The Internal Revenue Service is getting reports that some tax preparers are telling customers that their stimulus checks are taxable.

But the IRS has clarified that the stimulus payments will not reduce your 2007 or 2008 refund, nor will they increase the amount you owe when you file your 2008 return.

The confusion apparently has surfaced with various income tax software packages.  It asks filers to report the amount of their check to determine if they are eligible for the new recovery rebate credit.  So if you use tax software, be certain to check that the program is not calculating tax on stimulus payments.

Taxpayers who did not receive a stimulus payment may be eligible for a recovery rebate credit.

Because of the complexity of IRS tax laws, owing taxes on mutual funds happens more than one would think.  It occurs when a fund manager sells a stock, or other asset, that is held within the fund, for a gain.  The taxable capital gains are passed on to the owner of the fund. 

Let’s say you own ABC Fund and the manager bought shares of Google @ $200/share and six months later sold it for $300/share.  Initially this looks great.  The manager made money for the fund.  But mutual funds are made of many different stocks and if the value of the other shares “in the basket” cause the price of the fund to decline - then you sell it at a loss - you would be required to pay capital gains on the capital gains of the google sale.

Although this is a simple example, it is important to understand if you own a mutual fund.  If you are concerned or want to know more about mutual fund tax implications, contact your financial adviser or tax accountant.

Do you have questions about the economic stimulus payments?  Did you miss the Oct 15 deadline to file?  Can you still file anyway? Here are the top five questions currently being asked about the stimulus payments.

Address Change
1. I have moved since filing my 2007 tax return. How will my payment reach me?

A. Filing Form 8822, Change of Address, with the IRS and a change of address notice with the U.S. Postal Service will help ensure that any mail from the IRS, including your stimulus payment check, is sent to your new address. If the check has already been mailed and you did not provide the IRS with an updated address, the check will most likely be returned to the IRS. You may call the IRS at 1-866-234-2942 to provide your new address so that steps can be taken to have the check reissued.

Payment Timing
2) When will I get my stimulus payment?

A. It will generally take 8-12 weeks after you file your return to get your stimulus payment.

The IRS has already issued stimulus payments, both direct deposits and paper checks, for most returns filed by April 15. The IRS will continue to issue payments through 2008 for returns filed after April 15. Please allow 8-12 weeks after filing your tax return before checking on the status of your stimulus payment. To check on the status of your stimulus payment, you may visit Where’s My Stimulus Payment?or call the toll-free Rebate Hotline at 1-866-234-2942.

3) It has been more than eight weeks since I filed my return and my payment has not arrived. Can the IRS trace my payment to find out what happened to it?

A. Yes. If it has been more than eight weeks since you filed your return and your payment has not arrived, please visit an IRS Taxpayer Assistance Center or call the toll-free Rebate Hotline at 1-866-234-2942. A list of all Taxpayer Assistance Centers in your state is available at Contact My Local Office.

4) I heard that the IRS has finished sending the stimulus payments. Is it too late to for me to claim mine?

A. If you missed the Oct. 15 deadline for filing an income tax return for a economic stimulus payment, don’t worry. You can receive a payment in 2009 by filing an income tax return when the filing season opens in January. The IRS will have more information shortly.

5) I filed after April 15 and the payment date for my Social Security number has passed. How long will it take for me to get my stimulus payment?

A. It will generally take 8-12 weeks after you file your return to get your stimulus payment.

truetaxfacts.com will continue to provide updates on important information regarding the IRS and the economic stimulus payments. 

source: irs.gov

What is an Obesity Tax?  Well, according to NY state governor, David Patterson, it is a new tax idea to raise money to cut the state deficit. The tax would be applied on all non-diet sodas sold in New York State. This is completely outrageous. How can the governor get away with this?

Well, it is only a proposal. In fact, recent scientific studies have shown that people who drink diet soda also gain weight. So his logic seems a little skewed. And therefore, seems a little unfair to single out soda when beverages such as fruit juice can contribute to obesity.

The Governor is trying everything in his power to make up for shortfalls in the state deficit. He also plans on raising cash by applying the following tax moves:

reviving the state sales tax on clothing
Changing funding of hospitals and health care that could shift more health costs on individuals and employers
Lifting the limit on how much state tax can be charged for gasoline
Eliminating legal exemptions in the income tax that he considers “loop holes”
Making further adjustments to make sure all taxpayers are paying their fair share
Increasing taxes on insurance policies
Increaseing by $600 the tuition (about 15%) for state residents attending the State University of New York and City University of New York.

His 2009-2010 budget proposal is an effort to cutting spending and increasing revenues to deal with deficits he projects will total $47 billion over three years. The current budget is about $120 billion.

One bright spot of his budget proposal includes a call for an increase in the welfare grant beginning in 2010, the first since 1990; changes to make more poor New Yorkers eligible for government-subsidized health care; and more services for returning veterans. He proposes

Making it easier for the poor and working poor to get government health coverage by eliminating some anti-fraud measures, including face-to-face interviews, finger printing, and an asset test.
Allowing 19- and 20-year-olds who do not live with their parents to be eligible to enroll in Family Health Plus, the state health care plan, under the same rules as if they did live with parents.
Income-eligible public workers will also be able to enroll in the state’s Family Health Plus coverage.
seek a federal waiver to allow adults at 200 percent of the federal poverty level - about $20,800 a year - to be eligible for Family Health Plus
Take $282 million in funding for graduate medical education and redirect to the state’s pool to cover the care of indigents at teaching hospitals and to
Increase funds for indigent care in clinics.
Hire two workers to help alert returning veterans and their families of government services and to create a mobile outreach service that will travel the state to meet with veterans.
Increase funding to food banks, pantries, soup kitchens and shelters.
Increase funding in programs to prevent lead poisoning in children, mostly in poor city neighborhoods.
Create a $1 million obesity prevention program.

If obesity is an issue in your life and you’re looking for ways to lose weight, here are some great weight loss ideas.