Tax Deduction

What's the least defensible special break in the U.S. tax code? With so many distortions to choose from, it's hard to name just one. If forced to pick, I might say the deduction for state and local taxes, which cost $67 billion in fiscal 2011, according to the congressional Joint Committee on Taxation . This one overwhelmingly benefits upper-income households in a handful of upper-income states, while rendering the entire nation's finances less...

Martin Feldstein, a professor of economics at Harvard University and president emeritus of the nonprofit National Bureau of Economic Research, was chairman of the Council of Economic Advisers from 1982 to 1984. President Obama's recent meetings with members of Congress have raised hopes that a major fiscal deal will replace the "sequester" and put the federal debt on a healthier long-term path. But the key barrier to such a deal remains the disagreement between Republicans and Democrats about the balance between raising revenue...

A federal judge has barred a Washington-based charity and its founder from telling property owners that they can get huge tax deductions by giving the nonprofit organization "facade easements" on their high-end homes and commercial buildings. U.S. District Judge Gladys Kessler issued a nine-page injunction against Steven McClain and the Trust for Architectural Easements permanently restricting them from what the federal government said were abusive and illegal practices that have cost the U.S....

Although it wasn't a total win for homeowners and home sellers, the patchwork legislation that emerged from the "fiscal cliff" fracas on Capitol Hill came pretty close. In fact, it even reached back and resuscitated two key tax benefits for housing that had expired more than a year ago. Now, homeowners will be able to take deductions on their upcoming 2012 tax returns that they assumed were no longer available. Here's a quick tally sheet on what the new legislation could mean for you as a...

The White House and the nation's most prominent charities are embroiled in a tense behind-the-scenes debate over President Obama's push to scale back the nearly century-old tax deduction on donations that the charities say is crucial for their financial health. In a series of recent meetings and calls, top White House aides have pressed nonprofit groups to line up behind the president's plan for reducing the federal deficit and averting the year-end "fiscal cliff," according to people familiar with the talks.

When Bank of America agreed in December to pay $335 million to resolve federal charges that its mortgage-lending arm discriminated against black and Hispanic borrowers, government officials hailed it as the largest fair-lending settlement in history. But, in fact, the banking giant has the right to a massive discount on the payout. Thirty-five percent of the settlement is deductible. That means Bank of America could wind up saving $117 million on its tax...

Q My bank made a $1,000 error in my favor, which I brought to their attention -- twice -- and offered to repay. They said they'd look into it and debit my account, but it's never happened. May I keep the money? AYes. You made an honest attempt to correct the error, and the bank dropped the ball. You needn't keep trying. I trust that you have a record of whom you talked to and when, just in case the bank discovers the error and tries to say you did something wrong. After some time has passed, consider doing...

President Obama and reader Rosalind Stark [ letters , March 27] have forgotten the reason that the tax code allows a deduction for charitable donations in the first place: to stimulate charitable giving, acting effectively as a government subsidy to charities while allowing taxpayers to decide where to direct the funds. The other fact that is getting lost is that, even with a tax deduction for a donation, the taxpayer still has a net cash outflow. There is no "reward" to the taxpayer for donating money.

EARLY WEDNESDAY, delivering his victory speech in Chicago, President Obama elevated an issue that had hardly come up during the campaign. "We want our children to live in an America," he said, "that isn't threatened by the destructive power of a warming planet. " Later that day, Senate Majority Leader Harry M. Reid (D-Nev.) told reporters that climate change is an important issue and that he wants to "address it reasonably" — particularly following big storms in the Northeast that have highlighted rising sea levels and other dangers associated with...

WHATEVER THEIR disagreements, America's political leaders believe in home ownership -- and they have believed in it for decades. "Owning a home can increase responsibility and stake out a man's place in his community," President Lyndon B. Johnson, a Democrat, declared in 1968. Thirty-six years later, Republican George W. Bush promised "an ownership society . . . where more Americans than ever will be able to open up their door where they live and say, welcome to my home, welcome to my piece of property.

As the final minutes of 2012 ticked away and the "fiscal cliff" drew near, some very wealthy philanthropists scrambled to make large, last-minute charitable donations to take advantage of current tax breaks. Less-monied donors and nonprofit groups, meanwhile, worried how the economic uncertainty would affect their bottom line. With little resolved on Capitol Hill, affluent donors faced a year-end dilemma: should they give more in 2012, or take their chances on what Congress decides to do for 2013?

Federal agencies are taking greater steps to prevent companies from claiming tax deductions on settlements reached with the government, though loopholes in the tax code persist, according to a new study by U.S. Public Interest Research Group. In the past year, the government has exacted a series of multimillion-dollar settlements on companies that have rigged global interest rates, preyed on consumers or endangered the environment. Yet a number of these firms are entitled to write off as...

When Carol Barnes-Bryant saw the photograph of Children's Hospital in this column last week, she was transported back to 1955. Back then, she was a 2-year-old patient there, getting her tonsils removed. The photo made her remember the smell of ether. And then she remembered another patient on the ward, a boy in a body cast who had something very cool at his bed: a television set. "The nurses let all of us other kids sit around his bed and watch," Carol wrote. "When I saw that picture of the bed...

In congressional and White House negotiations on tax reform — including the mortgage interest and property tax deductions — who has the crucial political advantage of counting documented public opinion on their side? Is it the real estate and building lobbies, which argue that maintaining long-standing federal tax benefits are essential, given housing's key role in job creation and household wealth and given the fact that real estate is still in a fragile state coming out...

With all the holiday hoopla of parties and presents, no one could blame you if you're spending more time thinking about tinsel than taxes. But the biggest financial mistake you can make this season is forgetting that 2013 will bring sweeping changes to the tax code, even if the "fiscal cliff" is averted. "These are unprecedented changes to tax law," said Gil Charney, principal tax analyst at the Tax Institute at H&R Block. "The exemptions you qualified for before you may not qualify for...

The White House and the nation's most prominent charities are embroiled in a tense behind-the-scenes debate over President Obama's push to scale back the nearly century-old tax deduction on donations that the charities say is crucial for their financial health. In a series of recent meetings and calls, top White House aides have pressed nonprofit groups to line up behind the president's plan for reducing the federal deficit and averting the year-end "fiscal cliff," according to people...

I think that Charles Lane [" The deduction to chop ," op-ed, Nov. 20] could benefit from spending some time in a state with a high cost of living such as New Jersey, which has the highest state and local tax burden in the country. The area I represent includes three of the top 14 counties in the country with the highest property taxes. My constituents, who have an average annual income of $51,000, pay 15 percent of their income in property taxes and then must pay income taxes and other bills and save for such necessities as college or...

-- Products installed and in use: You must "place into service" eligible home improvement products between Jan. 1, 2009, and Dec. 31, 2010. (See story on previous page for credits available through 2016.) -- Existing residence: The items must be for an existing principal residence, though some purchases for second homes are eligible, including geothermal heat pumps, solar water heaters, solar panels and small wind energy systems. On new homes, tax credits are applicable only to geothermal heat pumps, photovoltaics, solar water heaters, small...

WASHINGTON — Most Americans who file income tax returns won't be affected by proposed changes in how charitable contributions are deducted because they don't itemize their deductions, federal income tax records show. But that hasn't stopped charity officials and others from lobbying Congress to fight any change in deductions as part of the "fiscal cliff" negotiations. That's because they draw billions of dollars from donors who itemize, and a huge chunk of those donations come from taxpayers who earn more than $500,000.

The story behind the story is that "tax reform," as we know it, is dying. During the 1980s, no major piece of legislation better symbolized bipartisan consensus than the Tax Reform Act of 1986 , which was regarded by both liberal and conservative experts as the best tax law since World War II. The basic idea was simple: Reduce tax rates and recover lost revenue by ending (or limiting) tax breaks. The struggle between President Obama and House Speaker John Boehner over the "fiscal cliff" indicates that this...