financial education

How to figure out your tax bracket, taxable income and tax rate

16th century painting Poborcy podatków by artist Marinus van Reymerswale.

Tax time has come and gone in 2012 for most of us, but it’s never a bad time to learn more. This is particularly true if you earn a raise at work during the year, as you may be in a new tax bracket. Here’s some background on the various tax brackets that the IRS certainly knows. You should know it, too.
Tax bracket basics
The tax bracket in which you the taxpayer falls is based upon your taxable income, rather than annual salary. Your bracket is also highly dependent upon your filing status with the IRS, whether it is single, married, […]

Tariffs inflating the cost of shoes for kids

dinosaur shoe tax

Shoes are a necessity, especially for working parents with children who seem to grow out of them on a weekly basis. Yet, import tariffs are jacking up the prices of nearly all U.S.-sold shoes, cutting into the fixed budgets of people who can afford it the least.
Cheaper materials taxed more
The so-called “shoe tax” is levied at the U.S. border on imported shoes. Though the tax rates vary greatly, they are higher on shoes made of  low-end materials, like those found in bargain outlets, such as Payless Shoe Source and Walmart. The tax rate on high-end leather shoes is a mere […]

IRS expands its taxpayer forgiveness program

Tax debt

The Internal Revenue Service (IRS) announced Monday that it will be expanding its “offer in compromise” tax debt forgiveness program with some key changes that will make it easier for more middle-income Americans to pay down their delinquent tax debt.
A more flexible Fresh Start
The changes to the “offer in compromise” program, part of the Fresh Start initiative, will allow debt-strapped taxpayers to negotiate directly with the federal tax agency to reduce their tax burden and to pay it down under more flexible terms.
IRS Commissioner Doug Shulman said in a press release:
“This phase of Fresh Start will assist some taxpayers who […]

Stupid ways to pay off debts


Debt is how our nation got into its current economic predicament. Once upon a time, credit was readily available and easy to get. Many of us became over-extended, never dreaming that the gravy train would slow down and make it hard to catch up again. But catch up we must, or sink deeper. Here are some not-so-wise strategies to avoid. Many who have tried them have ended up spending more in the long run.
Minimum Payments
If you are only making minimal payments on your lines of credit, you are increasing your debt. The interest will continue to rise until it sucks […]

Trading on the dead: postmortem identity theft

grave robbers

Grave robbing has traditionally been the option of very desperate criminals with exceptionally low scruples. In the novel and movie “True Grit,” a frontier dentist tries to make a deal with passersby for the ownership of a dead body. The dead have always had some value for those willing to plumb low enough to get it. Today, the dead are worth more than ever. A recent study says that more than 2 million dead people have their identities stolen on a yearly basis, and that is just in the U.S.
2.4 million deceased victims
According to a new report from ID Analytics, […]

Financial literacy concerns us all – Part 2

kids n money

Many children don’t receive a proper financial education at home. As we have seen, many parents are woefully uneducated themselves in basic money management skills. That leaves the schools to save us from becoming a nation of the financially illiterate. However, most schools are not making it a curriculum priority.
Trend slowing down
A 2011 report by the Council for Economic Education showed that, while there had been a trend toward more personal finance education in schools, that “trend is now slowing, and in some cases, it’s moving backward.”
Jump$tart conducts its survey once every two years. The previous study, conducted in 2008 […]

Financial literacy concerns us all – Part 1

Kids and money.

Some parents teach personal finances to their children at home. However, most do not. Only a handful of states require personal finance education in high schools at this time. So where do most children learn about money? Usually, the evidence suggests, they learn about it on their own in real-life trials by fire. Those who do start their financial lives with a solid foundation of personal finance information tend to be much more successful throughout their economic lives.
Now more important than ever
According to CNN, having a working understanding of basic personal fiances is more important than ever now. The economy […]

What tax records to keep, which to shred


It has been nearly a week since 2011 income tax returns were due. Many tax payers may be wondering which records need to be saved and which ones can be shredded.
Keep old returns
According to Kiplinger magazine, keeping old returns is imperative. They contain information on your background that can be useful for mortgage applications, applying for disability and a variety of other situations. They can be also be very useful when filing your taxes next year. If storage is an issue, they can be be kept on a disk or other forms of digital storage, such as an online service […]

What to do with your tax refund

Multiple $10 bills folded into a flower, origami-style.

Tax refunds are on their way to many U.S. taxpayers. Along with a tax return comes the annual decision on what to do with your tax refund. The average refund for the 2012 filing season is $2,899, according to the IRS, $100 less than in 2011. In case you’ve forgotten, here are some sound ideas.
Make green improvements to your home
Home improvement is a never-ending process. Why not apply your tax refund to the type of energy-efficient fixes that can save you money in the long term? Green home improvement can make a difference on next year’s taxes, and such projects […]

Most Americans say Buffett Rule is fair

Warren Buffett

The so-called “Buffett Rule,” which states that all millionaires and billionaires should be required to pay at least 30 percent income tax, is currently being debated by the Senate. But a new poll shows that most Americans agree with Warren Buffett.
Nearly all groups favor rule
The study, conducted by CNN, found that 72 percent of the more than 1,000 people surveyed — 912 of them registered voters — support the Buffett rule. Ninety percent of Democrats polled favored the rule, as did 79 percent of those who make less than $50,000 annually. Urban residents also supported the idea 79 percent of […]

Why paying taxes with credit card is a bad idea

debt spiral

Chances are, anybody who hasn’t filed their taxes yet probably is not expecting a refund. Since the IRS has partnered with several credit card providers, paying by plastic seems the most convenient way to go. But is it? Most of the time, tax experts say no.
Two reason it’s a bad idea
The two main reasons why it is almost always a poor idea to pay a tax debt with a credit card are convenience fees and interest charges. Most of the time, these will cost you more than the IRS charges in penalties and interest, even if you are unable to […]

File even if you are unable to afford tax bill

Form 4868

Tax day is only a few days off. So what happens if you find, in this time of financial hardship, that you can’t afford to pay your tax debt? Experts say don’t put off filing.
Higher penalties for late filing
The reason for this is that the Internal Revenue Service penalizes those who don’t file at a higher rate than it penalizes those who don’t pay immediately. The penalty for not filing is 5 percent per month for the first 25 months. For not paying right away, however, the tax bureau charges only 0.5 percent a month.
In either instance, tardy taxpayers will […]

Factors that influence a refinanced mortgage rate

A new house.

When considering mortgage refinancing, it is important to know what factors can affect the refinance rate. Each factor can have as much as a full percentage point’s difference in the new mortgage rate, according to various mortgage experts. Armed with knowledge, you can approach your own mortgage refinancing with greater confidence.
Advertisements typically reflect points
As anyone who has looked into refinancing a mortgage knows, banks compete for business by advertising low mortgage refinancing rates. However, what many people don’t know is the fine print in this scenario. According to Pat Cunningham of Home Savings and Trust Mortgage of Fairfax, Va., those […]

Traffic deaths increase on Tax Day

Benjamin Franklin

Benjamin Franklin famously said, “The only things certain in life are death and taxes.” A study released this week combines the two in a far more tangible way than Franklin ever could have guessed. The study shows a spike in traffic deaths on each of the last 30 tax days.
Spike in each of the last 30 years
According to an article published Tuesday in the Journal of the American Medical Association, for each of the last 30 years, traffic death numbers rose by an average of 6 percent on tax filing day. For a control, the tax day numbers were compared […]

Strange state taxes for tax day fun

An unsliced bagel.

State tax codes don’t make for a riveting read, but there are hidden chestnuts that are sure to please. Here are a few strange state taxes, presented for taxpayers who can use a bit of a laugh. See if your state’s tax laws are opportunistic or hopelessly arcane!
Bagels and dogs, salt and arrows
The dizzying array of items that are taxed in various states is both amusing and bewildering. It could involve labor (such as the tax on sliced bagels in New York), controlled substances, pets or tattoos. Even everyday substances like salt can be a sticking point for state tax […]

Lottery winner tax evasion thwarted by IRS

Pennsylvania State Lottery

Taxes and the lottery have both been prominent in the financial news recently.  A recent story touched on both. A man was indicted Wednesday for trying to hide lottery winnings from the IRS, proving, once again, that tax evasion is a risky proposition at best, and a bad idea for sure.
Man failed to report lottery income
Sherman W. Friend, a 69-year-old man from McClellandtown, Pa., was indicted before a grand jury April 4 for hiding about $481,000 in lottery winnings from the IRS.
The IRS estimates he evaded paying about $132,000 in income taxes between 2009 and 2010. According to the indictment, […]

States cracking down on tax zapper programs

Many states are starting to crack down on businesses that use so-called “tax zapper” programs to keep two sets of books by simply inserting a flash drive into the cash register. States say the programs cost them billions in unreported taxes.
Illegal in five states now
Florida, Georgia, Maine, Utah and West Virginia have all enacted legislation to make it illegal to use the tax-cheating programs. New York, Tennessee, Michigan, Indiana and Oklahoma all have bills pending targeting tax zappers. Lawmakers in Massachusetts, Connecticut and Alabama, meanwhile, are discussing drafting similar measures.
Maine’s legislation was signed into law in March. There, business owners […]