According to CNN, “taxes are likely to head higher. And a return to historical levels could derail your retirement savings – unless you protect yourself now.” We shall see what they have to say in detail:

If you’re among the 130 million people who qualify for the rebate, that’s great. But you should savor the feeling. Regardless of what happens over the next few months, your taxes have nowhere to go but up in the long-term future.
And if you didn’t qualify for the tax rebate because you make too much money [it phased out at an adjusted gross income of $75,000 for singles or $150,000 for married couples] you’re even more vulnerable.
That is a monumental cut in taxes over a relatively short period of time. And the same story holds true for taxes on investment income: the maximum rate on long-term capital gains has plunged, from 28% in 1980 to 15% today.
Today’s low rates can’t last. The tax cuts of the past decades were supposed to lift economic growth (which they did) and hike tax receipts faster than federal spending (which they did not). Not even close. The resulting tsunami of federal debt is one reason to expect your taxes to rise over the next quarter-century.
And then there’s the looming retirement of 77 million Baby Boomers. The oldest Boomers have already become eligible for Social Security, and they’ll become entitled to Medicare in three years. According to research by the National Center for Policy Analysis, if today’s low tax rates remain in place, a staggering 76% of all federal income tax revenue in 2050 will be soaked up by those two programs alone - before a penny is spent on defense, national parks, health care for the poor or haircuts for congressmen.
Clearly, something has to give; it will undoubtedly include today’s historically low tax rates. And that has major implications for your retirement savings strategy.
All of this means that when you’re saving for tomorrow, you must factor in the very real possibility that you’ll be in a higher marginal tax bracket when you retire.
That means that you should be saving in vehicles that allow you to pay taxes today, instead of putting them off until tomorrow. The Roth IRA and the new Roth 401(k) are two examples.
You can contribute up to $5,000 to a Roth IRA [$6,000 if you’re age 50 or older] in 2008. To be eligible, your modified adjusted gross income must be less than $116,000, or $169,000 as a couple filing jointly.
A Roth 401(k), on the other hand, has no income caps - no matter how much you make, if your employer offers it, you can contribute to it. You can contribute up to $15,500 to a Roth 401(k) [$20,500 if you’re 50 or older] in 2008. You can also divvy up your 401(k) contributions between the traditional and Roth versions, as long as your total contributions don’t exceed the annual limit.
Sure, it’s conceivable that tax rates won’t go up in the future. But why take that chance? By diversifying and putting some of your savings into Roths, and other money into accounts that let you pay tax up front, you’ll at least be hedging your bets.

I guess you would’ve got an idea on why the tax rates will rise in the future.
Take care see you soon with another article.

We all would have got to know by now what the 3 presidential candidates have to offer in terms of tax schemes. But here’s brief review:

Leading democrats propose new spending and higher taxes.
McCain favors lower taxes, lower spending.

Clinton:

• $60 billion funding of new National Infrastructure Bank to finance large – scale projects.
• $10 billion emergency infrastructure repair fund.
• $150 billion spending on green energy technologies over 10 years.
• Tax credits to spur retirement savings, $20 billion - $25 billion a year.
• $110 billion annual investment to expand health care coverage.
• Funding sources – Reverse Bush income tax cuts on high earners; maintain estate taxes; raise oil company taxes.

Obama:

• $60 billion investment over 10 years through National Infrastructure Reinvestment Bank.
• $150 spending on green energy technologies over 10 years.
• Making Work Pay tax credit of $500 per person, saving taxpayers $70 billion a year.
• $65 billion annual investment to expand health care coverage.
• Funding sources - Reverse Bush income tax cuts on high earners; maintain estate taxes; raise oil company taxes; hike taxes on capital gains and dividends; end Iraq war; tax carbon pollution.

McCain:

• Cut corporate income tax rate to 25% from 35%
• Let business deduct 100% of the cost of equipment purchases in first year.
• Double child tax deduction.
• Funding sources – End earmarks; budget savings.

The focus on McCain’s economic policies is to try to keep government from growing too big and getting in the way of the private sector. Clinton and Obama, on the other hand, want the government to take a more direct role in the economy.
Both Clinton and Obama want the government to be a bigger player in health care. They would finance coverage for the uninsured by reversing President Bush’s tax cuts for those earning at least $250,000. They also would give individuals the choice of buying insurance directly from the government.
McCain believes regulation and tax policy raise health care costs by restricting competition. He would give everyone a tax credit to buy insurance, departing from the current system that favors people who buy expensive policies at work.
Clinton and Obama would apply their power to try and change the rules of trade. Both, for example, have vowed to back out of the North American Free Trade Agreement unless Mexico and Canada renegotiate.
McCain embraces free trade and would cut taxes to improve America’s competitive position. Meanwhile, he would try to cushion the blow for workers hurt by globalization with a renewed emphasis on retraining and reform of the unemployment insurance system.
While election-year promises at least provide a sense of the next president’s priorities, budget analysts aren’t impressed with any of the candidates’ plans to finance their proposals.

See you later with another article.

Hi! Before we see how taxes work, I thought of briefing you moms about the types of taxes.

• Alternative Minimum Tax [AMT] - is part of the Federal income tax system of the United States. There is an AMT for those who owe personal income tax and another for corporations owing corporate income tax.
• Capital gains tax [CGT] - is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.
• Corporate income tax – this refers to a tax levied by various jurisdictions on the profits made by companies or associations.
• Estate tax in the Unites States - a tax imposed on the transfer of the “taxable estate” of a deceased person, whether such property is transferred via a will or according to the state laws of intestacy.
• Excise tax [includes taxes on cigarettes and alcoholic beverages] - In the United States, the term “excise” means: (A) any tax other than a property tax or capitation [i.e., an indirect tax, or excise, in the constitutional law sense], or (B) a tax that is simply called an excise in the language of the statute imposing that tax.
• Federal income tax - The federal government of the United States imposes a progressive tax on the taxable income of individuals, partnerships, companies, corporations, trusts, decedents’ estates, and certain bankruptcy estates.
• Federal unemployment tax [FUTA] -  The Federal Unemployment Tax Act [or FUTA, 26 U.S.C. ch.23] is a United States federal law that imposes a federal employer tax used to fund state workforce agencies. Employers report this tax by filing an annual Form 940 with the Internal Revenue Service. In some cases, the employer is required to pay the tax in installments during the tax year. This tax covers the costs of administering the unemployment insurance [UI] and job services in all states.
• FICA [Federal Insurance Contributions Act ] tax [includes Social Security tax and related programs] – This is imposed by the federal government on both employees and employers to fund Social Security and Medicare.
• Gasoline tax - A fuel tax [also known as a petrol tax, gasoline tax, gas tax or fuel duty] is a sales tax imposed on the sale of fuel.
• Gift tax – A tax on transfers of property during a person’s life; the gift tax prevents avoidance of the estate tax should a person want to give away his/her estate just before dying.
• Luxury taxes - luxury tax is a tax on luxury goods — products not considered essential. A luxury tax may be modeled after a sales tax or VAT, charged as a percentage on all items of particular classes, except that it mainly affects the wealthy because the wealthy are the most likely to buy luxuries such as expensive cars, jewelry, etc. It may also be applied only to purchases over a certain amount, for instance, some U.S. states charge luxury tax on real estate transactions over a limit.
• Property tax - Property tax, or millage tax, is an ad valorem tax that an owner pays on the value of the property being taxed.
• Sales tax and equivalent use tax - A sales tax consumption tax charged at the point of purchase for certain goods and services. The tax is usually set as a percentage by the government charging the tax. There is usually a list of exemptions. The tax can be included in the price [tax-inclusive] or added at the point of sale [tax-exclusive].
• State income tax - State income tax is an income tax in the United States that is levied by each individual state.
• Tariffs -  These levied an average tax of about 20% of the value of some imported goods [imports that were not taxed were “free”].

These are some of the general taxes imposed. From the next article onwards we will mainly see about the taxes which are connected with home & business. Until then take care see you soon.

Hello everyone, this blog called TAXES will be all about planning your taxes, both business and personal.  Proper tax planning will undoubtedly help save you money. We also will discuss your tax responsibilities, filing income taxes and tax saving tips for home based business owner. Some people do not have the slightest idea of how taxes work so we will take pleasure in educating you with everything we know. We will also look at what kind of business opportunities this field generates.  Some of them might be suitable to you. Have a great day!!!