Cost of living increases will affect dollar limitations for pension plans and other retirement-related items for Tax Year 2012.

What does this mean?
The IRS uses a cost-of-living index to determine contribution and compensation levels for pensions and retirement plans, like the 401k. When the index meets a threshold, it triggers their adjustment. For the 2012 tax year, limits are being increased to match the rise in the index. Taxpayers should be aware that other limitations will remain unchanged. Here are the highlights of the 2012 Tax Year changes: More on Tax Year 2012 Pension Plan Changes

Flat tax plans are the hot topic in the republican presidental candidate race. After seeing the popularity of Herman Cain skyrocket after his proposed 9-9-9 flat tax, Texas governor and presidental candidate Rick Perry has proposed his own flat tax plan.

Perry has proposed his own flat tax plan that allows taxpayers the option to continue using the current tax code or pay a flat tax of 20%. Even though the details of his flat tax strategy hasn’t been announced, the tax plan cannot work.

In summary, the Texas governor’s flat tax plan would give taxpayers a choice between filing taxes under the current tax code and an flat tax of 20%. Those who opt for the flat tax could maintain their mortgage deductions if they earn less than half a million dollars, about 99% of taxpayers. Perry’s flat tax plan would allow taxpayers to declare exemptions of $12,500 for each family member.

At first glance the plan might look appealing but it falls short because it won’t foster growth and it would send the federal deficit even higher.

The advantages of implementing a flat tax is to encourage individuals and corporates to invest in businesses instead of looking for tax breaks and tax loopholes. By offering taxpayers the option to choose between a 20% flat tax and the current tax code, big businesses will continue to rely on their tax accountants to file under the current system.

Rick Perry’s 20% flat tax proposal appears to be nothing but a knee-jerk reaction to Herman Cain’s 9-9-9 flat tax plan.

I wonder if the governor read his plan and critiqued it with his tax accountants before announcing it!

More taxpayers than ever before are struggling to pay their taxes.  In response to this concern, the IRS is providing tax help to individuals and small businesses that are having difficulties meeting their tax obligations.

Back in February, the Internal Revenue Service announced a tax help initiative for taxpayers to get a fresh start with their tax liabilities. This tax help plan centers on changes to the collection practices that will lessen the impact on taxpayers.

Tax help for taxpayers will come in the form of changes to the IRS Lien Policies that will: significantly increase the dollar threshold when liens are generally issued, resulting in fewer tax liens, making it easier for taxpayers to obtain lien withdrawals after paying a tax bill, and withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.

Taxpayers struggling to meet their tax obligations will benefit from the IRS policy changes.