Could “Red” States Actually Be Considering Tax Hikes?

Revamping the nation’s tax system is a very hot topic in Washington D.C. at the moment and that’s not going to change any time soon. One of the reasons Donald Trump was elected president was his stance on simplifying the country’s tax system and lowering the nation’s tax bill. This was a common theme amongst House and Senate republicans during the election, as well. However, some states that typically vote republican are now singing another tune.

According to recent reports, several red states are actually considering new taxes as a way to give their tax revenue dollars a boost. Many of these states, including Kansas, recently made big waves by cutting taxes across the board. However, they are now finding depleted budgets with no relief in site.

That’s why Kansas, along with several other states, including Arizona, Tennessee and Missouri are all considering raising taxes or creating new ones, including raising gas taxes, among them. Meantime, lawmakers in Oklahoma, Nebraska, Indiana and Mississippi are all considering different tax hikes, including raising tobacco taxes, increasing sales and property taxes, creating an Internet sales tax and additional vehicle taxes.

On the other hand, states that have just voted to put republicans in control are still considering tax cuts, including Iowa and New Hampshire. No matter where you live, taxes continue to be a hot topic just like they are on Capitol Hill. 2017 stands to be an interesting year for tax reform, one way or the other.

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Important Tax Filing Deadlines You Don’t Want to Miss

Before you send in your tax return there are a lot of things you have to remember, which is why having a tax checklist is good idea. Of course, the right accountant will help you with that as well. However, before you ever get to that final point in the tax-filing process, you need to be aware of several changes to the tax laws, and of course deadlines. After all, missing a deadline can end up being very costly.

So as the 2017 tax season kicks off, here are a few important deadlines to make a note of, because missing these might hurt you.

• 1040 Filing Deadline – first off, the deadline this year for filing your taxes is actually on April 18 and not April 15. That’s because the 15 & 16 fall on the weekend and April 17 is a holiday. The extension deadline falls on October 16, but you have to file for that extension by April 18.

• Refund Delays – for those claiming the additional child tax credit or the earned income credit, they will have to wait a little longer to get their refunds, due to a new law to help fight tax fraud. The IRS will begin sending those refunds on February 15 and they will likely start arriving around Feb. 27.

• Small Business Filing Dates – there are several deadlines that will affect many small businesses, including the date to turn in Form 1065 partnership return, which has been pushed up by a month. It’s now due two and half months after the tax year closes instead of three and half months. That means this year the deadline is March 15 instead of April 15. Conversely, the deadline for Form 1120 C corporation returns has been moved back a month from March 15 to April 15. The due date for 1120S returns of S corporations will remain the same.

• Compensation Forms – employers and business used to have till the last day of February or March 31 to turn in W-2 and 1099 forms to the IRS, but that deadline is now January 31.

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Which Tax Policy Issues Will Be Big in 2017?

Taxes, taxes, taxes. One could argue that 2017 will bring more changes to our country’s tax system and policies than we’ve ever seen before. The hope is that all that change will bring about better rewards, including a simplified tax return process and tax cuts for most, if not everyone. So as the New Year begins, what will be some of the biggest tax policy issues that we might face over the next 12 months?

Will there be major tax reform or will there just be a major tax cut? Both Trump and Congress have made big promises, but it remains to be seen if true tax reform will take place, instead of just a large tax cut. Speaking of tax cuts; another one of the biggest questions is whether or not the wealthy will get a big tax break in 2017?

How fast will lawmakers move on their proposed changes? Congress and the president-elect both say they will move quickly on tax reform, but that also remains to be seen. Creating new tax policy usually takes a lot of time, so it will be interesting to see how quickly they can actually move forward with their plans.

How much will the nation’s deficit grow under the proposed tax changes and how much debt will republicans be able to live with? Most economic experts predict that a huge tax cut will ultimately increase the national debt, which could hurt the country’s long-term growth. Will republicans be able to live with that?

A few other tax issues that will be watched closely in 2017 include whether or not republicans will be able to attract support from democratic lawmakers, how congress is going to pay for health insurance subsidies and how will the corporate world respond to Trump’s economic plans? As you can see, there is a lot to look forward to in the next 12 months.

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There’s Still Time to Cut Your 2016 Tax Bill

So with tax season officially kicking off next week, as the IRS will begin receiving returns on January 23rd, it would seem that the time to save money on your 2016 taxes is now gone. However, there is still a nice tax break available for this year all the way up till April 18th (the tax filing deadline for 2017). You can still use your contributions to a traditional IRA as a deduction on your 2016 tax return.

In fact, you can even contribute as much as $5,000 for both the 2016 and 2017 tax years; and if you’re older than 50 you can also contribute an extra $1,000 for each year as a catch-up contribution. While you can also do the same for a Roth IRA those contributions are not eligible for a tax deduction. Also, keep in mind that this limit applies to all your IRA accounts. You cannot contribute $5,000 to each, but rather $5,000 collectively.

This is a great way for just about anyone to lower their tax bill, including investors that don’t currently have an IRA set up. The savings can be significant. For example, if you contribute the maximum of $5,500 (for taxpayers under 50 years of age who fall in the 25 percent tax bracket) you would save $1,375 on your tax bill for 2016.

The good news doesn’t end there, because, of course, in addition to the nice tax savings you will also be creating a nice retirement fund for those golden years, which is another a great reason to open and contribute to an IRA. If you need help with this tax-saving idea then contact us today.—-here/article_8ba9e540-1177-5ba8-9230-c03650001cef.html

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Tax Season Starts Next Week – Are You Ready?

It’s almost here. That glorious time of year known and loved by millions as “tax season.” Of course, the reality is that most taxpayers don’t look forward to this time of year – unless they’re expecting a large return – but even those that fall into this category still don’t look forward to the tax filing process. In any case, love it or hate it, tax season is here. In fact, according to the IRS, the official tax filing season kicks off next week, on January 23 and runs through April 18.

There are some other filing notes to be aware of, as well. Anyone who e-files can submit their return before January 23rd; however, whichever software or online program you use will not actually submit them to the IRS until the 23rd. Additionally, anyone claiming the earned income credit or the additional child tax credit will not begin seeing their refund till Feb 23rd, due to a new law to protect against fraud.

So what can you do to start getting ready? First, there are several key forms that you should be looking for, including W-2s, 1099-Misc and 1099-Ks. These should all arrive by January 31. If you haven’t already begun gathering all your important tax and financial documents then now is the time to get started. If your taxes are complicated, or you’re a high net worth taxpayer then you should contact an experienced and qualified tax professional for help.

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Will Latest Group Lottery Winner Be Affected by Taxes?

There is nothing quite like winning the lottery. In almost all cases lotto winners go from rags to riches overnight. There is definitely a thrill and exhilaration that comes with becoming an instant multi-millionaire. Who wouldn’t want to win the lottery? Hold that thought. Winning the lottery comes with several possible catches that could lead to tax trouble. In fact, for some lottery winners, the tax fallout is a real nightmare.

The tax headache can be especially big when several people decide to purchase lottery tickets together, as a group, which is exactly what happened to some recent lottery winners in Tennessee. Twenty co-workers won a $420.9 million Powerball jackpot in November, with the lump sum payment being $254 million. Split evenly, each winner will receive $12.7 million before taxes.

However, the first question that must be answered is could this group be considered a real partnership? The 20 winners have been pooling their money together for eight years, so it’s a legitimate question. It’s also an important one as it could make a big difference in how they report it and their overall tax bill.

Another question is could their agreement be viewed as a trust? If the IRS considers it a grantor trust it’s simply taxed as a flow-through. However, if it is a more complex trust that is taxed the same as a corporation the tax headache can be huge and expensive. So, what should you do if you become an instant millionaire? If you ever end up choosing the right numbers, the smartest thing to do is talk with a qualified tax professional before you even collect the money. This will help you avoid several possible headaches.

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Could Some Wealthy Taxpayers Pay More Taxes With Trump?

Are you ready for some new tax policies under President-Elect Donald Trump? Ready or not, there are likely going to be big changes to the nation’s tax system when Trump takes office this month. All the talk since the election began has been about Trump’s tax cuts helping the rich get richer.

While it’s true that many of the country’s top earners will benefit from Trump’s proposed tax changes, not all of the wealthy stand to benefit. In fact, there are some that could actually see their taxes increase under Trump’s plan.

So who are these unlucky individuals? Well, it turns out that several taxpayers that once fell into the 28 percent tax bracket would now end up in the highest tax bracket under Trump’s three-bracket plan. That means these families and individuals would see their tax rate increase to 33 percent.

So how much do you have to make to end up in the highest bracket? If you are an individual that makes between $112,500 and $190,150 in gross income, or you are married or filing jointly and make between $225,000 and $231,450 in gross income then you would be subject to the new higher rate.

For example, if you make $225,000 your tax bill would be $63,000 at a rate of 28 percent. With a 33 percent tax rate your bill would jump to $74,250. That’s a significant increase. So while many of the nation’s top earners will see a decrease in taxes, there are several wealthy taxpayers who will actually pay more under Trump.

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At Least One Top Hedge Fund Manager Favors Trump’s Tax Plan

The tax questions continue to grow as the country waits for President-Elect Donald Trump to be sworn in, in just a few more days. Of course, there is much debate as to whether or not Trump’s tax policies will help or hurt our country and it’s overall economy. The nation is as divided over that issue as they were during the election.

One group that is watching this debate closely is hedge fund managers. In fact, at least one major hedge fund manager who has already taken a hit since Trump won the election is still sure that a Trump presidency will be good for the nation’s financial position. Nelson Peltz, who owns Mondelez, which has dropped 10 percent since the election, is still certain that Trump will be good for the economy.

Peltz believes that if Trump is able to enact the tax reductions and changes that he has proposed the country will see improved employment and more companies moving their operations and revenue back to the U.S. In fact, even though Trump has been critical of Mondelez-owned companies such as Chips Ahoy!, for moving jobs to Mexico, Peltz still likes the potential benefits that Trump’s tax plans bring to the country.

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Trump Warns Companies Considering Sending Jobs to Foreign Countries

One of the many promises president-elect Donald Trump made during his run to the White House was to keep more jobs in America. Now that he has been elected, it appears that he is serious about this promise. Trump recently made it very clear, in no uncertain terms, that companies that try to shift jobs or business operations overseas and then bring that money back here by selling their products in the U.S., without consequences, have another thing coming.

Trump warned businesses that following such a plan would earn them a 35 percent tax if they try to sell their products in America. There is good news though, as Trump has said he plans to significantly reduce regulations and taxes on corporations, which is designed to encourage companies to keep their employees and operations stateside instead of moving them overseas to more tax-friendly locations.

In several posts on Twitter, Trump stated: “The U.S. is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies.”

Trump hopes his stern warning will be enough to deter businesses from manufacturing so many product outside of the U.S. and thus produce more jobs for Americans.

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IRS to Put an End to Its Top 400 Report

Many people believe that the nation’s wealthiest individuals already make too much money without paying their fair share of taxes. Now that billionaire Donald Trump has been elected as our country’s next president, many expect that to only get worse. However, starting next year, it will now be very difficult for anyone to really know how much of a difference Trump’s new tax policies will make to the nation’s top earners.

That’s because the IRS recently announced that it would no longer continue to release its Top 400 Report, which is an annual statistical report of the top 400 taxpayers in the country, according to adjusted gross income. This year’s report, which for now will be the last, showed just how hard the current president’s tax hikes have hit the wealthiest taxpayers over the past several years.

In 2012, the top 400 paid an effective tax rate of 16.72 percent on average adjusted gross income of $226 million. Compare that to 2014 when the same group paid an effective federal tax rate of 23.13 percent on AGI averaging $318 million. If Trump’s tax proposals are put into law then the top 400 are likely to see their effective tax rate go back down again, but now that the IRS will no longer be releasing this report, there is no way to know by exactly how much.

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