Tax Law

On Thursday, the day the Supreme Court upheld Obamacare, a 47-year-old Baltimore woman went to the drugstore, and pulled out her debit card to pay for a prescription refill. But she didn't have enough money in the account to cover the $425 charge. So she asked the pharmacist and staff for a favor. "I asked them to break up the prescription to give me one-third," says the woman, who would not allow her name to be published because she didn't want to disclose her medical conditions.

State tax officials should take steps to help ensure that Marylanders who receive the homestead property tax credit remain eligible for the popular discount, auditors said in a report released Wednesday. Auditors also said state officials should methodically review some past recipients to identify owners who have gotten large tax discounts improperly — and who should refund the government. "There are ways to be proactive about this and not depend on people providing tips," state Legislative Auditor Thomas J. Barnickel III said in an interview Wednesday.

Tax protesters present a nettlesome dilemma for the nation. We must respect their right to dissent and to publicize their views, even as we know that their cause at heart is to avoid paying for the communal services that benefit us all. Their bottom line is to improve their bottom line at our expense, no matter how elegantly embroidered their cloak of constitutional sophistry.There is also the suggestion of a cult-like network in the tax protest movement. Some individuals even make a living from it, peddling their brand of legal truth to gullible folk who prefer to fork over hard cash to a stranger than to the government.

This is the busiest time of year for Robin McKinney. McKinney is the director and co-founder of the Maryland Creating Assets, Savings and Hope (CASH) Campaign, which provides free tax preparation for low- to moderate-income households in the state. She also lobbies state lawmakers to improve the finances of Maryland consumers during the legislative session. McKinney was an early advocate for state regulation of tax preparers who are paid to fill out people's returns. For years, anyone in Maryland could set up a business to fill out returns, which is why Marylanders could find tax preparation services springing up at gas stations and psychics' shops during tax season.

The ink is barely dry on the 1997 tax law, but creative accountants and tax lawyers already have spotted ways for homeowners -- and other real estate owners -- to reap benefits beyond what even Congress might have contemplated.Tops on the list: Call it the serial home-sale strategy.It could save some property owners hundreds of thousands of dollars over a period of years.The technique has potential applicability to homeowners who also own a second house or condo, a vacation house or any rental residential property.

The Howard County Taxpayers Association's petition drive to reverse the county's income tax increase has hit a minor snag. After about 50 volunteers started gathering signatures this week on a petition to put the issue of raising the income tax to 3.20 percent to a countywide referendum, the group's president yesterday realized the petition's format was flawed. The phrasing on the petition of the tax law did not meet state and county guidelines, said Pat Dornan, the group's president.

NEITHER THE PRESS nor real estate moguls seem to have noticed. But inner cities could reap a harvest of residential investment from a provision of the new budget-tax law that virtually repeals the capital gains tax on the sale of personal homes.That's surely not what President Clinton and the Republican Congress focused on when they decided to allow individuals up to $250,000, couples up to $500,000, in tax-free gains on selling their residences. The politicos were making another play to America's perennially pampered homeowners.

MAXXED out on your retirement plan at work and wish you could salt away more? Got a late start on saving for retirement and want to catch up? If so, the new tax law has something for you. Among the highlights: A boost in contribution limits for individual retirement accounts and 401(k)s; a chance for workers 50 and older to contribute more than the new caps; a tax credit for lower-income workers saving for retirement; and a new plan with a tax-free feature. Of course, some changes will be available only if employers adopt them.

Q.I have been living with my boyfriend for two years and we are contemplating marriage. We both earn good salaries: $90,000 and $80,000 as attorneys. I have often heard of the "marriage penalty" when it comes to paying taxes. Can you explain how it would apply if we were married in 1991.A. The "marriage penalty" refers to the extra tax a couple would pay if they married and filed their tax returns jointly versus remaining single and filing as individuals.The new tax law that went into effect last fall increases that marriage penalty.

IT TAKES 808 pages for CCH Inc., a tax information service, to explain the new tax law. Most of the provisions are narrow. But when they affect you, they can make a big difference. For example:reverse the transaction without penalty, as long you do so by the due date of your tax return (including extensions). To reverse it, call your Roth trustee and say you want to make the change. You'll be taxed on any money you withdraw in cash.Why would you want to switch back to a regular IRA? Two possible reasons:First, you might discover that your income exceeded $100,000, which makes you ineligible for a Roth.

We read about famous people like French film star Gerard Depardieu, who moved to Belgium to avoid a 75 percent income tax on millionaires proposed by France's Socialist government (a measure rejected last week by a French council, though French leadership has vowed to resubmit a similar proposal). Then there is Eduardo Saverin, who took the extreme step of giving up his U.S. citizenship and could see a savings of $39 million on his Facebook investment, according to the research firm Wealth-X.

For years, anyone in Maryland could prepare tax returns for money, so it wasn't unheard of to find tax services offered at laundromats, car dealerships or palm-reader shops. The industry is no longer unregulated. Starting this year, individual tax preparers in Maryland must register with the state before they can fill out a return for a fee. They will have to undergo continuing education if they want to stay registered. And consumers now have a place to go to find out if there have been complaints or disciplinary action against a local tax preparer.

I enjoyed the letter "A punishment that fits the crime: Sentence Schurick to register African-American voters. " Tailoring punishment to fit crimes is exactly what good judges do. Here are some additional suggestions: Sentence Democratic congressman and admitted tax cheat Charlie Rangel to perform community service work on behalf of the Tea Party Express or any other non-government entity that promotes responsible taxation initiatives and...

In a hunt for more revenue, Maryland officials are weighing ways to pressure hotel-booking websites such as Expedia and Orbitz to pay more taxes — a tactic that has netted some cities, counties and states tens of millions of dollars, but left others mired in lengthy legal battles. The premise is simple. Maryland now collects sales taxes based on the bulk rates that the websites pay hotels for their rooms. But some officials say the taxes should be based on the higher prices for which the websites sell the rooms to customers.

Only four days remain in 2010 — but that's still enough time to make a few financial moves that will not only lower your tax bill next year but help out charities and your retirement. Here's a rundown of some last-minute tax-saving strategies: Charitable donations Make a donation to a charity before year's end, and you can deduct it on an itemized 2010 tax return. Pay with a credit card, and you can claim the deduction for 2010 but won't have to pay the bill until next year.

While much attention has been paid to the extension of Bush-era tax cuts in the massive tax package signed by President Barack Obama this month, Congress also tucked in other tax breaks and tweaks. And not everyone will benefit. The bill cuts the payroll tax so workers will get more in their paychecks next year, although some workers will see a bigger bump than others — and some won't get any. The home improvement energy credit returns, but it's stingier. Meanwhile, the federal estate tax is resurrected in a far more generous form.

Upset by a report that nearly half of Maryland's major corporations didn't pay income taxes last year, Gov. Martin O'Malley said he would seriously consider pushing for "combined reporting," a tax law change that advocates say would make it hard for companies to hide their profits in other states. O'Malley, a Democrat who is developing plans to close the projected $1.5 billion annual gap between state spending and revenue, said that if citizens are going to be asked to pay more taxes, businesses should pay their fair share, too. "This is an unfairness of the tax code that would allow some of the largest and most profitable corporations in the state to pay no income tax," O'Malley said.

Baltimore state Sen. George W. Della Jr. acknowledged Thursday that he received an undeserved tax break by wrongly applying the state's Homestead Property Tax Credit to both his Federal Hill townhouse and a home in Baltimore County. Della, a Democrat, said he has contacted state and county officials and requested that he and his wife be billed for the $1,184 in back taxes he owes from the Baltimore County property. The seven-term senator represents all of Baltimore's waterfront neighborhoods and is locked in one of the tightest contests of his political career against a young, well-funded opponent, Bill Ferguson, who first noted the inappropriate tax breaks in a recent campaign mailing.

: Recent data show that Baltimore-area home sales increased 10 percent in July compared to 2008, though sale prices dropped about 7 percent. Does that indicate the housing market is turning around? Yes 28% No 59% Not sure 13% (665 votes, results not scientific) Next poll: : Gov. O'Malley and legislative leaders say they'll balance the budget with cuts, but some lawmakers want tax law changes that would make corporations pay more. Should the state consider such a measure? Vote at baltimoresun.