Tag Archives: Income tax

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.

How To Use The IRS To Get Free Tax Help

A lot of people require help when filing taxes. Deciding on the forms to fill, number of dependents and how to claim your tax refund are some of the prevalent concerns that taxpayers face.

However, there exists numerous methods that can be helpful during the process. Below are some of the best techniques and practices that you can employ on top of using TurboTax 2014.

English: YOKOSUKA, Japan (Feb. 10, 2009) Volun...

English: YOKOSUKA, Japan (Feb. 10, 2009) Volunteer income tax assistance (VITA) (Photo credit: Wikipedia)

The IRS website (www.irs.gov) is a one stop shop for tax payers. “1040 Central” is especially beneficial to those who are experiencing difficulties with filing their taxes. It will give you tips, guidelines and a lot of useful information. Moreover, the page has links to other important webpages such as the latest news and FAQs.

Online tools such as the Interactive Tax Assistant and IRS Tax Map can also be useful in giving you solutions to some of your questions and problems. “Where’s My Tax Refund” will show you the status of your refund while the Earned Income Tax Credit Assistant can tell your eligibility for the tax credit. All this information is available 24/7.

Another great tool found on the IRS website is the Free File. There are various software under Free File such as TurboTax 2014 that you can use to file your taxes electronically. Filing taxes electronically is not only convenient, but guarantees you faster refunds especially if used with direct deposit.

Free File is very useful for those who may have earned less than $58,000 in the last year. You can also use TurboTax 2014 with the same limit if you are in the military. The software has a simple interactive interface with a procedural approach that makes it easy to use for anyone. Those earning more than $58,000 can use Free File Fillable Forms to compute their taxes online.

The Volunteer Income Tax Assistance (VITA) is a program that enables people who make under $52,000 yearly to file their taxes online freely. Tax Counselling for the Elderly is also critical in helping older members (60 years and above) of the community file their taxes. Furthermore, it can be useful for those with low to moderate earnings.

These VITA programs are available everywhere within the country. To find one closest to you, simply search for VITA on the IRS website and select “Free Tax Return Preparation for You”. You can call 800-906-9887 to find out the same information too.

Lastly, those who do not have access to the internet can call the IRS on 800-TAX-FORM (800-829-3676) to get tax forms and publications. You can call 800-829-4477 to know the status of your refund and listen to more than 150 recorded messages on different tax related issues.