Taxes

Last week, my daughter celebrated her first birthday. Marking that important milestone for my family allowed me to reflect on the difference that just a year can make. Today I’m celebrating another important milestone for my family and for yours—the one hundredth birthday of our federal personal income tax—and reflecting on its benefits for all of us.

One hundred years ago today, President Wilson signed the Revenue Act of 1913 into law, giving birth to the personal income tax. Although that first personal income tax looked a lot different than it does today, its adoption signified an important shift in our country’s approach to raising revenue. In honor of this important birthday, here are two things to celebrate about the federal personal income tax—and one suggestion to make the next hundred years even better. Read more »

This morning, a Senate subcommittee is holding a hearing on "Offshore Profit Shifting and the U.S. Tax Code," which will include testimony from Apple CEO Tim Cook, as well as Apple's CFO and Head of Tax Operations. 

You might ask why Apple is the subject of this congressional scrutiny; after all, Apple did pay about $6 billion in taxes in the U.S. last year on its American operations, which is more than some major corporations that managed to avoid paying any federal income tax at all. But as Senator John McCain observed, while "Apple claims to be the largest U.S. corporate taxpayer... by sheer size and scale, it is also among America's largest tax avoiders." 

Specifically, a new report from congressional investigators concludes that Apple used a web of offshore tax shelters to avoid paying billions in taxes to the United States and other countries. The investigators found that Apple's tax avoidance strategies shielded at least $74 billion from the Internal Revenue Service between 2009 and 2012. By officially locating subsidiaries in places like Ireland while managing them from company headquarters in California, Apple was able to, in effect, make the subsidiaries "stateless" — so they were exempt from taxes anywhere in the world. In its own analysis of Apple's financial reports, Citizens for Tax Justice found that "Apple has paid almost no income taxes to any country on its $102 billion in offshore cash holdings." 

Pretty sneaky, right? But that doesn't mean it's illegal. The U.S. tax code makes it awfully easy for Apple and other giant corporations to avoid paying taxes. Read more »

In my first Tax Day blog post, I focused on one really unfair aspect of our tax code: the wealthiest Americans often benefit more from all sorts of deductions and exclusions than middle-income taxpayers do.

But the super-rich aren’t the only ones who might be getting a better deal from the tax code than you. If you paid even a dollar of federal income tax last year, you paid more than Facebook did. And more than FedEx. And more than Southwest Airlines. Every year, these and many other large, profitable corporations manage to take advantage of loopholes and special preferences in the tax code to avoid paying their fair share of taxes; in fact, these companies often end up with a big tax rebate. Today, Citizens for Tax Justice is calling out these tax dodgers, making the rounds in D.C. with a giant mobile billboard:

Happy Tax Day, everyone! When it’s time to pay my taxes, I try hard to focus on all of the important programs and services those dollars support. (You can see exactly how your own federal income taxes are spent using this nifty Tax Receipt from the National Priorities Project.)

But I have to admit – I’m also thinking about the people who make a whole lot more money than I do and get a better deal from the tax code. The fact is, super-rich taxpayers currently benefit much more than ordinary taxpayers like me from many federal income tax deductions and exclusions. For example, for a wealthy taxpayer in the top tax bracket (39.6 percent) who pays $10,000 in mortgage interest, the mortgage interest deduction is worth $3,960. For a middle-income taxpayer in the 15 percent tax bracket who pays the same $10,000 in mortgage interest, the deduction is worth only $1,500.

This post is the ninth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

So today is the deadline for filing your federal tax return (and most state returns). Although many people associate filing their taxes with feelings of confusion, stress, and general misery, tax time can also help give low- and moderate-income families a financial boost through federal tax credits like:

• Earned Income Tax Credit, designed to supplement the wages of low- and moderate-income families (those who earned less than $50,270 in 2012). This credit is worth up to $5,891 and is available as a refund for families who owe little or no income tax.
• Child Tax Credit, designed to help families offset some of the costs of raising children. This credit is worth up to $1,000 per child. Families who owe little or no income tax can receive some or all of this credit as a refund if they earned at least $3,000 in 2012.  
• Child and Dependent Care Tax Credit, designed to offset some of the child and dependent care costs that families incur in order to work. This credit is worth up to $2,100, though the amount that can be claimed is limited by the amount a family pays in federal income taxes.

And many states offer their own versions of these credits. Read more »

This post is the eighth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

April 15th is fast approaching, which means the time to file your taxes is running out. I know what you’re thinking – “I’d rather watch paint dry.” I felt the same way. Filing my taxes ranks high on my list of most boring life activities, but unlike waiting in endless airport lines or sitting in traffic, it comes with a great reward.

After filing my taxes, I felt accomplished – I crossed off a big item on my to-do list, I was now compliant with the law, and I had fulfilled my civic duty. But best of all, I knew I had a nice refund coming my way. Little did I know how quickly it would arrive. I filed my federal tax return online on March 26 and by April 3 the U.S. Treasury Department had deposited my refund into my bank account. Read more »

Tax Day (April 15) is nearly upon us. Maybe you’re scrambling to file, or maybe you’re happy to have a refund on the way. Whatever your feelings about your own taxes, it’s important to remember that taxes are essential to fund critical investments – everything from roads and bridges to education and life-saving scientific research.

But perhaps you’re thinking, “Wait a second. The roads where I live are crumbling, and the schools aren’t in such great shape either. And Washington just cut funding we need to improve our roads and our schools and help families who are struggling. I don’t think our tax code is working the way it should.” Well… you’re right. The tax code contains a bunch of special-interest loopholes and preferences that are used by the wealthy and big corporations to avoid paying their fair share of taxes. Some of the richest Americans pay a lower tax rate than middle-class families do, and some very profitable corporations manage to pay no federal income tax at all.   Read more »

This post is the seventh in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

Tax Day is right around the corner! If you haven’t filed your taxes yet, here are the top 8 things you should know before April 15.

1. You may be eligible to have your taxes done for free.

If you make less than $51,000 a year, you may be eligible to have your taxes filed for free through an IRS-sponsored Volunteer Income Tax Assistance (VITA) sites. http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers

If you are over age 59, you may also be eligible, even if you earn a moderate income. The IRS-sponsored Tax Counseling for the Elderly (TCE) and the AARP-sponsored Tax-Aide sites both offer free tax services to individuals 60 years of age or older. For more information, check out this article.

2. Where to find a free tax service preparation center near you.

To find out where you can go to get free help with your taxes at IRS sponsored sites, go to http://irs.treasury.gov/freetaxprep/ or call the IRS toll-free at (800) 906-9887. This website will also tell you if the site needs an appointment or accepts walk-ins, so you can plan your visit.

For Tax-Aide sites, go to: www.aarp.org/money/taxes/aarp_taxaide/ or call 1-888-OUR-AARP. Read more »

Did you see the first video from NWLC and the National Priorities Project explaining why budget and tax issues are women’s issues? No? Then stop what you’re doing and watch it here.

Now that you’ve seen it, you’re eager for more, right? Well, my friend, you’re in luck. In Part 2, you’ll learn how Congress can protect programs that serve women and families by requiring the wealthy and large corporations to pay their fair share of taxes. Watch the second video now:

After a couple of weeks of intense debate over budget plans proposed in the House and Senate, you may feel that this week’s Congressional recess is a welcome break from talk of taxes and spending, deficits and debt. But Congress is back in session April 8 – and the budget battles will return, too.

  Read more »