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Entries in Income Taxes (25)

Wednesday
Sep262012

USA Harvest Founder Charged with Looting Charity

Nick M Do/Getty Images(NEW YORK) -- The founder of charity group USA Harvest, which has ties to celebrities Scarlett Johansson, Hillary Duff, the Goo Goo Dolls and Green Day, has been charged by the Justice Department with stealing more than $553,000 from the organization.

Hugh “Stan” Curtis, the founder of USA Harvest, has been charged by the U.S. Attorney’s Office in Kentucky with mail fraud, money laundering and filing false income tax returns with the Internal Revenue Service.

Curtis allegedly stole over $180,000 between September 2005 and September 2007 of donations that he solicited on behalf of the organization -- a tax-exempt charity. The theft included some large donations meant for USA Harvest.  

According to the criminal charges, Curtis allegedly deposited checks into his bank account for the charity that included a $20,000 and a $25,000 check from donors.

The charity provides food and meals for individuals in need by partnering with restaurants and hospitals to get leftover food to soup kitchens and food banks. According to the USA Harvest website, which highlights their ties with celebrities such as Johansson, the charity works with 5,400 agencies to provide food and notes that they have provided over 437 billion pounds of food to organizations since their founding in 1989.

The criminal charges filed by the Justice Department allege that Curtis failed to pay taxes on approximately $553,891.67 in personal income which included $183,000 in donations and over $370,000 in personal travel expenses that he billed to the charity.

According to a press release from the U.S. Attorney’s Office in Western Kentucky, “None of the charities Curtis has been associated with -- USA Harvest, Kentucky Harvest, and Blessings In A Backpack -- have been accused of any wrongdoing or impropriety.  The only charitable organization to have suffered any loss as a result of the conduct charged in the information was USA Harvest.”

A request for comment from USA Harvest by ABC News has not been returned.  A review of the court docket did not reveal a defense attorney for Curtis.  

If convicted of the charges, Curtis could face a maximum of 52 years in prison.

Copyright 2012 ABC News Radio

Tuesday
Aug142012

Paul Ryan's Budget Plan Could Raise Middle Class Taxes, Says Panel

Creatas/Thinkstock(NEW YORK) -- While Mitt Romney would reportedly pay less than 1 percent of his income in taxes under Paul Ryan's previous tax plan, most Americans making less than $200,000 would see a tax hike under the budget Ryan proposed before he was selected to be Romney's running mate.

Most of Romney's income is comprised of interest income, capital gains and dividends, which are not taxed under the plan Ryan first introduced in 2010.

Ryan proposed two tax rates, 10 and 25 percent, instead of the current 6 percent.

The House Republican budget for the 2013 fiscal year, passed by the House in June, would raise taxes by $1,358 for jointly-filing households earning between $50,000 and $100,000, assuming the additional income is taxed at a 10 percent rate, according to a report published earlier this summer by the Joint Economic Committee of Congress.

Households with incomes between $100,000 and $200,000 would see their taxes increase by $2,681, the Joint Economic Committee said.

Rep. Ryan's office did not return a request for comment.

The committee reported Ryan's budget plan would give the richest Americans -- those who make over $1 million -- a tax break of about $300,000.

According to the Center for Budget and Policy Priorities, Ryan's budget plan would make the Bush tax breaks permanent, including the extra tax cuts on taxable household income above $250,000, and would cut the top tax rate paid by the wealthiest Americans and the corporate income tax rate by nearly 30 percent.

Americans for Tax Fairness Action, a left-leaning political group, criticized Ryan for giving tax breaks to millionaires and ending the Medicare guarantee.

"The bottom line is that our tax system is rigged in favor of the wealthy and big corporations who play by their own set of rules," said Sean Crowley, communications director for Americans for Tax Fairness Action.  "The tax system is not working for most Americans.  The richest already get the biggest tax breaks.  It's not fair and we need to radically overhaul our tax system."

Copyright 2012 ABC News Radio

Friday
Jun012012

How Did 21,000 Wealthy Americans Avoid Paying Income Tax?

Ryan McVay/Thinkstock(NEW YORK) -- The richest woman in Wisconsin, Diane Hendricks, is worth an estimated $2.8 billion, but she did not pay a dime in state income tax in 2010, the Milwaukee Journal-Sentinel first reported.

Because of a change in how her company, ABC Supply Inc., the country’s largest distributor of roofing, windows and siding, is structured, Hendricks reduced her personal state income tax burden from $2.3 million in 2009 to zero in 2010, according to records the state Department of Revenue released to the Journal-Sentinel.

While a tweak in ABC’s corporate structure allowed its CEO to get out of state income taxes, a complex web of deductions and exemptions in the federal tax code have allowed more than 20,000 wealthy tax filers get off the hook on paying federal income taxes.

A recent IRS report showed that 20,752 households that reported earning more than $200,000 in 2009 paid no federal income taxes.  About 1,500 of those tax-free Americans were millionaires.

So how does someone in the top 3 percent of America’s income earners finagle their income tax burden down to zero?  For the majority of them, it’s all about donating to charity, investing in local and state governments, earning money overseas and writing off doctor bills.

In Hendricks’ Wisconsin case, ABC Supply switched from an ”S” corporation, which passes all of its profits and losses through its owner to be taxed under personal income, to a “C” corporation, which stands independently of its owner and whose income is subject to corporate taxes.

Scott Bianchini, ABC tax director, told the Journal-Sentinel that the switch was a “substantial part” of why Hendricks had no state income tax liability.  Bianchini noted that while Hendricks’ tax burden was minuscule this year, the billionaire has paid more than $10 million in taxes since 2005.

On the federal level, the nearly 21,000 high-income earners who aren’t paying federal income tax represent only one half of one percent of the four million tax filers that make up the top 3 percent.

They account for an even smaller fraction of the 59 million tax filers who did not pay income tax in 2009.  The vast majority -- 56 million -- of the people who skipped out on these income taxes earned less than $50,000 per year.

In 1969, Congress was so up in arms about a mere 155 individuals who earned more than $200,000 and paid no income tax that it passed the Alternative Minimum Tax (AMT), which aims to prevent wealthy people from claiming too many tax exemptions and deductions.

More than 40 years after the AMT went into effect, the number of wealthy, income-tax-free individuals has ballooned to 133 times as many as the 155 that inspired the new tax.

In the 2012 battle for the White House, President Obama has made taxing these wealthy Americans a cornerstone of his re-election campaign.  Under his tax plan, the Bush tax cuts would expire, raising taxes for married couples earning more than $212,300 by 3 percentage points.  Obama also plans to enact the “Buffett Rule,” which creates a minimum tax rate of 30 percent for millionaires.

Mitt Romney takes a virtually opposite approach to tax reform for the wealthy.  His plan not only extends the Bush tax cuts, but further reduces tax rates at all income levels by 20 percent, which puts the tax rate for those making more than $200,000 at about 28 percent.  Romney ardently opposes instituting a minimum tax for millionaires, such as the Buffett Rule.

Under Obama’s plan, the top 1 percent of income earners would see their taxes go up about 5 percent.  Under Romney’s plan, they would go down by nearly 8 percent, according to an analysis by the Tax Policy Center.

Copyright 2012 ABC News Radio

Monday
Feb272012

Tax Tip: Calculating Investment Income

Comstock/Thinkstock(NEW YORK) --  If you had investment income from stocks last year, its important that you get your numbers right in time to file your tax returns.

As Eric Smith of the IRS explains, "People often make mistakes in calculating the gains and losses on the sale of stock."

Smith says taxpayers will need two forms: "With the form 8949, you're going to seperate your short-term activity, your long-term activity.  You're going to separate transactions where you have basis reported to you on the form 1099."  This involves the cost basis rule.

Kathy Pickering, who runs the H&R Block Tax Institute, adds that there's a change this year.

"Brokers and financial agencies are issuing those forms that show your stock transactions.  This year they have to report the basis on those transactions," she says.

In past years they didn't have to report as much information about stock values.

"For those who've had to file this in the past, you know, it can be a little bit tough to try to calculate the basis that will make it easier," Pickering says.

Copyright 2012 ABC News Radio

Tuesday
Feb212012

Tax Tip: Do You Have to File?

Creatas/Thinkstock(NEW YORK) -- With the tax filing deadline less than two months away, many are making plans to submit their tax returns soon.  But as Eric Smith with the IRS explains, some people don't have to file.

"If your income is very low chances are you are not required to file a return -- but there are many situations where you'll want to file a return anyway," he says.

ABC News asked tax preparer Janice Hayman about who might not need to file.

She says, "There may be retired people that don't need to file a tax return if their taxable income is low enough."

And if you have low or moderate income, be aware of the earned income tax credit.

"If you're trying to make ends meet on about $49,000 or less there's a good chance you may qualify for this credit," Hayman notes. "About one in five eligible tax payers fail to claim the credit."

Copyright 2012 ABC News Radio

Friday
Feb102012

Tax Tip: Preparing and Filing Your Taxes for Free

iStockphoto/Thinkstock(NEW YORK) -- The majority of U.S. taxpayers are eligible to have their tax returns filed for free, which begs the question: Why pay money for for tax preparation software?

"If your income is about $57,000 or less, there's a good chance you can qualify to file your return electronically and do it for free," explains Eric Smith with the IRS. "That profile fits about 70 percent of American taxpayers."

The IRS offers a service called Free File that uses brand name tax preparation software. Taxpayers choose which program they want to use, then follow the instructions.

"You enter information from W-2s and 1099s, but you also answer questions that can help the program help you determine which deductions and credits you qualify for," Smith says.

Depending on the state you live in, you might also get Free File to do your state taxes, as well.

And taxpayers seem to like it. The IRS says 98 percent of people who use Free File would recommend it to a friend. 

Copyright 2012 ABC News Radio

Thursday
Jan052012

IRS Gives Taxpayers Two-Day Extension to File Returns

iStockphoto/Thinkstock(WASHINGTON) -- The Internal Revenue Service officially kicked off the 2012 tax filing season on Wednesday, and this year, taxpayers are in store for a federal tax holiday of sorts -- a two-day extension to file their 2011 tax returns.

Tax Day will be moved up to April 17, given that the usual April 15 deadline falls on a Sunday this year and the following day is Emancipation Day, a holiday observed in the District of Columbia.

As the IRS explains, "According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year."

The agency expects to receive more than 144 million individual tax returns in 2012.  Taxpayers can begin submitting their e-file and Free File returns on Jan. 17.

Copyright 2012 ABC News Radio

Tuesday
Jul122011

Lawmaker Concerned Debt Deal Could Mean Income Tax Increases

Creatas/Thinkstock(WASHINGTON) -- Sen. Jim Webb, D-VA., says he has "serious concerns" about income tax increases as part of debt limit deal.

"As the Congress works to resolve the current impasse on the deficit, I must again emphasize my belief that revenues should be raised by other means, including ending costly subsidies and tax loopholes or by adjusting such measures as capital gains," Webb wrote in a paper statement Tuesday.

Webb says that he has consistently opposed the notion of increasing revenues through raising taxes on “ordinary, earned income."  Rather, he has introduced and supported legislation for numerous proposals that do otherwise -- such as closing the “carried interest” tax loopholes, eliminating counterproductive ethanol subsidies, ending costly agricultural subsidies, and a one-time windfall profits tax on bonuses over $400,000 that were paid to executives benefiting from the taxpayer bailout of companies who received more than $5 billion from the Troubled Asset Relief Program (TARP).

“Taken together, such provisions could reduce the federal deficit by hundreds of billions of dollars and restore a measure of fairness to the tax code,” Webb says. “I believe these and other similar approaches should be taken by Congressional and Administration leaders, rather than increasing the tax burden on Americans whose paychecks are coming from earned income as the result of their direct services.”

Copyright 2011 ABC News Radio

Wednesday
Apr062011

Tax Tip: Deducting for Charitable Donations

Brand X Pictures/Thinkstock(NEW YORK) -- Giving money to your favorite charity qualifies as a tax deduction, but "the key is if you make a charitable contribution, get a receipt or make sure your bank account shows who you've made a charitable contribution to," says Eric Smith with the IRS.

The money must go to a registered nonprofit group, religious organization or charity.

Have you donated clothing to organizations like Goodwill or the Salvation Army?

"If you can keep a list of -- 'Okay, there were four pair of pants and two shirts and the pants are valued at $3 and the shirts are at $2.'  That would be really good documentation to be able to provide."

Expenses involved in charitable work may also be deductible.

Copyright 2011 ABC News Radio

Monday
Apr042011

Tax Tip: Getting Help from the IRS?

Comstock Images/Thinkstock(NEW YORK) -- Is the IRS more user friendly than it used to be?

Tax accountant Janice Hayman thinks so. “They really are trying to encourage people to be open with them," she says. "Contact them. Communicate with them. Let them know if you're having a problem paying them."

The worst thing you can do about your taxes, Hayman says, would be to ignore them.  “Just don't run and hide. Do something," she says.  "Call them. Lay it on the line, tell them your story and they will try to work with you."

Jodie Reynolds with the IRS says there is a toll-free number you can call: “Anybody can call the 1-800-829-1040 line with tax law questions – account questions, if you have a balance due."

But Hayman says IRS.gov is quicker and often more reliable than calling the IRS.  “I think going to the IRS website should be first choice," she says.

Copyright 2011 ABC News Radio







ABC News Radio