Tuesday February 1, 2011
People can now check the status of their federal tax refund, not just online, but also using their smartphone. The Internal Revenue Service launched the IRS2Go smartphone application, which is currently available for Android-based mobiles and Apple's iPhone.
According to the IRS' news release, the mobile application offers three functions:
- Ability to check your tax refund status (similar to the already existing refund status Web page);
- Ability to subscribe to daily Tax Tips delivered via email;
- Ability to subscribe to the official IRSnews micro-feed on Twitter.
I haven't tried out the mobile application yet, but I am already deeply skeptical this represents a good deal for taxpayers. Will your sensitive tax information be protected? Does the IRS phone app offer the same level of protection as their secure Web page? These are questions I intend to find out, one way or another. (If you're a mobile security expert, perhaps you'd like to share your thoughts concerning what you liked or didn't like about IRS2Go.)
Monday January 31, 2011
The IRS has stopped mailing out tax booklets and forms. You can download the forms, instructions and various publications directly from the IRS.gov Web site. The IRS also has recently re-designed their forms and publications page. In the redesign, the most common forms and instructions have been placed near the top of the page, making it easier for taxpayers to find and download the files they need. The IRS has also redesigned their archive page for tax forms from previous years. I've had trouble finding specific files using this page, and I much prefer utilizing this page that organizes forms by year.
Also updated is the About.com page providing links to the most common federal tax forms. You can locate state tax forms by navigating to your state tax agency Web site and then searching for the forms you need.
You may also be able to find paper tax forms at libraries, post offices and local IRS offices.
Tuesday January 25, 2011
By the end of January, employees should see a 2% reduction in the amount deducted from paychecks for Social Security taxes.
The Social Security tax rate is reduced from its normal 6.2% to 4.2% of total wages. This tax rate reduction will be in effect for the remainder of 2011 and will go back to the normal rate in 2012.
Self-employed persons will be able to take advantage of the rate reduction too, by using the lower 13.3% rate for the self-employment tax instead of the normal 15.3% rate.
More about the Social Security tax rate reduction for 2011.
Employers have until the end of January to implement the lower tax rate for Social Security. Most employees should see their paychecks increase by 2% of their gross wages (which is the difference between the old and new Social Security tax rates).
Politically, the Social Security tax "holiday" replaces the Making Work Pay credit, which ended in 2010. But lower income persons are likely to pay more federal taxes overall with the Social Security tax reduction compared to the Making Work Pay credit which was a flat $400 for most taxpayers, based on numbers crunched by the Tax Policy Center.
Still, the reduced tax withholding for Social Security provides an opportunity for us to utilize our hard-earned wages for something other than taxes. What will you do with your tax savings?
Tuesday January 18, 2011
The state of Illinois has legislated higher tax rates on personal and corporate income, taking effect this year 2011 through 2025.
The personal tax rate in the Prairie State increases from 3% (in 2010) to 5%. The corporate tax rate increases from 7.3% to 9.5%. Illinois is one of seven states with a flat tax, so the 5% personal rate will apply to all Illinois residents and nonresidents with Illinois-source income.
The tax rate increase will gradually taper off. The personal tax rate is scheduled to decrease to 3.75% in 2015 and then decrease again to 3.5% in 2025. Similarly, the corporate rate will fall to 7.75% in 2015 and then reset to the original 7.3% rate in 2025.
The Illinois Department of Revenue has advised employers that the new 5% withholding rate on payroll and other income goes into effect immediately. The DOR has advised that employees may, at their sole discretion, request that employers withhold extra amounts to catch up for pay periods during which a lower rate of withholding was applied.
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