That said, one of the nice things about the tax code, and there aren’t too many nice things, is that there are a litany of tax benefits available only to families (or at least family units with dependents, such as children). I hadn’t spent much time thinking about it until just recently but I collected a bunch of tax tips I hope to use after our kid comes screaming out of the womb.

• Amend your health insurance. Having a child is considered a “life changing event,” which means you will be permitted to change your health insurance policy. This might be a good time to add the little one to your plan or make other changes you forgot to do the last time your plan renewed. The IRS states that you have 31 days from the event date to make changes but check with your provider for their schedule.
• Take advantage of that dependent care FSA. A dependent care FSA is an flexible spending account that can only used for dependent care. You can adjust this after a life changing event, so if you are still expecting and didn’t set one up yet, don’t fret. You can always adjust it after the birth. This will be offered by your employer and you can read more about it in Publication 503. How much you can save will depend largely on your tax bracket but every little bit helps!
• Child and Dependent Care Credit. In addition to the dependent care FSA, which is offered through your employer, there is a care credit that gives you a credit for expenses associated with supporting a “qualified dependent,” which would include your new child. The maximum credit you can receive for this, which is adjusted based on your income and actual expenses, is $3,000 a year.
• Child Tax Credit. The Child Tax Credit is a tax credit you get just for having a child! There are income limitations (the phase out starts at $110,000 and ends at $130,000) but it’s a direct tax credit of up to $1000, not a tax deduction, so it can have a big impact on your tax bill. This credit may be refundable depending on your income.
• Adjust your withholding. Now that you have a new baby, you have a new dependent and that reduces your tax bill. As a result, to avoid a larger than necessary tax rebate, you should adjust your withholding with your employer. This can be done by filing a new W-4 form and I recommend talking to your HR department to find the best way to do that.
• Check eligibility for the Earned Income Credit. The Earned Income Tax Credit is a credit given to low income individual and families, but the limit is quite low for those without children. In 2010, the limit was $18,470 for joint filers without children but it rises to $40,545 if you have one child. Check to see if you may now be eligible for the EITC after you have your baby.
• Consider a 529 plan or Coverdell Education Savings Account. With that child comes potentially going to college in eight years (and paying for it!). Now might be a good time to take a look at 529 plans, Coverdell ESAs, and other higher education perks. Coverdell ESAs are like Roth IRAs for education and 529 plans, which vary from state plan to state plan, are a little like very limited 401(k) plans for education.
• Get some sleep. I know that’s not a tax tip but being well rested is a good life tip!

Good luck!

Last-minute getaways may sound expensive, but cheap deals are there for the taking if you are willing to be flexible. Here are some tips.

Go with the flow. Whether you are flying, taking the train, or shipping out on a cruise, the more flexible you are with your travel plans, the better. Leave late at night or on a different day to get the cheapest flight. And if you are willing to go standby, or fly into a less popular city or airport, you can score big time. The same is true of cruises – if you cruise the web to find ads for last-minute vacancies, or travel “shoulder” times, before or after traditional summer and Christmastime rushes, you may find a vacation deal that costs less than staying home.

Embrace the web. Check your favorite internet travel sites, and check them often. Prices fluctuate from day to day and from city to city. But do your research and watch out for pitfalls. Sites like PriceLine.com and SkyAuction.com let you name your own price, but know the range available elsewhere so you don’t end up overpaying. On AirBnB.com, find a place to rent for just one night from a real person, for less.

Tweet for a sweet deal. Use Twitter’s search box to look for special discounts and coupons. Just enter a hashtag (#) followed by your destination and the word discount (for example “#Miamidiscounts”. Or enter “@” followed by your airline hub’s three letter code (for example, “@LAX”) to locate deals near you. Also, follow travel deals sites like @TravelZoo on Twitter for up-to-the-minute deals.

Travel solo. If you are looking for a single ticket on an airline or to an event, you’ll find it easier to nab a deal. You can make arrangements to meet your friends at the destination, even though you won’t be sitting together.

Call ahead. You’ll find some good hotel deals by calling ahead and calling around. Don’t just arrive with your baggage in the hotel lobby, since clerks will quote you higher prices since they know you don’t want to schlep those bags all over town.

Go off-season and off-beat. Visiting a summer attraction in the winter or a ski resort in the summer will save big bucks in lodging and meals. Or stay nearby your destination, not right in town. Camping out will trim your costs, and you can save on meals by packing a lunch and enjoying a picnic. If you splurge on a meal at a well-known restaurant, go for lunch instead of dinner or enjoy the early bird special to cut the tab by up to 40%.

Free works for me. There are many free attractions wherever you go, and many inexpensive ones as well. A hootenanny or a free concert in the park, a walking tour or nature walk, all can make for a pleasant afternoon. At historic destinations such as Washington DC, Philadelphia and Boston you’ll find that many of the great attractions are free.

Above all, enjoy the hunt. Traveling cheap is a game, so take pleasure in the experience. If you miss one deal, don’t fret, there’s another one around the corner.

The first step to adjusting your withholdings is to get a copy of your W-4 form. You should also have your most recent pay stub, last tax return, as well as last year’s W-2. The form itself is pretty brief, it will take into account whether you itemize or take the standard deduction. The form also considers your dependents an whether you expect to have any interest or dividend income. Last, it takes into account whether you are filing jointly with your spouse. These calculations are all done to arrive at a single number, your withholding allowance.

There are a number of situations that would prompt you to want to review and possibly adjust your withholding.

Marriage or divorce is a major tax-changing event, and once you’d done either, it’s time to look at how your taxes would be impacted. The addition of a dependent, by birth, adoption, or an elderly parent moving in and getting more than 50% of their support from you will qualify as an extra exemption. This last example is easy, and shows how one additional withholding allowance on the W-4 represents one more personal exemption on your tax return. On a side note – these life changing events should also trigger a review of your beneficiaries on any and all of your retirement accounts.

The purchase of a new home is likely to have the largest impact on your withholding. A $250,000 mortgage (at 4.5% 30yr fixed) with have just over $11,000 in interest the first full year. Add another $4,000 for property tax. If your state income tax already put you at or near the standard deduction, then this $15,000 will translate to 4 additional allowances on your W-4. For purposes of this form, a dependent’s exemption of $3,700 (in 2011) or any itemized deductions for the same $3,700 are equivalent, one withholding allowance having the same effect as an exemption. It’s your way of telling your payroll department, “Don’t tax me on that $3,700 worth of income.” For a couple in the 25% bracket, the example above will help them increase their take-home pay by just over $300 per month. But only if they adjusted their withholdings!

Is this the right time for you to review your withholdings?

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For example, there are other items that can impact your effective marginal rate, phase outs of credits or certain deductions. Today, I would like to focus on the taxation of social security benefits. Partially because it impacts so many people, and also because there are some strategies to minimize this extra tax hit. For those collecting Social Security benefits if half the benefit plus your other income exceeds $25,000 (if single) then up to half the Social Security Benefit is taxable. If half the benefit plus your other income exceeds $34,000 (if single) then up to 85% of the Social Security Benefit is taxable.

This can be quite confusing, so let me put it in simple terms. You are single, and collecting a pension and Social Security. Thinking you are in the 25% bracket, you withdraw an extra $1000 from your IRA, after all, you’re not going to be anywhere near that $83,600 income level, your total taxable income including the Social Security is barely $40,000. What you find, however, is that extra $1000 in income caused an extra $850 from Social Security to be taxed as well, and the result was a tax bill that was $462.50 higher, feeling like a 46.25% effective marginal rate.

With a bit of planning, however, you might be able to avoid or reduce this phantom marginal rate. The planning needs to start as early as possible, right after Thanksgiving will due, as TurboTax is available by then and there’s still time before year end. If you find you will be right in the midst of this high marginal rate, you can do a couple things to lower your income. If you itemize your deductions, pull in a bit of the donations you planned to make next year. If you still have a mortgage, pay the January payment before the month ends. If you converted any traditional IRA funds to a Roth this year, you can recharacterize back to traditional to take that money back out of your taxable income. In fact, if the recharacterization is part of the plan, you can wait until you file your return , extension included, so you can get your taxable income exactly where you’d like, and not worry some dividend or capital gain will put you back over at year end.

The other possibility is that you find that all your Social Security will be taxed and you can’t avoid it. Your RMDs (Required minimum distributions from your 401(k) or IRA) may be rising, and you’re back to a 25% marginal rate. Seeing that this rate extends right to a taxable income of $83,600, now may be the time to convert some IRA money to Roth. Just enough to “top off” that 25% bracket and help lower those future RMDs.

If you have any questions or thoughts on this articles, please feel free to leave a comment below.

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In December 2010, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act) was approved in Congress and signed into law. The tax law changes contained within the Act basically allowed existing tax rates to prevail until 2012. One other thing to keep in mind is that many of the tax breaks in the 2010 Act were designed to be phased in over a number of years, or indexed to inflation. These breaks applied to 2010 and later years.

With 2010 now behind us, let’s take a look at what changes the Act has in store for us with regard to our 2011 tax returns. I’ll focus specifically on what is new or different for 2011.

New Payroll Tax Cut for Wage Earners

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Wage earners and self employed individuals will see a significant cut in their share of payroll taxes. Instead of paying 6.2% on wages up to $106,800, they will now pay 4.2%. That could mean a savings of over $2000 for those making over $100,000 per year. This applies just for 2011. What’s really great about this tax cut is that you’ll see the savings reflected in each paycheck throughout the year. In other words, it’s not going to be reflected in the tax return you file by next April 15, 2012, but in each current paycheck. For example, if you earn $60,000 annually and are paid bi-weekly, you’ll see an extra $46 in each paycheck.

Self-employed individuals also benefit from the payroll tax cut. Self-employed individuals will pay 10.4%, instead of 12.4%, on self-employment income up to the $106,800 threshold.

Perhaps not too surprisingly, the good news is offset by some bad news. The payroll tax cut replaces the Making Work Pay Credit (MWPC), which expired at the end of 2010 and was not renewed for 2011. The MWPC provided a tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns. Nevertheless, you can see that if you’re earning more than $20,000 annually, the payroll tax cut is a big winner.

Mortgage Insurance Premiums

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The deduction for mortgage insurance premiums paid on mortgages taken out after 2006 expired on Dec. 31, 2010 so this deduction no longer applies for 2011. Keep in mind that this is for your mortgage insurance premiums, not your mortgage interest.

Flexible Spending Accounts

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Employees with flexible spending accounts can no longer use pretax funds to pay for many over-the counter medicines, except for insulin, without a doctor’s prescription. So this limits the benefit of paying for drugs like aspirin and other common cold remedies from your flexible spending account. This rule also applies to health reimbursments accounts, health savings accounts, and medical savings account plans. In addition to stingier rules for using your flex spending account funds, the penalty has doubled in some cases when you use these spending account funds for non-qualified expenditures. The penalty can be as much as 20% of the amount taken out of the account.

Residential Energy Improvement Credits

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For individuals making energy-efficient improvements to their homes in 2011 important changes have taken place for a popular tax credit. The Tax Relief Act extended the energy efficient property credit for homeowners for one year, through December 31, 2011. However, more restrictive rules apply for 2011 than applied in 2010. An individual is now entitled to a 10% credit qualified energy efficiency improvements (building envelope components) installed during the tax year.

The maximum credit allowable is $500 over the lifetime of the taxpayer. The $500 amount must be reduced by the total amount of credits previously taken by the taxpayer in 2006, 2007, 2009 and 2010. There are also certain restrictions on the amounts claimed for certain items as well. For example, the amount claimed for windows and skylights in a year cannot exceed $200 less any credits you claimed for these items in all earlier tax years ending after December 31, 2005. The credit also cannot exceed $50 for an advanced main circulating fan, $150 for any qualified natural gas, propane, or hot water boiler, and $300 for any item of energy efficient property.

New Broker Basis Reporting Rules

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Beginning in 2011, generally all brokers will be required to report your “adjusted cost basis” in stock you sell that year as well as whether it is short or long term. This reporting will be done on Form 1099-B. This simplifies the task of tracking your stock costs and ensures that your investment transactions are properly reported.

These are just some of the many important tax changes that you’ll see in 2011 and for the federal return you prepare by the deadline on April 15, 2012.

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Say you suddenly find yourself in need of one of your old tax returns.  Such a circumstance might come about when applying for a loan, be it a home mortgage, refinancing, or for college funding.  If you’re unable to find your tax return among the piles of old photo albums and dated baseball cards in your closet, the IRS can help.  Here’s how:

Request Your Tax Return

Surprising as this might be, to receive a copy of an old tax return from the IRS, you must fill out a form.  In this case, the paperwork is Form 4506, aptly named “Request for a Tax Return.”  While the form is straightforward, it is not without cost—each tax return you would like to receive will set you back $57.  (Why $57 and not $50 or $60 remains an uninvestigated mystery).  You can request any tax return up to six years old. (No, you can’t request someone else’s tax return.)

Once your check clears, expect your return(s) to arrive in about 2 months.  Note that if you are impacted by a federal disaster area, you probably won’t have to pay any fees.

Only Need the Highlights?  Get a Transcript

Sometimes, the requesting your entire return is unnecessary.  Given the cost, first check to see if a tax return transcript will satisfy your needs. If so, request a transcript, available at no cost.  To get your tax return transcript, simply dial 800-908-9946 or visit http://www.irs.gov.  Then, click Online Services and choose “Order a Transcript.”

A transcript provides all the most important line items for your return and is often sufficient for your lender’s documentation requirements. Unlike a full tax return, transcripts are available for the previous three years only.

To request your transcript, complete 4506-EZ, the short form for requesting an Individual Tax Return Transcript.  This relatively new form is streamlined, especially for those who are going through a mortgage application, refinancing, or modification.  As such, you can request your transcript be mailed directly to a third party such as your lender.

You can get all forms at the IRS web site (www.irs.gov) or by calling 800-829-3676.

When disaster strikes like this, it can take weeks or months before things return to normal. Filing taxes is the last thing on anyone’s mind. The IRS certainly understands that there will be delays in tax filings and payments by those affected by the storms and floods, and they provide for extensions of time when those filings and payments are due. They have put together a section of their website which highlights some of the latest information on tax relief for disaster victims.

Here are some of the highlights from the affected areas:

Joplin, Missouri – Due to the devastating effects of the May 22, 2011 tornado outbreak in the area, both individual and business taxpayers throughout Jasper County, Missouri do not have to file returns or pay taxes due until August 1, 2011. This applies to any payments or filings that were due since April 19, 2011. For those who pay estimated taxes, this means you will not have to pay them on June 15, 2011. You can wait till August 1st. See more information at Joplin area disaster tax relief.

Alabama – An unbelievable forty-two counties in Alabama were declared a federal disaster area in April and May of 2011. Since the bad storms started on April 15th in the area, taxpayers in the affected counties get tax relief from the federal individual deadline, which was on April 18th this year. Taxpayers in the affected areas have until June 30, 2011 to complete their federal tax return, payment, and 2010 contribution to their IRAs. In addition, casualty losses due to the disaster can be taken on either their 2010 or 2011 returns. See more information at Alabama disaster tax relief.

Other states affected by storms and listed on the IRS site include: Kentucky, Mississippi, Tennessee, Arkansas, Georgia, Oklahoma, and North Carolina. Several counties in each of these states have been declared federal disaster areas and thus, individuals and businesses who reside there, or who have tax forms there, are allowed to delay their filings and payments. The times and types of delays that taxpayers are eligible for will vary by incident. When in doubt, contact the IRS to see if you are eligible for tax relief due to a disaster in your area.

The first step if you haven’t already is filing your taxes and submitting them to the IRS, and luckily we’ve got a step-by-step guide for you on how to file back taxes. You will also need to make sure that you’ve completed the your filing using the proper year’s form. You can either use software like TurboTax or go directly to the IRS’ site and download the forms.

When filing your back taxes, send them through certified mail to get confirmation that the IRS received your documents.

Consequences of Not Paying Back Taxes

There are some people that fear filing their taxes late and try to avoid it, but there are serious consequences to not paying your taxes. The IRS will charge you 5% interest each month that you are late with a maximum of 25%.

The good news is that the IRS in most cases have customer service agents who can assist you in getting everything straightened out in a reasonable fashion. I used them to straighten out a miscommunication with my taxes this year. It was resolved fairly quickly.

Contact the IRS and Get Help with Back Taxes

If you’re not sure if you owe back taxes, it would be wise to check with the IRS (800-829-1040) to get the amount owed. If you do owe taxes, you may be surprised to find out that the IRS in many cases will work out a payment plan with you.

You have several payment options with the IRS in getting your taxes straight. Use whatever is best for your own financial situation:

• Credit card
• Check
• Money Order
• EFTPS
• Electronic Withdrawal

If you can not afford to pay the IRS what you owe, you may want to look into Offer in Compromise with them. If the IRS analyzes your financial circumstances and see that you can not make the payments, they may be willing to settle for a smaller amount.

Thoughts on Back Taxes

One advantage of using software like  TurboTax is the expertise and tax community behind it. You can ask questions about your specific tax situation and feel confident about submitting your taxes.

I’m curious – have you ever had to pay back taxes? How did you resolve it?

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Vacation Locally

Spending a little time away from home is great, but travel costs can turn even a simple vacation into an expensive proposition. Obviously, air travel is costly, especially with all the new fees, so sticking to a local vacation spot can save literally hundreds of dollars. So, toss the idea of flying across the country or overseas and look local. You may be surprised what attractions that are just a few hours away. Look to some of your state’s tourism info and get ideas for what might be interesting to you. Gas may be expensive, but a couple tanks of gas is still far less than a pair of $400 round trip tickets.

Take the Train

In today’s society it’s all about rushing around and getting as much done in as little amount of time as possible. That’s why slowing down a bit and taking your time can be rewarding in and of itself. Taking the train is a leisurely way to travel and save a bundle. For example, I can get an Amtrak ticket to take me from Chicago to Kansas City for just $61 and the trip takes about 7 hours. Guess what? If I wanted to drive that same trip it would cost me more than double in gas and take almost exactly as much time. Plus I’d be behind the wheel the entire time.

By taking the train you have a chance to relax while saving money. Since you aren’t driving you won’t be dealing with stressful traffic, stopping for gas, or worry about falling asleep at the wheel. Instead you can kick back in the train car and read a book, play games on your iPad, watch a movie, or grab a meal.

Go On a Cruise

A cruise can be either a very inexpensive vacation or extremely expensive. It is up to you to decide, but if you’re a smart shopper you can have yourself a wonderfully inexpensive vacation. Start looking far in advance with various cruise lines and consider cruising during the usual “off-season” to save even more.

It isn’t uncommon to find cruise specials for less than you could even get a hotel room anywhere else. I’ve seen 5-day Caribbean cruises for less than $300! That’s less than $60 a day and the best part is all your meals are included and there’s plenty of onboard entertainment that won’t cost you another dime. Try staying at a beachfront hotel and eat three meals a day for less than sixty bucks. You won’t be able to.

Sure, if you don’t live near a port you’ll have to pay for transportation to get there, but these destinations usually have affordable fares. Even so, a round-trip ticket and the cruise fare will often be less than $1,000 per person so you can take that vacation with your spouse and still have some tax refund money to spare.

Still looking for your tax refund? Here’s more information on how to find your tax refund.

1. Save your files. You’ve input your data into TurboTax, and you won’t have to do that again if you store your TurboTax file in a safe place so it will be available next year. Store a copy of the TurboTax file on a media separate from your computer: burn it to a CD, copy it to an external drive, or upload it to your ISP’s storage space. That way, if your computer crashes you’ll still have the TurboTax file. Or, just use TurboTax Online Basic or above and have your return saved year-over-year.

2. Make document gathering easy. Wouldn’t it be nice if you could open a file and everything you need to prepare your tax return is there? Here’s a simple way to make that happen. Prepare a file and label it Current Tax Info, and tuck it into your desk drawer. Now, every time you see something during the year that’s tax-deductible, drop it into the file. Make a donation with your credit card? Circle the donation on the statement, then drop it in. Property tax bill paid? Drop it in. Sorting the data into categories at the end of the year will be easy if it’s all in one place.

3. Consider Quicken. Is this the year you start keeping your records electronically? Having the year’s transactions on Quicken can make tax preparation simple as you transfer the files to TurboTax with the press of a button. Getting started on Quicken involves a bit of a learning curve, but it’s not difficult if you stick to the basics at first, mastering those before you explore the other nifty tools that Quicken provides. Or, if you prefer free online money management, try Mint.com.

4. Avoid a big refund. The fastest way to get your refund is not to let the government have your money in the first place. It’s easy to adjust your Form W-4 withholdings right now, while you are thinking about it. Download the W-4 form from http://www.IRS.gov, and using your tax return data fill out the simple withholding computation schedules. Once you see how much your net pay changes, tuck the difference into a savings account or better yet, increase your 401(k) contribution. That way, you’ll save it rather than squander it away.

5. Reduce underpayment penalties. If you are self employed, you don’t have taxes withheld from your income. But the IRS still expects you to pay at least 90% of your taxes during the year through estimated tax payments. If you failed do so last year, you paid the price with a big tax bill and penalties due on tax day. Don’t let that happen again. Compute estimated taxes due using tax software and simply fill out forms, and send them in your payment on the prescribed due dates. Even if you don’t have enough to pay the complete installment, paying what you can will reduce the taxes and penalties next April. Simply cross out the printed number on the form and write in the amount you are paying.

Finances don’t top everyone’s list of favorite things to do, but by following these tips now you can make your burden easier next year.

Reconsider Withholding

If you’ve filed your taxes and ended up with a large refund or had to cut Uncle Sam a check, it’s time to address your withholding. If you owed money it’s a no-brainer that you want to adjust your withholding so more money is set aside for taxes so that you don’t have a bill next April. But having a large refund can be just as bad. In fact, the average refund this year is a little over $3,000. That means most people are letting Uncle Sam hold a few thousand dollars hostage for 11 months of the year when it could probably be put to better use immediately. Think about it—a $3,000 refund works out to an extra $250 a month of added cash flow. If money is tight you can see how helpful having that money each month would be. By adjusting your W-4 you can have a little less money withheld and put more money in your pocket with every paycheck. TurboTax makes it easy to adjust Form W-4.

Check Your Investments

Now is a good time to check your investments. That’s because the past two years have been two of the best consecutive years in the history of the stock market. If you’ve been invested during this time and saw some of these rapid gains your portfolio is probably a little out of whack. You should have a target asset allocation you try to remain at, but the gains in the market could have skewed your allocation heavily toward stocks if you haven’t rebalanced in a while. If that is the case you are likely more exposed to risk than you realize, so it’s time to check your investments and rebalance your portfolio to get you back on track.

Automate Your Finances

If your finances are in pretty good order and you’re still looking for a change that can help your finances, consider automating everything. Technology is a wonderful thing and these days you can virtually put your entire finances on autopilot. From automatic bill pay to retirement contributions, these days you don’t have to think twice about things.

Start with your savings goals. If you have a 401(k) that’s obviously automatic already, but if you have an IRA or other investment account you can set it up to make regular and automatic contributions on the interval you choose. The same can be said for even a regular savings account. Why wait to make a one-time transfer from checking to savings when you can set it up so that a little bit goes into your savings account with each paycheck? Once it’s automatic you never have to think about it or worry about spending the money before it gets deposited. Finally, the most obvious choice is automating bills. The fewer checks you have to write and accounts to login to, the easier your life will be. Why spend an hour or two each week paying bills when you can pay them without thinking twice about it? Not only will you have more free time on your hands, but you may even save some money by making it automatic.

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Window Tax

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The income tax may be the most common form of taxation today, but it wasn’t always. In 1696, King William III of England introduced a “window tax” instead of the controversial income tax. Each household had to pay two shillings per year by default, and the more windows you had, the more you paid on top of that amount. (Evidence of window taxes can be found in the National Archives of Scotland as well.)

The extra tax rates took effect if you had more than ten windows, and an even higher one kicked in if you had over twenty. Although the king believed this would cause less resentment than an income tax, the citizens despised it, likening it to a tax on sunshine and air. Many responded by boarding or bricking up windows in unused rooms to avoid being targeted by the tax, which was finally taken off the books in 1851.

Beard Tax

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Comical as it may sound, there have actually been several leaders throughout history who taxed facial hair. King Henry VIII of England, in a true act of hypocrisy, taxed everyone who wore beards in 1533 while defiantly continuing to wear his own. His daughter, Elizabeth 1, later re-introduced the same tax. Tsar Peter 1 levied a similar tax on Russian citizens in 1705, forbidding anyone to wear a beard unless a tax was paid.

The penalty for those who kept their beards without paying: carrying around a sign that said “beards are a superfluous burden”, according to Pavel Florensky in his book The Pillar And Ground Of The Truth.

Hearth Tax

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Tax compliance was as much a concern in 17th century England as it is in 21st century America. In order to simplify things, King Charles II imposed a “hearth tax” in 1662. The reason? It was easier to count immovable stone hearths than human beings (who tend to evade being counted or taxed when possible.) The actual tax (discussed at length in Robert Fossier’s The Cambridge Illustrated History of the Middle Ages) amounted to two shillings per hearth, per year.

This tax was also offensive because it permitted tax officials to enter homes unannounced and inspect the number of hearths. Much like the window tax, citizens responded by clogging their chimneys, effectively rendering their hearths unusable and avoiding the taxes levied on them.

Freedom Tax

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Slavery in America is widely viewed as a black mark on the nation’s history. In Ancient Rome, however, it was a completely accepted and mainstream practice. Slaves were sometimes freed by their owners after working a set number of years, and even had the opportunity to work for others on the side and buy their freedom that way.

But slave owners weren’t the only ones who needed to be paid. The Roman government also demanded of any freed slave a 10% tax (on top of whatever they paid their owner) in exchange for their newfound freedom, according to The World Of The Citizen In Republican Rome.

Urine Tax

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No, this isn’t a late April Fool’s joke. Way back in 1st Century Rome, there was actually a government-sanctioned tax on urine. While privileged Romans had their own sewage systems, commoners had to empty chamber pots into disgusting cess pits on the street. Their bodily refuse, in turn, was then collected and used for industrial purposes around Rome.

What industrial uses could urine possible serve, you ask? As it turns out, plenty: tanning leather for one, and also cleaning and whitening togas. Fortunately, this tax was at least levied on the collectors of the urine (not the producers, according to Neatorama.)

Wig & Powder Tax

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Wigs aren’t part of the fashion mainstream anymore (proof that not everything was better in the “good old days.”) Back in the 18th century, though, virtually all men of stature proudly wore powdered wigs as a staple of their daily wardrobe. Hoping to capitalize on this trend, British parliament introduced taxes on wigs and powder in 1795, according to Stephen Dowell’s History of Taxation and Taxes in England from the Earliest Times to the Year 1885.

In practical terms, the tax amounted to what would today be forty euros. Like the hat tax (another unpopular and ill-fated tax of the same era) the wig and powder tax was roundly protested and eventually repealed without much fanfare. Foolish as these taxes sound today, the basic idea – taxing whatever people love to do and are reluctant to stop doing – can be seen time after time in today’s tax code. If you do owe, don’t fret, there are options for paying your Federal taxes.

]]> http://blog.turbotax.intuit.com/2011/04/13/strange-old-taxes-that-arent-around-anymore/feed/ 2 joshritchie http://blog.turbotax.intuit.com/2011/04/13/what-are-irs-tax-forms/ http://blog.turbotax.intuit.com/2011/04/13/what-are-irs-tax-forms/#comments Wed, 13 Apr 2011 09:38:48 +0000 Elle Martinez http://blog.turbotax.intuit.com/?p=6030 Full story]]> It’s crunch time for your taxes if you haven’t filed already. While you still have until April 18th to get it done, you’ll want to take care of it sooner than later. What do you need to be prepared for your taxes this year? What tax forms are some big ones to look out for? I’ll share the typical tax forms that you can expect to see this year.

The Most Important Tax Form – 1040s

When you submit your taxes to the IRS, you’ll have completed a 1040 form. There are three different types of 1040s, depending on your financial situation.

• 1040 - This is the standard income tax return and if you have itemized deductions, then is the form you’ll be filing .
• 1040A - This form is for those who are taking the standard deduction and meet other guidelines.
• 1040EZ - A 1040EZ is the simplest to fill out and is for the most straight forward of returns.

Software like TurboTax an automatically file the correct form for you as you go through the process.

Informational Forms – W2s and 1099s

The benefits of having uniform tax forms is that it standardizes how the IRS gets its information and improves its efficiency. The two big forms that you should’ve already received to help you fill out your 1040 form are W2s and 1099s. Your employ sends out W2s for all your income last year with them which goes into line 7 of your 1040. It also records the federal income, social security, and Medicare tax withheld from your pay which has a tremendous effect in calculating your tax obligations. If you’ve also elected to participate in your company’s 401(k), your contributions are recorded on your W2 as well, lowering your income that can be taxed. 1099 forms are for other sources of income such as  independent contractors income, unearned income like dividends and interest over the course of the year, and HSA distributions. The 1099s most taxpayers are familiar with are 1099-INT, 1099-DIV, and 1099-MISC. Since I’m self-employed, I keep track of what 1099s to expect from my contracts. You may also be required to fill out scheduled forms. These forms are meant to gather more information to determine your tax obligations for the past year.

• Schedule A - Itemized Deductions
• Schedule B - Interest and Dividends
• Schedule C - Profit/Loss from Business

Being as accurate as possible is for your own benefit and will make the process much easier.

Thoughts on Tax Forms

While there are certainly more forms that you may encounter when filing your income taxes, those 3 are the most commonly seen. I’ve used turboTax for the last few years and found it extremely helpful with handling all of our tax forms. How about you? When you filed your taxes last year, what forms did you have to fill out?