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Latest in Taxes: 3 Tax Mistakes People Make Every Day ---- Are You an Unwitting Tax Cheat?

You know the saying, nothing is certain but death and taxes. Well, we can't help you with the first one, but here you'll find all the latest tax planning news, advice and calculators you need to help you with the second.

Learn how to maximize the money you keep in your pocket without setting off red flags to the IRS.

Stay on top of today's top tax news and take advantage of expert advice.

Senators say no to checks for elderly, disabled

Kelly Phillips Erb Mar 5th 2010 @ 11:00AM EST Filed Under: Tax

In February 2009, Congress voted in the American Recovery and Reinvestment Act of 2009. A significant part of the ARRA was the Making Work Pay Credit, but there was one catch: Retirees, veterans, and the disabled were not eligible for the credit. Instead, Congress elected to authorize one time payments of $250 for eligible retirees, veterans and the disabled.

So, of course, with the economy still slow, Congress would do it again ... or not. On Wednesday, the Senate rejected a measure to issue the checks for a second year. Despite support from President Obama, the measure still did not pass. The Senate defeated the measure by a vote of 50 to 47. The vote was largely along party lines, with only one Republican, Sen. Olympia Snowe (R-MAINE), and one Independent, Sen. Bernie Sanders (I-VT), voting in favor. Three Senators did not join the vote: Sen. Kit Bond (R-MO.), Sen. Kay Bailey Hutchison (R-TX) and Sen. Johnny Isakson (R-GA.).

Those who supported the bill were disappointed with the outcome, noting that Social Security payments will otherwise not increase this year. This is because Social Security payments do not receive an automatic Cost of Living Adjustment (COLA) increase. Instead, adjustments are tied to consumer prices; there was no increase in the Consumer Price Index (CPI-W) over the last year.

In an election year, this won't be the last you hear about Social Security benefits. The powerful American Association of Retired Persons (AARP) has already responded, with Executive Vice President Nancy LeaMond saying she was "disappointed" there had been no action. It is highly likely that another bill will be introduced to benefit seniors in some way over the next several weeks. However, with a major hole in the budget, it won't be an automatic pass: Expect to see a lot of give and take in any bill that includes more benefits in 2010.

Are you an unwitting tax cheat?

Kelly Phillips Erb Mar 5th 2010 @ 10:00AM EST Filed Under: Tax

With just over a month to go until the April 15th tax deadline, the IRS is ramping up efforts to get the message out to taxpayers about the importance of filing returns correctly.

The focus on accuracy has grown more intense as the estimated tax gap (the difference between what taxpayers owe and what they actually pay) has grown to $300 billion each year. And, in a bad economy, many Americans are feeling the burden of paying what they perceive to be more than their fair share of taxes -- causing some to be more prone to cutting corners. In fact, the IRS Oversight Board reported that 13% of the people it polled last year said it was acceptable to cheat, up from 9% in 2008.

While some taxpayers may think it's okay to cheat, others do so without even realizing it. Here are seven common ways that taxpayers cheat (deliberately or otherwise) on their tax returns:

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Should you get married for tax purposes?

Kelly Phillips Erb Mar 1st 2010 @ 12:00PM EST Filed Under: Family Money, Tax, Celebs & Money, Tax - Advice

Though activist and model Jenny McCarthy has been together with actor Jim Carrey for five years, marriage has not seemed to be in the cards. In 2008, McCarthy announced on The Ellen DeGeneres Show that she did not intend to marry Carrey, saying the couple "didn't need a certificate."

That may be changing. McCarthy recently told Us Magazine that marriage is a possibility. "We say 'never,' but I don't know. Maybe for tax purposes, someday, when we are old."

But wait ... what about the so-called marriage penalty? Isn't getting married for tax reasons a bad idea? Isn't that what we've been told?

It depends on whom you ask. The Tax Code has flip-flopped over the years to make adjustments for a changing demographic and changing priorities. But no one "fix" has fit every situation.

Prior to World War II, the general rule was one income equaled one return. This made sense in traditional one income families where most women opted not to work. During World War II, the increasing numbers of women in the workplace (remember Rosie the Riveter?) resulted in the need for a change. In 1948, Congress adopted a joint tax return. Married couples combined their incomes and received deductions and exemptions worth roughly twice that of single filers. That structure stayed in place for more than 20 years until it was replaced in 1969.

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Taxpayers sound off about refunds

Kelly Phillips Erb Feb 28th 2010 @ 5:00PM EST Filed Under: Tax, Technology

As tax season plugs along (just 45 days until April 15), more and more taxpayers are talking about refunds. Some are finding that they are due more than they expected, while adjustments in withholding have resulted in a balance due for other taxpayers who have come to rely on money back at tax time.

Last year, just a few weeks after tax day, the IRS reported that it had issued a whopping 96,673,000 individual taxpayer refunds worth $259.348 billion. The average individual income tax refund was $2,683.

Of the refunds processed in 2009, over 70% of those were by taxpayers who elected to receive their money by direct deposit. Those taxpayers who received their refunds via direct deposit had, on average, a slightly higher refund of $2,948.

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Check on the status of your tax refund in seconds

Kelly Phillips Erb Feb 26th 2010 @ 4:30PM EST Filed Under: Tax, Tax - Online

Checking on the status of your tax refund is easier than ever. You have two options: calling the IRS or checking online.

If you want to check the status of your refund online, you can do so directly on the IRS Web site. Visit the IRS' online refund tool or the Spanish version of the tool. The Web sites are available 24/7.
To check on the status of your refund, you'll need the following information:

Social Security Number or Taxpayer Identification Number.
The filing status you used when filing your return.
Your expected refund amount (in whole dollars).

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3 tax mistakes people make every day

Kelly Phillips Erb Feb 24th 2010 @ 10:00AM EST Filed Under: Tax, Tax - Advice, Tax - Deduction

Last week, our family made a now familiar trip to the hospital for my five-year old. She's been diagnosed with a form of vasculitis known as Henoch-Schonlein Purpura. It is a nasty and invasive -- but fortunately, not contagious -- illness that attacks the joints and blood vessels in your body. As a result, we have been making regular trips to her pediatrician and occasional trips to the hospital.

As I got into the car, my mind was simply fixed on getting her better. At no time did I note the odometer. On the way out of the parking garage, I was so thrilled to be leaving after a long five-hour day that I didn't bother to get a receipt. We stopped at the pharmacy on the way home to pick up some medication to ease her inflamed joints and while we were there, I picked up a few things I needed for the office that I had been too distracted to get earlier in the week. Back home, I breathed a sigh of relief. Our stressful day was done.

But I was also a little annoyed at myself. I had managed to commit a host of tax sins throughout the day. In fact, many taxpayers do exactly the same thing. It's easy to make tax mistakes every day, and no one, not even a tax professional, is immune. Here are three common mistakes that taxpayers make (almost) every day:

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Overlooked deductions: Home office expenses

Kelly Phillips Erb Feb 22nd 2010 @ 11:00AM EST Filed Under: Tax, Tax - Advice, Tax - Deduction

When my husband and I first started our business, we turned part of our house into a proper office. It was furnished with two desks, computers, and a copy machine on one side; a small conference table and chairs on the other. A separate phone line and fax ran only to that part of the house.

Ten years -- and three kids -- later, our old office is now our master bedroom. My "home office" is now a spot on the couch where I desperately attempt to get work done at odd hours. Fortunately, we've expanded outside of the home into a much larger office, so our dedicated work space is a few miles up the road. Even though I work from home quite a bit these days (it's part of what comes with being a parent and owning a business), we no longer claim a home office deduction on our tax return. We simply don't meet the criteria anymore.

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Business mileage deductions could cut your tax bill

Kelly Phillips Erb Feb 19th 2010 @ 2:00PM EST Filed Under: Tax, Tax - Basics, Tax - Deduction

A few years ago, it appeared any company that required you to drive for your business would just hand over the keys to a new car -- my friends in sales or service seemed to magically have a new vehicle every few months. In this economy, however, that has changed. While more jobs require reliance on a car (some for multi-tasking), fewer companies are footing the bill for it. But there's still some relief available; If you use your car for business or your job, you can deduct car-related expenses on your tax return.

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Are you eligible for the Making Work Pay tax credit?

Kelly Phillips Erb Feb 19th 2010 @ 12:00PM EST Filed Under: Tax, Tax - Basics, Tax - Credit

The highly touted Making Work Pay tax credit is proving to be a headache for many taxpayers this season. Despite a PR campaign by the IRS designed to provide information about the credit, taxpayers are still struggling to understand who is eligible for the credit and how it affects their 2009 federal income tax return. Following are answers to some of the most popular questions about the Making Work Pay credit:

Who is eligible to claim the credit?

The Making Work Pay credit is intended to provide tax relief for working and middle class families. This means most taxpayers will be eligible for the credit, but there are some exceptions:

Continue reading Are you eligible for the Making Work Pay tax credit?

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