Archive for the ‘tax’ Category

« Older Entries

Tax Quotes and Jokes for Tax Season

January 22nd, 2012



Like death, paying taxes is inevitable. In the case of most Americans, tax season is just around the corner. If only paying taxes was so easy.

As you begin pulling out those receipts, the eraser and reading plain English tax instructions that Einstein couldn’t figure out, you’re going to need a good laugh. Here you go:

1. I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.

2. People who complain about taxes can be divided into two classes: men and women.

3. Like mothers, taxes are often misunderstood, but seldom forgotten.

4. The best measure of a man’s honesty isn’t his income tax return. It’s the zero adjust on his bathroom scale.

5. Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.

6. A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform.

7. Few of us ever test our powers of deduction, except when filling out an income tax form.

8. What’s the difference between a mosquito and an IRS agent? One is a bloodsucking parasite, the other is an insect.

9. It would be nice if we could all pay our taxes with a smile, but normally cash is required.

10. The government deficit is the difference between the amounts of money the government spends and the amount it has the nerve to collect.

11. Taxes: Of life’s two certainties, the only one for which you can get an automatic extension

12. What Mae West said about sex is true about taxes. All tax cuts are good tax cuts; even bad tax cuts are good tax cuts,

13. The federal income tax system is a disgrace to the human race. – Jimmy Carter

If nothing else, it is good to know that a former President of the United States feels the same way about taxes as you. If only someone would agree to a flat tax, millions of Americans could dispense with the aggravation and stress of filing taxes each year.

Comments Off

Posted in tax

Tags:

Property Tax Grievances – Should You File For a Reduction?

January 9th, 2012



In the 9 years that I grieved taxes professionally, I was asked many of the same questions over and over again. I would like to take a few minutes to go over some of this information in order to dispel some myths about lowering property taxes.

The most common questions were as follows:

Does filing a property tax grievance invite a higher assessment from the assessor?

What are my chances of winning?

Do I need a lawyer to file for me?

Is it expensive?

These questions keep many homeowners with legitimate cases from ever filing. The answer to the first question is that the law and many court cases support the right of a homeowner to challenge his property taxes. Actually, when you file a case, you are not grieving the taxes, but rather the assessed valuation that the tax assessor has assigned to your property. The assessor cannot raise your assessment to “teach you a lesson”. It is your legal right to pay only your fair share of taxes. The law provides this method for homeowners to challenge unfair assessments without any fear from the assessor’s office. Remember, tax assessors are only doing their jobs to properly assess properties in order to raise taxes for schools, police fire and other municipal services. They are not the bad guys. All of the tax assessors I have dealt with have been fair and honest. They have a difficult job to do, and do it with remarkable efficiency.

The odds of winning are excellent if you have done your homework to prove your case. The paperwork is not very difficult. It should take less than an hour to prepare the papers for filing. The important thing to remember is that there is a specific day each year beyond which you cannot file your case. Be sure to find out what this day is. If you miss it by even one day, you are out of luck until the following year.

Most states do not require a lawyer to file your case. Usually a lawyer is only required for certain commercial cases that go to court. Residential property does not require a lawyer to file a case on your behalf(most states).

In most cases, the costs are minimal to file a tax grievance, if anything. Some states only require a fee if your case goes before a judge. Most cases are heard before a review board, which is free.

In a later article, I will address evidence that you need to file and some money saving tips for homeowners.

Comments Off

Posted in tax

Tags:

Tax Shelters the IRS Doesn’t Like

January 7th, 2012



Tax shelters can be good–reducing your taxable income. But tax shelters can be bad–illegal and causing participants to commit tax fraud. How to know what shelters to avoid? The key is education, read the IRS forms, and pay attention. The old caveat, if it sounds too good, it’s most likely bad, is very often true. The best tax shelter for the business owner is to use sound tax planning strategies and think of your business as a legal way to avoid and rightfully reduce taxes. It is all in the deductions and keeping good records (receipts, checks, daily journals).

A tax shelter is a type of investment that allows people to reduce their tax liability. Pension plans and real estate investments are good examples. Persons can reduce taxable income if you have losses on investments. These are all legal strategies. But fraudulent or “abusive tax shelters” are considered by the IRS to use many schemes to filter or hide transactions: trusts, off-shore credit/debit cards, hedges, circular cash flows, defeasances, insurance schemes, and other activities are all attempts to hide. If investments insulate the client from significant economic risk, the courts have decided they are not appropriate.

The IRS considers tax shelters “abusive” when they are designed solely for avoiding taxes. They have no other significant business purpose. There are various means to do the abusive practices–helping clients falsify tax losses or report phony tax losses. In 2005, KPMG, a Big Four accounting firm, cost the U.S. $2.5 billion, according to the Department of Justice, by helping clients to develop tax losses. The following scenario (from Grace Wong, a reporter from CNN’s website “Money”) is a simplified explanation of one method such firms used to help clients develop tax losses.

Here’s an example:

* Joe is a new millionaire and has capital gains of $20 million. He wants to create an “artificial” loss.

* Joe places an option in identical amounts and prices on the euro /U.S. dollar for exchange rates. He buys a call option with the right to buy Euros at a certain price on or before a certain date for a premium of $20 million. He writes an option with the same strike price and expiration date for $20 million. The premiums offset each other.

* Joe then transfers the option to a partner in a friendly “accommodation” partnership, someone who paid big fees to enter into a partnership with no real business purpose.

* When he sells for zero profit, Joe claims a tax loss of $20 million, even though he’s incurred no real economic loss.

Hard to follow the details? The concepts of many bad tax shelters lack definable business purpose. An “abusive tax shelter” is a marketing scheme that offers tax transactions with little or no economic value. In the real world people invest money to make money. The bad kind of tax shelters offer inflated tax savings based on large tax write offs and tax credits out of proportion to your investment. There is no real economic investment. An abusive tax shelter often involves little risk and its tax write off ratio is frequently much greater than one-to-one. If you use a tax shelter, be sure to file Form 8271 from the IRS. Read the experts. Read the known tax shelter abusers listed on the government’s IRS site. And below are some of the worst schemes for abusive tax shelters.

Tax Shelters the IRS Dislikes
Lease In Lease Out(LILO) Sale In Lease Out (SILO) Partnership Straddle Corporation Owned Life Insurance Sham Transactions (COLI) Overseas Shelters

Comments Off

Posted in tax

Tags:

Reducing Tax Burden: Follow These Simple and Practical Steps

December 16th, 2011



Taxes of any type and form always burden you. Your income, off and on, is half eaten by the taxes you pay. These taxes can be federal taxes, state taxes, local income taxes, payroll taxes, which include Social Security and Medicare, sales tax, excise taxes and property taxes. However, if you are intelligent enough, you can apply tax-planning tricks that would eventually enhance your income. Given below are the effective steps for reducing your tax burden:

1. Understand your tax situation – By understanding how much tax you will pay, or what part of your income is taxable, you would smoothen your tax burden. In addition, you should keep a fair account of your daily and miscellaneous spending on various items. These include housing, medical care, food, transportation, recreation, clothing and other luxury items. If you calculate, you would come to know that you spend approximately double the amount of above items on the taxes you pay on your income.

2. How much did you pay as taxes – You can estimate how much you paid as taxes the previous year, and how much extra or less will you be paying this year. You can do this by getting the details of the previous year’s personal income tax returns and comparing it with your present income tax. All information in this regard is found in form 1040, line 62, which also gives detailed information on your total tax liability for the year.

3. Plan your investment – If you know the facts, you will be better in generating your wealth. This means, that you can choose available and effective tax-saving investment plans. You can choose NSC, infrastructure bonds, flexibonds (Anshu – Pls check the research, I don’t think there are NSC bonds etc in America) and the like. Thus, you will save a major portion of your taxes and you can invest this money to earn extra profits. It is this money that you used to waste away paying taxes and adding to Uncle Sam’s kitty. What is more, if you reduce your taxes, the government will give you extra benefits on retirement.

4. Tax Saving Strategies – This is the most important step that will make your income grow. You can download some real tax information from the net on various tax saving strategies. In addition, you can consult a local tax professional.

Thus, by following these simple and effective steps, you will certainly improve upon your income by reducing your tax burden.

Comments Off

Posted in tax

Tags:

How to Handle Delinquent Tax Returns

December 13th, 2011



If you earned $8900 as a single individual or about $17,800 as a married couple in the calendar year, you have to file an income tax return. If you had enough withholding, you may not need to pay the IRS anything. However, if you owe, you need to pay as soon as you possibly can.

If you have unfilled tax returns, the best course of action is to file them. Fill out the returns and send them to the Internal Revenue Service via certified mail. You will get a return receipt from the Internal Revenue Service, which will serve to prove the returns were filed.

The Internal Revenue Service database ias upgraded. They have records on everyone who has a savings or checking account and a job. If you should be filing, but you are not, you could be in for trouble.

a
When the Internal Revenue Service finds that you have not filed your returns, they will send letters demanding payment. You must then file a return or file an appeal. If the IRS does not hear back from you in a reasonable amount of time, they will file a return for you, using the highest possible tax bracket, without deductions, exemptions, or tax credits.

Even if this happens, you should still file a return because all of the exemptions, credits, and deductions you list are what will be used to determine the proper tax liability. Not filing a tax return also restricts you from some other functions of life like qualifying for Social Security, Medicare, unemployment compensation, and industrial insurance.

Inaction is the worst response to the Internal Revenue Service. Immediately upon receiving notification from the Internal Revenue Service, you need to take action. Otherwise, the Internal Revenue Service will begin to apply their particular brand of collection strategies. The strategy will begin by immediately imposing very high interest charges to the debt they say you owe. These penalties and fines will continue to increase during all the time you owe.

Remember, as well, that you cannot make any installment deals with the Internal Revenue Service if you have if you have failed to file returns, and you cannot make an Offer in Compromise or abate tax penalties if you have failed in filing income tax returns.

You might want to look into hiring a professional tax resolution service to aid you in this matter. They can help you to file back returns and come to the best resolution over any unpaid tax debt, penalties, and fines you may have incurred with the Internal Revenue Service.

Comments Off

Posted in tax

Tags:

4506 Tax Form – Tips For Obtaining IRS Tax Returns and Transcripts

December 7th, 2011



The 4506 tax form is used when taxpayers require a copy of previously filed returns. IRS form 4506 can be used by authorized third parties to obtain tax records for their clients. Third parties include certified public accounts, probate executors, lawyers, banks, credit unions and mortgage lenders.

Third parties submitting 4506 tax form requests must abide by Internal Revenue Service codes set forth in section 6103(e). This section of established IRS codes relates to laws of confidentiality and provides guidelines for requesting returns of dissolved corporate entities.

Taxpayers and their agents can use IRS 4506 to obtain all types of previously filed tax forms including: 1040, 1120, 941 and 706. Taxpayers may also request copies of attachments which were submitted with each year’s return. These can include W-2 forms, 1099s, schedules and amended returns.

When taxpayers require multiple returns they must submit a separate IRS form 4506 request for each years’ return request. For example, if an individual requires copies of returns filed in 2001, 2004 and 2006 they must complete three separate 4506 forms.

Presently, the IRS charges a $57 fee per requested tax return. Acceptable forms of payment include personal or business checks or money orders. Financial instruments must be made payable to “United States Treasury” and include the taxpayer’s social security or employer identification number. The IRS requires the words, “Form 4506 request” to be included in the memo section of the check or money order.

Transcripts are available at no charge. These summarized statements only include certain elements such as gross income, adjusted gross income, and amount of return or taxes owed for the specified time period.

Transcript requests can be obtained by submitting IRS form 4560-T or by contacting the IRS via phone. Summaries generally meet requirements of mortgage lenders and providers of student loans. 4506-T transcripts are a quick and efficient way to obtain required documents and generally arrive within ten business days from the time the Internal Revenue Service receives the request.

The IRS limits the number of transcripts to the current and previous three years of filed returns. When taxpayers require more than four years of transcripts they will be required to submit a 4506 tax form and pay for a full statement. The $57 charge will be applied to each return request.

Income tax return transcripts are required by taxpayers and corporations filing for bankruptcy protection. New bankruptcy laws enacted in 2005 require debtors to provide copies of current, amended, or past due returns filed while their case is pending.

In order to comply with Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) requirements, debtors must submit tax returns or transcripts to the bankruptcy court seven business days prior to their 341 creditor meeting.

Individuals or corporations planning to file for bankruptcy protection that require previous years’ returns should submit Form 4506 a minimum of 90 days prior to needing them. The IRS is infamous for moving at a slow pace. Do not risk the opportunity to obtain financial relief by not having required documentation.

Forms 4506 and 4506-T can be downloaded at no charge via the IRS website at irs.gov. Payment must accompany each tax return request.

Comments Off

Posted in tax

Tags: