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William Perez
Guide since 2004

About.com Tax Planning: U.S.

Tax Planning Basics

The goal of tax planning is to arrange your financial affairs so as to minimize your taxes. There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.

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Setting Up Monthly IRS Payments

Setting up a monthly payment plan with the Internal Revenue Service is fairly easy. Either you or your tax professional can set up an installment agreement over the phone, by filling out some paperwork, or by using the Online Payment Agreement web application.

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Tax Planning: U.S. Spotlight10

Obamas, Bidens Release 2013 Tax Returns

Tuesday April 22, 2014

President Obama and Vice President Biden released their tax returns for the year 2013 to the public on April 11, 2014. The tax returns are available to download on the White House blog as PDF files.

President Obama filed jointly with his spouse Michelle Obama. They reported a combined total income of $503,183 and a total tax liability of $98,169. As is the case for many taxpayers in this income range, the Obamas reported an alternative minimum tax of $9,513, which is calculated based on deductions that are not allowed for AMT, such as state and local taxes. The Obamas also incurred the net investment income tax and the additional Medicare tax, two new taxes that took effect in 2013 for higher-income earners. The Obamas overpaid their taxes by $19,108, and opted to apply all of that refund towards their 2014 estimated tax.

To calculate their effective tax rate, we could take their total tax liability and divide it by total income (98,169 / 503,183 = 19.5%). But that would be an incomplete picture. The Obamas' total tax includes self-employment tax and the additional Medicare tax (both of which, presumably, go to fund the Medicare trust fund), and Social Security taxes were withheld on the President's salary. So to get a complete picture of their federal tax burden, we'd have to add in Medicare withholding ($7,478 from Form 8959 line 19) and Social Security withholding ($7,049.40 = 6.2% of $113,700, inferred from Schedule SE line 8a). With these payroll taxes factored in, the Obamas paid a total of $112,696.4 in federal income, Social Security and Medicare taxes, or 22.4% of their total income.

Vice Present Biden filed jointly with his spouse Dr. Jill Biden. They reported a combined total income of $408,733, and a total tax liability of $96,378. The Bidens also incurred an additional minimum tax, the net investment income tax, and the additional Medicare tax. They also paid a "nanny tax" of $656, representing payroll taxes for compensation paid to household employees. The Bidens owed $5,381.

To calculate the Biden's effective tax rate, we take their total tax liability of $96,378, add in their Social Security withholding ($12,639, from "statement 6" of their tax return) and Medicare withholding ($4,807 from Form 8959 line 19). With these payroll taxes factored in, the Bidens paid a total of $113,824 in federal income, Social Security and Medicare taxes, or 27.8% of their total income.

Tax Reform Act of 2014, Part 5, Employee Benefits

Thursday April 17, 2014

House Ways and Means Committee Chairperson Dave Camp released draft legislation, the Tax Reform Act of 2014, proposing a wide variety of changes to America's tax system. In part 5 of a series, we look at proposals for changing employee benefits.


What To Do if You Missed the Tax Deadline

Wednesday April 16, 2014

Filing a tax return after the April 15th deadline typically isn't any different than the normal procedures. Be sure you have all your tax-related documents for income and deductions, prepare your tax returns, review the return for completeness and accuracy, and file the tax return with the IRS. Tax software is still available. Web-based Free File tax software also remain operative through October 15th. (After October 15th, Web-based tax software will go offline to transition to next year's software system.)

The only a couple of extra things to remember about filing after April 15th.

First, remember to include any extension payment along with your other withholding and payments on your tax return.

Second, if you have a refund, the IRS typically won't assess any late fees. If you have a balance due, however, the IRS will assess a late payment fee along with interest.

Tax Day

Tuesday April 15, 2014

Today, April 15th, 2014, is the day that tax returns are due to the IRS.

You either need to file your tax return or file an extension. I recommend filing an extension. An extension is a formal request for additional time to file a tax return. The IRS automatically grants extensions, as long as you file Form 4868 to ask for one.

Extensions can be filed online, sometimes for free or low cost. It takes about 20 minutes (give or take) to file an extension online. The extension will need to be submitted to the IRS before midnight in order to be valid.

You might also need to file an extension with your state.

Today is also the last day to:


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