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Posts Tagged With 'Tax'

Your Take: Is Our Tax System Fair?

When Miranda approached me with the idea for this mornings story, based on what she recently read in a CBO report, I thought it would make for an interesting (and lively, as all political and tax related Your Takes tend to be!) topic of discussion on the eve of the 4th of July. Well be taking tomorrow and Friday off but I wanted to discuss this before everyone left for the weekend, so we accelerated the Your Take to a very rare Wednesday afternoon. Hopefully youre all still here and can chime in.

Personally, I think our tax system is overly complicated because its a series of tax breaks and tax punishments to incentivize and penalize certain behavior.

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Post Fiscal Cliff Deal 2013 Tax Brackets

There seems to be a good amount of confusion around what the American Taxpayer Relief Act (aka the fiscal cliff deal), actually means for marginal tax rates.

Many media outlets and personal finance blogs are incorrectly reporting that the new (old) highest 39.6% tax bracket replaces the 35% bracket. Not true. The IRS released its 2013 marginal tax rates, and the new 39.6% bracket is in addition to, not a replacement.

There are also a number of inflation adjustments this year for the tax brackets and for standard deductions.

This may be a good time to revisit what your overall adjusted gross income might be this year and adjust your tax allowances so that you don???t end up getting penalized for owing too much in taxes or getting too big of a refund (lending your money to the government, interest-free).

What are Tax Brackets or Tax Tables?

Before getting to the changes, its important to know that tax brackets represent the income tax rate you owe for that portion of your income that falls into that bracket.

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When Should You Amend Your Tax Return?

A few years ago, after preparing my taxes, I realized I left off some income I earned that year. As a sole proprietor of a personal finance blog, I would receive several 1099-MISC forms each year from various vendors. A 1099-MISC is to freelancers what a W-2 is to a full time employee. I knew that since I left it off, it would only be a matter of time before the IRS checked the numbers and saw a mismatch. The solution? File an amended return.

Its not that uncommon to forget something on your taxes considering how complicated they can be. Perhaps you didn???t record all of your deductions and credits or you entered the wrong filing status. A 1099-INT from one of your banks gets lost in the mail and delivered a few months late? If you make a major mistake, it becomes necessary to file an amended return.

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Ask the Expert: Tax Consequences of a Maturing CD

Q: When my CD matures, can I put it into a savings account without having to pay taxes on it?

A: The answer is yes and no. The maturation of a CD is not, in and of itself, a taxable event which would trigger the payment of taxes. However, this is only because your bank should have been including income on the CD in each year???s 1099 form. In short, if you???ve been declaring income from that form on your taxes, then you would have been paying the taxes on the CD interest year-by-year, as it was earned.

The one caveat is that if the CD was part of an IRA or other tax-deferred retirement plan, you will want to make sure the proceeds roll into an account which the bank has also set up as tax-deferred plan.

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