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Tax fireworks galore: Carnival of Taxes #2 is here!

Fireworks_japan_2_1 Launch the bottle rockets! Wave the sparklers! Light the firecrackers! We're celebrating the arrival of the second edition of the Carnival of Taxes!

In fact, CPA Kevin Hume notes that today's Tax Carnival #2 conveniently coincides with the birth date of George M. Cohan, who officially arrived on July 3, 1878, but always celebrated being "born on the Fourth of July." Cohan is better known to most of us as a songwriter and inspiration for the film Yankee Doodle Dandy.

But, Hume says, Cohan also has a tax connection. He is the namesake of the IRS' Cohan Rule, a possible way out of tax trouble for poor record keepers facing an IRS audit. That was the situation the patriotic song-and-dance man found himself in back in 1930.

Hume refers us to this excellent, albeit dated, summary of the Cohan Rule at Uncle Fed, as well as the CPA Journal article "Income Reconstruction."

The importance of tax recordkeeping also figures in Punny Money's How to Handle Your Money So That It Stays Your Money, day seven of his series of nine days to a lawsuit-free life.

It was deductions that got Cohan's filings examined, and we've got a further deduction discussion in Ohad's Internet News, which explores ways to write off vacation expenses by conducting some business on the trip.

Ohad's based in Israel, but U.S. travelers might want to be more circumspect in claiming their combined business-personal excursions. The Illinois CPA Society cautions that to get the deduction, the IRS says the reason for your trip must be mainly business, not pleasure.

And excessive itemized deductions also could be an audit trigger, according to Brian Brown who blogs at Your Money Matters. Brian asks "Who does Uncle Sam audit?" and then gives us a rundown of just what might get you asked in to talk to an IRS examiner.

Just as scary as an audit and a lot more likely for a growing number of us is the alternative minimum tax. Debt Free tells us that if we're not scared of the AMT, we "damn well should be!"

Fireworks_stand_texas_2Wow! Taxes always seem to ignite fiery discussions, but that last group of topics really lit up the sky! In this next group of tax pyrotechnics, the Carnival's going to take the explosions down just a notch with some items that look at the positive components of our tax system.

FreeMoneyFinance offers an excerpt from Stuart Lucas' book "Wealth," specifically the segment focusing on taxes and investments. It's an interesting view of the government as a tax partner rather than an adversary.

Some investments are tax-deferred or even tax free. Chris over at Great FX Business Cards takes a look Reducing Taxable income Through Retirement Funds.

Of course, we all hope that our investments, be they taxable and otherwise, will lead to untold riches. Sometimes, though, it seems that it's only the rich who get richer. That's a subject addressed at Mauled Again, where the Professor examines the latest stats on wealth in America and what role our tax code plays in that accumulation.

It might not propel you immediately into the ranks of the well-to-do, but Frugal at My 1st Million at 33 suggests a nifty way to come up with some extra cash by underwitholding.

Firecracker_exploding_icon Well, it's getting late, so it's time to light the last of the Roman Candles and wrap up this nearly 4th of July Tax Carnival #2 with a flourish.

If you're looking for ways to reduce your coming tax bill, Irregular Payments reminds us that some energy-efficient home renovations can produce Free Gov’t Money!

Car Buying Tips to Save You Money reports a neat auto sales tax break that applies in his state. Just be sure to confirm that the tax law is the same in the state where you live, either by checking it out yourself or by consulting a tax pro for advice.

In fact, says How to Make a Million Dollars, hiring a tax professional to help with your taxes is well worth the price in many cases.

One of those instances where a tax expert is definitely called for is when you sell rental property, a situation discussed by William Perez at About: Tax Planning.

Perez also figures in TaxMama Eva Rosenberg's look at some tax issues that arise during divorce, an explosive topic year round! Eva adds a nice touch to the advice: In addition to reading, you can listen to the tip by clicking the button just atop the text.

And Jack Yoest brings us the strange-but-true report that one the things China admires about the United States is the Internal Revenue Service.

We can't leave the Tax Carnival without some entertainment. It comes this month courtesy of our pal taxalicious, who found this claymation video. I'm not quite sure exactly what these figures are doing or how it's tax related, but I can't resist anything that uses a Beatles' tune -- yes, it's "Taxman" -- as its soundtrack.

Georgemcohan_2_1 Finally, to wrap up this Nearly Independence Day Tax Carnival, please pardon a bit of self-indulgence. Check out my earlier Flag Day post and you'll find at the end some info on Cohan's 1942 bio-pic (that's his mug to the right), the aforementioned and fittingly patriotic Yankee Doodle Dandy. It's one of my favorite movies for musical, not tax, reasons.

Thanks for reading. Enjoy the tax tips in today's Carnival and thanks to all who contributed. We'll be back in early August with more in Tax Carnival #3.


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Chuck Russell

Thanks for the link! Very nice layout, well put together, and great info.

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