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Anne Powelson

Anne Powelson

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Tuesday, 09 December 2014 23:21

Predictions for tax season

How will tax filing go this winter? I took out my trusty magic eight ball to help predict what will happen with the upcoming tax season.

Question: Several sections of the tax code expired Dec. 31, 2013; will they be extended for use on 2014 tax forms?

Wednesday, 19 November 2014 11:59

If you hear from the IRS

There it is, sitting in your mailbox, the unexpected envelope from the IRS. For many people it's a moment of dread.

Don't panic and don't ignore it. Receiving a letter doesn't mean the IRS will be beating down your door tomorrow. It means they have a question with your return, or are wondering why you haven't filed. Millions of these letters are sent out every year. To be fair, often times it is a request for more money. But not always; once in a while people get notices saying they will be issued a larger refund than expected. Whatever it says, don't burn it and hope it will go away. If no timely response is received, the IRS assumes you agree with their correction and begins making plans to collect it from future refunds or other sources.

Tuesday, 07 October 2014 14:41

Higher education: lower tax bills?

Starting your freshman year at college? Taking a single class at a university? Pursuing a certificate program? You may be able to lower your tax bill. Here are some tips for doing that:

Know Your Credits: There are two education credits available.

Thursday, 11 September 2014 00:08

Changes in store for Maine

Fall is in the air, leaves are starting to change color. Change is on tap for Maine taxes too. These changes are all scheduled to affect your 2014 taxes (which begin filing in January 2015.)

Larger pension deduction. Good news for retirees: the pension deduction will increase from $6,000 to $10,000. This will continue to be decreased by taxable or non-taxable Social Security income received for all but military pensions. However, the list of qualifying pensions eligible for the deduction grows to add non-penalty distributions from IRA's, SIMPLE plans and retirement annuities to the prior list of 401(k) distributions, state, federal and company pensions. Early distributions from plans which are subject to a federal penalty are not eligible, nor are state pension amounts already exempted as 'pick-up contributions.'

Wednesday, 13 August 2014 14:18

Taxing reading

Midsummer is upon us, and perhaps you've grown tired of frothy summer fare about spies, zombies and fashion models. If you're ready for a change of pace, here are three books related to U.S. taxation. Not a single one tells you how to fill out a form, but each is intriguing.

Charles O. Rossotti was the IRS Commissioner from 1997 to 2002. His book is 'Many Unhappy Returns: One Man's Quest to Turn Around the Most Unpopular Organization in America,' published in 2005 by Harvard Business School Press. Rossetti was instrumental in overhauling IRS procedures giving taxpayers more rights. It's nice to read about a time when the IRS was becoming more responsive to taxpayers, and how Rossetti hoped for future simplification of the tax code.

Starting a new job? Switching jobs? You'll probably be asked to complete a Form W-4, Employee's Withholding Allowance Certificate. A W-4 sets how much tax is withheld from your income. Taxes are due when income is earned; if you owe too much at the end of the year you may owe a penalty. On the other hand, you don't earn any interest on large refunds, so you might not want excess withholding.

So what should you do? Most people don't read tax forms, and in the case of the W-4 that's probably just as well. That's because the W-4 instructions are not perfect. Here are two common problems with the W-4.

Tuesday, 10 June 2014 22:30

People on the Move

Spring is moving time, as evidenced by vehicles jammed with possessions. I saw one pickup piled three layers high: first boxes, then a canoe, and on top, two sections of a green sofa. Now, I hope they weren't headed very far, but maybe you, or someone you know, is.

If you move over 50 miles for business reasons, your move may be deductible. This is true even if you are moving to take your first job or to return to work after not working for a significant period. Moving can even be deductible for self-employed people.

Tuesday, 13 May 2014 22:22

Home sales and yard sales

Spring is in the air and signs are on the lawns. But can a yard sale or a home sale impact your taxes?

First, let's talk about yard sales. Yard sales rarely create taxable income. Not because the government is generous - even found money is taxable but for a different reason. Yard sales are sales of personal goods, items you bought or were gifted. You are selling these items for less than you paid for them. Therefore, there is no gain to report, and a loss on personal use items is not allowed.

Open enrollment for individual insurance at Healthcare.gov is scheduled to close at the end of March. So now is a good time for a few reminders regarding the Affordable Care Act.

1.  There is NO penalty being assessed on current tax returns. I am still hearing of people afraid to do their 2013 taxes because they think they will need to pay a penalty. The mandate for individual health insurance begins in 2014. Penalties (also called the individual shared responsibility payment) are scheduled to begin in 2015 when the 2014 taxes are filed.

Wednesday, 12 February 2014 18:08

Got student loans? Don't miss this credit in 2014

Student loans are a common way to fund a college education; the average student loan debt for Maine's class of 2012 was $29,252. Wouldn't it be great if there was a program rewarding recent Maine graduates who are paying off student loans? Well there is - the Maine Opportunity Credit. This year it's better than ever.

What is the Maine Opportunity Credit? Maine Opportunity Credit is a credit on your Maine return, reimbursing you for student loan payments made. That's right, reimbursement of the entire student loan payment, not just the interest.

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