turbotaxlogin

Tax Mythbusters: The Top 5 Tax Tips To Amaze Your Friends And Family


Tax MythBusters: The Top 5 Tax Tips to Amaze your Friends and Family

I commonly find there are sooo many misconceptions about taxes out there. I have heard a lot of them so many times, they make me laugh. I would like to dispel some untruths about taxes and educate you just a little. Here is my top 5:

  1. "I cannot afford to earn any more money this year because I will jump into the next tax bracket." or "Boy, I would not want to win the lottery. It would cost me too much in taxes."
    Tax Brackets: In the US, our tax brackets are marginal. Only the next dollar that falls into that bracket will increase to the next higher rate. Even if you earn a $1,000,000, there is still a portion of income that is taxed in each bracket: 0%, 10%, 15%, 25%, 28%, 33% and 35%.
  2. "I will go ahead and give to charity since it is a tax write-off."
    Deductions: Remember that deductions are not a $1 for $1 reduction in tax. A $100 deduction will save about $15 in taxes for someone with $60,000 income. This does not mean that you should not give to charity, but use your money wisely and make sure it is put to good use.
  3. "My customer did not pay their bill. I would like to write it off."
    Bad debts can only be written off if they were claimed as income previously. In most cases, small business owners are cash basis tax payers and therefore, only pay taxes on the income when it is received. In this case if your customer did not pay you, you never have claimed it as income so you can not reduce your income further.
  4. "I don't want the IRS to come knock on my door to audit me."
    IRS Audits: Most audits are not face to face. They are letter audits based on notices for matching or numbers that are out of the normal range on tax returns. If you do have a face to face audit, you should be well prepared and represented by your CPA or a tax attorney. Worst of all, be prepared to write a check. The IRS does not do face to face audits to see if you seem to be a nice person, their purpose is to collect revenue.
  5. "I can deduct the cost of my vehicle since I have my business advertised on it, right?"
    Auto Deductions: Unless you want to be the one writing the big check to the IRS as discussed in item #4, the answer is "no." You cannot write off the cost of a vehicle for advertising. You can write off the cost of the magnetic signs or the painting to put your advertising on it, but you still must follow the same rules for deducting automobile expenses. Don't forget, unless the vehicle is 100% business use, you must keep track of your business and personal mileage for any deduction of your mileage. Remember, at 50.5 cents per mile for 2008, this can be a substantial deduction so it is worth while.

We hope we have given you the ammunition to join in the conversation with your friends to tell them about the tax mythbusters listed here. Keep in mind that you would not let your "friends" do your root canal, so you probably should not depend on your "friends" for authoritative tax advice. Ask your CPA!

Required US Dept of Treasury Circular 230 Disclosure: Any written advice concerning one or more federal tax issues arising from any entity, plan or arrangement that concludes at a confidence level of "more likely than not (i.e., a greater than 50% likelihood) that the subject manner of the advice would be resolved in the taxpayer's favor if challenged by the IRS, and the principal or significant purpose of the subject matter is the avoidance or evasion of any tax imposed by the Internal Revenue Code (IRC). The advice provided in this email is not intended or written to be used, and cannot be used by you or any other person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any applicable state or local tax law.

7 Most Commonly Overlooked Sources Of Taxable Income

7 Most Commonly Overlooked Sources Of Taxable Income

  1. Social Security Income
    Social Security benefits may be non-taxable, or partially taxable. It depends on your total income from other sources. If your sole source of income during the tax year was Social Security, your benefits are probably not taxable. But, if you have other forms of income, including tax-exempt income, it could make your Social Security benefits taxable. If you add half the amount of your Social Security Benefits to all other forms of income, and the total exceeds a ?base? amount, then a portion of your benefits will be taxable. In 2008, the base amount is $25,000 if single, married filing single, or head of household, and $32,000 if married filing jointly.
  2. Unemployment Compensation
    People are always surprised that unemployment compensation is taxable income. This includes any amounts you received under federal or state unemployment compensation laws, state unemployment insurance paid by a state (or District of Columbia) from the Federal Unemployment Trust Fund. If you received unemployment compensation during the year, you should receive IRS Form 1099-G, showing the amount you were paid, and if any taxes were already withheld. If your unemployment benefit payments were made from a private, non-union fund to which you voluntarily contribute are only taxable if you received more money than you put into the fund.

Please note that as a result of passing the American Recovery and Reinvestment Act (ARRA), starting in 2009, the first $2,400 earned in unemployment compensation is excludable as taxable income.

  1. Gambling Winnings
    Gambling winnings are fully taxable and must be reported on your tax return. Gambling winnings include any winnings from lotteries, raffles, horse races, or casinos. Both cash winnings and the fair market value of prizes such as cars and trips are counted as taxable income. If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must also include it in your income. A payer (such as the casino or track, etc.) is required to issue you an IRS Form W-2G if you receive certain gambling winnings or if your gambling winnings are subject to Federal income tax withholding. All gambling winnings must be reported no matter if any portion is subject to withholding or not.

Please note that you may deduct gambling losses only if you itemize deductions. You may claim your gambling losses as a miscellaneous deduction, however, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return.

  1. Bonuses
    Bonuses or awards from your employer based on work performance are included as taxable income. Money, gift cards, property, or prizes such as a vacation trip all count as ?bonuses?. If the award you receive is a good or service, then you need to include the fair market value in your income. Even holiday bonuses count if your employer gives you cash, a gift certificate, or a similar item that you easily can exchange for cash.

Please note that if you receive personal property (e.g. something other than cash, gift card, or its equivalent) as an award for length of service exceeding five years, the fair market value of the award is less than $1,600, and the award is presented as part of a meaningful presentation, it can generally be excluded as income.

  1. Punitive Damages
    If you were awarded damages for actual monetary losses (due to property damage or medical care for injuries) the funds are generally not taxable. However, if any damages were awarded beyond compensating you for monetary losses, like punitive damages, (usually to punish or make an example of a defendant based on outrageous conduct), interest, emotional distress, injury to reputation etc these are all taxable income.
  2. Reimbursed Business Expenses
    Reimbursed business expenses may be considered taxable income, depending upon whether your employer meets the requirements for an Accountable Plan. To be considered an Accountable Plan, your employer?s reimbursement or allowance arrangement must meet all of the following rules:

Employee paid or incurred expenses that are deductible while performing services as an employee.

Employee adequately accounts for these expenses to employer within a reasonable time period.

Employee returns any excess reimbursement or allowance within a reasonable time period.

If your employer?s reimbursement arrangement does not meet all three requirements, the reimbursements you receive for business expenses should be shown on your W-2, and the payments should be reported as income. You can get this income back by itemizing your deductions and completing IRS Form 2106 with your return.

  1. Severance Pay
    Any type of severance pay or payment on the cancellation of your employment contract is taxable income. This includes a lump-sum payment for accrued vacation or leave time, or back pay awards as the result of a judgment or settlement. If you choose a reduced severance payment in exchanged for your former employer paying for an outplacement service or employment agency, you must include the unreduced severance pay as income.

Tax Credit Amount For Lexus Gs 450 Hybrid Issued By Irs


Prior to January 1, 2006, you were restricted to claiming a $2,000 tax deduction if you purchased a hybrid car. Now you can claim a tax credit, which is much more valuable.

Tax Credit Amount for Lexus GS 450 Hybrid Issued By IRS

Conspiracy theorists often offer rather exotic arguments about how the government tries to control us. When it comes to taxes, they are absolutely correct. Both federal and state governments try to influence our behavior by levying or reducing taxes. If the government wants to promote something, it gives you tax breaks if you do it. If the government wants to discourage something, it loads the product or service up with taxes.

If you have filled up your car at the pump in the last week, you know gas prices are out of control. Despite our wailing, they politicians really cannot do that much since we are dependent on foreign oil sources. They have, however, taken one long-term approach by promoting the purchase of hybrid vehicles.

Prior to 2006, the government provided all taxpayers that purchased a new hybrid with a healthy $2,000 tax deduction. With the recent passage of the Bush Energy Act, the government has made it foolish NOT to purchase a hybrid. It did this by changing the tax deduction into a tax credit.

The IRS is now allowed to set tax credit amounts applicable to hybrid purchases so long as the amount does not exceed $3,400. In regard to the 2007 Lexus GS 450 hybrid, it has just done so. If you purchase a new 2007 Lexus GS 450 hybrid after January 1, 2006, you can claim a tax credit of $1,550.

You may think $1,550 is nice, but not overly impressive. How wrong you are! Unlike a tax deduction, a tax credit is applied directly to the amount of taxes you owe. Assume you determine you owe $6,500 when you prepare your 2006 taxes next year. Instead of writing a check to the IRS, you will first deduct your tax credit from the amount you owe giving you a bill of 4,950. This dollar for dollar reduction in your tax liability is what makes tax credits so great.

As with all hybrid tax credits, they scale down as more cars are sold. Make sure to ask your accountant or dealer the current tax credit amount when you make your purchase.

tax

Taxbrain Review


I decided to write this TaxBrain review after having the opportunity to see what exactly it could do. Hopefully, after reading this short review, you?ll have a better understanding of what TaxBrain is and if it is a tool you should use when the next tax season comes rolling around.

I think we?ve all been in the situation where we?ve depended on our tax return from the IRS, and we all know the agony of waiting for it. Maybe the money was going to be spent on a vacation or towards a new roof, or maybe to cover bank fees as a result of your checking account being $471 overdrawn. Whatever the reason is for you counting on the money, TaxBrain understands and works hard to get your refund to you as fast as possible.

In fact, TaxBrain works so fast refunds can be paid in as little as 24 hours. Supported on both the State and Federal levels in all 50 states, TaxBrain even has an accuracy guarantee. If they incorrectly prepare your tax return, they will pay the interest and penalties. What?s not to like about a company that is that confident in their services?

Worried about downloading yet another program onto your computer? Not a problem. TaxBrain is web-based, not program based. Just go to the web site and in less than an hour your taxes will be done, and done right. Best yet, you can do it from the comfort of your home, in your pajamas if you?d like!

Obviously, TaxBrain is the way to go in terms of tax preparation. It?s fast, easy and way more affordable than an accountant. Still, it?s just as accurate (if not more so!) than the expensive CPA. I highly recommend TaxBrain for all of your Federal and State tax filing.

10 Tips Employees Can Use To Reduce Your Tax Bill

10 Tips Employees Can Use To Reduce Your Tax Bill

  1. Use your tax allowances. If you have the cash available, use your ISA savings allowance ?7,200 for 2008/09of which ?3,600 can be in cash deposits.
  2. Make pension contributions. The amount you can pay and get tax relief is as much as your annual earnings, with an upper limit of ?235,000 for 2008/09.
  3. Get a 'green' car Employers can get 100% tax relief in the year they purchase a small 'green' car, and the benefits for the employee are much lower then for a normal car.
  4. Salary sacrifice - employers can offer to contribute to a pension (instead of the employee paying) and the employee agrees to forego some salary in return. This is 'acceptable' tax planning providing the correct paperwork is used, and it can save significant amounts in national insurance contributions.
  5. Use childcare vouchers - All employers can offer child care vouchers as part of their remuneration package. For those with young children these vouchers can create very worthwhile savings.
  6. Don't overlook expenses - employees can claim for expenses they incur "in the performance of the duties of the office or employment" which are not reimbursed. There is a table of agreed rates for various trades, and these allowances are often given via an adjustment to the employees tax code. If you don't receive a tax return, use form P87 to reclaim the tax on expenses.
  7. Tax-free round sum incidental overnight expenses * Employers may reimburse employees for incidental expenses when they stay overnight for work purposes (s240 and 241 ITEPA 2003) E.g. For newspapers, laundry or phonecalls home. For the employee, these expenses are not incurred necessarily in performing the duties of the employment, and so do not qualify for tax relief, however employers may nevertheless reimburse such incidental expenses, free of tax and NICs as follows:?5 per night for overnight stays in the UK * ?10 per night for overnight stays outside the UK (but see new guidance below)
  8. Happy families - a family can reduce the overall tax payable, if a higher taxpaying spouse transfers investments or savings to a spouse with a lower or no income.
  9. More family planning - children are entitled to the same annual personal tax allowance as adults. They can earn money working, and receive investment income free of tax, for example on a gift from Grandparents. However on a gift from parents if the income generated exceeds ?100 then the income is assessed upon the parent.
  10. It is almost never worth having 'fuel for private use' as a benefit. You have to do a huge private mileage for the extra tax to be less than even the cost of the fuel actually used for private motoring. It is very often better also for the individual to provide a car and be paid mileage for business use, and to be compensated with additional salary. The maximum mileage rates are 40p for the first 10,000 miles and 25p thereafter. If the actual reimbursement is below these rates, the difference can be claimed as an 'expense' on the tax return or a P87 form.

Uniform Tax Relief- A Way to Obtain Tax Refund


Paying off taxes is obligatory and it is indeed an irresponsible act on the part of people not to pay off taxesIt is obligatory for every responsible citizens of a country to pay off the accurate amount of tax to the government in the correct time. These money paid as tax is, in turn, spent by the government to boost up the well being of the individuals as well as society and to make improvement in the social infrastructure.The government of any nation also offers plethora of tax exemptions for the benefit of the populace. This is why people must in no way cheat the government by means of evasion of taxes for the reason that in case they really have predicament in repaying duties the government is going to certainly hear them.Tax relief is provided to those people who have definite uniforms at their place of workGovernment assist individuals in several ways by offering means of tax cut off. Among those ways, an evident one is uniform tax relief provided by the government to those having uniforms in their place of work.

These exemptions provided to the individuals can save lots of money. In United Kingdom the administration offers tax relaxation to the individuals having uniform in their employment places in that the price needed for purchasing, laundry expenses, repairing in addition to the maintenance price of the uniform are reimbursed by the government to the workers.What are the necessary conditions laid down in order to get the uniform duty relief by the government?If individuals have the intention to acquire uniform tax relief from the government it is vital for them to satisfy the mandatory conditions laid down by the government.

These conditions include the followingIn first case it is necessary that this uniform must have the company logo and it must not be at any cost worn outside the working place.The next necessary fact to keep in mind is that varying rates of tax reduction is applicable for different workers in accordance with their employment trade. Therefore to obtain tax relief the workers must be acquainted with the group they actually belong to. They must also know the reduction amount.Laundry expenses in actual are the expenditures that individuals cannot avoid but they can certainly same money simply by making use of the laundry coupons. This may be taken into consideration as the most excellent method to trim down the laundry expenditure.

Tax Relief: Let?s Be Fair And Charitable


Any tax scheme should reflect a nation?s goal to increase productivity and to improve the lives of people of all income and social levels. As it is now, the U.S. tax system has too many inequities. Let?s look at a few:

1. Successful small entrepreneurs must give almost 50% of their income to government in taxes
2. Most Americans can?t deduct their charitable donations
3. Marriage often means that a couple will be subjected to higher tax burdens
4. Farms and businesses owned by families are sold to pay death tax
5. Single parents (usually women) are in a higher marginal tax bracket than the wealthy

This is not a fair system and a tax plan must provide tax relief for those who belong to the groups described above.

When the income tax was established, the importance of supporting and encouraging charitable donations by providing a deduction for doing so was realised. Unfortunately, a whopping 70% of persons who file taxes cannot deduct the donations to charities because these deductions are not itemized.

While the intention is not to make the wealthy ?pay? for being wealthy, a fair, balanced tax relief must see the more affluent citizens bearing a bigger portion of the tax load; and by allowing each taxpayer to deduct her/his charitable donations by expanding this deduction to non-itemizers, millions or even billions more will be gained in charitable contributions.

So let?s encourage the government, through the way we vote and lobby and protest, to be for fair and charitable in the tax plan, so that we all - rich or not-so-rich - would get that tax relief.

Compliance Code of India Legal And Tax Compliance


In many cases, especially with new companies setting up operations in India, significant codes need to be followed. The compliance teams in a law firm provide such legal services during the formation and setting up phase. The compliances code includes corporate, tax and regulatory compliances. Legal Compliance in India Legal compliance is the process or procedure to ensure that an organization follows relevant laws, regulations and business rules. The definition of legal issue, especially in the context of corporate legal departments, has recently been expanded to include understanding and adhering to ethical codes within entire professions, as well. There are two requirements for an enterprise to be compliant with the law, first its policies need to be consistent with the law. Second, its policies need to be complete with respect to the law. The role of legal compliance has also been expanded to include self-monitoring the non-governed behavior with industries and corporations that could lead to workplace indiscretions. It is also important to realize that within the legal framework, legal teams work closely with executive teams and other business departments to align their goals and ensure proper communication. Legal Compliance Manual Legal Compliance Manual put together by the Indian Institute of Corporate Affairs (IICA) contains a list of compliances required to be carried out on the part of businesses that arise under various central and state legislation. The Legal Compliance Manual is divided into various sub-categories to cover respective legal requirements, namely: It is indeed a useful tool for practitioners and businesses given the plethora of legal compliance required on their part while operating in India. Tax Compliance in India Tax compliance is a complex phenomenon that is governed by a variety of factors. Some of these factors are tax rates, complexity of laws, procedures, forms and returns, the efficiency of tax administration including tax audits, and the legal consequences of non-compliance. The reforms in indirect taxes in the last two decades may have reduced the cost of compliance. Herein, the compliance cost is taken as a percentage of the total cost of running the business. Tax Compliance Review Tax Compliance Review (TCR) is an audit of the compliance requirements of tax laws covering besides correct payment of taxes and duties, complete availing of concessions, benefits, subsidies, exemptions and credits. TCR is a mechanism to ensure correct payment of taxes and helps businesses devise sound strategies for smooth functioning within the framework of different laws. In most businesses, in-house expertise is not sufficient to achieve these objectives. Fortified by a strong background in tax laws and litigation, Lakshmikumaran&Sridharan undertakes high-quality TCR for clients. TCR enables clients to maximize benefits, identify opportunities and exposures for taking corrective action. It ensures correct payment of duties/taxes, assessment of the training requirements and changes required in the business processes. The TCR team works closely with clients to understand their particular needs and deliver specific solutions.

Put Your Irs Stimulus Check To Good Use


Before you buy that new pair of shoes or that red dress that you will look devilishly beautiful in with the ?extra? money you either have already gotten or are going to get from Uncle Sam, consider this: Will either really change your life for the better?

Sure, it may make you feel good for a moment. I mean, who doesn?t like to get new stuff? But at the end of the day, is it really going to change your life in a positive way? I think if you were honest with yourself, you?d say no. And you?d be right.

The truth of the matter is, after a while, that dress or that pair of shoes will be just like everything else in a matter of months ? pushed to the back of the closet, possibly never to be seen or worn again.

But, what if I told you there is a way to use that stimulus check to stimulate your life?
Wait. Before I do, let me give you Webster?s definition of stimulate. Perhaps then, you?ll be more apt to really grab hold of what I?m trying to tell you.

Stimulate means to excite to activity or growth or to greater activity. What if you used the money you got from Uncle Sam to excite your life to activity or growth or to greater activity? Could you use a little excitement in your life?

You may be asking what all of this means to your life? And, I?ll tell you! I?m telling you to invest in yourself. Use that money to better your life. Not to pacify yourself for a brief moment by purchasing a feel-good item.

Oftentimes, we hope and pray for an opportunity to change our lives. But we miss them, because when they come, they?re not packaged like we think a grand opportunity should be, so we overlook them.

I?m here to tell you that your Tax Stimulus check is one of those blessed opportunities in disguise! And one of the best ways I would advise you to use it is to get started in a home-based business.

There are millions upon millions of home business opportunities awaiting you online. Why not take some of that stimulus money and use it to stimulate your life not only financially, but in personal growth as well!

Being a stay at home mom doesn?t have to be a dream any longer, it can become a reality.
And if you?re a stay at home mom already, supplementing your husband?s income from home is just as sweet! In fact, one day, you could truly earn more money part-time working from home, than he does full-time at his job!

When that stimulus check hits your bank account or your mailbox, these words are going to be brought back to your mind. I hope that a few months down the road you don?t have a pair of shoes and a new dress hanging in your closet that never sees the light of day, again.

I hope that you take my advice, start your home-based business, and have the financial wherewithal because of it to not only buy all the dresses and shoes your heart desires, but to buy a new home and have a separate closet just to hold all of them!

Being excited to activity and growth or greater activity is stimulating! Nothing helps you do that better than a home-based business. And the key to getting there lies in using your Tax Stimulus check the right way!

Don?t just change the nation?s economy; change YOURS by starting your own home business. You?ll be glad you did, and so will this country because as you increase, so will others!

Cost Segregation – Tax Deductions

Cost Segregation - Tax Deductions - The Primary Goal of Cost Segregation
By understanding business tax deductions, business owners may enjoy personal benefits from business expenditures - a nice car to drive, a combination business trip/vacation, retirement savings plan - if they follow the myriad tax rules.The tax code allows deductions from gross income, which reduce income taxes. Increasing tax deductions reduces taxable income and income taxes. Therefore, knowing how to maximize your deductible business expenses enables you to lower taxes.According to the IRS, trade or business expenses must be ordinary and necessary to be considered a tax deduction. Although the tax code does not specifically define "ordinary" and "necessary" tax deductions, these types of expenses are specified in various IRS publications and regulations. Some of the tax deductions business owners can claim fall under categories such as charitable contributions/donation deductions, medical and dental deductions, moving expense deductions, deducting job costs, travel and entertainment expense deductions, casualty and theft losses, depreciation and involuntary conversion deductions.The wisdom of tax planning is to take advantage of all the benefits Uncle Sam has to offer.

An increasingly popular federal tax savings phenomenon is utilizing a cost segregation study (CSS). These studies offer business owners of improved commercial real estate the opportunity to defer taxes, reduce their overall current tax burden, and free up capital by improving cash flow. A CSS study will identify any item that can be depreciated over a shorter period of time. These studies can result in accelerated depreciation deductions for properties including new buildings being constructed, renovations of existing buildings, leasehold improvements, and the purchase of real estate.The primary goal of cost segregation is to identify building components that can be reclassified from real property to personal property. This results in a substantially shorter depreciable tax life and accelerated depreciation methods. Ordinarily, the cost of real, or section 1250, property is recovered over lengthy periods (27.5 and 39 years for residential and nonresidential property, respectively), using the straight-line method of depreciation.

Personal, or section 1245, property is recovered over considerably shorter periods (5, 7 or 15 years), and employs accelerated methods of depreciation, such as 200% or 150% declining balance.Tax reduction services include federal income taxes, state income taxes and property taxes. We do not prepare income tax returns. Instead, our advisors review your circumstances and suggest cost effective options to lawfully reduce your income tax liability.