Congress appears to be gearing up to tackle the question over whether tax rates should increase in 2011.
"The House will hold a vote this week on extending the George W. Bush-era tax cuts only for middle income Americans," reports TheHill.com. But that publication is predicting a contentious debate in the Senate between legislators who prefer raising taxes only on people making more than $250,00 (as Obama has previously suggested) or to forgo any tax rate hike regardless of income-level.
Some legislators have suggested a compromise: increasing taxes on millionaires and not raising tax rates for people who make less than $1 million, reports the Washington Post.
People who relocate from one state to another likely will need to file two state tax returns. Tonya Moreno, CPA, explains how to file two partial year state returns and split your income and deductions between the states where you lived during the year.
The Bipartisan Policy Center, a non-profit policy think tank, has come up with its own tax and budget reform ideas for America to think about. They have released both summary (23 pages) and more detailed (140 pages) reports outlining their proposals. Here's the highlights of the BPC's tax reform ideas:
- "Enact a "payroll tax holiday" for one year (2011) - excusing employers and employees from paying the 12.4 percent tax into the Social Security Trust Funds...." Read more...
Each year the Internal Revenue Service reminds people that tax refunds checks have been returned by the post office as undeliverable. As of November 17, 2010, the IRS is holding 111,893 refund checks totaling $164.6 million. The average dollar amount of an undelivered refund check is $1,471. These refund checks were mailed out to taxpayers using the address shown on their tax return, but the mail was returned to the IRS as being undeliverable. If you think your tax refund check might be missing, give the IRS a call at 1-800-829-1954. You can also let the IRS know about your new address by downloading the Change of Address Form 8822 (pdf), filling it out and mailing it to your local IRS processing center.
The IRS also urged taxpayers to utilize direct deposit as a method to ensure that tax refunds are received quickly and without hassle. "While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns," the IRS writes in their news release. However I strongly disagree with this statement. People routinely report horror stories about losing their tax refunds using direct deposit, often due to making an incorrect data entry for their account number or bank routing number. The IRS and banks are under no obligation to fix these types of errors. And you can just imagine what happens to that refund money if it goes into another bank account by accident. By contrast, if someone else cashes your tax refund check, the IRS can pursue that person for bank fraud, recover the funds, and issue a new refund check to the taxpayer. Similarly, if you've moved, the post office can forward your check to your new address, or return it to the IRS; whereas banks won't forward incoming deposits to your new account at another bank or branch. Simply put, having your refund delivered as a paper check through the postal service provides far greater protection than direct deposit.