Tax Refunds & Advice

Smartmoney.com recently ran a story: The 5 Best Tax Changes We Won’t See. It is full of quality information on the current tax situation in the United States, as well as many changes that could definitely make things better. Unfortunately, as the title of the piece implies, these are tax changes that we probably won’t see anytime in the near future.

If you don’t want to click through to the article, here are the five changes that are detailed:

1. Stop double taxing social security benefits

2. Get rid of refundable tax credits

3. Get rid of the alternative minimum tax stipulation

4. Get rid of phase-outs to make it easier to understand the tax code

5. Give employees the ability to deduct group sponsored health insurance premiums

As you can see, these five tax changes are not that far-fetched. Sure, it would take some time to implement these changes but most people agree that they are more than doable. What do you think? Will we ever see these tax changes? Or are they nothing more than a dream?

New president Barack Obama is hard at work on the American Recovery and Reinvestment Act. This is the first major bill of 2009. This bill includes many of the tax breaks that president Obama talked about on the campaign trail and during many debates. Of course, this bill contains more than tax breaks. It is also pushing for roughly $550 billion in spending. It is important for taxpayers to be aware of both the pros and cons of this legislation.

Are you more worried about how this legislation will effect your tax situation? If so, here are a few changes that will come about if the bill is passed as it currently stands:

1. Making Work Pay Tax Credit: a $500 tax credit to offset FICA taxes on the first 6.2 percent of income.

2. American Opportunity Tax Credit: a provision that will expand the current setup of the Hope education tax credit.

3. Changes to the First Time Homebuyer Tax Credit: as it stands a tax credit of $7,500 is available to first time homebuyers as long as it is repaid. This bill hopes to eliminate the repayment portion.

4. Refundable Child Tax Credit: hopes to make this tax credit refundable for 2009 and 2010.

5. Increase tax credit amount for energy efficiency to 30 percent.

Will any of these changes work in your favor? While these are five of the most talked about details of the American Recovery and Reinvestment Act, they are not the only ones. Keep an eye out for changes and modifications to this legislation over the next few days. As a taxpayer you want to know exactly what is going on at all times.

Do you know what to expect when you file your 2008 tax return? While you may not know exactly what is going to happen, you should have an idea of what you are up against. Remember, the more you know the better off you will be when the big day arrives. This holds true no matter if you are filing your own tax return or hiring a tax professional. Even if somebody else is doing your taxes you should still have an idea of what you are facing.

The most important question to ask is whether or not you are going to owe additional money. After all, this is what most taxpayers think about. Will I receive a refund check? Or will I have to send more money in taxes? The best position is to find yourself at a break even point. This means you don’t receive a refund and you don’t owe any additional money. If you find yourself in this position it means you paid the right amount of taxes during the year.

If you are not organized you should not expect the filing process to be stress free. In fact, it will result in a lot of problems. Organizing your tax situation is not something that you do in one day. Instead, you need to be doing this month in and month out as the year goes by. This way when it comes time to file your tax return you will know exactly what you are doing and where your paperwork is located.

Do you know what to expect when filing your 2008 tax return? If not, collect some basic information so you don’t run into any surprises when the time comes.