Income Taxes

Dear Liz: I'm 25 and trying to maximize my tax savings and retirement contributions. I currently have two jobs: One is the typical salaried position with taxes withheld where I earn $45,000 a year, while the other is self-employed work I do on the side that grosses about $7,000 a year. Currently I have a Roth IRA that I max out and a 401(k) that gets the equivalent of 13% of my salary when combined with my employer's contribution. Given that I don't get a refund on April 15 and end up having to pony up a lot of money, is there a way for me to set aside my self-employment income into a retirement account such that I can just bypass all taxes on it, including payroll taxes?

SACRAMENTO - California has been flooded with revenue this tax season and is on track to finish the fiscal year with a surplus of billions of dollars, according to officials. State coffers contain about $4.5 billion more than expected in personal income tax payments. Nearly $2.8 billion of it arrived April 17, the third-highest single-day collection in California history, according to government figures. Business taxes have also rebounded and are likely to be $200 million ahead of projections.

WASHINGTON -- Many of the people criticized by Republican presidential candidate Mitt Romney for not paying income taxes actually do pay taxes -- specifically the federal payroll tax, the independent Tax Policy Center said. And nearly half of those who do not pay federal income taxes are elderly, the group found in an analysis last year. About 46.4% of households paid no income tax in 2011, according to a breakdown by the center, a joint venture of the Urban Institute and the Brookings Institution.

SACRAMENTO -- California is primed for a strong month for tax revenue after the Legislature's top budget advisor said Tuesday was among the biggest days for tax collection in state history. The state raked in $2.7 billion in income taxes Tuesday, according to the latest figures from the Legislative Analyst's Office. April is the most critical month of the year for income taxes, which are expected to supply more than 60% of general fund revenue for the current budget. So far this month, the state's income tax revenue has totaled $6.02 billion.

MOSCOW -- The Russian government has no idea how about 44% of the country's registered workers are making a living, a top official said Wednesday. Deputy Prime Minister Olga Golodets said the government is unaware of what's happening with about 38 million of the 86 million Russians registered as workers. About 48 million people are working in sectors of the economy that officials “can see and understand,” she said. “It is unclear what everybody else is involved in and to what extent,” Golodets said at an international economic conference at the Higher School of Economics in Moscow.

By now, most Americans who take their civic responsibilities seriously have no doubt seen, or at least heard about, Mitt Romney's peculiar approach to broad-based voter outreach. We're referring, of course, to his videotaped fundraising speech in Florida, in which he characterizes 47% of the American public as people who are "dependent on the government," who "pay no income tax" and who can't be convinced to "take personal responsibility and care for their lives. " Voters can decide for themselves whether Romney's words, taken at face value, bespeak a hopelessly crabbed approach to government's role in our lives or a principled stand for private enterprise and economic freedom.

Many of the nation's most profitable companies are paying far less than the government's 35% corporate income tax rate, with dozens paying no taxes at all, according to a controversial new report. Left-leaning advocacy and research groups Citizens for Tax Justice and the Institute on Taxation and Economic Policy examined 280 companies and concluded that they paid an average rate of 18.5% from 2008 through 2010 — about half the official rate. Several firms mentioned in the report lashed out at the findings.

Senate leader David A. Roberti indicated Saturday that he would oppose increasing income taxes, even if a newly enacted tax reform law is found to be the cause of a surprise budget shortfall of as much as $1 billion. In a radio speech, the Los Angeles Democrat pinned the blame on last October's stock market crash, and charged that Deukmejian Administration tax officials failed to take it into account and make corrective adjustments.

China will introduce an income tax next year in a bid to narrow the rapidly widening gap between rich and poor in this Communist nation, the official New China News Agency said Thursday. The "Provisions on Individual Income Regulation Tax," issued by the State Council, will apply to all Chinese citizens with residence and income in China, the agency said. The tax, to take effect Jan.

Evelyn Jenkins, 61, who joined her husband, radio talk show host Bill Jenkins, in arguing that income taxes were unconstitutional. In 1986, Jenkins and her husband were ordered to perform 200 hours of community service and to pay back taxes for 1979, 1980 and 1981. They charged that federal and state income taxes are unconstitutional on the grounds the 16th Amendment providing for taxes was never properly ratified.

MOSCOW -- The Russian government has no idea how about 44% of the country's registered workers are making a living, a top official said Wednesday. Deputy Prime Minister Olga Golodets said the government is unaware of what's happening with about 38 million of the 86 million Russians registered as workers. About 48 million people are working in sectors of the economy that officials “can see and understand,” she said. “It is unclear what everybody else is involved in and to what extent,” Golodets said at an international economic conference at the Higher School of Economics in Moscow.

The state's tax revenue is outpacing earlier projections by about $4.5 billion over the last eight months, according to new figures from the State Controller's office. The rosier-than-anticipated state revenue numbers are the result of income taxes coming in to state coffers at a higher rate than what was predicted by the governor's office last summer. Those strong income tax numbers have made up for sales and corporate taxes, which have been soft. But Controller John Chiang said in a statement Monday he was encouraged by the February numbers, which show money from both levies was higher than expected in February.

More than 25% of Americans are dipping into 401(k) retirement accounts to pay for bills. U.S. workers are tapping into nearly a quarter of the $293 billion placed into their retirement savings each year to pay for mortgages, credit cards and other debts, according to a report from financial advisory firm HelloWallet. Those in their 40s are the most frequent raiders, with about one-third using their 401(k)s to pay for current bills. Other studies bear out those results. Vanguard, an investment management group, said that Americans workers withdrawing money from 401(k)

WASHINGTON -- Consumers spent slightly more in January than the previous month even as their income plummeted by the largest amount in 20 years because of the "fiscal cliff," the Commerce Department said Friday. People boosted their spending by saving less money as they sought to offset tax increases that took effect. The personal saving rate in January was 2.4% -- down from 6.4% in December -- marking the lowest monthly level since late 2007. Personal consumption expenditures rose 0.2% in January following a 0.1% rise in December.

After months of big gains, the U.S. auto industry dropped into a lower gear last month with sales slowing to single digit gains for most of the big car companies. Still, car shoppers appear to be shrugging off economic factors such as higher payroll and income taxes as well as the ongoing budget debates and spending reductions in Washington. February auto sales in the U.S. grew 3.7% year over year to about 1.2 million vehicles. The gain came even though February had one fewer day than in the previous, leap year.

WASHINGTON -- Economic times are tough, but more Americans -- nearly 9 in 10 -- say it is "not at all acceptable" for people to cheat on their income taxes, according to a 2012 survey by the Internal Revenue Service. The 87% figure was up 3 percentage points from the 2011 Taxpayer Attitude Survey, conducted by the IRS Oversight Board, an independent panel that tries to help the agency better serve the public. Just 11% of respondents said it was acceptable to cheat on their income taxes, either "a little here and there" or "as much as possible.

A former San Diego police officer pleaded guilty Wednesday to evading $63,000 in income taxes from 2001 to 2003 on his salary and money he made selling property stolen from the police evidence room on EBay. James Estrella, 46, faces up to five years in prison when he is sentenced Dec. 5 in federal court. He has also pleaded guilty in Superior Court to four counts of receiving stolen property.

Re “The new generation gap,” Opinion, Feb. 22 Great column. Ronald Brownstein only left out two points: The Republicans really do want to reform entitlements, including Social Security and Medicare - apparently President Obama does not; and the young and their families are going to be paying for our out-of-control spending with higher taxes for Social Security, for Medicare and their regular federal income taxes as well as their state income...

This month marks the 100th anniversary of the ratification of the 16th Amendment, which gave Congress the power to tax American incomes. Unlike the contentious congressional drama in passing the American Taxpayer Relief Act to avert going over the "fiscal cliff," the 16th Amendment was accorded little emotion when it received a thumbs-up from both houses in 1909. That was because most congressmen backed the amendment for the wrong reason - they firmly believed that no such taxing proposal would ever be ratified by the requisite three-fourths of the states.