Preparing for Tax Season

It is crucial to complete all of your tax forms well before the deadline to avoid the last minute crunch. Waiting to fill out all of the W-2s and 1099s for the minute before the deadline will only increase the amount of pressure from tax season, and your stress level. It is helpful to create an organized process that works for you, so that compiling documents and numbers and making decisions doesn't become a snowball effect of stress and chaos. There are five steps you can take to make your tax preparation manageable.

(1) Gather your receipts to know all of your deductions

(2) Make a list of all your income sources - employers, banks, mutual funds, etc.

(3) Consider an IRA contribution

(4) Review your withholding instructions

(5) Learn from this year and create a better system for next year.

Read the article at Forbes.com

Tax Cut Extension Supports Small Business

President Obama's American Jobs Act will cut employer and employee's tax contributions from 4.2 percent to just 3.1 percent.

For the 22 million small businesses, this tax relief will allow both the employers and employees to be paid portions of the FICA contribution. The employer will see their tax liability decrease, which will help small businesses grow long-term.
The tax relief will extend to four different types of business structures: sole proprietorship, partnership, corporation and Limited Liability Company. Each structure pays the same amount in FICA taxes, and each has certain advantages and disadvantages.

 Millions of businesses will generate economic activity and help the economy return to prosperity from the tax relief.

For more, read

Obama vs. Romney

Obama's key argument in the upcoming presidential campaign: accusing former Massachusetts Gov. Mitt Romney of "flip-flopping".

David Axelrod, Senior Obama strategist, says that Romney has changed positions on a series of issues such as his stance on taxes, health care and trade with China.

"On health care, [Romney] continued to assert that his program, which was a model of our health program, was for the state of Massachusetts and that every state has to develop its own program," Axelrod said. "But in 2007, he told Newsweek that the Massachusetts plan would be a 'model for the nation'".

This leads Axelrod to question if Romney can be trusted as president.

"If you are willing to change positions on fundamental issues of principle, how cane we know what you will do as president?" Axelrod said.

At the GOP debate, Axelrod listened to Gov. Romney repeatedly talk about the middle class, however, his program does not benefit this group of people.

"When you look at his program, what you find is that.. the tax benefits largely accrue to corporations and upper income Americans. When you get down to the middle class, it means a $50 tax cut for the typical family," said Axelrod.

The Obama Administration estimates the tax cut extension will give workers an extra $1,500 in tax savings. However, Romney does not believe the extension will be a solution. Romney referred to Obama's payroll tax cuts as "temporary little Band-Aids". He is in favor of keeping taxes and burdens down on American businesses and employers. Rather than an extension, Romney prefers "permanent changes to the tax code". 

Senior Romney campaign adviser Eric Ferhnstrom responded to Axelrod on Twitter: “Mitt Romney believes this election is about saving America but @davidaxelrod thinks it’s about saving Barack Obama’s job.”

Further Reading: Washington Post , ABC News

Tax Holiday Extension to Avoid Recession

With the risk of another recession, businesses have been hesitating to hire. The unemployment rate was 9.1 percent for a third straight month in August. Even with the return of state government workers in Minnesota increasing payroll, the results were not repeated in September. The U.S. economy provided 103,000 new jobs in September, however, economists estimate it will take at least 100,000 new jobs every month to decrease the unemployment rate.
This is why the payroll tax holiday has been extended. Obama implemented the extension so businesses can add new workers, or raise salaries for existing employees. Businesses will have this privilege if they increase their payrolls by $50 million from the previous year. According to U.S. economist, Mark Zandi, a key attribute of the payroll holiday is that it is straight-forward and will help businesses without complicated direct-assistance tax credits. The payroll tax will be reduced from 6.2 percent to 3.1 percent for 2012.

For further reading: Gain in Payroll , Zandi , Snap Analysis