is not considered as a substitute for your regular payment due.
You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support.
IRS will automatically apply the refund to the taxes owed.
For 2009, the standard mileage rate for the cost of operating your car for business use is 55 cents per mile.
Medical- and move-related mileage. For 2009, the standard mileage rate for the cost of operating your car for medical reasons or as part of a deductible move is 24 cents per mile.
Charitable-related mileage. For 2009, the standard mileage rate for the cost of operating your car for charitable purposes remains 14 cents per mile.
Here’s a fun Video from your friends at IRSAuditInsurance.com
Hey Everybody! Just a helpful FYI aimed at saving somebody somewhere some aggravation. The Brazos County Texas Parks and Wildlife Office has moved to its new location at:
- 12845 FM 2154, Suite 160
- College Station, TX 77845
For More info visit the Texas Parks and Wildlife website here
Surprisingly, this address info is not available online yet!!!
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One of the top things to do in College Station on my list is to try to make a Motorcycle Track day at Texas World Speedway. Willing speedsters can sign up for 3 levels of “classes” that allow participants to run “all out” on one of the best racetracks in the country. Lone star Track Days is one of the more popular hosts.
Similar activities are available for cars and even those cool Go cart things called Karts.
According to Texas World Speedway’s Site:
“The historic Texas World Speedway is most established premier road Motorsports venue for Racing, Testing, Driving Schools, Corporate Events, and Film Shoots in the Southwest.
TWS is one of only seven Super Speedways in the USA and is the only Super Speedway in the Southwest. TWS’s oval became known as “The World’s Fastest Speedway”; when Mario Andretti set a world closed course speed record of 214.158 mph on October 6, 1973 while qualifying for an Indy car race.
TWS is located on approximately 400 acres with direct access to Highway 6 south of College Station, Texas. In addition to the two mile “D” shaped oval with 22 degree banking turns with 8 degree banking in the front of the grandstands, TWS is a road racers speedway with a 1.8, 1.9 and 2.9 mile high speed road courses.”
For more info on Texas World Speedway in College Station visit their Site Here!!!
IRS Audit Insurance 