The Tax Questions Blog

Archive for April, 2008

Question: Municipal bonds?

Why is it that municipal bonds are not taxed at the federal level, but are taxable across state lines? Why is it that U.S. Treasury bonds are not taxable at the state level?

Answer: the concept has its roots in the constitution and the regulation of interstate commerce as well as intrastate commerce and states rights. essentially, as part of the constitutional compromises, it was agreed that the federal gov shall not interfere with commerce within a state (i.e. mom&pop stores, restaurants, financial transactions that remain withing the borders of a give state-hence state chartered banks); and states shall not interfere/inhibit/restrict commerce transacted between states or across state borders (i.e. airline travel, interstate trucking[UPS,etc.]

however it was last modified in the securities act of 1954 as well as enhance by US Treasury Dept regulations.

N.Y. Localities’ $36 Million in Muni Bonds Led Holiday Market

Dec. 29 (Bloomberg) -- New York state municipalities led sales in the municipal bond market with the auction of $36 million of securities to banks offering the lowest interest rates.

Question: E-file not accepted....5-7 weeks!?

i just efiled on taxcut and it said this....
"This return does not qualify for electronic filing since total other federal withholding cannot exceed taxable interest, taxable dividends, taxable IRA distribution, taxable pension distribution and taxable social security benefits."

now i have to mail in my return...it said direct deposit takes 5-7 weeks! will it be there sooner....
Could i refile and possibly correct this....

Answer: The error message says you screwed up when you entered the data from your 1099s.

I suspect you entered the withholding from your W-2 twice. Once when asked for the W-2 and once as "other withholding." Go back and take out the other withholding and it will go through.

Somewhere you said that you made $1000, but had $1500 withheld. This isn't possible.

If you haven't mailed the return, then you can fix the problem and re-efile.

The Complexities of Roth Conversions

Roth conversions don't make sense for everyone. But with new rules in 2010, it's wise to run the numbers.

Will my retirement pension be taxable in Spain?

Question: Is alimony in solido taxable to IRS on form 1040?

Answer: It depends upon the interpretation of the term under local law. In some states it appears that alimony in solido (which means periodic payments of a lump sum) is a form of property settlement, in which case it should not be deductible by the payor or taxable to the recipient. In at least one case it has been held that alimony in solido is not alimony for tax purposes because (under Tennessee law) it did not terminate with the death of the recipient spouse.

A mind-boggling tax system

Many of us Americans like to gripe about our taxes, and I am no exception. Now that the dreaded Apri ...