Tag / Taxes

by Hoosier Econ

Indiana Businesses Stuck With Unemployment Taxes

Indiana business owners get hammered with an aray of taxes that the public doesn’t take into consideration. One of them is unemployment taxes they have to pay. Indiana is still paying off the loan from federal government when the economy went south in 2008. Here is more from News-Sentinel.com:

    “We have a surplus? That’s because employers are eating it,” said Black, controller of Nowak Supply Co., 302 W. Superior St., which in the past two years has paid $10,000 in federal tax surcharges because Indiana still has not repaid all of the $2.4 billion it borrowed from the federal government in 2008 when the recession wiped out the state’s unemployment compensation fund. Nowak, which paid more than $14,000 in state and federal unemployment taxes last year, expects to pay another federal unemployment tax surcharge this year in excess of the $6,000 it paid last year — a penalty shared by other employers throughout the state.

    Then the recession hit and the account’s black ink turned into a raging river of red, which resulted in officials from Indiana and at lest 25 states to seek more than $47 billion in federal loans to keep unemployment benefits flowing. Indiana was supposed to have repaid its loan five years ago but still owes about $900 million, Frank said — debt that will be repaid in part by the penalties Nowak, Black and no doubt countless other business owners consider so unwise and unfair.


Unemployment taxes show that it makes businesses think about or actually hire less with its regressive taxation formula:

    After all, if a company’s penalty is determined by the number of employees, isn’t that just one more incentive to keep the labor force as small as possible?

by Hoosier Econ

How Many Immigrants in Indiana are Here Illegally?

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The Times Herald wrote up an article on Indiana’s immigrant population and found this piece of data:

The Indiana Business Research Center says a Latino population of 422,200 will double in the next two decades. The Pew Research Center estimates about 85,000 of the state’s Latino population may be here illegally.

by Hoosier Econ

MLB Spring Training Helps Players Pay Less Taxes

Major-League

While baseball purist fans rejoice in spring training opening up, so do the players not just for the game but also their paychecks. Spring training camps are located in Arizona and Florida which helps players pay less since they are legally working in those states. This helps cushion the tax blow they receive from the states they play in during the regular season.

Sean Packard, CPA, who is Director of Tax at OFS. He specializes in tax planning and the preparation of tax returns for pro athletes shared this tax benefit with Forbes.com:

Spring training is an opportunity for players to escape state income taxes on roughly 20% of their income. Professional athletes pay taxes in all states in which they play. This is known as the “jock tax.” Most states calculate a player’s jock tax based on the number of duty days spent inside the state divided by the total days a player works.

Unlike most sports, where preseason training occurs near the team’s home, spring training takes place in one of two states, Florida or Arizona. Florida does not have an income tax and while Arizona does, it does not begin taxing professional athletes until the beginning of their teams’ regular season. This means that duty days spent in the state prior to the season do not count as taxable days. Holding spring training in these two tax havens can save elite players hundreds of thousands of dollars in state income taxes.

Packard provides an example of how money a player can save just at spring training.

The portion of Santana’s salary allocable to spring training under the duty day calculation is $5.355 million. If the Mets held spring training in New York instead of Florida, this income would be allocated to New York and subject to their 8.82% income tax. But because the Florida (and Arizona) climate is more conducive to baseball in February, Santana will save $472,000 in state income taxes.

by Hoosier Econ

Obamacare Enrollees Getting Taxed

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Last week I reported H&R Block website had a new feel good name for one Obamacare tax.  This week new analysis comes from Americans for Tax Reform about more taxes within the law:

The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block.  This clawback is reducing the refunds for these taxpayers by 17 percent this filing season.

Families of four earning less than $97,000 are eligible for a credit.  So is a single mother with two children earning less than $80,000 and an unmarried/childless taxpayer earning less than about $12,000.  By definition, these are the lowest income recipients of Obamacare health insurance outside the Medicaid-eligible population.  Higher income taxpayers received no tax subsidy and aren’t facing this tax season surprise.

According to the study, a majority of credit recipients–52 percent–have had to pay back the IRS an average of $530, reducing their refunds by an average of 17 percent.

Read the rest here

by Hoosier Econ

New Name for Obamacare Tax

I filed my taxes this past weekend online through H&R Block and stumbled upon the Obamacare tax. The sly government gurus have gave it a warm fuzzy college theory name of “Shared Responsibility Payment”.

Remember, under collectivism, shared responsibility also involves shared misery.

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by Hoosier Econ

Indiana in Top 10 for Tax Climate

Via The Payroll Blog

10 best business tax climates can be found in:

Wyoming
South Dakota
Nevada
Alaska
Florida
Washington
Montana
New Hampshire
Utah
Indiana

The worst tax climate states for small business, according to the report, are:

New York
California
Minnnesota
Wisconsin
North Carolina
Maryland
Rhode Island
Connecticut
New Jersey
Vermont

by Hoosier Econ

Tax Season: Deductions, Credits & More

Tax filing season is underway so here is some basic information for deductions and tax credits. Read more at Forbes as they have a big list for all types of taxpayers.

Standard Deductions. The standard deduction rises to $6,200 for single taxpayers and married taxpayers filing separately. The standard deduction is $12,400 for married couples filing jointly and $9,100 for heads of household.

Earned Income Tax Credit (EITC). For 2014, the maximum EITC amount available is $3,304 for taxpayers filing jointly with one child; $5,460 for two children; $6,143 for three or more children and $496 for no children.

Child Tax Credit. For taxable years beginning in 2014, the value used to determine the amount of credit that may be refundable is $3,000 (the credit amount has not changed).

Kiddie Tax. For 2014, the threshold for the kiddie tax – meaning the amount a child can take home without paying any federal income tax – remains at $1,000.

by Hoosier Econ

How the Wealthy Write Off Taxes

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Whenever I see someone famous on TV talking about the need for higher taxes or claiming they enjoy paying taxes I always say, “Their accountant is laughing”.
Senator Tom Coburn issued a report showing exactly what I mean.

The tax code is so peppered with special giveaways that companies such as Facebook end up getting refunds, and high-profile athletes and artists use their tax-free foundations to give friends jobs while avoiding taxes — all leading to higher income tax rates for the rest of us, Sen. Tom Coburn charges in a new report being released Tuesday.

Here is a snapshot of what was found by his staff:

-Baseball owners are able to claim their players “depreciate” over time, the same way farms are able to claim their tractors depreciate
– Athletes and Hollywood stars who form tax-exempt organizations that they then use as tax shelters, throwing parties or paying employees’ salaries from the tax-exempt accounts while dedicating almost no money to charitable works.
-Kanye West’s foundation spent more than $1 million in 2009 and 2010 but “gave virtually nothing” to charity. Fellow performer Lady Gaga’s Born This Way Foundation raised $2.6 million but only gave away $5,000 in grants

You can read more via Washington Times

by Hoosier Econ

Wind and Solar Carry Higher Megawatt Prices

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Economic Policies for the 21st Century recently published a lengthy article titled America Should Avoid Germany’s Failed Energy Policy. Found an interesting price comparison of renewable energy vs standard forms.

These problems with green energy help to explain why only 4 percent of U.S. energy comes from wind and solar. Data from the Energy Information Agency show that, for plants entering service in 2019, levelized wind power costs will be between $64 and $175 per megawatt. Solar power will cost between $155 and $195 per megawatt. For comparison, conventional natural gas fired plants produce energy at a levelized cost of $14 per megawatt. Nuclear comes in at $71 per megawatt, comparable with efficient wind farms. The costs to consumers from renewable energy mandates are even higher when tax incentives are included.