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Helpful Tax Tips For Federal And State Tax Returns

Jul 29

Posted by admin in Taxes

Each year there are millions of Americans who prepare their own federal and state tax returns and even more individuals have their taxes professionally prepared. Whatever choice a taxpayer makes there are a number of important tax tips that everyone should know.

A W-2 or 1099MISC is needed to accurately prepare a federal or state income tax return. There is always a chance that a taxpayer may misplace these forms or for one reason or another the forms may not have reached them. For federal tax returns and most state tax returns a W-2 or a 1099MISC is required. Individuals who do not attach these items are likely to prevent their tax returns from being processed or cause a refund delay. The Internal Revenue Service (IRS) states that all taxpayer should receive their W-2 or 1099MISC forms before February 15th. Individuals who did not receive these items are encourage to contact their employer to determine why the forms have not arrived. Taxpayers who misplaced their W-2 or 1099MISC forms are encouraged to contact their employer right away to receive a copy. Taxpayers must do so because even if a wage or income form is missing a tax return is due on the traditional April 15th deadline or else late fees and penalties may be assessed.

Another one of the popular tax tips that taxpayers should know about is tax deductions. It is estimated that each year the American public loses millions of dollars from tax deductions that they were entitled to, but failed to claim. A professional tax preparer and a tax software program may prompt an individual to claim tax deductions that they qualify for. Individuals preparing their own paper taxes are more likely to miss tax deductions that they may claim. To prevent this from happening taxpayers are encouraged to research the most frequently overlooked tax deductions to determine which deductions they may qualify for.

Another one of the most common tax tips that taxpayers need to be aware of is what to do if they can?t pay the amount of taxes owed on federal or state tax returns. The biggest mistake that taxpayers make when realizing that they cannot pay the amount due on their taxes is to not file a tax return. Some people think that not filing a return will prevent a refund from being owed on time when in reality it can make the situation a lot worse. Taxpayers can file an extension deadline; however, the estimated amount of taxes owed is still due on the traditional tax deadline. The Internal Revenue Service (IRS) will impose a number of late fees and penalties on tax payments that were not received in time. Just ignoring the Internal Revenue Service (IRS) may increase the number of or the amount of penalties.

One of the most important tax tips that a taxpayer needs to keep in mind is that the Internal Revenue Service (IRS) and many state governments change or update their tax laws each year. For this is reason taxpayers are encouraged to check out the website of the Internal Revenue Service (IRS) or the website of their state tax department to determine if any of the tax law changes need to be applied to their federal or state tax returns.

These helpful tax tips are just a few of the many tax tips that can help tax preparation flow more smoothly. The above mentioned tax tips will also help to reduce the amount of money that an individual owes on federal or state taxes or even potentially increase the amount of their refund. Why pay late fees or lose money on tax deductions that you deserve? Let these and other helpful tax tips assist you this tax season.

http://www.taxhelpdirectory.com/irs/irstaxlaw/

About The Author
Gray Rollins is a featured writer for the Tax Help Directory. To learn more tax tips, visit http://www.taxhelpdirectory.com/taxtip/ and for more tax information, visit http://www.taxhelpdirectory.com/taxinformation/.

Writen By : Gray Rollins

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Other Taxpayers Have It Worse

Jul 28

Posted by admin in Taxes

U.S. taxpayers aren\’t the only ones to feel a bit of a crunch at tax time. In fact, we don\’t have it that bad.

You may not believe it after paying that huge tax bill in April, but the U.S. isn\’t the top of the income-tax list when compared to the rest of the world. A recent study by the Organization for Economic Cooperation and Development compared the tax rates in 30 countries.

In Belgium, a single worker with the average income paid 42% of his income to the government in 2005. Twenty-eight percent went to income taxes and 14% went to Social Security, according to the study.

The German worker also paid a combination of income and Social Security that hit 42%. In Denmark, the average worker only pays 41%.

All tax rates were based on single workers with no children. They did not take into account what the employer pays in Social Security for the worker\’s behalf.

In the U.S., the average worker pays 24% to income tax and Social Security combined. The rate ranks the country 19th among the 30 listed.

Mexico came in at number 30, with 8% going to the combination of income taxes and Social Security taxes.

\”Countries differ in how much they decide to collect in taxes on people\’s income and how much tax they collect on when good are bought,\” explained Christopher Heady, head of OECD\’s tax policy and statistics division.

He points out that Mexico collects a very small amount of tax when compared to the other countries. But it collects most of its revenue on the sales of goods, not on labor. Belgium, on the other hand, doesn\’t charge much for sales tax, relying on labor income instead.

When all taxes were considered, including income, sales, business and others, Sweden was the top of the list. It tax revenues came in at about 50% of gross domestic product. Denmark and Belgium finished up the top three.

At the bottom of the list were Mexico, at number 30; Japan and Korea, tying for 29 and 28; and the U.S. at 27.

\”The U.S. is a comparatively low-tax country. I\’m sure the people filing tax returns recently wouldn\’t agree with that, but that\’s particularly because the U.S. collects a lot of its revenue from income tax and you don\’t have a value-added tax,\” Heady said.

Heady points out that high-tax countries do have benefits.

\”Most of those high-tax countries have universal health-care systems. That means you don\’t have to pay for your own health care or pay for insurance to cover your health,\” he explained. The countries \”usually have more generous state-provided retirement pensions than the U.S, so that people don\’t usually feel the need to buy a private pension. There\’s better provision of preschool education, and universities are cheaper. There are all sorts of public services that are provided at lower cost.\”

However, he points out in the U.S. \”the advantage is that you have more choice over how you spend your money, because you get more of it.\”

Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

Writen By : Martin Lukac

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How To Make Tax Time Less Painful

Jul 25

Posted by admin in Taxes

There are a few things that you can do throughout the year that may help you get through tax time with less stress. First, organize your documents and keep them organized throughout the year. Search the internet for free websites that give you organization suggestions. Some of them even have templates to help you put your tax records in order. Consider a good software program like Microsoft Money which has a 90-day free trial.

If you itemize your deductions, and you certainly should itemize if you are self-employed, keep all your receipts in an expandable folder that can be organized by month, alphabetically, or any way that you want to organize it. If you are ever audited, you will lose the deductions you claimed that cannot be verified by a receipt. If you make cash donations, IRS has a formula that calculates how much you can deduct, but, as with any other deduction, you must have a receipt in order to claim the deduction. Be sure your receipts have the name, date, address, amount, purpose, type, value, and any other information pertinent to the validity of the deduction.

Unless you are really knowledgeable in accounting and tax law, a good CPA is well worth the money. The tax laws are constantly changing, and the average person cannot keep up with the changes let alone understand them. Remember that you should always make the best use of your resources, and that includes using your talents for those things that you do well and outsourcing those things that someone else can do better.

There is no absolutely certain way to avoid an audit, but people say that certain things increase the likelihood of an audit. For example, make sure there are no math errors in your tax return. If there are inaccurate calculations, the IRS will have to take a second, more careful look at your return. Once IRS is looking more closely at your return, there may be red flags that could lead to an audit. It is best to do the math correctly so that IRS never has to take a closer look at your return.

There are blogs and websites for almost any topic, and doing a little research will help you be better educated and less stressed. Don?t forget that your local library has many book about income taxes and tax returns. You may also want to look into Turbo-Tax, Microsoft TaxSaver, or one of the other good tax software. Even if you hire a CPA, you will save yourself time and money by being well-prepared and by understanding the process.

IRS also has telephone help lines that can be really helpful. The IRS website at www.irs.gov is also very helpful and easy to use. It is alright to contact IRS and ask questions. You are not any more or less likely to be audited if you contact IRS and ask your questions. As previously stated, you are more likely to be audited if you make errors on your tax return. These are just a few basic suggestions that can help make tax-time less stressful for you.

Jo Ann Joy, Esq., MBA, CEO
Copyright 2006 Indigo Business Solutions. All rights reserved.

About the Author

Jo Ann Joy is the CEO and owner of Indigo Business Solutions, a legal and business consulting firm. Indigo Business Solutions is a ?one stop shop? for small businesses. We differ from other business consulting firms, because we offer comprehensive legal and business counseling. We can offer most of the professional services that a business requires. We work with our clients to develop strategies that create value and competitive advantage.

Jo Ann has a law degree, an MBA, and a degree in Economics, but she is not a traditional attorney. Rather, she is a strategic business attorney who works closely with clients to create and implement strategies that will greatly improve their performance and chance of success. Her background includes commercial and real estate law, accounting, financial planning, mortgages, marketing, product development, banking, and business strategies. She ran a successful business for 10 years, and she has written and given presentations on many different legal and business subjects.

You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. You may request free copies of her other Ezines or purchase her E-books on the website.

For more information about these and other important business topics and for legal consultation, please visit our website at http://www.IndigoBusinessSolutions.net

The future of your business starts here.

Writen By : Jo Ann Joy

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Using IRS Form 8829 To Deduct Expenses For Business Use Of Your Home

Jul 23

Posted by admin in Taxes

IRS Form 8829 is used to claim the allowable expenses that you can deduct for business use of your home on your federal tax return. From Form 8829, you calculate the deduction amount to be inserted on Schedule C (Form 1040). To deduct expenses related to the part of your home used for business, you must meet the following tests:

1. Your use of the business part of your home must be either:

Exclusive: You must use a specific area of your home only for your trade or business, and the area cannot be used for any other purpose. The area can be a room or other separately identifiable space. The space does not need to be marked off by a permanent partition.

Regular: You must use a specific area of your home for business on a continuing basis, not just occasional or incidental use; or

2. The business part of your home or a separate structure (not attached to your home) must be your principal place of business where you meet or deal with patients, clients, or customers in the normal course of your business. You must conduct the administrative or management activities of your business in your home exclusively and regularly, and you have no other fixed location where you conduct those activities
Deductions

You generally cannot deduct expenses that are allocable to tax-exempt income. To calculate deductions, you can use square feet or any other reasonable method to measure the area for the part of your home used for your business. Direct or indirect expenses for the business use of your home can be 100% deductions.

You can deduct the depreciation of the part of your home you use for business by using the cost or the fair market value of your home on the date you first used the home for business. You will need to attach a schedule showing the cost of additions and improvements placed in service after you began to use your home for business. Then you refer to the IRS chart in the instructions booklet for the use of Form 8829 to find the percentage to use to calculate the depreciation deduction.

If your expenses are greater than the current year\’s limit, you can carry over the excess to the next tax year. For more information on deducting expenses for the business use of the home expenses, see IRS Pub. 587.

About the author:

Jo Ann Joy, Esq., MBA, CEO

You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016

For more information about these and other important business topics and for legal consultation, please visit our website at http://www.IndigoBusinessSolutions.net

Copyright 2006. Indigo Business Solutions is a registered trade name.

The future of your business starts here.

Jo Ann Joy is the CEO and owner of Indigo Business Solutions, a legal and business consulting firm that differs from other business consulting firms, because it offers comprehensive legal and business counseling. Jo Ann has a law degree, an MBA, and a degree in Economics, but she is not a traditional attorney. Rather, she is a strategic business attorney who works closely with clients to create and implement strategies that will greatly improve their performance and success.

Jo Ann uses her talents, expertise, and education to inspire enterprising and imaginative people to make their goals a reality and enjoy professional and personal growth. Her background includes commercial and real estate law, accounting, financial planning, mortgages, marketing, product development, and business strategies. She ran a successful business for 10 years, and she has written and given presentations on many different legal and business subjects.

Writen By : Jo Ann Joy

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The Business Tax Basics

Jul 21

Posted by admin in Taxes

Your required business tax issues can be complicated and overwhelming. The first thing you must do is consult your tax professional for all tax questions. This article is not intended to be a complete list of required forms. It is an overview of the most frequently required tax forms and issues you may need. First, you must obtain a federal tax ID online at the IRS website, www.irs.gov.

If you have employees, there are certain tax forms that you must file: Form I-9 verifies that each employee is legally eligible to work in the U.S.; Form W-4 is completed by each employee to indicate their withholding tax; Form W-2: is the Wage and Tax Statement you prepare every year for each employee and give copies to employees and file a report with I.R.S; and Form 1099 must be prepared for payments of $600 or more paid to non-employees in one year such as independent contractors. You give copies to the payee and mail a copy to IRS.

There are other tax forms that you may be required to file if you give your employees bonuses or make certain kinds of sales. Form 1099-MISC is required for prizes or awards of $600 or more or for sales of consumer goods for $5,000 or more to a person who intends to sell the goods retail, but does not conduct the sales in a permanent retail establishment. In addition, you are required to file Form 8300 for cash payments you receive in one transaction that are more than $10,000.

The I.R.S. website, www.irs.gov, has many inexpensive small business products that you can order on line. The publications are: Tax Calendar for Small Businesses and Self-Employed, A Virtual Small business Tax Workshop DVD, Small Business Resource Guide CD, Recognizing Illegal Tax Avoidance Schemes Brochure, and Home-Based Business Tax Avoidance Schemes Brochure. There are numerous small business and self-employed resources offered on the I.R.S. website. There are even small business classes and workshops.

As a business entity, you will have to pay income tax and file a Form 1040 or self-employment tax and file Schedule SE (Form 1040). On behalf of your employees, you will have to withhold from salary and pay to IRS and the state federal and state withholding tax. You will be required to withhold from salary and match the amount from the business? funds to pay social security and medicare tax. You also must pay federal unemployment tax.

If you sell certain kinds of products or engage in certain business activities, you will be required to pay excise tax. If you sell a product, you will have to pay sales tax usually to the city in which you operate. There are numerous schedules that business entities or self-employed persons are required to file with their 1040. One of the most important is Schedule A which itemizes your business deductions.

You may deduct your business expenses which are the cost of operating a business. If you manufacture products or purchase them for resale, you can deduct the cost of goods sold. The I.R.S website explains how to calculate the deductible cost of goods sold. Other types of business deductions are the expense of using your car in business, salaries and payments to independent contractors, your contribution to employees? retirement plans, rent expense, insurance, and interest on any business loans. There are additional allowable deductions that you can discuss with your tax professional.

Capital expenses are not deductible. You must capitalize, rather than deduct, some capital costs. These costs are a part of your investment in your business. There are generally three types of costs you capitalize: going into business, business assets, and improvements. You cannot deduct personal expenses. If you use your Home for your business, you can deduct a prorata share of the expenses you incur on your home. You must file a Form 8829 stating you home?s total square feet and the percentage of your home used exclusively for business. The Form 8829 instructions explain how to calculate a deduction for your home office.

Jo Ann Joy, CEO
www.IndigoBusinessSolutions.com, Phone (602) 663-7007
The future of your business starts here.

For more information about these and other important business topics and for legal consultation, please visit our website at http://www.IndigoBusinessSolutions.net Copyright 2006. Indigo Business Solutions is a registered trade name.

Jo Ann Joy is the CEO and owner of Indigo Business Solutions. She has a law degree and an MBA, and an undergraduate degree in Economics. Her background includes commercial and real estate law, accounting, financial planning, mortgages, marketing, product development, budgeting, sales and banking. She ran a successful business for 10 years, and she has written and given presentations on various business subjects.

Writen By : Jo Ann Joy

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Giving To Charities – Tax Deductions And Such

Jul 18

Posted by admin in Taxes

The tax code in the United States contains many provisions to promote certain behavior. One area of behavior is the promotion of giving to qualified charities.

Giving To Charities ? Tax Deductions and Such

In the rush to get tax returns prepared and filed, many people absentmindedly forget to include deductions for contributions to charities. If you itemize deductions on your tax return, this can be an expensive omission.

Pursuant to relevant provisions of the tax code, you can take significant deductions if you donate money or goods to a qualified charity. A qualified charity is one that is registered with the IRS as a 501c3 entity. The 501 designation refers to the relevant section of the tax code.

Importantly, not all charitable organizations are qualified with the IRS. You can go to the IRS web site and search through a list to see if a particular group is included. If they are not, red flags should go be raised.

Before claiming your deduction for donations, there are a couple of things to keep in mind:

1. Politics ? You may feel strongly about certain political ideologies, issues or candidates. You can contribute to the causes, but you can?t deduct the contributions as charitable giving.

2. You can only deduct contributions actually made for the year in question. If you forgot to claim donations on your tax return for the 2004 year, you cannot claim them on a 2005 return. Instead, you should go back and amend the 2004 return.

3. If you make a contribution for a good or service, you can only deduct the amount you contribute which is in excess of the fair market value of the good or service. For instance, many charitable groups will hold auctions to raise money. If your winning bid for a two night hotel stay is $800, you can claim a deduction for the bid amount minus the normal cost. You cannot just write off $800.

4. In general, donations of stock or property should assigned the fair market value, not an arbitrary figure based on your opinion. Big ticket items should be supported with an appraisal.

5. The rules for donating automobiles have changed. The charitable group should have sent you correspondence regarding the amount it was able to sell the vehicle for. This is the amount you can deduct, not the blue book amount previously allowed. If the charity has not sent you anything, call them to get written confirmation. They know it has to be done under new IRS regulations.

Donating to charities is positive moral step. Make sure to claim your deductions to reap savings on your taxes.

Richard A. Chapo is with BusinessTaxRecovery.com – providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.

Writen By : Richard Chapo

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Tax Credits: Getting Your Share

Jul 18

Posted by admin in Taxes

Tax Credits ? those insignificant questions at the end of the form where you actually get to add money back ? do you read them? Do you often look them over and wish you understood them?

If you are paying more taxes in at the end of the year, chances are good that you should have some kind of credits coming?

But what kind? Where do you find that information?

If you hired a qualified tax professional to do your taxes, they should be asking questions that will help you get the most value from your tax preparations. There are specific directive forms from IRS that do help with figuring those credits. But you have to do a lot of research to find them. Is it worth the time and effort it takes to find those documents? YES.

Specific Tax Credits that might apply to you include Education Credits, Child Tax Credits, Employment Credits, Enterprise Credits (if you own your own business), and Childcare Credits. You can research many of these topics online with favorable results. If in doubt, contact IRS and ask about specific documents and Informational Circulars that explain the wherefores and whys of specific forms.

If you consistently have to pay more tax at the end of the year, I highly recommend you find a tax consultant with proper credentials to help you figure the best use of your tax dollar.

Best-case scenario: You pay in every dime you owe in taxes, but not one penny more.

IRS Rules and Regulations are there to support our government; they are created to make tax paying as fair and equitable as possible for the Tax Payer. Use them to your benefit.

Tax Preparer and Small Business Developer Jan Verhoeff believes in making the most of every dollar. You can best do that by using each dollar to the fullest and qualifying your expenses. Is that a deductible expense? What qualifies each business expense as deductible? Educated choices make the best decisions. http://taxprep101.blogspot.com

Writen By : Jan Verhoeff

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