New Jersey Governor Chris Christie’s proposal to cut  income taxes by ten percent will benefit the rich and not the middle class.

Christie’s plan would benefit taxpayers who pay a significantly higher income tax rate under the state’s current tax system.  But the plan doesn’t help middle-class who are struggling more with the property tax rate.

“We all want to cut taxes, but we want to cut the right taxes in ways that help those most in need and that provides the most benefit to the economy,” said Senator Paul Sarlo (D-Bergen), chairman of the Senate Budget and Appropriations Committee, which conducted the first of many expected hearings Monday on the tax cut proposal.

Republicans argue that the Democrats are rebuking the proposal too quickly.

“Democrats cannot have a knee-jerk reaction,” State Sen. Kevin O’Toole (R-Essex) said. “History shows that it will create more income tax revenue, attract jobs and more opportunities.”

O’Toole noted that when former Gov. Christine Todd Whitman, also a Republican, cut income taxes in the 1990s, overall income tax revenue increased as the economy expanded, incomes rose and jobs were created.

Under the proposal, a family earning $50,000 a year would save $80.50, and those making $100,000 would save $275, according to David Rosen, budget and finance officer with OLS. Families who make $1 million would save $7,265, Rosen said.

The Office of Legislative Services also did an analysis of the taxes paid in 2004 and found that NJ taxpayers who made less than $200,000 paid a greater share of their income toward property taxes than income taxes.  For example, a family that makes $80,000 paid about 6 percent of its gross income for property taxes and about 1.6 for income taxes.

Based on the analysis, it seems unlikely that Cristie’s income tax cut proposal will win approval. Expect the Democrats to offer a counter proposal that would emphasize property tax cuts for the middle class.

Computer software changes by the IRS will cause refund delays for early tax filers.  According to the Internal Revenue Service, early tax filers can expect at least a one week delay in receiving their tax refunds this tax season.

The delay was caused by new safeguards installed in IRS computer systems to prevent refund fraud, IRS spokesman Michelle Eldridge says.  Taxpayers who filed their federal income tax return before January 26, 2012 can expect the delay in receiving their income tax return; those filing returns after January 27 will not be affected.

Even with the delay, taxpayers will still receive their refunds “in line with historic refund delivery times,” Eldridge says. Taxpayers who e-file their tax returns and arrange for direct deposit typically receive their refunds within 10 to 21 days.

The IRS provides a “Where’s My Refund” tool that provides an update on the status of taxpayers’ refunds, but the IRS notes that the dates are estimates and subject to revision. For that reason, taxpayers shouldn’t automatically assume they’ll receive their refunds on the projected date, says Judy Strauss , an enrolled agent in Cobleskill, NY.

sources: usatoday, irs.gov

The first thing you should do if you can’t pay your taxes is not to panic. If you can’t afford to pay the amount of taxes you owe, the best thing you can do is still file your tax return by the April 15 tax deadline and pay as much of your tax debt to avoid penalties and interest.

You should also contact the IRS to discuss your tax payment options. The IRS toll free number to discuss your tax debt payment options is 1-800-829-1040.

The IRS understands that many taxpayers are facing financial problems due to unemployment and the rise in prices for services and basic necessities, but you should still file by the tax deadline. In fact, the Internal Revenue Service may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills.

It’s a smart idea to learn about your tax debt payment options if you can’t pay your taxes.

source: irs.gov