Saturday, August 27, 2011

President Declares Emergency For Massachusetts http://ping.fm/W3lKt

President Declares Emergency For Massachusetts

WASHINGTON -- The U.S. Department of Homeland Security's Federal Emergency Management Agency (FEMA) announced that federal aid has been made available to Commonwealth of Massachusetts to supplement the commonwealth and local response efforts in the area due to the emergency conditions resulting from Hurricane Irene beginning on August 26, 2011, and continuing.

Wednesday, August 24, 2011

Monday, August 22, 2011

Seven Tax Tips for Recently Married Taxpayers



With the summer wedding season in full swing, the Internal Revenue Service advises the soon-to-be married and the just married to review their changing tax status. If you recently got married or are planning a wedding, the last thing on your mind is taxes. However, there are some important steps you need to take to avoid stress at tax time. Here are seven tips for newlyweds.
  1. Notify the Social Security Administration Report any name change to the Social Security Administration so your name and Social Security number will match when you file your next tax return. File a Form SS-5, Application for a Social Security Card, at your local SSA office. The form is available on SSA’s website at www.ssa.gov, by calling 800-772-1213 or at local offices.
  2. Notify the IRS if you move If you have a new address you should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from www.IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
  3. Notify the U.S. Postal Service You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence or refunds.
  4. Notify your employer Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
  5. Check your withholding If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator available on www.irs.gov to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will give you the information you need to complete a new Form W-4, Employee's Withholding Allowance Certificate. You can fill it out and print it online and then give the form to your employer(s) so they withhold the correct amount from your pay.
  6. Select the right tax form Choosing the right individual income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.
  7. Choose the best filing status A person’s marital status on Dec. 31 determines whether the person is considered married for that year. Generally, the tax law allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but usually filing jointly is more beneficial.
For more information about changing your name, address and income tax withholding visit www.irs.gov


IRS Summertime Tax Tip 2011-20

Thursday, August 18, 2011

Credit Reports: What You Should Know


How do lenders determine who is approved for a credit card, mortgage, or car loan? Why are some individuals flooded with credit card offers while others get turned down routinely?

Because creditors keep their evaluation standards secret, it is difficult to know just how to improve your credit rating. It is important, however, to understand the factors and to review your credit report periodically for any irregularities, omissions, or errors. Reviewing your credit report annually can help you protect your credit rating from fraud and ensure its accuracy.

Credit Evaluation Factors

Many factors determine your credit. Here are some of the major factors considered:

Age
Residence
"Authorized user" payment history
Checking and savings accounts
Bankruptcy
Charge-offs (Forgiven debt)
Child support
Closed accounts and inactive accounts
Jobs
Payment history
Recent loans
Collection accounts and charge-offs
Cosigning an account
Credit limits
Credit reports
Debt/income ratios
Department store accounts
Payment history/late payments
Finance company credit cards
Income/income per dependent
Mortgages
Revolving credit
Name/alias
Number of credit accounts
Fraud
Inquiries

These factors may be used, and weighted, in determining credit decisions. Credit reports contain much of this information.

Obtaining Your Credit Reports

Credit reports are records of consumers' bill-paying habits. Credit reports are also called credit records, credit files, and credit histories and are collected, stored, and sold by three credit bureaus, Experian, Equifax, and TransUnion.

Recent changes to the Fair Credit Reporting Act (FCRA) require that each of the three credit bureaus provide you with a free copy of your credit report, at your request, every 12 months.

If you have been denied credit or believe you've been denied employment or insurance because of your credit report, you can request that the credit bureau involved provide you with a free copy of your credit report - but you must request it within 60 days of receiving the notification.

Disputing Errors in Your Credit File

The Fair Credit Reporting Act (FCRA) protects consumers in the case of inaccurate or incomplete information in credit files. The FCRA requires credit bureaus to investigate and correct any errors in your file.

Tip: If you find any incorrect or incomplete information in your file, write to the credit bureau and ask them to investigate the information. Under the FCRA, they have about thirty days to contact the creditor and find out whether the information is correct. If not, it will be deleted.

Be aware that credit bureaus are not obligated to include all of your credit accounts in your report. If, for example, the credit union that holds your credit card account is not a paying subscriber of the credit bureau, the bureau is not obligated to add that reference to your file. Some may do so, however, for a small fee.

Fair Credit Reporting Act (FCRA)

This federal law was passed in 1970 to give consumers easier access to, and more information about, their credit files. The FCRA gives you the right to find out the information in your credit file, to dispute information you believe inaccurate or incomplete, and to find out who has seen your credit report in the past six months.

Understanding Your Credit Report

Credit reports contain symbols and codes that are abstract to the average consumer. Every credit bureau report also includes a key that explains each code. Some of these keys decipher the information, but others just cause more confusion.

Read your report carefully, making a note of anything you do not understand. The credit bureau is required by law to provide trained personnel to explain it to you. If accounts are identified by code number, or if there is a creditor listed on the report that you do not recognize, ask the credit bureau to supply you with the name and location of the creditor so you can ascertain if you do indeed hold an account with that creditor.

If the report includes accounts that you do not believe are yours, it is extremely important to find out why they are listed on your report. It is possible they are the accounts of a relative or someone with a name similar to yours. Less likely, but more importantly, someone may have used your credit information to apply for credit in your name. This type of fraud can cause a great deal of damage to your credit report, so investigate the unknown account as thoroughly as possible.

We recommend an annual review of your credit report. It is vital that you understand every piece of information on your credit report so that you can identify possible errors or omissions.

If you need help obtaining your credit reports or need assistance in understanding what your credit report means, give us a call.

Wednesday, August 17, 2011

Tuesday, August 16, 2011

Back-to-School Tips for Students and Parents Paying College Expenses


Whether you’re a recent graduate going to college for the first time or a returning student, it will soon be time to get to campus – and payment deadlines for tuition and other fees are not far behind. The Internal Revenue Service reminds students or parents paying such expenses to keep receipts and to be aware of some tax benefits that can help offset college costs.

Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.

1. American Opportunity Credit  This credit, originally created under the American Recovery and Reinvestment Act, has been extended for an additional two years – 2011 and 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment. The full credit is generally available to eligible taxpayers whose modified adjusted gross income is below $80,000 ($160,000 for married couples filing a joint return).

2. Lifetime Learning Credit  In 2011, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student, but to claim the credit, your modified adjusted gross income must be below $60,000 ($120,000 if married filing jointly).

3. Tuition and Fees Deduction  This deduction can reduce the amount of your income subject to tax by up to $4,000 for 2011 even if you do not itemize your deductions. Generally, you can claim the tuition and fees deduction for qualified higher education expenses for an eligible student if your modified adjusted gross income is below $80,000 ($160,000 if married filing jointly).

4. Student loan interest deduction  Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, if your modified adjusted gross income is less than $75,000 ($150,000 if filing a joint return), you may be able to deduct interest paid on a student loan used for higher education during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.

For each student, you can choose to claim only one of the credits in a single tax year. However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis. You can claim the American Opportunity Credit for your sophomore daughter and the Lifetime Learning Credit for your senior son.

You cannot claim the tuition and fees deduction for the same student in the same year that you claim the American Opportunity Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For more information,please do not hesitate to contact me for help.

Thursday, August 11, 2011

Five Tax Scams to Avoid this Summer




Hiding income offshore, identity theft and return preparer fraud topped the IRS’s list of tax scams in 2011. The Internal Revenue Service issues an annual list of the top 12 tax scams, known as the “Dirty Dozen.” These scams are illegal and can lead to significant penalties and interest and possible criminal prosecution.

Here are five year-round scams every taxpayer should know about.

1. Hiding Income Offshore The IRS aggressively pursues taxpayers involved in abusive offshore transactions and the promoters who facilitate or enable these schemes. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks and brokerage accounts, or by using offshore debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or life insurance plans.
In February, the IRS announced a second voluntary disclosure initiative to bring offshore money back into the U.S. tax system. The new voluntary disclosure initiative will be available through Aug. 31, 2011.

2. Phishing Scam artists use phishing to trick unsuspecting victims into revealing personal or financial information. Scams take the form of e-mails, phony websites or phone calls that offer a fictitious refund or threaten an audit or investigation to lure victims into revealing personal information. The IRS never initiates unsolicited e-mail contact with taxpayers about their tax issues. Phishers use the information to steal the victim’s identity, access their bank accounts and credit cards or apply for loans. Please forward suspicious scams to the IRS at phishing@irs.gov. You can also visit www.irs.gov, keyword phishing, for additional information.

3. Return Preparer Fraud Dishonest tax return preparers cause trouble for taxpayers by skimming a portion of the client’s refund or charging inflated fees for tax preparation. They attract new clients by promising refunds that are too good to be true. To increase confidence in the tax system, the IRS now requires all paid return preparers to register with the IRS, pass competency tests and attend continuing education. Taxpayers can report suspected return preparer fraud to the IRS on Form 3949-A, Information Referral.

4. Filing False or Misleading Forms The IRS continues to see false or fraudulent tax returns filed to obtain improper tax refunds.

Scammers often use information from family or friends to file false or fraudulent returns, so beware of requests for such data. Don’t claim deductions or credits you are not entitled to and never willingly allow others to use your information to file false returns. If you participate in such schemes, you could be liable for financial penalties or even face criminal prosecution. The IRS takes refund fraud seriously, has programs to aggressively combat it and stops the vast majority of incorrect refunds.

5. Frivolous Arguments Promoters of frivolous schemes encourage people to make unreasonable and outlandish claims to avoid paying the taxes they owe. If a scheme seems too good to be true, it probably is. The IRS has a list of frivolous legal positions that taxpayers should avoid on www.irs.gov. These arguments are false and have been thrown out of court repeatedly.

For the full list of 2011 Dirty Dozen tax scams or to find out how to report suspected tax fraud, visit www.irs.gov.

Wednesday, August 10, 2011

Tuesday, August 9, 2011

August 13th and 14th is the 2011 Massachusetts Sales Tax Holiday Weekend


The following information has been provided by the Massachusetts Department of Revenue.

I. Introduction

A recently enacted statute provides for a Massachusetts “sales tax holiday weekend,” i.e., two consecutive days during which most purchases made by individuals for personal use will not be subject to Massachusetts sales or use taxes. St. 2011, c. 86 (“the Act”).  The Act provides that the sales tax holiday will occur on August 13 and 14, 2011and on those days, non-business sales at retail of single items of tangible personal property costing $2,500 or less are exempt from sales and use taxes, subject to certain exclusions. The following do not qualify for the sales tax holiday exemption and remain subject to tax: all motor vehicles, motorboats, meals, telecommunications services, gas, steam, electricity, tobacco products and any single item whose price is in excess of $2,500. The Act charges the Commissioner of Revenue with issuing instructions or forms and rules and regulations necessary to carry out the purposes of the Act.

 II. Purchases Qualifying for the Exemption

The exemption applies to sales of tangible personal property bought for personal use only. Purchases by corporations or other businesses and purchases by individuals for business use remain taxable. Purchases exempt from the sales tax under G.L. c. 64H are also exempt from use tax under G.L. c. 64I. Therefore, eligible items of tangible personal property purchased on the Massachusetts sales tax holiday from out-of-state retailers for use in Massachusetts are exempt from the Massachusetts use tax.

 III. Specific Rules

The following rules are to be applied by retailers in administering the Massachusetts sales tax holiday exemption:

 A. Non-Exempt Sales. All sales of motor vehicles,[1] motorboats,[2] meals,[3] telecommunications services,[4] gas,[5] steam, electricity, tobacco products[6] and of any single item whose price is in excess of $2,500, do not qualify for the sales tax holiday exemption and remain subject to tax.

 B. Threshold. When the sales price of any single item is greater than $2,500, sales or use tax is due on the entire price charged for the item. The sales price is not reduced by the threshold amount. For example, if an item is sold for $3,000, the entire sales price of the item is taxable, not just the amount that exceeds $2,500.

 Exception: Under G.L. c. 64H, § 6(k) there is no sales tax on any article of clothing unless the sales price exceeds $175; in that case, only the increment over $175 is subject to tax. If, on the sales tax holiday, the price of an article of clothing exceeds the threshold, the first $175 may be deducted from the amount subject to tax. The $2,500 threshold amount is not increased by $175.

 Examples:  A customer buys a suit on the sales tax holiday for $600. No tax is due.

A customer buys a wedding dress on the sales tax holiday for $2,550. Tax is due on $2,375 ($2,550 – $175).

C. Multiple Items on One Invoice. Where a customer is purchasing multiple items on the sales tax holiday, separate invoices do not need to be prepared. As long as each individual item is $2500 or less, there is no upper limit on the tax-free amount each customer may purchase.

 Example: A customer purchases a television, a stereo receiver, and a computer. The three separate items costing $1,500, $1,200 and $2,000 can be rung up together, all tax free.

 D. Bundled Transactions. When several items are offered for sale at a single price, the entire package is exempt if the sales price of the package is $2,500 or less. For example, a computer package including a CPU, keyboard, monitor, mouse, and printer with a single sales price of $3,500 would not qualify for the sales tax holiday exemption because the single sales price of the package ($3,500) is more than the sales tax holiday threshold amount of $2,500.

 Items that are priced separately and are to be sold as separate articles will qualify for the sales tax holiday exemption if the price of each article is $2,500 or less. For example, a customer purchases a personal computer for $3,000, and a computer printer for $200, each of which is priced separately. The purchase of the personal computer will not qualify for the exemption because the sales price ($3,000) is in excess of the sales tax holiday threshold amount of $2,500. However, since the sales price of the computer printer ($200) is less than $2,500, the printer would be exempt from tax.

 E. Coupons and Discounts. If a store coupon or discount provided by a retailer or manufacturer reduces the sales price of the property, the discounted sales price determines whether the sales price is within the sales tax holiday price threshold of $2,500 or less. If a store coupon or discount applies to the total amount paid by a purchaser rather than to the sales price of a particular item and the purchaser has purchased both eligible property and taxable property, the seller should allocate the discount on a pro rata basis to each article sold.

 Example: A furniture store customer has a coupon for 20% off her entire bill. She purchases a dining room table for $1,800, and a sofa for $3,500.  The total discount available is $1,060 ($5,300 x .20), of which $360 is attributable to the table ($1,800 x .20), and $700 is attributable to the sofa ($3,500 x .20).  No tax is due on the sale of the table. Tax of $140 is due on the sales price of the sofa, $2,800 ($3,500 – $700), as even its discounted price exceeds the $2,500 threshold.    

 F. Exchanges. Consistent with the Department’s usual practice, if a customer purchases an item of eligible property during the sales tax holiday, but later exchanges the item for an identical or similar eligible item, for the same price (“an even exchange”), no tax is due even if the exchange is made after the sales tax holiday, see LR 03-8.  

 G. Layaway Sales. A layaway sale is a transaction in which property is set aside for future delivery to a customer who makes a deposit, agrees to pay the balance of the purchase price over a period of time and receives the property when the last payment is made. Layaway sales do not qualify for the sales tax holiday, even if the last required payment (or payments necessary to complete the transaction) are made on August 13 and 14, 2011.

 H. Special Order Items; Transfer of Possession after Sales Tax Holiday.  Special order items such as furniture are eligible for the sales tax holiday so long as they are ordered and paid in full on the sales tax holiday weekend, and the cost of each item is $2,500 or less, even if delivery is made at a later date. Generally, a customer pays for an item when the seller receives cash, a credit card number, a debit authorization, a check, or a money order or the buyer and seller enter into financing arrangements with a third party, including an affiliated entity (but excluding seller financing where the seller extends credit to the customer). A prior special order purchase with a deposit paidbefore August 13, 2011 will not qualify for the holiday, even if the retail customer pays the entire remaining balance due on August 13 or 14, 2011.

 I. Rain checks. When a customer receives a rain check because an item on sale was not available, property bought with the use of the rain check will qualify for the exemption regardless of when the rain check was issued if the rain check is used on the sales tax holiday weekend. Issuance of a rain check during the sales tax holiday weekend will not qualify otherwise eligible property for the sales tax holiday exemption if the property is actually purchased after the sales tax holiday.

 J.  Rentals.  Generally, rentals for thirty days or less of tangible personal property other than motor vehicles and motorboats are eligible for the sales tax holiday, even if the rental period covers days before or after the holiday, providing payment in full is made during the sales tax holiday weekend. The sales tax holiday does not apply to rentals or leases of tangible personal property of any type if the term of the rental or lease contract is longer than thirty days.

 K. Rebates. A rebate is a refund of an amount of money by the manufacturer of a product to the retail purchaser of the product. If a vendor sells tangible personal property to a customer who applies a manufacturer’s rebate to reduce the sales price at the time of the sale, the rebate is generally treated as a cash discount and is excluded from the sales price. The discounted sales price determines whether the sales price is within the sales tax holiday price threshold of $2,500 or less.  

 If a vendor sells tangible personal property to a customer who will receive a rebate after the sale (e.g., by mailing a coupon to the manufacturer), the full purchase price of the property determines whether the sales price is within the sales tax holiday price threshold of $2,500 or less, and tax must be charged on the full purchase price if it is over $2,500.

 If a vendor offers a customer a cash discount upon the purchase of tangible personal property and the customer also receives a rebate from the manufacturer of the property after the sale, only the cash discount given by the retailer is excluded from the sales price for purposes of the sales tax holiday exemption. The amount of the manufacturer’s rebate is not deducted from the sales price.

 L. Internet Sales. If a customer orders an item of eligible property over the Internet, the item is exempt if it is ordered and paid for onAugust 13 or 14, 2011 Eastern Daylight Time. Generally, a customer pays for an item when the seller receives a credit card number, a debit authorization, a check, or a money order. The actual delivery can occur after the holiday period. For example: a customer orders a computer over the Internet with a sales price of $2,000 and charges the sale to his credit card at 1:00 p.m. (EDT) onAugust 13 or 14, 2011; the computer has a delivery date of September 20, 2011.  The sale is exempt since the computer was ordered and paid for during the sales tax holiday.

 M. Splitting of Items Normally Sold Together. Articles normally sold as a single unit must continue to be sold in that manner. Such articles cannot be priced separately and sold as individual items in order to obtain the sales tax holiday exemption.

 N. Returns. Generally, sales tax may only be refunded to a retail customer on returns within 90 days of the sale. G.L. c. 64H, § 1. For the 90 day period following August 13 or 14, 2011, when a customer returns an item that could have qualified for the sales tax holiday exemption, the vendor may not credit or refund sales tax to the retail customer unless (1) the customer provides a receipt or invoice that shows the tax was paid or (2) the seller’s records show that tax was paid. Sellers may set their own return policies. This requirement is not intended to change or extend a seller’s return policy.

 O. Erroneously Collected Taxes. Customers who were erroneously charged sales tax by a vendor for an exempt purchase should take their tax paid receipt to the vendor to obtain the refund. If the vendor has previously remitted the erroneously collected tax to the Department, the vendor may file an application for abatement of the erroneously collected tax within 3 years upon satisfactory evidence that the vendor has credited or refunded the tax to the purchaser.

 IV. Responsibilities of Retailers

 A. Participation. All Massachusetts businesses normally making taxable sales of tangible personal property that are open on August 13 or 14, 2011must participate in this sales tax holiday.

 B. Erroneous Collection. Any sales or use tax erroneously or improperly collected by a retailer on August 13 or 14, 2011 must be remitted to the Department of Revenue.

 C. Certification of Nonbusiness Use by the Purchaser. Normal business records showing the date of sale, item(s) purchased, and selling price must be kept by the retailer/ vendor. However, a separate certification from the purchaser on transactions of $1,000 or more will not be required for the 2011 Sales Tax Holiday. The requirement that purchases under the Sales Tax Holiday be for nonbusiness use is unchanged and purchasers paying for tangible personal property with business credit cards or checks must be charged tax on the items purchased.

 D. Out-of-State Retailers. Out-of-state retailers registered to collect Massachusetts sales and use taxes must participate in this sales tax holiday. Such retailers should not collect sales/use tax for items ordered and paid for onAugust 13 or 14, 2011 in accordance with the rules of this technical information release. The retailers must keep records sufficient to verify the date of sale, item(s) purchased, and selling price.

 E. Penalties.  Retailers that back-date sales occurring after August 14, 2011 or that forward-date sales that occurred beforeAugust 13, 2011 in order to make them appear to qualify for the sales tax holiday or otherwise fail to follow the rules in the TIR in order to improperly avoid collecting and remitting sales or use tax may be subject to the tax evasion penalties of G.L. c. 62C, § 73, including a felony conviction, a fine of not more than $100,000 or $500,000 in the case of a corporation, or by imprisonment for not more than five years, or both, and may also be required to pay the costs of prosecution.


Monday, August 8, 2011

Ten Tax Tips for Individuals Selling Their Home


The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, please do not hesitate to contact me with your questions. For some helpful moving info, click here for a complimentary NFS Moving Day Guide.

Friday, August 5, 2011

S&P downgrades US credit rating from AAA to AA-plus, first debt downgrade in US history

WASHINGTON -- Credit rating agency Standard & Poor's on Friday downgraded the United States' credit rating first time in the history of the ratings.

The credit rating agency said that it is cutting the country's top AAA rating by one notch to AA-plus. The credit agency said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation.

A source familiar with the discussions said that the Obama administration feels the S&P's analysis contained "deep and fundamental flaws."

S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.

S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country's debt.

After months of wrangling and negotiations with the administration, Congress passed this week a debt reduction package at the 11th-hour that averted a possible default.

In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.

S&P said it was now "pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon."

Tuesday, August 2, 2011

House Approves Debt Ceiling Raise

WASHINGTON, D.C. - The House of Representatives voted to raise the debt ceiling, only a day before the August 2 deadline for averting a default on the federal government’s debt obligations.

The vote Monday evening saw the measure approved by a 269-161 margin, with 95 Democrats voting for the bill and 95 voting against it. Sixty-six Republicans also rejected the bill, including many Tea Party freshmen, but 174 voted in favor. Rep. Gabrielle Giffords, D-Ariz., returned to the Capitol for the first time since she was shot in the head in January to cast a vote in favor of the bill and was greeted effusively by her fellow lawmakers. The Senate is expected to vote on the bill at noon on Tuesday.

The bill would give the Treasury Department the ability to borrow an additional $400 billion immediately, allowing it to avoid a default on interest payments on Treasury bonds. Payments will also go out on time for Social Security and veterans’ benefits, Medicare, unemployment insurance and other expenses.

The bill would raise the $14.3 trillion debt ceiling in several increments, getting it past the November elections. The initial infusion of $400 billion will be followed by another $500 billion in the fall, unless two-thirds of both chambers reject it. A “super committee” made up of lawmakers from both parties will meet to approve up to $1.5 billion more in borrowing authority, balanced by spending cuts and possible tax reforms. However,

Republicans are not expected to go along with any tax increases that aren’t “revenue neutral.” The committee’s recommendations will then go to Congress for an up or down vote in November. If the recommendations are rejected, the bill would set up a trigger to force deep cuts in spending, including defense.

“Tonight’s vote marks a victory for our economy and the American people,” said House Ways and Means Committee Chairman Dave Camp, R-Mich., in a statement. “The legislation not only cuts spending and reforms how Washington manages its budget, it also prevents default on our financial obligations. Importantly, the package does not increase taxes, which is critical to making sure job creators have the resources they need to invest and hire more workers. Finally, the legislation establishes the clearest path yet to a balanced budget amendment—something I have long supported and that is long overdue.”

However, many Democrats and Republicans remained unhappy with the package, including House Minority Leader Nancy Pelosi, D-Calif., who nevertheless voted for the package.

Rep. Emanuel Cleaver, D-Mo., the chairman of the Congressional Black Caucus, called it a “sugar-coated Satan sandwich” on MSNBC because it would deeply cut spending on social programs for the poor without any tax increases on the wealthy or corporations. Pelosi agreed, telling ABC News that it was a “Satan sandwich with Satan fries on the side.” However, she voted for the package to avoid a first-ever default by the U.S. government and the broader impact it would have on the economy.

On the right, Tea Party members were also unhappy with raising the debt ceiling at all. “Throughout this process, the President has failed to lead and failed to provide a plan,” said Rep. Michele Bachmann, R-Minn., the leader of the Tea Party Caucus, according to The Guardian. “The ‘deal’ he announced spends too much and doesn’t cut enough. Someone has to say no. I will.”

Monday, August 1, 2011

Seven Tax Tips for Job Seekers
http://ping.fm/sG9AS

Seven Tax Tips for Job Seekers


Many taxpayers spend time during the summer months updating their résumé and attending career fairs. The Internal Revenue Service reminds job seekers that you may be able to deduct some of the expenses on your tax return.
Here are seven things the IRS wants you to know about deducting costs related to your job search.
  1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
  2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
  3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
  4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
  5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
  6. You cannot deduct job search expenses if you are looking for a job for the first time.
  7. The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income.  You figure your deduction on Schedule A.
For more information about job search expenses, please do not hesitate to contact me.