Taxes 
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Where do I mail my tax return?

I don’t usually dispense much information about filling out IRS forms manually because I am a big believer in e-filing. There are, however, certain times when it’s necessary to mail in a form and where the benefits of e-filing are reduced significantly. For example, if you owe taxes, you can buy yourself a few extra days by mailing in the form which can mean the difference between bouncing a check and keeping the IRS happy.

Warning: These addresses are out of date. Please visit the IRS for the latest addresses.

That said, it’s not always easy to find where you need to mail something because the addresses change. On most forms, there will be a section that indicates where you should be mailing it. In the event you can’t find the instructions or you picked up just a form, here is a helpful list of addresses, organized by your state. Where you mail your tax return depends on where you live and whether you have included a payment and I recommend do a “Find” on this page (Ctrl-F) for your state, as this won’t be in alphabetical order because multiple states mail their forms to the same address.

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 NEWS 
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New Millionaire Income Tax Bill Introduced

Representative Jan Schakowsky (D-Illinois) introduced new legislation, the H.R. 1124 Fairness in Taxation Act, on Wednesday, March 16th, that would introduce new tax brackets for those who earned more than $1 million dollars a year. The current top income tax rate is 35% on income starting at $373,650 and the new legislation would introduce five new brackets, starting at $1 million dollars.

The new brackets would be:

  • $1 – 10 million: 45%
  • $10 – 20 million: 46%
  • $20 – 100 million: 47%
  • $100 million – 1 billion: 45%
  • $1 billion+: 45%

I don’t know what’s more stunning: the reality that there are people who make over a $1 billion a year or that there are people who make over a billion a year and pay the same tax rates as someone making a fraction of that.

In addition to adding new brackets, the bill would also tax capital gains and dividend income as ordinary income for those whose income was over $1 million. According to the Citizens for Tax Justice, these new rates and changes would raise $78 billion, though it’s unclear how that number was calculated.

As for historical precedence, the last time the top rate was over 40% was back in 1986 when the top rate was 50%. Just a few years earlier, in 1981, the top rate was 70% for incomes over $215,400 ($524,421.99 in 2011 dollars). Before you think those rates were high, the top rates have always been very high, peaking into the ninety-percents through World War 2 until the early 60′s. The Tax Foundation has a list of historical tax rates since 1913.

What do you think of these new rates? Would youl ike to see them implemented?


 Taxes 
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Understanding How Income Is Taxed

Taxes!Remember when Warren Buffett famously declared that he paid a lower tax rate than his administrative assistant? It probably confused a lot of people who aren’t familiar with the myriad of ways our income is taxed and that confusion can lead to misplaced frustration and anger. With how charged politics can be, it’s not uncommon for people to get really passionate and fired up over things that they’ve misunderstood.

A prime example, outside of money and politics, is the issue of vaccines and autism. The link between the two was based heavily on the fraudulent work of Dr. Andrew Wakefield in what has now been declared an “elaborate fraud.” Yet autism is a very real problem, one whose cause is still unknown, and people still insist on not vaccinating their children. While I think I have a right to tell people what to do, the fact that this vehement rejection of vaccines is based mostly on a fraud is just one example of this.

So today, I hope to explain how our income is taxed and hopefully that will remove some of the existing, incorrect, ideas some people have about our tax structure.

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 Taxes 
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What is Form 6251: Alternative Minimum Tax

Form 6251 AMTForm 6251: Alternative Minimum Tax (Individuals) is the form taxpayers must fill out to determine whether or not they are subject to the dreaded Alternative Minimum Tax (AMT). The AMT is another way of calculating your tax liability and those subject to its wrath will see their tax liability increase, as certain deductions are disallowed under AMT.

As scary as the AMT itself is, the form is only two pages with 54 “questions.”

Simple, right?

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 Your Take 
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Your Take: Plans for Your Tax Refund?

Last year, the average tax refund was a cool three thousand bucks. While we don’t know what the average tax refund will be for the 2010 tax year, chances are it’ll be pretty sizable as a result of all the different stimulus and tax credits of the last year. While I’ve long talked about adjusting your tax withholding (and reasons why you wouldn’t want to adjust), most people don’t do it. Some people are concerned about penalties, others prefer this “forced savings,” and others just don’t want to bother.

We learned yesterday that most people were planning on paying down debt or putting it towards savings, while others were going to buy a big ticket item or go on a vacation. The question we have for you today is – what do you plan to do with it? Save for a rainy day? Spend it on a vacation or new television? Put it towards a downpayment or against existing debt?


 NEWS 
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Some Americans Plan Fun for Tax Refund

The National Retail Federal did a survey recently that asked Americans what they were going to do with their tax refund this year. 13.2% said they would be buying a big ticket item like a new television or some furniture, up from 12.5% last year. 11.9% plan on taking a vacation, which is more than the 10% who planned on taking a vacation with it last year. 29.7% went with the ho-hum answer of spending it on everyday items.

Before you start complaining about people being irresponsible, it turns out that most people will either pay down debt or put it towards savings. 41.9% will use their tax refund to pay down debt, 42.1% will be using it for savings. What’s interesting is that since 2007, the percentage of respondents who said they’d pay down debt went up and then down, peaking at 48% in 2009. 41.9% is the lowest it’s been since 2007, when it was 43.1%. Savings rates, however, have been steadily increasing since 2008. (One caveat, this was a survey of what people planned on doing with their refund… how many actually saved or paid down debt is another story!).


 Taxes 
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How to Check Your Tax Return Status

Last year, the average tax refund was over three thousand dollars. Since the tax brackets were extended an additional two year and many of the same deductions and credits along with it, we have every reason to believe that people will still be getting sizable refund checks (let’s be honest, despite all the “adjust your withholding” articles, very few people optimize this for fear of messing up).

So, if you’ve filed your return already and are anxious to get that check (or even better, see the direct deposit hit your account), the IRS has provided a few ways for you to check your tax refund. The easiest way is to go to the IRS website and use their Where’s My Refund tool. You’ll need your social security number, your filing status, the exact whole dollar amount of your refund, as calculated when you prepared your return. You’ll also need to give them 72 hours after the IRS acknowledges the receipt of your return and, if you filed a paper return, you’ll need to extend that to three to four weeks.

If you’re an iPhone app addict, you can always download the IRS2Go which puts the same functionality in a nice iPhone application. I think it’s better to use the IRS website directly, since the app doesn’t seem to have much more utility beyond checking your return, but it’s ultimately a matter of personal preference (neither is more or less secure).


 Taxes 
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Watch Out for these Expired Tax Breaks

ExpiredDuring the last two years, many of us have become accustomed to a number of tax breaks that were instituted to help during a time of economic difficulty. However, these tax breaks were never meant to last forever — and they haven’t. Tax breaks that you might have been counting on are disappearing, and you might be in trouble.

In some cases, the disappearing tax breaks are a bit of a nuisance. In other cases (especially for those who should have taken a required minimum distribution on an IRA in 2010), though, the absence of a tax break you have come to rely on might be a little more difficult to deal with financially. As you file your taxes, here are some things to be aware of with regard to a reduction in tax breaks.

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