The Tax Preparation Blog

Archive for the ‘Tax Rates’ Category

Question: New tax year the 10p starting savings rate?

the new rate for savings is 10p in the pound for the first £2232.00.Some people will get it some will not.My income is under the personal yearly allowance so I do not pay tax.Now would I get the 10p savings rate on my savings because of this?
Thank you Scotty

Answer: I think you have some things muddled up here.
Firstly INCOME TAX
Last year, income tax on the first £2230 that you earned after your personal allowance – was taxed at 10p in the pound.

So if your personal allowance was £5225 for example, then you pay no tax on this amount, then 10p in the pound on earnings from £5226 to £7455, then the basic rate on earnings above £7455.

this 10p rate has been abolished for this tax year 2008/9

When it comes to savings, tax is charged on any interest you earn. So if you have some money in the Building Society and it earns you £100 in interest for the year – then the building society will only pass on £80 to you, because the tax rate is 20% and this is deducted and passed on to the government on your behalf. If you are a non-taxpayer then you can fill in a form and make a declaration that will pay yor interest in full – ask your savings institution for more info.

Finally dividends on shares – have had10% tax already deducted (just like the building society example above) before the dividend is passed on to you.

Hope this clears a few things up.

Tax seminar helps prep for season

ZANESVILLE — The year 2009 was full of highs and lows, but one thing many people appreciate the most is the first-time homebuyer tax credit.

Income Tax Savings of $4,500

Question: If you made $50,000 a year, paid 25% federal income tax, which left you with $37,500……….?

and you paid this same rate until 2011 (with no pay raises), and in 2011, on that same $50,000, you were left with $38,000, which do you think is better?

a. the taxes before 2011

b. the taxes after 2011

Now match the candidate with each answer. (Remember, one will cut taxes, and one will simply make the current tax cuts permanent.) (This also assumes you file single.)

Answer: b. taxes after 2011

I think Obama is b and McCain is a. Just a guess.

Estate planning: Death of the estate tax

On Jan. 1, 2010, after nine years of steady decline (under 2001 enacted legislation), and despite last ditch Congressional efforts to revive it, the estate tax died.

Dems’ Job-Killing Policies Highlighted at House GOP’s “Where Are The Jobs?” Roundtable

Question: Why are the Democrats going back on their promise not to raise taxes on the middle class with Health Care?

My question is based on an article in the WSJ:

“In order to raise enough money to make their plan look like it won’t add to the deficit, House Democrats have deliberately not indexed two main tax features of their plan: the $500,000 threshold for the 5.4-percentage-point income tax surcharge; and the payroll level at which small businesses must pay a new 8% tax penalty for not offering health insurance.”

“Americans of a certain age have seen this movie before. In 1960, only 3% of tax filers paid a 30% or higher marginal tax rate. By 1980, after the inflation of the 1970s, the share was closer to 33%, according to a Heritage Foundation analysis of tax returns.”

So basically, the Democrats are lying to us when they say our taxes aren’t going to increase. When it clearly has in the past with their legislation and it clearly will in the future.

Answer: I think Pelosi and Obama think all this spending is going to work and be shining little stars. I will bet my last dollar when you throw in cap and Tax our economy will tank into a full depression. Our dollar is weaker daily and other countries do not want to loan to us, period. What are these clowns thinking??
I can not believe some of these people. You do not get ANYTHING for FREE! Of course our Taxes will go up how would they pay for this debacle otherwise, think about it.

Estate tax set to expire Thursday

Benjamin Franklin’s maxim that “nothing is certain but death and taxes” remains true. But a congressional stalemate has left the federal estate tax, the levy on assets left to heirs, in doubt for at least part of 2010.

Budget 2010 (Part 5): Maximum individual income tax rate cut to 26%, higher personal relief

How many years have you been paying your current mortgage? If it has been at least two years old you could have it refinanced by a new loan. Real estate property prices are always on the rise and no doubt, you will be able to get a better rate for your home. Some aspects like the worth of your house, you earnings and your current credit rating and the existing interest rates as dictated by general economic conditions will affect your mortgage rate.

Actually, these aspects may have already improved or deteriorated for most people from the time they took their first mortgage. All over the country, prices for real estate properties have constantly escalated giving the properties extremely good rates. Also, your income could have already improved over the last two years. Of course, it would not be the same for everyone. But if you are one of the lucky ones then it could positively affect your mortgage rating. If you have been a good payer all these time, your credit rating will definitely be better, and the current interest rate will benefit you.

Rates

If your mortgage rate is not fixed, if will definitely go with the prevailing rates which could either go up or down. Yet, if it has been fixed, then even if the prevailing rates fall, it will have no bearing on your rate. However, if it surges, then you will be protected from additional repayment costs. Right now, interest rates are still okay and there are so many mortgages that have been at fixed rates which are much higher than what the lenders are currently offering.

If you find yourself in the same situation, then it could be a good idea to opt for mortgage refinancing. This simply means that you will get a new mortgage at better rates so you can pay off your present mortgage. Of course the financing company will charge you certain fees for fixing up the loan. Additionally the old mortgage may require fees for early repayment so see that you are aware of all the fees you have to pay before carrying on. Generally, the fees are negligible compared to the amount of savings one can have by refinancing. Generally, the refinancing fees will take at most two months savings. After that, it will be all savings and definitely something well worth taking into consideration.

Tax cuts in advance of HST take effect

Provincial tax cuts meant to offset the upcoming harmonized sales tax took effect on Jan. 1. Ontario taxpayers will see a 16.5% cut in the tax rate on their first $37,106 of taxable income.[...]

Do You Pay the Same Tax Rate as Donald Trump?

Question: In tax returns, “married filing separately”, I have to report my wife’s income. Do I also add in her tax paid?

When you file married filing separately, they ask you to include your income and spouse’s income. But then there’s one field with “federal income tax withheld”. Is this the TOTAL income tax withheld from me + my wife as one total? Or just my income tax withheld?
My mistake. It’s true, it only asks for income, as in mine only. We’re trying both joint and separate returns and we got confused…

Answer: Please go back and re-read the instructions.

When you file Married Filing Separately, you do NOT show your spouse’s income on your separate returns! Nor to you include the amount of tax withheld from your spouse’s wages.

Different rules apply if you are in a Community Property state. However if you are in a Common Law state, you NEVER show ANY of your spouse’s income on a MFS return — you ONLY report your income. You must show your spouse’s SSN but that is all that you show regarding your spouse.

What You Need to Know About Taxes in 2010

How can you maximize your tax return and what should you do if you get an e-mail from the IRS?

Requirements of a Common-Law Marriage | Family Law