Oregon tax law may or may not change this year, and this article helps to explain the process we are in with regards to filing 2010 state taxes. Only a small percentage of tax filers are affected by these changes, and everyone can file now and will get their refund if eligible. If Oregon tax law does change, which is not for certain yet, then amendments are easily done to the return. Please see the below article for an overview on what the situation is at present. Email the office at office@mbtaxpro.com with any questions, thanks!
reprinted from OregonLive.com
The holiday trimmings are cut and gone, the ham and cookies consumed. Time to gather your W-2s, taxes are due soon.
I know. I'm way ahead of you. Ducks fans, remotes glued to their hands, wouldn't deign pick up this column for days.
But Congress wrangled with the tax code so much last month, we all could use a reality check. Especially now that some of my tips in December no longer apply.
As we reported today, recent moves by Congress make the tax code more complex than Chip Kelly's playbook. Some Oregonians will have to add federal tax breaks back on Oregon returns, unless the state Legislature acts (preferably before spring training).
For the self-employed, small business owners, teachers, and parents paying college tuition -- this could be a good year to file a state extension.
No wonder individuals and businesses devote 6.1 billion hours a year to mollifying the tax man, according to IRS Taxpayer Advocate Service's Nina E. Olsen. Six of 10 individuals hire help to do it, and three in 10 use software.
The typical taxpayer spends $258 a year complying with this code, Olsen says. That's money you can't use to watch the BCS title game on a new LCD TV.
Olsen, by the way, is actively soliciting your comments on reforming taxes online.
"What would you be willing to give up," she asks on the site, "if you knew that others are giving up their breaks and the end result would be a much simpler system?"
Harry Reid, John Boehner: Will you listen? (No need to weep, John; just wondering.)
While you respond or switch pregame shows, I think it best NOW to highlight some of the wrinkles taxpayers face BEFORE we all start procrastinating and file our returns April 14.
Forms and filing
Tax deadline: For once, it might be OK to wait until April 14. This year, the feds and Oregon give us until 11:59 p.m. April 18 to file.
The reason: Emancipation Day. On April 16, 1862, President Abraham Lincoln signed D.C.'s Emancipation Act, making its residents the first freed in the nation.
The district commemorates the holiday, but this year it falls on a Saturday. That means the public holiday is April 15. The IRS will be closed and, regrettably, unable to accept returns.
Emancipated! For three days!
Forms: You say you want austerity? The IRS will do its share by no longer mailing federal returns or instructions to you.
Last year, seven in 10 Americans filed returns electronically. Now the agency wants more of you to plug in. It'll save the IRS $10 million in printing and mailing costs, spokesman Richard Panick said, as well as reduce filing errors.
For those not on board or online, the agency will make paper forms available at libraries, by mail if you call 1-800-829-3676 and online.
Oregon is still mailing a quarter-million forms in 2010 (got mine on New Year's Eve) but only to those who filed paper forms last year. It's a good thing, too. Free e-filing wasn't as widely available to Oregon taxpayers as it was on the federal level.
This year, the state won't be depositing forms at local libraries or most post offices, Oregon Department of Revenue spokesperson Rosemary Hardin said. But you can always call 1-800-356-4222 to request one, she said.
Other breaks
No tax on long-term capital gains and qualified dividends: For those in the 10 and 15 percent tax brackets, Congress will, until 2012, allow you to sell your stocks, bonds or mutual fund assets that you've owned for more than 12 months without taxing you on the gains.
For 2010, the 15 percent tax bracket includes singles or married couples filing separately with taxable incomes of $34,000 or less. Couples filing jointly fall into the lower brackets if their taxable incomes fall below $68,000.
Taxable income is your adjusted gross income minus deductions. Capital gains assets include stocks, bonds, mutual funds, furniture, even classic cars. Qualified dividends shelled out by stocks and mutual funds also avoid taxation.
Oregon residents, however, will still owe income tax on those gains, usually at a rate of about 9 percent.
And be careful. A couple who sell a lot of stock and push their taxable income above the $68,000 tax-bracket ceiling ($34,000 for singles) might end up paying capital-gains tax on the amount that exceeds the tax-bracket threshold.
Seniors with lower incomes who sell a lot of long-term capital gains could end up with enough income to have to pay taxes on half or most of their Social Security benefits. Figuring this out is complicated, so consult your tax adviser.
Sales tax deduction: Washingtonians, rejoice. You'll get to deduct sales tax if you itemize. Congress extended that break, which seems about to expire every year.
Home energy credits: Congress extended for two years the Nonbusiness Energy Property Credit set to expire Dec. 31.
Unfortunately, it also toned it down.
The credits, part of the 2009 stimulus package, are now good for 10 percent (down from 30 percent) of the amount spent on such improvements as new heating and cooling equipment, insulation and roofing, up to $500. But Congress limited some incentives on certain improvements to $300 or less, including windows, water heaters and gas furnaces.
It also resurrected credits for builders of highly efficient new homes. Visit energytaxincentives.org for details.
Estate tax: Yes, Congress changed the estate tax rules. You don't really need to worry unless you inherited assets worth more than $5 million last year. If you did, you best seek advice from an accountant or estate-planning attorney to figure out your strategy. Oregon's inheritance tax still kicks in after only $1 million in inheritance.
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