Two tax bills signed in 2005 and 2006 extended
through 2010 the favorable rates on capital gains and dividends
that had been enacted in 2003, raised the exemption levels for
the Alternative Minimum Tax, and enacted new tax incentives
designed to persuade individuals to save more for retirement.
In this course we will be
reviewing some basic tax preparation concepts regarding income, deductions
and credits on your tax return. One of these basic tax preparation items is
interest income. When you receive interest income as a nominee, it
means that the income is in your name, but it actually belongs
to someone else.
On or before the first Monday in February of each year the
President is required by law to submit to Congress a budget
proposal for the fiscal year that begins the following October.
Then again in 1997, President
Clinton signed a tax revenue act which cut taxes by $152 billion including a
cut in capital gain tax for individuals a $500 per child tax credit along
with tax incentive for education.
This per child tax credit has now increased to
$1,000 per child. The child tax credit started at $400 per child and
increased to $500 per child in 1999. It was with this act that Roth IRAs
were established. This act also exempted the capital gain taxation of the
sale of personal residences of up to $500,000 for married couples and up to
$250,000 for single taxpayers. There is also a $600,000 estate tax exemption
and family farms and small businesses can qualify for exemption of $1.3
million. It was also at this time that the annual gift tax was corrected for
inflation.
If you changed your name because of marriage,
divorce, etc., be sure to report the change to the Social
Security Administration (SSA) before you file your tax return.
This prevents delays in processing your tax return and also will
prevent any delay in issuing your refund. You want to update your files with
the Social Security Administration (SSA) to safeguard your social security
benefits.
Notify the Social
Security Administration before you
file your tax return with the IRS if you or your dependents changed your
names. The name and the name of your dependents with the Social Security
Administration must match the name with the reports you
file with the Internal Revenue Service. Avoid filing your tax return without
double checking your Social Security Administration
records first because you will encounter the most difficult problem to try
to fix the mismatch with the Internal Revenue Service (IRS) if you
entered the wrong identifying information for you or your dependents.
You should do everything in your power to avoid any kind of letter from the
IRS especially a letter something so simple as a a social
security number and name mismatch. It will especially be very difficult to
straightening out the problem if they disallowed a credit such as the Earned
Income Credit because of a social security mismatch. This is where an ounce
of prevention is worth a pound of cure.
Your direct deposit request will be rejected and
a check will be sent instead if the items in the direct deposit
request form are not completely filled out. If any items are crossed out or
whited-out your direct deposit will be rejected and a check will be sent
instead. If your account in an individual bank account, your financial
institution will not allow a joint refund to your account. It is quite
needless to say that if your bank account is not in your name, your request
for direct deposit would be denied.
