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How long should you keep your tax records?

How long should you keep your tax records?

Published 1/25/12  (Modified 2/1/12)

How long should you keep your tax records? By Aaron Crowe

Somewhere deep in every home office, thrown in haphazardly or filed semi-neatly in a file drawer, are years' worth of tax returns and records that support them.

Sooner or later the files get so big that the drawer or cabinet is busting open, creating a paper mess that could be explored on A&E's "Hoarders" TV show. My one file drawer of old tax files probably isn't enough to get my office profiled on the show, but I don't want to take any chances. I'm cleaning it up...

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Will tax reform cost you? 5 ways to tell

Published 5/16/11  (Modified 5/17/11)

Will tax reform cost you? 5 ways to tell By Richard Barrington

Taxes are such a hot-button topic that even the language of taxation is sensitive. What sounds like tax reform or simplification to some people comes off as code for tax increases to others.

Differences over tax policy are more than just perception, because there will be winners and losers from any changes in the tax code. In fact, because of the huge national debt, tax changes are a less-than-zero-sum game, meaning that winners and losers won't cancel each other out: when all is said and done, there will be a net price to pay in order for federal income taxes to address the national debt.

Prominent tax proposals

There are endless possibilities for federal income tax reform, but here are three major themes:

  1. Simplification of the federal income tax code. This means getting rid of loopholes in the corporate tax code, and reducing the number of tax deductions available to individuals.
  2. Adjusting federal tax brackets. An oft-mentioned trade-off for reducing loopholes and individual deductions is that it would enable tax rates to be lowered in at least some federal tax brackets. This was the essence of the Reagan tax reforms in the 1980s - tax rates were lowered in exchange for simplification which reduced many loopholes and deductions.
  3. Raising taxes on high incomes. Traditionally, taxpayers with the greatest
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Can't wait for a refund? Refund Anticipation Loans will cost you

Published 3/21/11  (Modified 8/5/11)

Can't wait for a refund? Refund Anticipation Loans will cost you By Tom Tennant

You've got bills to pay and a creditor or two reminding you that you're a couple weeks behind on your payment. Maybe your car is in desperate need of repair. Or, heck, could be that vacation is around the corner and you'd like some extra "walkin' around" money.

No matter the reason, the promise of quick cash by way of an "instant tax refund" is pretty darn alluring. The problem is, that fast federal tax refund isn't a refund at all. It's a loan - and an ultra-expensive one at that.

We're talking tax preparation fees, interest rates that could soar into the triple digits, and the possibility that your refund will be less than your loan amount.

Which begs the question, if you can file your taxes electronically, possibly for free and with help from local non-profit groups and the IRS, and then have Uncle Sam direct deposit your refund straight into your checking account in under two weeks, why give so much of that refund away to get cash in your pocket the same day?

It just doesn't make sense.

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Learn how to get your federal income tax refund fast

Published 3/14/11  (Modified 3/29/11)

Learn how to get your federal income tax refund fast By Jim Sloan

I drove by one of those sign wavers dressed up as the Statue of Liberty this morning. Maybe you've seen one or two of them in your town. They wear green costumes and direct people to the offices of their employer, Liberty Tax Service, which prepares tax returns for people.

Weird thing was this particular sign waver had a beard. The Statue of Liberty endures some pretty harsh conditions there in New York Harbor, but last time I checked things weren't so bad that the towering lady had grown a beard.

Other changes expected in your federal income tax return

There are some other things about this federal income tax season that are off kilter, as well. For one thing, outfits like Liberty Tax Service and other businesses that figure out your tax deductions for you are not likely to be making as many refund anticipation loans as they used to.

Those loans are attractive to many people who can't afford to pay to have someone prepare their return. With a refund anticipation loan (RAL), though, they can have their return completed and e-filed and the company will give them a check right away--minus the "processing fee" and the tax preparation fee.

The tax preparation companies' RAL business has been handicapped this year by the IRS's decision to stop providing tax preparers with "debt indicators," which let the companies know when their client's refund might be withheld for

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Federal income tax filing: 5 common mistakes -- and what they can cost you

Published 2/5/11  (Modified 3/22/11)

Federal income tax filing: 5 common mistakes -- and what they can cost you By Peter Andrew

Long before he became a cop, Kevin was my best friend. So when he joined the police, it seemed natural that I'd often join him and his colleagues for an after-work drink. They were a great bunch, and I really enjoyed the time I spent with them. But as they told their job-related stories, I'd frequently think to myself how much I enjoyed being their friend, and how little I'd like to meet them professionally.

I don't know any IRS agents, but I suspect that the same would apply. They're probably charming people socially, but you really, really don't want to spend time with them when they're working.

Luckily, there are simple things you can do when filing your federal income tax return that can help you avoid finding out whether I'm right.

Beware of these 5 common mistakes to avoid Tax Trouble

Here are five common mistakes routinely made on taxes, and how they can be avoided:

  1. You didn't double check

    Among the most common federal income tax filing mistakes are some that are so embarrassingly elementary that you wouldn't want to admit to them outside a confessional. So, before mailing your return, ask yourself these three questions:

    • Have I signed and dated the form?
    • Have I entered and triple-checked my social security number?
    • Have I attached Copy B of the W-2 form(s) my employer(s) sent me?
  2. You got the math wrong

    According to the IRS, the most common mistake of all is people making basic errors in their arithmetic. You can

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What an Internet Tax means to you

Published 1/31/11  (Modified 3/22/11)

What an Internet Tax means to you By MoneyBlueBook

I recently bought a laptop over the Internet. Shopping online, I found a great price and I didn't have to drive around to different stores to compare products and features. But is it fair that I didn't have to pay any sales tax because I bought the laptop online?

Retailers say the playing field should be leveled out with an Internet sales tax that would be collected at the point of purchase. Now I am not fan of paying more taxes, but the thought of helping put a local company out of business because I like to shop in my pajamas doesn't sit well with me either.

Taxing e-commerce

During President's Clinton administration, the Internet Tax Freedom Act was signed into law to protect commercial aspects of the Internet. The law prohibits federal, state and local governments from taxing access to the Internet or adding taxes that would limit Internet usage. The Internet Tax Freedom Act (ITFA) has now been renewed through Nov. 1, 2014, but the law does not address the collection of sales tax. So a few states have made it mandatory for online retailers to charge a sales tax, while a few others left the burden on the consumer to self-report their sales tax.

The latest twist is that some states have now decided that large retailers like Amazon or Overstock should be forced to collect sales tax even

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