Tax Day Specials, Promos and Freebies

Kelly Phillips Erb for Forbes writes: April 15. It’s that red letter day on the calendar that many taxpayers have come to hate: time to pay up to Uncle Sam. It may be painful to write that check but all across the country, retailers and restaurants are offering taxpayers a break to make the day a little brighter. Here are some of the companies offering you a break on Tax Day:

Food and Drink

• Arby’s (locations nationwide) is hosting its third annual Tax Day Curly Fry Giveaway. Head over to the site and get your coupon for free curly fries or potato cakes. Good on Tax Day only.
• Cinnabon (locations nationwide) is offering two free Cinnabon bites to taxpayers at participating locations between 6 p.m. and 8 p.m. on Tax Day.
• Birch Coffee (New York City, NY) knows that cramming for tax day can be tiring. From now until April 16th (stay awake until the day AFTER tax day!), Birch Coffee will personally deliver their addictive 64-oz cold brewed iced coffee growlers. In true New York style, jug delivery is made via custom-made Birch Bikes…tricycles built to carry 30 jugs at a time. Each growler makes between eight and ten cups of iced coffee. First jug delivery is $25/jug and each jug after that is $20/jug. For this special, the $5 delivery fee per jug is waived.
• Boston Market is offering a “We love the IRS” (Incredible Ribs Special) promotion with 1,040 $15 gift cards for randomly selected customers who enter from April 8 – 30. And, consumers can enjoy “The Big Rib-bate” on April 15 at Boston Market restaurants – 2 St. Louis Style rib meals for $10.40 (includes ¼ rack of ribs with mashed potatoes and gravy, corn and homemade cornbread). Customers entering the “We love the IRS” promotion will also receive a $1 coupon for a ribs meal via Facebook orTwitter.
• Bruegger’s Bagels (300 locations) is running a fun promotion for Tax Day. Starting April 12 through April 15 guests pay just $10.40 for a Big Bagel Bundle (a deduction of nearly $3.50). A Big Bagel Bundle offers taxpayers their choice of 13 fresh-baked bagels and two tubs of Bruegger’s Bagels 100 percent made-in-Vermont cream cheese. Download and print the Tax Day coupon on Facebook.
• C-View (Chicago, IL). C-View, an outdoor rooftop terrace and indoor lounge located on MileNorth, A Chicago Hotel’s 29th floor, is offering 15% off tabs of $15 or more during the entire month of April. Filers can also enjoy the refreshing Taxed libation mixed with Crown Royal, Peach Tree, Red Bull and a splash of cranberry juice.
• Carvel Ice Cream is offering their customers something sweet (and what could be better than something sweet after paying your taxes?!). Visit and like Carvel on Facebook to receive a printable coupon for an 18-pack of Lil’ Oreo Rounders. The suggested retail price for Lil’ Oreo Rounders is $13.99; with the coupon, they will be priced at $10.40. This special pricing is available from April 13 – April 15 at participating Carvel locations.
• Courtyard New Orleans Downtown/Iberville(New Orleans, LA) who show proof of filing a tax return will receive one complimentary Deduct-ini at Vieux Carre Café. Located in the historic Maison Blanche department store in the heart of the French Quarter, travelers are just steps from iconic landmarks such as Bourbon Street, Café du Monde and Jackson Square.
• Daily Grill (19 locations). If you filed for extension or finished your dreaded taxes just before the deadline, pat yourself on the back and head to Daily Grill on April 15 only for the $10.40 Lunch Special: a classic cheeseburger, fries and soft drink. Valid until 4pm on April 15 at all Daily Grill locations.
• The food and beverage team at JW Marriott(Chicago, IL) looked to the Boston Tea Party (perhaps the biggest tax-related event in America’s history) to create special tea-inspired Tax Day menu items to help guests and locals ease stress or treat themselves after completing their taxes. Check out whimsical cocktails like the Tax Collector (Makers Mark/Canton Ginger Liqueur/ Chai Tea/ Orange Juice/ Lemon Juice) and the Lucky Deduction (Titos Vodka/ Triple Sec/ Lemon Juice/ Simple Syrup/ Cream de Cassis).
• JW Marriott Ihilani Resort & Spa (Oahu, IL) has the perfect Tax Day cocktail. Available for $10.40 each (inspired by the 1040 tax return form), the Drown My Sorrows will do just that featuring a higher alcoholic content with Bacardi 151, Patron, Triple Sec, orange juice, and grenadine, all set on fire while the Filthy Rich will help you rejoice after receiving your tax refund. The green drink will have you thinking money with Malibu Rum, pineapple juice, sweet & sour, and Midori. Whether you’re whining or winning, guests can enjoy the cocktails at the Pool Bar & Grill and Hokulea Lounge.
• Local House Raw Bar & Grill at Sense Beach House (Miami, FL) is hoping to alleviate some of that tax day stress with tax-free lunch for those dining on April 15th. Patrons are invited to pick and choose from any of the bistro’s lunch or brunch options, including goat cheese croquettes, fresh ceviche and grilled grouper sandwiches sans those pesky taxes.
• Pescatore (New York, NY) will be offering tax relief by paying for the guest’s tax for the entire day. Diners may enjoy lunch from noon to 5 p.m. and dinner until 11:30 p.m. For reservations, contact Pescatore Restaurant at 212.752.7151.
• RA Sushi Bar Restaurant (Palm Beach Gardens and Pembroke Pines, FL locations) has created a Tax Day Monday special, extending its Happy Hour from 3 p.m. to close. Choose from more than 35 sushi, appetizer, and tapas selections ranging from $2.25 to $7.25, plus a wide variety of beer, wine, sake, and signature cocktails ranging from $3 to $7. For more information about Tax Day Monday, visit Facebook (Pembroke) or Facebook (PalmBeachGardens).
• Sheraton New Orleans (New Orleans, LA) is offering two tax-themed cocktails for those looking to relax and unwind after filing their returns. Available on April 15th at the hotel’s Pelican Bar, travelers can enjoy a Tax Revolution or Show your W9…I’ll Show Mine cocktail, complete with Mardi Gras beads, for only $10.40 each (specially priced after the 1040 form). As an added perk, those willing to show their W9 will receive one of these fun cocktails free.
• The St. Regis Bahia Beach Resort (Puerto Rico) welcomes tax-stressed travelers to island time with a complimentary Rum Punch along with first-class style mail service courtesy of the St. Regis Butler. While taking in the resort’s golden shores set on 438 acres of nature reserve at the foot of El Yunque National Rainforest, travelers can feel at ease knowing that a St. Regis Butler will cover their postage and hand deliver their taxes to the post in a complimentary envelope through April 15th. Details on Facebook orTwitter.
• Westin Diplomat Resort & Spa (Hollywood, FL) is offering guests a sweet treat in honor of Tax Day. On April 15, money-inspired desserts will be festively decorated with designs like edible dollar bills so guests can truly put their money where their mouth is. Travelers can find the tax delights at the grab-n-go style restaurant ingredients (some assembly required) for just $4.15.
• Yellow Springs Inn (Chester Springs, PA) is offering $10.40 off of the price of your entree through April 19 (mention this special when you make a reservation). 610.827.7477.

Getaways

• Bolongo Bay Beach Resort (Virgin Islands). De-stress and forget about tax season with a beach vacation in the Caribbean. Save with the Tax-Day Relief special of 20% off all inclusive stays of 5 nights or more. The stay includes Oceanview accommodations for two, all-you-can-eat and drink at two seaside restaurants. Guests also enjoy complimentary Discover Scuba Dive lesson and complimentary non-motorized water sports such as stand up paddle boards, kayaks, snorkel gear, Hobie Cats and more. Special is available for travel April 1 – 30, 2013, but must be booked by Tax Day April 15, 2013. Daily rates are $520 per couple including tax and service charge. Reservations: 1-800-524-4746 (use promo code Tax-Day). No passports are needed for US citizens to travel to the US Virgin Islands.
• Goldmoor Inn (Galena, IL). Tax day is savings day at the Goldmoor Inn located in Galena, IL, where they’re offering 15% off all rooms on Monday, April 15. You’ll also receive 15% off a decadent dinner served at the inn’s on-site restaurant.
• The Hummingbird Inn Bed and Breakfast (Goshen, VA). April is tax month. But, at the relaxing Hummingbird Inn, located just west of the scenic Goshen Pass on at the edge of the Shenandoah Valley, you can stay in one of their five spacious guest rooms while the inn pays your taxes – sales and lodging tax for your room, that is!
• Inn at Riverbend (Pearisburg, VA). Why wait for your refund when you can get it on the spot! Plan your escape to one of the scenic rooms overlooking the majestic Appalachian Mountain region at the Inn at Riverbend on April 15-16th and you’ll be refunded $75 off your total stay!
• The Inn and Spa at Loretto (Santa Fe, NM) is offering the 1040EZ tax relief package during the month of April, designed to reward weary tax filers. The package includes a four night stay in luxury accommodations for two; and a special tax-inspired cocktail at turndown, The Tax-Tini (a mix of Hacienda Gin, Campari, Negori Sake and St. Germain sure to relieve any residual stress and headaches associated with tax season); $104.0 in spa credits for much needed relaxation and pampering at The Spa at Loretto and $104.0 in restaurant credits for use at Luminaria Restaruant. Package totals at $1,040, not including taxes and service fees. Purchase online (promo code P1040) or via phone at 866-582-1646 now through April 31, 2013. Booking must be completed at least 24 hours in advance and is valid for new reservations only. Package requires a four-night stay and is not valid for groups.
• JW Marriott (Indianapolis, IN) is promoting the Treat Yourself Tax Refund package. Rates start at $239 per night and the package includes deluxe overnight accommodation; complimentary overnight self-parking; $50 Simon shopping gift card (usable at the Circle Center Mall, accessible from the hotel via a skybridge); $25 Regal Theater gift card (usable a few blocks away from the hotel at a nearby theater); and a bottle of Champagne (for guest over 21 years of age).
• The JW Marriott San Antonio Hill Country Resort and Spa (San Antonio, TX) is offering a special Tax Day Retreat spa treatment until April 30. It includes a detoxifying body wrap and facial mask of thermal mud to exfoliate and hydrate. Normally priced at $140, tax filers can get it for $99.
• Kimpton’s FireSky Resort & Spa (Scottsdale, AZ). Throughout the month of April, the downtown Scottsdale resort is inviting guests to Take the Pressure Off with the aptly named package designed to comfort and calm. Hotel guests and locals alike can also catch a break and enjoy a cocktail on the house with proof of a 2013 tax filing. While there, they can delight in a selection of stress relieving special dishes and drinks featuring herbal blends from Taggia, a Kimpton restaurant.
• Mission Inn Hotel & Spa (Riverside, CA), is offering the incredible Tax Free package for the entire month of April. The Tax Free Package includes overnight Deluxe accommodations for two; Casey’s Cupcakes turndown service; $25 resort gift card to spend at any of the Inn’s award-winning restaurants, lounges or Kelly’s Spa and Boutique; and complimentary valet parking. It’s all inclusive at $169. All information subject to change. All packages are based on double occupancy and subject to availability. All packages are charged in full at time of booking and are non-refundable. Available Sunday – Thursday 4/1/2013 – 4/30/2013.
• Sagamore, The Art Hotel (Miami Beach, FL) is offering the Taxes are a Beach! package that promises travelers a true gain with daily stimulus funds, tax-free accommodations and beachside relaxation with its very own IRS (Internal Rejuvenation Services). Based on a minimum two-night stay, the Sagamore’s Taxes Are a Beach vacation offer starts at $320 per night and features tax-free accommodations in a luxurious Sagamore Suite; $25 daily stimulus (a hotel credit which can be used towards hotel amenities or to deduct even more from the room rate); daily breakfast for two; daily beach chairs for two; and complimentary WiFi. The offer is valid for stays throughout April 2013 only. To reserve this package, go online or call 877.242.6673. Taxes will be adjusted at checkout. The offer-which cannot be combined with any other offers or promotions-is applicable to new bookings only, based upon availability and subject to blackout dates. Other restrictions may apply.
• The Sheraton Nassau Beach Resort & Casino (Nassau, Bahamas) is offering a 1040 De-Stresser for post-taxation relaxation. Book four nights from April 5th through April 30th, 2013 and enjoy a one-time rate of $1040 for four nights (inclusive of tax and resort fee); Dolphin Therapy for two; and guaranteed upgrade to ocean view room with guaranteed Sweet Sleeper(tm) bed. Rates are inclusive of tax and resort fee, are subject to availability, and are applicable to the travel dates of April 5th, 2013 to April 30th, 2013. The package can be booked online or by calling 1-866-716-8106 and mentioning the rate plan SN1040.
• Wolcott Hotel (New York City, NY). Travelers booking a room at the Wolcott Hotel on April 15 will receive a $10.40 credit with nightly rates starting at $150. To redeem the offer, stays must be booked by calling the hotel directly at 212-268-2900 and mentioning the code 1040.

Other Fun Stuff

• Cheek’d, the reverse engineered dating site, is offering a tax day deal to find love on Cheek’d, with 50% off all Cheek’d orders with the code, TAXDAYLOVE.
• ooVoo, the largest independent social video chat provider with 70 million registered subscribers, is offering a Tech Refund that everyone can enjoy: a free Android phone. To claim this offer, Americans can log on to ooVoo.com/Androidand select their wireless carrier and preferred phone model. The new Android phone will be delivered straight to mailboxes, just like a refund from the IRS. Phone models include DROID RAZR M by Motorola, HTC’s DROID INCREDIBLE, the Kyocera Rise, Samsung’s Galaxy S Blaze and more.
• The *SOUND+SLEEP nomad* machine will be on sale for $79.95 with free expedited shipping for Tax Week (4/8-4/15). The coupon code is TAX2013. Lots of folks lose sleep over their taxes so what better timing for a sale on a product to help you through this? Getting a good night’s sleep is essential to being able to handle daily stress.
• 100 Free Tax Professional Memberships in TaxConnections Worldwide Directory of Tax Professionals are available to the first 100 Tax Pros to make the request atmemberships@taxconnections.com.
• Trojan is giving Americans the biggest return on pleasure by giving away thousands of vibrators in Los Angeles. On Monday, April 15 (Tax Day) in LA, people can swing by the Trojan Vibrations Pleasure Carts at the LA Exchange (618 S Spring St) between 12pm at 4pm for some tax day pleasure relief. All they need to do is let our onsite staff know they’ve filed their taxes, and they’ll walk away with a free Trojan Tri-Phoria (MSRP $39.99) or Trojan Pulse (MSRP $29.99) vibrator, while supplies last.
• VerticalResponse is launching a special offer to our small business customers. For every customer who purchases 1040 or more email credits, they’ll receive a $5 Starbucks gift card! In a nutshell, VerticalResponse provides self-service online marketing tools for small businesses and non-profit organizations, including email marketing and social media marketing. Customers can opt to be on the pay as you go program (which the Tax Day promotion will apply to) where they buy email credits in advance, much like postage stamps (one credit is used per email address on their list), or on the monthly subscription program.

My very favorite offer is from the very witty @CoyleCPA: Just for Tax Day: tomorrow (April 16), extensions for everybody 50% off! A little tax geek humor…

Keep in mind that while I’ve made every effort to verify the information in this post with the powers that be, I can’t vouch for all of these specials personally – and of course, things change. If you’re planning on making a special trip, I recommend giving a call and double-checking the details first.

I’ll update as we go (rumor has it, I might have some giveaways!). If you hear of a special, send me a note or post in the comments below. Enjoy the day!

Not Ready To File Your Taxes? Extension Form, Details Available

Kelly Erb Phillips for Forbes writes: It’s nearly Tax Day. If you’re like me, you’re not ready to pop your return in the post just yet. That’s right: like more than 10 million other taxpayers, I’m filing for an automatic extension this year.

Don’t get all judge-y. There’s no need. There are lots of legitimate reasons why taxpayers need more time to file. One of the most common reasons is a situation like mine where income does not come from a mere W-2. In addition to having self-employment income, my husband and I own a business; it’s a pass through entity so we can’t start our returns until we receive the information from the business. Not to mention that, oh say, I’m a bit busy this time of year.

But there are other reasons: you could be a beneficiary of a trust or estate or a shareholder or partner in a pass through entity and just now getting your Schedule K-1. You might not have received your forms on time. You might still be waiting for a 1099-R. You might be funding an IRA (you have until tomorrow) and need to include that information on your form 1040. There are lots of reasons. You don’t need to tell anyone why you’re filing for extension – even the IRS. And it doesn’t (contrary to popular belief) increase your risk of audit or examination.

Here’s what you need, generally, to file an extension:

• Your name (and spouse’s name if you’re filing jointly) – I think you can manage.
• Your address.
• Your Social Security (and spouse’s Social Security number if you’re filing jointly).
• Estimate of total tax liability for 2012
• Total of what you paid in 2012 (including withholding)
• The amount you’re paying with the extension, if anything.

The last bit is important because an extension is an extension of the time to file and not an extension of time to pay. If you expect to owe at tax time and you’re filing for extension, you should make a payment with your extension request.

To file for an extension, you can:

• File for an extension online for free using Free File link on IRS.gov;
• Ask your tax preparer to file for extension for you;
• File using tax prep software like TurboTax, TaxAct, or H&RBlock; or
• File for an extension using the federal form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return (downloads as a pdf) or download it here:

The regular “timely filing” rules apply – so be sure and get your extension postmarked by the end of the day on April 15.

Filing for extension gives you a six month extension of the original time to file. For 2013, this means that, with an extension, you’ll have until October 15 to file a return. If you timely file for your extension, you will not be subject to the late-filing penalty, which is normally 5% of your unpaid balance per month.

In some circumstances, taxpayers get an extension of time to file without having to ask. For 2013, that includes:

• If you’re a US citizen or resident and you live outside of the U.S. or Puerto Rico and your main place of business or post of duty is outside of the US or Puerto Rico or if you are active duty military and live outside of the U.S., you qualify for a 2 month extension without having to file form 4868. That moves your due date to June 17 (since June 15 falls on a Saturday) to file and pay. However, interest is still due on any tax payment made after April 15.
• Members of the military and others serving in Afghanistan or other combat zone localities generally have until at least 180 days after they leave the combat zone to file returns and pay any taxes due.
• People affected by certain tornadoes, severe storms, floods and other recent natural disasters have extra time. Currently, parts of Mississippi are covered by federal disaster declarations, and affected individuals and businesses in these areas have until April 30 to file and pay.

The whole process should only take you a few minutes and, in most circumstances, won’t cost you anything. So stop worrying, do it now and then breathe. You got this.

Tax filing extension: pros and cons

Jeff Reeves for USA Today writes:  Many taxpayers are scrambling right now to meet the Monday, April 15, deadline for their 2012 taxes. But whether you're a procrastinator or whether you are trying to track down a few errant forms, take heart: There is always the option of filing for an extension.

The Internal Revenue Service allows taxpayers to file their 2012 taxes as late as Oct. 15 without any penalties – presuming you ask permission to file an extension by April 15 by filling out the simple Form 4868.

But there are pros and cons of asking the tax man for an extension, so make sure you know what you are getting into.

NEED HELP?: Get the latest tax news and advice

PROS OF A TAX EXTENSION

All you have to do is ask. The IRS doesn't care why you are asking for an extension. It only cares whether you ask by April 15, and whether you fill out the very simple form correctly. Meet those two simple thresholds and you'll be granted an extension.

Save yourself an audit. A common misperception is that extensions make you more likely to suffer an audit. But you may be much more likely to be audited by failing to file a return at all with the IRS or rushing and making a boneheaded mistake that raises a red flag with auditors.

TAX TIPS: How to avoid an IRS audit

Save yourself late penalties. The IRS charges you two kinds of penalties for missing the deadline: The first is one is a failure to file penalty, which is commonly 5% of taxes due for each month past the deadline. This penalty will not exceed 25%. The second is a failure to pay penalty if you have taxes due, which is 0.5% of unpaid taxes per month, with a cap again at 25%. You don't want to mess with charges like these.

Wait six days or six months. Although few Americans file their returns three months before tax day because of a lag in getting paperwork, there's no reason why you can't file three or four months before the October deadline. Heck, file April 16 if you want. The extension simply gives you the option to wait six months, not the obligation.

Cheaper preparation. Not surprisingly, some tax-preparation businesses charge a premium on any work done in March or April. If you file an extension and go to your accountant in July, chances are you'll probably not pay as much for the return.

CONS OF A TAX EXTENSION

No more time to pay. This is a biggie. Unfortunately, an extension on the paperwork is not an extension on your bill. When you file for an extension you need to estimate what you owe and then send payment on or by April 15. If you don't, you'll face interest and penalties even if granted an extension. Obviously this is not an exact science, so the IRS will waive any penalties if you pay at least 90% of your tax bill up front and then submit the remainder with your formal return by October 15. But make sure you err on the side of overpayment if you're making an extension or else you could get stuck with steep fees even if you have permission to file late.

A longer wait for your money. Some folks see a big tax return as a built-in savings mechanism. But on the other hand, consider that this isn't a windfall or a bonus – it's your money that you overpaid in taxes. That's why it's called a tax "refund." If you have double-digit interest on credit card debt or a pressing need for cash, why should Uncle Sam be allowed to sit on your money? Even if you just were going to sock the tax return away in a savings account, at least by taking ownership back you'll start earning interest instead of letting the cash collect dust in the U.S. Treasury.

Delaying the inevitable. If you're filing for an extension out of procrastination, you could very well continue to procrastinate and face the same time crunch in six months — with no safety net this time. Make sure you're actually using the extra time instead of just wasting it.

Claims about the cost and time it takes to file taxes - It takes the average American taxpayer 13 hours to comply with the tax code, gathering receipts, reading the rules and filling out the forms the IRS requires.....

Glenn Kessler for the Washington Post writes:  “It takes the average American taxpayer 13 hours to comply with the tax code, gathering receipts, reading the rules and filling out the forms the IRS requires. . . . The tax code forces Americans to spend over $168 billion to comply and 6 billion hours.”

— Rep. Dave Camp (R-Mich.), hearing of the House Ways & Means Committee, April 11, 2013

 Federal taxes are due on Monday, so it seems appropriate to check some of the rhetoric concerning the burden of complying with the nation’s complex tax code. Politicians love to complain about the size and scope of the tax code — though much of the complexity stems from laws passed by Congress.

Camp is chairman of the tax-writing committee in the House of Representatives, and his remarks at a hearing on the president’s budget caught our attention. The Fact Checker has always done his own taxes, but sophisticated tax software in recent years has certainly eased the burden of endless calculations.  How accurate are Camp’s figures and where do they come from?

The Facts

Camp’s first statement — about compliance taking 13 hours — was carefully phrased, adding in not only filling out the forms but also gathering receipts and reading the rules. He does not cite a source, but it turns out this estimate comes from the Internal Revenue Service itself.

According to the IRS, the average burden for all taxpayers is 13 hours, with four hours devoted to actually completing the forms. Record-keeping takes an additional six hours and tax planning two more, it says, and an extra hour is thrown in for miscellaneous tasks.

“Reported time and cost burdens are national averages and do not necessarily reflect a ‘typical’ case,” the IRS says. “Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type.”

The IRS breaks it down even further, saying that someone filling in a 1040 form (69 percent of all taxpayers) actually devotes 16 hours to the task, mainly because the record-keeping figure is higher. The 1040EZ form, by contrast, takes just four hours out of a year.

And that average for 1040 forms is really driven up by business filers (which can include anyone filing a Schedule C, E or F with their 1040 form). Business filers spend an average of 23 hours, compared to the 70 percent of taxpayers who are non-business filers. For just non-business filers, the average time drops to a mere eight hours.

That’s the problem with averages. A relatively small segment of taxpayers who face burdensome extra forms help increase the overall number. But, with those caveats, there’s nothing wrong with the figure that Camp used.

These IRS estimates, by the way, originally stem from a study done in the early 1980s by Arthur D. Little, based on a mail questionnaire of 6,200 people, as well as a diary study of 750 people. (The IRS later updated the methodology using an IBM study in the early 2000s.) The figures have increased over time, perhaps reflecting increasing complexity: In 1992, the 1040 form was estimated to take an average of about 10 hours to complete, and in 2004 about 13 hours, compared to the 16 hours today.

Meanwhile, Camp’s other numbers — $168 billion and 6 billion hours spent on taxes — come from another source: the IRS Tax Advocate.

In its 2012 annual report, the Tax Advocate estimated it took a total 6.1 billion hours for all taxpayers to handle their taxes, which it calculated by “multiplying the number of copies of each form filed for tax year 2010 by the average amount of time the IRS estimated it took to complete the form.” But it concedes that this figure “is difficult to measure with precision.”

Interestingly, the Tax Advocate as recently as 2008 gave an estimate of 7.6 billion hours, but then the next year the number suddenly dropped by about 15 percent — which was attributed to efficiency gains because higher-income taxpayers increasingly were using tax software. Even so, in a footnote, the Tax Advocate concedes that the number may be still lower because the IRS has not kept up with efficiency gains from such software.

The $168 billion is based on a another simple calculation: The Tax Advocate focused on what was spent just on personal and business incomes taxes (thus excluding such items as estate taxes) and came up with a figure of 5.648 billion hours. It then multiplied that against the average hourly cost of a civilian employee ($29.72) as reported by the Bureau of Labor Statistics.

You see where this is going. There was an average time spent on a form, which had been multiplied by the number of forms filed, to get a figure for the total number of hours. Then that was multiplied against an average wage. “There is no clearly correct methodology,” the Tax Advocate says, but it notes that its result — about 15 percent of tax receipts — falls in the mid range of other estimates.

Indeed, we’ve previously given Pinocchios to House Speaker John Boehner for claiming that the cost of compliance was an astonishing $500 billion. We noted the Tax Advocate’s much lower number and concluded: “The estimates of the cost of tax compliance vary all over the map, but the safest bet would be to rely on the estimate of a federal government entity — the IRS Tax Advocate.”

The Pinocchio Test

There are always going to be problems with estimates and averages, and so politicians need to handle them with care. Camp here demonstrates a textbook case for how to use such data.

He placed the average time burden of 13 hours in the right context, noting that it includes record-keeping and reading the rules. He also cited the most recent figures produced by an official government entity, even though the numbers were lower than what other Republicans have used in the past. He earns a prized Geppetto Checkmark.

How the Obama Budget Would Change Your Taxes

SEOMOZ writes from Fool.com: President Obama released his budget proposal yesterday, and as expected, it included a number of new provisions that would dramatically change the tax laws once more, with impacts on taxpayers up and down the income scale. The Obama proposal comes as a clear disappointment to anyone who believed that the resolution to the fiscal cliff crisis at the beginning of the year would prove to be the last word on the tax front, but for those who want to see further revenue increases as part of a broader solution to address the national debt, the budget's tax provisions address some of their concerns.  Let's take a look at some of the budget's most important tax proposals and the impact they could have on both individual and corporate taxpayers, as well as the businesses that serve them.

Limited tax savings for itemized deductions and municipal-bond interest
The biggest revenue-raising part of the Obama budget would limit the value of itemized deductions, including the mortgage interest deduction, to 28%. That would impact only high-income taxpayers above the $200,000 and $250,000 income thresholds for single and joint filers, respectively, costing them as much as 11.6 percentage points in tax savings. Because of the high-end focus, the impact on industries like the homebuilding sector that benefit from customers taking advantage of those deductions would be limited, with luxury-oriented companies Toll Brothers (NYSE: TOL  ) and Ryland (NYSE: RYL  ) more at risk than homebuilders aimed at lower price points.

Implementing the Buffett Rule
The budget also wants to ensure that those with taxable income above the $1 million mark pay an effective tax rate of 30%. The mechanics of implementing what's become known as the Buffett Rule would include a phase-in of the tax for incomes between $1 million and $2 million, representing a further increase for those highest-income taxpayers with extensive deductions other than charitable contributions.

Lower inflation adjustments for tax-related provisions
The same proposal to link Social Security benefits to the chained Consumer Price Index would also have an impact on taxes. The budget would use the chained CPI to adjust tax brackets, personal exemptions, and standard deductions, leading to slower increases in those figures going forward. Unlike the limits on itemized deductions, the inflation adjustment provisions would affect all taxpayers.

Maximum amounts in IRAs and other retirement accounts
The budget would limit IRA, 401(k), and other tax-favored retirement balances to about $3 million. Combined with increases on carried-interest tax rates, this provision would capture hedge-fund managers and other investors who've used retirement accounts as successful high-growth investing vehicles.

A new cigarette tax
The Obama budget would hike federal taxes on cigarettes by $0.94 per pack. Altria (NYSE: MO  ) and other cigarette manufacturers would inevitably get hurt by such an increase, as it would add yet another impediment to cigarette demand that has already been falling sharply for decades.

Lower estate tax exemptions
The budget would reduce the current $5.25 million estate tax exemption to $3.5 million and push the top tax rate from 40% to 45%. That's still an improvement from what the estate tax would have looked like without the fiscal cliff compromise, with roughly $1 million exemptions and 55% top tax rates. But the failure to index the $3.5 million figure to inflation will create a need to revisit the issue repeatedly, which is a far cry from the certainty that inflation-indexing gave estate planners earlier this year.

Reduced tax preferences for energy production
Under current law, ExxonMobil (NYSE: XOM  ) , Chevron (NYSE: CVX  ) , and other energy producers are eligible for several tax benefits, including expensing for intangible drilling costs, percentage-based depletion for wells, and the domestic manufacturing tax deduction. The budget would remove these provisions.

Lower corporate taxes
The budget calls for broad reform of the corporate tax in an effort to cut its rate from 35% to 28% for most companies. Exactly how that reform would take place isn't entirely clear, but the general idea is to expand the base of money subject to tax to offset any rate reduction and keep the overall impact revenue-neutral.

Some limited tax breaks
The Obama budget also uses the tax laws to reward certain behavior. They include:

Making current educational tax credits permanent. A 10% tax credit for small businesses to hire new employees or boost what they pay existing employees. Tax credits to encourage employers to create retirement plans and automatically enroll their workers in those plans. Special tax treatment for business investment and hiring targeted in certain high-poverty areas. Tax incentives for education bonds used for building public schools.

Don't panic -- yet
Shares of tobacco companies like Altria, homebuilders like Toll Brothers and Ryland, energy giants Exxon and Chevron, and other businesses that would be hit by the budget proposal didn't drop dramatically yesterday. Moreover, the municipal bond market actually gained ground on a bad day for the bond market overall.

The lack of panic shows just how low a probability most people put on the Obama budget ever becoming reality. But as a sign of where the initial battle lines are drawn, knowing what the Obama budget means for your taxes can help you plan for likely compromise positions down the road.

Altria wouldn't like a cigarette tax, but it has dealt with them before and remains the best-performing stock of the past 50 years. Yet as the number of smokers in the U.S. continues to steadily decline, is Altria still a buy today? To find out whether everyone's love-to-hate dividend stock is a savvy investment choice or a hazard to your portfolio, simply click here now for access to The Motley Fool's new premium research report on the company.

8 Ways Singles Pay More on Tax Day -- And Every Other Day, Too

Bella DePaulo for the HuffPo writes: There is no marriage penalty. There is only a singles penalty. That's what I discovered when I was researching Singled Out. (I also wrote about it here). To be sure, I have no expertise on taxes. So I felt reassured that I got it right when attorney Lily Kahng, who served "three years as attorney advisor in the Office of Tax Legislative Counsel in the U. S. Department of the Treasury," made the same case in a more sophisticated way in a law review article. If you still think there's a marriage penalty, read that article, or my briefer discussion of it, to see how you've been misled.

The singles penalty in income taxes, though, is just the beginning of the ways in which single people pay extra simply for being single. In fact, if you are single, every day is tax day.

Some of the stunning details of the high price of single life were unmasked by Onely's Lisa Arnold and Christina Campbell in their article in the Atlantic (discussed here). Singled Out (especially the chapter on the myth of family values: "Let's give all the perks, benefits, gifts, and cash to couples and call it family values") puts it all in context. The Singlism book offers plenty of examples and analyses from many domains. It is time to put to rest the myth of the single people who are not contributing their fair share.

Here are just a few of the ways in which every day is tax day when you are single:

1. When you are single, every day is the day when you pay into Social Security, just as your married co-workers do, but get so much less back.

[Some details: Your Social Security benefits go back into the system when you die while your married coworker's go to a surviving spouse, or a whole array of ex's if your coworker's previous marriages lasted long enough to count. While you are living, no one can leave their Social Security benefits to you. Meanwhile, married people of a certain age can draw some from a spouse's benefits while the spouse is alive, and then when the spouse dies, they are awarded with even more.]

2. When you are single and paying into an IRA, every day is the day when your contributions to your IRA account will be burdened by penalties from which married people are exempt.

[Some details: IRAs are better in some ways than Social Security with regard to treatment of single people, but there are still some special penalties aimed solely at single savers.]

3. When you are single, every day is the day when it costs more to stay healthy.

[Some details: The costs of health spending are much higher for single people than for married couples.]

4. Every day, the costs of housing are higher for singles than for married people.

[Some details: This is not just a matter of "economies of scale" (the money you save by sharing a place and splitting the costs of rent or mortgage and utilities and all the rest). There is also housing discrimination against single people.] 

5. Every day, the income earned by single people is taxed more than the income of married people.

[Some details: There is a singles penalty in income taxes, not a marriage penalty. (See above for the relevant links and references.)]

6. If you are a single man, every day is the day when you are likely being paid less for the same work, at the same level of seniority and expertise, as your married coworkers.

[Some details: Research, including a study of pairs of identical twins in which one is married and the other single, suggest that married men get paid about about 26 percent more than single men.]

7. If you are single, every day is the day that you do not qualify for the special discounts for couples or families in insurance, travel, restaurant deals, health club memberships, dues for professional associations, and so much more.

[Some details: Every time couples or families pay less per person for any goods or services than single people do, that's a singles penalty. As they are stuck paying full price, the single people are subsidizing the couples and families. Check out this collection of unfair business practices.]

8. If you are single, every wedding and shower gift that you give is a subsidy to a married couple who probably already has two of everything, including salaries.

The costs of being single are not just financial.

Investing and taxes: Pay now or pay later

Jeff Reeves for USA Today writes: When you think about retirement planning, it's important to remember two powerful factors that matter as much as the dollar amount you save: time and taxes.  Compound interest over the decades can turn even a modest amount of money into a substantial nest egg. And being shrewd with your tax burden can wind up saving you an additional 10% or more of that nest egg when it's time to actually tap your retirement funds.  In most cases, tax-deferred investments like an employer-sponsored 401(k) are a wise choice. Here are the benefits:

Reduce your annual tax burden during your working life. Simply by saving for retirement, you save at tax time. Putting pre-tax money into an employer-sponsored 401(k) reduces your overall taxable income, and contributing to a traditional IRA allows folks to deduct up to $5,000 on their tax returns. These breaks could significantly lower the taxes on your peak earnings years, keeping more of your paycheck in your pocket.

Taxes paid later in life are likely lower. Deferring taxes isn't just kicking the can down the road if you will pay a lower tax rate in retirement. Consider that after hitting 59 years and 6 months, you will pay ordinary income tax rates on what you withdraw from a 401(k) – meaning a single person withdrawing $35,000 from her 401(k) in 2012 was subject to no more than 15% tax on that sum. A top wage earner in 2012 could have paid double that in taxes last year.

Your tax savings fuel compound interest. Perhaps the most tangible benefit of all is that by deferring taxes, you put 100% of your money to work in an investment account so it can grow instead of forfeiting a fraction to taxes. If you save $5,000 annually and get a 5% rate of return on your investments, you'll have almost $350,000 in 30 years. But if you save just $4,000 each year because the IRS is eating up about $1,000 in up-front taxes, you'll have $280,000 in the same time frame and at the same rate of return. And if your rate of return is even higher? Then you leave more money on the table because of paying taxes up front instead of putting that money to work and paying taxes later.

The vast majority of Americans hold traditional IRAs or 401(k) plans because of these very tangible benefits. Of course, there are a few cases when it does make sense to pay taxes on the front end and invest in vehicles such as a Roth IRA or even a brokerage account. Here's when that makes sense:

You're young and proactive. Most people wait until they have good-paying jobs to start planning for retirement. But what if you're 19, working at the mall and making only several thousand dollars annually? Your tax rate is rock bottom – a 10% effective rate according to 2012 tax brackets. In this case, paying taxes up front and opting for a vehicle like a Roth IRA is very wise because there's little chance you'll be able to pay lower taxes down the road. Best of all, Roth IRA withdrawals can be used before retirement to pay for your first home so you have options beyond retirement to tap that nest egg.

You want to spend the money sooner. There are severe penalties for withdrawing tax-deferred retirement funds in your late 40s or early 50s. So if you want to invest with an aim of quitting work early or just want the flexibility to tap into your investment gains for a nice vacation, you may have no choice but to use a taxable brokerage account or other investing options. Conventional retirement plans accommodate only conventional retirement ages.

You have maxed out tax-deferred options. If you want to retire in style, sometimes you'll have to save more than the IRS allows you to write off. As mentioned, a traditional IRA offers most folks a $5,000 cap on deductions. So what if you want to save more than $5,000? You could, of course, plow more into the tax-deferred IRA without a tax benefit. But without that sweetener, the vehicles that make you pay taxes up front may not look as unappealing anymore. Depending on your specific income, tax burden and retirement needs it may make sense to explore multiple investing options.

Remember, the bottom line is that all investment and retirement decisions are intensely personal. Any moves should be based on your specific finances now, your family's goals and any unexpected occurrences life can throw your way across the 20 or 30 years between now and retirement. If you find yourself in a sticky situation with no easy answers, perhaps the best investment you can make is to hire a qualified tax and retirement professional to advise you on the proper course of action.

Sometimes a few hundred bucks spent on a qualified retirement adviser is worth much more than any other investment you can make.

Should You Be Paying Taxes on Your Baby Sitter?

Jacoba Urist for the New York Times writes:  If you want to hear a pin drop, ask a room of parents whether they report employment taxes for their baby sitter or nanny. My (admittedly unscientific) conclusion, drawn from four years of Manhattan motherhood, is that many families do not. In a 2011 discussion of nanny compensation on Park Slope Parents, most families reported paying their caregivers completely off the books, while very few said they paid the tax. Susan Fox, founder of Park Slope Parents, suspects the off-the-books number among her readers is well over half.

For some reason, otherwise lovely and law-abiding citizens find nanny-tax withholding to be one of the most sensitive and perplexing household finance issues out there. When I was speaking recently at a legal workshop for parents, a pregnant woman raised her hand, and asked me rather incredulously, “Are we really expected to pay taxes on a nanny?”

Legally, the short answer is, “Yes.” It’s also the right thing to do, as parents who want to teach our kids to play by the rules, and as taxpayers who want to pull our weight in society. And don’t get too hung up on the word “nanny” either. You may be required to pay taxes on a person who you think is “only” a part-time or occasional baby sitter.

The longer answer, of course, is why so many parents choose to hunker down and hope that their tax return never gets flagged for an audit, or that their relationship with their nanny never sours.

In my experience, many parents feel the threshold for nanny tax responsibility is too low. And in a place like New York, where the going rate for a sitter is $18 to $20 per hour, that’s a pretty plausible perception. According to the I.R.S.’s Household Employer’s Tax Guide (or Publication 926) for 2013, any family that paid a household employee $1,800 in cash wages over the year is required to withhold Social Security and Medicare, and to match that withholding with an employer contribution. Additional unemployment and state taxes may also be due.

So some parents who pay a full-time caregiver’s salary perceive an acute unfairness in having to withhold for not only their full-time nanny, but also for a more casual sitter. And the whole thing starts to seem a little silly. It’s the kind of rule nobody is really meant to comply with fully anyway, and a tax law you can bend harmlessly. Even outside of big cities, at $12 an hour, about three Saturday “date nights” a month can make someone a household employee. Raising the dollar amount at which withholding kicks in to a more sensible level (say, $5,000) might actually lead to more compliance — by making the law seem more fair and reasonable.

Susan Tokayer is co-president of the International Nanny Association, a nonprofit umbrella organization for the in-home child-care industry thatcompiles annual salary and benefits data as reported by child-care providers.

“When it comes to nanny taxes, clients often say they feel they’re being double-taxed,” Tokayer said. “Here they are paying income taxes on their own earnings, paying their nanny’s salary from their after-tax income, and then they have to pay their nanny’s taxes.”

At the same time, parents who want to put a nanny on the books can’t always find a caregiver who’s willing to be paid legitimately. Despite the occasional sensationalistic story, 99 percent of nannies do not make six figures. For most of them, every dollar counts.

And the feeling is often mutual. In a world in which child care can cost as much as college, parents want to maximize their dollars too. If the nanny who seems like the best fit for their family can’t afford withholding, and the parents can’t afford to gross up her pay (without losing hours they need to be at work), many choose their family’s well-being over the I.R.S.

There’s also the issue of undocumented caregivers, which adds to the touchiness so many parents feel about nanny taxes.

But Professor Peter Markowitz, director of Cardozo School of Law’s immigration clinic in New York City, points out that a lot of undocumented workers do, in fact, comply with the tax law and file returns. A nanny without a green card or Social Security number can apply for an Individual Tax Payer Identification Number so she can pay her taxes, and an employer can withhold as if she were here legally. And while an undocumented caregiver may be extremely hesitant to put her name into the system, Professor Markowitz explains that the I.R.S. has every incentive not to be a gateway for the Department of Homeland Security, because the I.R.S. is just trying to create revenue.

In the final analysis, it’s most important to remember that withholding rules are designed to protect your nanny, by financing her Social Security and Medicare down the road — just as she tries to anticipate your child’s needs each and every day.