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Taxes

A New Twist on Tax Day

Happy Taxpayer Pride Day! Yes - you read that right, and no - I haven’t lost my mind.

For many, April 15 brings feelings of doom and gloom. It’s the day you might have to hand over some of your hard earned money to Uncle Sam (and if you’ve waited until the last minute, it’s the day you’ll have to stand in a long line at the Post Office with your fellow procrastinators). But we, inspired by our brilliant friends at NETWORK, will be celebrating April 15 as a day of joy and gratitude.

Why?

When you think about it, the world around you is fueled by tax revenue. Without taxes, we’d be less safe, less educated, and all around less content. Safety first: our tax dollars support police officers, fire fighters, the uniformed military, traffic lights, stop signs, street lamps, crossing guards, guardrails, airport security. I could keep going but I think you get the picture. Taxes support our elementary, middle, and high schools, state colleges and universities, cutting edge research that can both change and save lives, health care for the over-65 crowd (that’ll be you someday!) and the poor. Read more »

2 out of 19?! Paid Tax Preparers Receive a Failing Grade

2 out of 19.  According to a new report from the GAO, 2 out of 19 is the number of randomly selected paid tax preparers who calculated the correct refund amount on tax returns.  That means that fully 89% of the time, tax returns prepared by paid preparers are incorrect—ultimately putting the individuals and families who file them at risk of paying penalties or even facing criminal sanctions

This is an especially serious problem for low-income families, the majority of whom rely on paid tax preparers to help them file their taxes.  In 2011, 60% of EITC recipients—or 16 million families—relied on a paid tax preparer to help them with their taxes.  These are families whose tax refunds provide an infusion of cash that helps them pay down debt, cover major expenses like car repairs, and otherwise make up for all those other months when—no matter how many corners they cut—ends just don’t quite meet.  Read more »

Tax Day Cometh - And That Can Mean Help for Millions of Families

As the April 15 tax filing deadline approaches, NWLC and its partners want you to know about federal and state tax credits for which working families may be eligible -- and how to get help filing tax returns.

Many families are still struggling to recover from the recession, and keeping up with their bills can be a challenge. So it’s important now, especially for families with children, to claim federal and state tax credits that can to help them make ends meet.  To do that, families must file tax returns.

Families may be eligible for:    Read more »

Obamacare and Taxes: Two Important Tips for Avoiding a Headache (and a Wallet Ache!) Next Year

Did you recently sign up for health insurance through your state’s health care marketplace?  If so, hurray! I’m sure I don’t have to tell you why having affordable health insurance is a great thing. (If you or a loved one doesn’t currently have health insurance, and you haven’t signed up through the Marketplace yet, it’s time to start shopping—the open enrollment period ends in a little over a month, on March 31.)

But wait, you ask—what do taxes have to do with signing up for health insurance? Quite a bit, it turns out. The IRS just released some health care tax tips—from those, here are a couple of really important highlights to keep in mind between now and next tax season. And yes, I did say next tax season—what you know now will definitely help you later. Read more »

This Tax Season, Equal Treatment for Same-Sex Married Couples

"The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment."

U.S. v. Windsor

“In light of the Windsor decision, the [Internal Revenue] Service . . .concludes that the terms “husband and wife,” “husband,” and “wife” should be interpreted to include same-sex spouses.”

IRS Rev. Rul. 2013-17

 

I know this might sound strange, but filing my taxes the year after my wedding made me feel more married.  I remember it distinctly—around this time of year, the W-2s arrived. My husband and I worked on the tax return together, and filed using the Married Filing Jointly status. There was something about that tax form recognition that felt weighty and real. Official.

So when the Supreme Court struck down a portion of the Defense of Marriage Act (DOMA) in U.S. v. Windsor last June, I thought about that feeling that I had at tax time in the year after I got married. And no joke—that very thought made me tear up. Why? Simply put, Windsor was huge decision, both symbolically and practically. It provided, for the first time, federal recognition and protections for same-sex, legally married couples. Just one example of the decision’s far reaching implications: this tax season, if a couple is legally married in a state or foreign country that recognizes same-sex marriage, they are considered married for federal tax purposes. This is a welcome change from previous tax years, when, because of DOMA, same-sex married couples were denied the ability to file their federal tax returns using a married status. Read more »

Raising the Bar on Paid Tax Preparers—a Proposal that Works for Working Families

This week, the Chairman of the Senate Finance Committee released several initial proposals to overhaul the tax code. One of these proposals deals with changes to the administration of the tax laws. So what do administrative tax law changes have to do with family economic security, you ask? A lot. They can help ensure that eligible families receive the tax credits they’re entitled to—and don’t fall victim to expensive and dangerous scams.

Together, the Earned Income Tax Credit (EITC) and the Child Tax Credit are routinely responsible for lifting millions of people out of poverty. They are important lifelines for low-income families, providing a financial safety net that families most often use to pay bills, repair housing, and maintain transportation.

Unfortunately, every tax season, unscrupulous paid tax preparers take advantage of low-income taxpayers. They charge exorbitant fees—a true travesty considering the availability of free tax preparation help. They provide misinformation. In fact, earlier this month, the fourth largest tax preparation company in the country was shut down by the Department of Justice for just these practices, among others. And after all of that—they often produce error-riddled tax returns [pdf]. Read more »

We Agree: Close Tax Loopholes Benefiting the Rich and Corporations

Americans for Tax Fairness has released the results of a new poll on taxes and spending that should define the issues in current negotiations over the federal budget. 

Last month, Congress passed, and the President signed, a deal to end the shutdown, suspend the debt ceiling, and fund the federal government through January 15, 2014. What the bill left undone is a plan to fund the government after January 15. To that end, House and Senate leaders have agreed to meet in a conference committee on the FY 2014 budget, with the goal of reaching agreement on a budget plan for the remainder of the year by December 13. 

The Senate-passed budget protects core safety net programs, proposes new investments to expand early childhood programs and grow the economy, and calls for a balanced package of revenue increases and spending cuts to replace the across-the-board federal budget cuts of the sequester; in contrast, the House-passed budget would end the sequester only for defense programs, while making even deeper cuts to programs that support low-income Americans and giving trillions in tax cuts to millionaires and corporations. 

There’s no guarantee that the conference committee will be able to reach agreement, and no penalty if they don’t — at least for Congress. Read more »

IRS to Taxpayers: Beware of Scammers!

On Halloween, the IRS issued a warning about a definite TRICK — a sophisticated phone scam targeting taxpayers, including recent immigrants, across the country.

The scam involves a call from someone claiming to be from the IRS, who tells the victim that they owe the agency money—and asks for payment through a pre-loaded debit card or wire transfer. Victims are threatened with arrest, deportation, or the suspension of a business or driver’s license if they don’t comply.

Unfortunately, the scam is pervasive—according to the IRS, it is impacting people in almost every state in the country. It is also highly sophisticated—scammers are able to provide victims with the last four digits of their Social Security number, and also imitate the IRS’s toll-free phone number on caller ID. 

If you get a phone call from someone claiming to be from the IRS, here’s what to do:

  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.

Happy 100th Birthday, Personal Income Tax! Two Reasons to Celebrate (and One Suggestion to Grow On)

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 »

Apple is a Tax Dodger. Blame the Tax Code.

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 »