H&R Block’s CEO Bill Cobb Is Being Pro-Active

This demand could seem a little weird considering it comes from an organization specializing in tax preparation and earning by way of filing millions of tax returns. Still, H&R Block‘s CEO (Bill Cobb) gave a statement Tuesday saying he supports making the 74,000 pages of tax code substantially less intimidating.

On CNBC Cobb told ‘Squawk Box’ that there are indeed several ways of making the tax code a lot simpler. He also added that be believes it’s nonsense to break up a code that is so long just because it seems too complex.

While all of that was going on, the GOP front-runner that everybody knows well, Mr. Donald Trump, stated that he’d like to put H&R Block totally out of business. He wants to streamline our tax system by putting in revenue neutral proposals.
Cobb, however, is proposing that rather than change the rules of the tax code, that we need to figure out how to administer the social programs. H&R Block‘s CEO explained the tax credits have been designed for everything in there, ranging from the ‘Earned Income Tax Credits‘ to ‘Obamacare’. They are all run according to the tax code. He believes that it’s not the rate but it is the ‘refundable credits’ that make the thing so complex.

H and R Block photo

Photo by jcrakow

Obamacare Will Either Help or Hurt You, Depending on Your Situation

Cobb also noted that the bottom line for many taxpayers is how much they get from the government. He says that out refunds average around $3,000 and to most U.S. citizens it’s like their yearly bonus. He says our citizens enjoy two busy seasons, one when they’re having their taxes done and another when they’re getting the refunds back.

On Tuesday in New York, Cobb was on Wall Street to ring the opening bell. The goal of this visit was to draw attention to the newest service put out by ‘Block Advisors’ (new company that helps with highly complex tax returns, financial planning, and tax preparations for small businesses).

Five Taxes That Increased For Wealthy Taxpayers

Rich taxpayers may end up paying higher tax bills this season. Due to the changes in the 2012 tax law, anyone who makes enough to consider themselves wealthy will pay higher taxes on their income.

The first bill that raised taxes for the wealthy is The American Taxpayer Relief Act of 2012. This bill is also commonly known as the fiscal cliff tax bill. This law prevents rich taxpayers from reducing their bill by utilizing certain tax privileges.

The second change affecting wealthy taxpayers comes from the Affordable Care Act. Two provisions from this law went into effect in 2013. Clearly, this bill targets high-income taxpayers, but the language in the bill fails to provide a numeric value for the term high-income.

These two laws created five significant changes for wealthy taxpayers. These changes are the main causes for higher tax bills and reduced privileges.

Rich taxpayers may end up paying higher tax bills this season. Due to the changes in the 2012 tax law, anyone who makes enough to consider themselves wealthy will pay higher taxes on their income.

Tax rate increase from 35% to 39.6%

This change applies to regular or ordinary income. It affects single taxpayers who earn $400k per year and married couples who earn $450k per year. It also affects married couples who file separately if their income reaches $225k per year.

Capital gains tax increase of 5%

Wealthy taxpayers with numerous investments will pay more taxes this season. Income earned from real estate, currency, and paper assets will increase from 15% to 20%.

Payroll tax increase of 0.9%

Employers must subtract an extra 0.9% from employees who earn $200k or more. Self-employed individuals must adhere to this change as well.

Tax on net income from investments.

The healthcare law adds a 3.8% tax to single individuals earning $200k and married individuals earning $125k. This tax applies to net earnings from capital gains and other investments.

Lower dollar amounts on exemptions and deductions.

The previous exemptions and deductions for wealthy individuals no longer apply. The dollar amounts for these deductions are lower and some exemptions are obsolete. Taxpayers will need to file their income taxes before they could come up with a dollar amount for this loss. Using an updated tax software like TurboTax will reduce the confusion that may occur during the calculating and filing.

Some tax preparers may use the new laws as an excuse to raise fees for wealthy taxpayers. If you have a high income, you can avoid this headache by using TurboTax instead. As long as you are using a recent version, you will be able to accurately file your taxes with the updated percentages and new deductions, exemptions, and provisions.

The Government Can Take Your Tax Refund

Take Your Tax Refund

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Taxpayers are filing their taxes early this year to avoid having an identity thief file their return before they do. But what is surprising some is that the government keeps their tax refund and uses it to pay down their student loan debt when they are in default. Called the Treasury Offset Program, the Department of Education is able to take Social Security payments and tax refunds and apply them to outstanding debt that you have not been paying.

Experts in the field say the Department of Education is required to notify you ahead of time if they intend to apply this offset program to your funds. Within this notification are rules and what you can do to avoid this happening to your tax refund at tax time.

You can request a hearing if your loan was not in default when the funds were taken and have them sent to you. Another thing you can do is to adjust your withholding on the w-9 form. This tells your employer to not take as much out of your checks each pay period. This will give you more money during the year to pay your student loan payments, and reduce your refund at the end of the year.

Also, set up a payment option with your student loan that you can afford. Getting in default of you student loan causes problems in your financial life that you would rather avoid. Your credit will be affected and the interest you need to pay on other loans is likely to go up.

Health Insurance And Your Taxes

Tax filing season will be here before you know it, and there is a big change on the tax forms that almost 50 percent of Americans aren’t aware of. Tax filers will be required to verify that they have health insurance when they file their 2014 taxes, or face a penalty.

An Intuit TurboTax survey carried out by Harris Poll among over 2,000 people aged 18 or over found that around 48 percent of Americans are still unaware of this new Obamacare rule.

Health Insurance

Tumisu / Pixabay

The deadline to avoid having to pay a penalty for the 2014 tax season has already been and gone, although 87 percent don’t actually realize that. However, about 62 percent of Americans without health insurance do realize that they will have to pay some sort of penalty for not having current and valid health insurance.

Sacha Adam, the TurboTax representative in charge of the affordable care act pointed out that most Americans simply don’t register or don’t understand the important relationship between their taxes and their health care. This is despite the fact that open enrollment is still taking place at the moment.

People living in the southern states are less likely to have health insurance than those living in other states, although about 90 percent of all Americans have health insurance.
Premium tax credits have been designed to make health insurance more affordable for families on a low to moderate income, although almost 50 percent of all Americans are not aware of these.

Almost 75 percent of those who bought health insurance through the health insurance open marketplace say that they will renew their insurance the next year. TurboTax has a strong presence in the San Diego area and the company offers information and tips on Obamacare and many other tax and health insurance topics at TurboTaxHealth.com.

New Baby Tax Filing Tips

The first thing to consider when filing your taxes with a new baby is your tax status. If you were single before and now support the household, you should file Head of Household instead. The tax brackets are better and the standard deduction is increased for this tax filing status. Here are some additional tax filing tips:

An old Social Security card with the "not...

An old Social Security card with the “not for identification” message (Photo credit: Wikipedia)

Consider informing your rich relative about the gift tax if they are thinking about gifting you over $14,000 for your new born. Normal gifts are not taxable, which is the good news.

Any uncovered medical expenses can be deducted once a 10% floor is applied to the deduction amount based on your adjusted gross income (AGI). To claim your medical expenses, use the long form 1040 and file a Schedule A Itemized Deductions form.

Claiming your new born as an exemption on your taxes requires them to have a social security number. File form SS5 with the Social Security Administration quickly, you will want to as soon as possible after the birth of your child. File for an extension if your taxes are due and you were not able to obtain a SSN in time.

Claim your new dependent on your taxes. You can shelter up to $3,950 in income with an additional dependent. Use the IRS tool for dependency if you are uncertain if you can claim your new born on your taxes.

Get Caught Up On Your Expat Taxes

time for CHANGE ...item 1.. Déjà Vu in Gaza? -...

time for CHANGE …item 1.. Déjà Vu in Gaza? — This calls to mind the words of Mark Twain: (Nov 28, 2012 / 14 Kislev 5773) …item 2.. Cobblers, Crisps and Crumbles (Nov 29th, 2012) … (Photo credit: marsmet546)

Did you know that there are over 7.6 million American people living or working overseas? Half of these people are only filing their US tax returns, despite still being citizens. It is clear that many expats do not realize that they still have an obligation to the US Federal Tax. This means that they are in fact targets for the IRS. Luckily, there are ways to get rid of this worry and move on.

The Streamlined Filing Procedures

This is probably the best way to deal with filing taxes if a person was not aware of them. This is a great program that was designed to be able to fix tax problems without seeming like you were hiding amounts of money, or knowingly evading taxes. Most people fall into this category if they live overseas. This means that they have to only provide the last 3 years of Federal Tax Returns and 6 years of Foreign Ban Account Reports. The trick with this is that you only need to file the FBARs if you hit at least 10,000 or more during a tax year, even if only for a small bit of time.

This procedure is wonderful because the IRS has recently deigned to waive all late fee penalties and filing deadlines. This does still mean that they have to be filed, however, so that you do not end up owing. Most people end up not having to owe any money anyway.

Being able to get your taxes fixed up no matter where you are living in the world is important, but even more so if you do not currently live in the United States and are still a citizen. Filing taxes is important!

Should you give back to your school?

English: Cadets of the Air Force Academy Class...

English: Cadets of the Air Force Academy Class of 2003 celebrate at graduation ceremonies on May 28, 2003 as the Air Force Thunderbirds fly overhead. The 974 students marked the academy’s 45th graduating class. (Photo credit: Wikipedia)

Graduating from college is a wonderful achievement, and you may have spent an appreciable amount of money to make it happen.

Ironically, graduation may tie you to your school even more, and the interaction may last for years to come.

Money Concerns of College Alumni

College is beneficial for the student and the school. The learning institution provides opportunities for your future success, and your successful endeavors after graduation serve as a testament to the school.

Newsflash: Your success is gauged by your income!

Your healthy income is a tangible way for your college to verify their skill in preparing students for their future success.

Many graduates give back to their schools when filing taxes or as part of other financial activities. Reputable publications such as U.S. News and World Report use the percentage of alumni who donate as an important ranking factor, and this is why many colleges begin asking for alumni donations so soon after graduation.

The Benefits of Donating

You may feel grateful for your educational experience, and giving back can be an ideal way to display your appreciation.

You may benefit when filing taxes if you make a charitable contribution to your former college. This deduction may reduce your taxable income and any money that you may owe at tax time, and you may receive more money back if you are entitled to a tax refund.

Your degree can appear more valuable by many aspects as your school maintains or improves its good reputation and ranking.

The Financial Considerations of Donating

You may want to support your college, but it may be advantageous to wait if you have student loan or credit card debt to settle at present. Most colleges have multiple avenues for raising funds, and you can support your college when the time is right for you.