Tuesday, March 3, 2009

Porn Tax Proposal Given a Swift Death

For Rep. Mark Miloscia, levying an 18 ½ percent sales tax against the porn industry seemed like an easy way to save a program for the poor and disabled from getting axed by the state. But the reaction from the public was swift and severe. Opponents — some of whom claimed the tax would violate constitutional rights and destroy their sex lives — jammed Miloscia's phone lines for hours before he finally ordered his staff to shut off the phones.

Read more

Seattle Times

Monday, March 2, 2009

Tax Credits You Should Not Forget

Here are other tax credits that you should claim if you qualify because tax credits reduce your tax liability dollar for dollar.

Child Tax Credit
A taxpayer who has a dependent child under age 17 probably qualifies for the child tax credit. This credit, which can be as much as $1,000 per eligible child, is in addition to the regular $3,500 exemption claimed for each dependent. A change in the way the credit is figured means that more low- and moderate-income families will qualify for the full credit on their 2008 returns. The child tax credit is not the same as the child care credit.

Earned Income credit
The Earned Income (EITC) helps people who work but do not earn a lot. Working families with incomes below $41,646 and childless workers with incomes under $15,880 often qualify. Generally, you must have earned income as an employee, independent contractor, farmer or business owner to qualify. Taxpayers under the minimum retirement age who receive disability payments from an employer plan may also be eligible. Most tax credits tend to reduce your tax liability down to $0. The EITC is a refundable tax credit so that it will reduce the taxpayers tax liability down to $0 and unused amounts will be refunded to the taxpayer. The IRS`has an EITC assistant that will help you determine whether you qualify for this credit.

Credit for Dependent Care
An individual who pays for someone to care for a child so he or she can work or look for work probably qualifies for the child and dependent care credit. Normally, the child must be the taxpayer’s dependent and under age 13. Though often referred to as the child care credit, this credit is also available to those who pay someone to care for a spouse or dependent, regardless of age, who is unable to care for him- or herself. In most cases, the care provider’s Social Security Number or taxpayer identification number must be obtained and entered on the return. Anyoe claiming this credit must complete Form 2441.

Education Credit
The Hope credit and the lifetime learning credit help parents and students pay for post-secondary education. Normally, a taxpayer can claim both his or her own tuition and required enrollment fees, as well as those for a dependent’s college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. A taxpayer can also choose the lifetime learning credit, even if she is only taking one course. In some cases, however, she may do better by claiming the tuition and fees deduction, instead. The education credit is claimed on Form 8863.

Savers Credit
The saver’s credit is designed to help low- and moderate-income workers save for retirement. A taxpayer probably qualifies if his income is below certain limits and he contributes to an IRA or workplace retirement plan, such as a 401(k). Income limits for 2007 are:

$26,500 for singles and married taxpayers filing separately
$39,750 for heads of household and
$53,000 for joint filers

Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply. There is still time to put money into an IRA and get the saver’s credit on a 2008 return. 2008 IRA contributions can be made until April 15, 2009. The savers credit is claimed on Form 8880.

Sunday, March 1, 2009

Wisconsin Loooking to Tax Digital Downloads

The State of Wisconsin just recently signed a bill into law that allows for a 5% tax on all digital downloads spanning music, books, ring tones, and even video games. The state expects to rack up nearly 7 million dollars yearly from the tax once the law goes into effect on October 1st of this year.

Other states are also looking into taxing digital downloads including Florida, North Carolina and New York, so it would seem likely that other states would soon follow. It seems gamers had better get ready to pay a little more for their digital download gaming fix if this is any indication of things to come.