Tax news

Tax

Taxable or Non-Taxable?

Generally, most income you receive is taxable, according to the IRS. But there are some areas where certain types of income are partially taxed or not taxed at all.
Tax

Audits of Some Taxpayers Increase, Computers Partially Responsible

While the number of IRS agents conducting face-to-face audits has decreased significantly in the past 10 years, the actual quantity of returns being audited is slowly increasing.President Bush's proposed budget includes an extra $133 million for the IRS earmarked for "high-income non-compliance" including investigations into questionable tax shelters like those marketed by Big Four firms Ernst & Young and KPMG and like the one owned by former Sp
Tax

Gift Giving

If you gave any one person gifts valued at more than $11,000 in 2002, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift.The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.You make a gift when you give property, including money, or the use or income from property, without expecting to receive something of equal value in return.
Technology

Techies Warn Self-Filing Taxpayers of Possible Identity Theft Threat

Leading tax preparation software companies Intuit (TurboTax) and H&R Block (TaxCut) may be producing software that puts customer tax data at risk, according to some data security experts. Both TurboTax and TaxCut leave taxpayer data files unencrypted and thus unprotected from hackers, and some people are concerned about the possibility of identity theft.Security Firm PivX Solutions has issued a warning about the hacker potential.
Tax

Tax Assistance For Individuals With Disabilities And Hearing-Impaired

Are you unable to complete your federal income tax return because of a physical disability or hearing impairment? Get help from the IRS through its Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs, or through a special TDD phone number available in both English and Spanish.The VITA program has IRS-trained volunteers who provide free tax assistance at neighborhood locations such as churches, schools, libraries and community centers. VITA is aimed at those who may find it difficult to pay for tax assistance.
Tax

Massachusetts Takes Aim at Rapid Refund Loans

The State of Massachusetts has ordered tax preparation giant H&R Block as well as other tax preparers to file for a license that will prevent the tax companies from collecting exorbitant interest rates on the popular tax refund anticipation loans. The Massachusetts law would limit tax preparers and banks to an annual interest rate of 23% on the rapid refunds. Rapid refund loans enable taxpayers to get their tax refund money as soon as they file their tax returns, or within 2-3 days, as opposed to waiting 10 days or more for the IRS to produce the money.
Practice

Tax Professionals Can Now E-File Employment Tax Forms

Tax professionals are able to file employment taxes for business clients for the first time as part of a new Employment Tax e-filing System offered by the Internal Revenue Service.The IRS expects the e-file upgrades will continue to reduce the paperwork burden on small businesses.
Tax

Check Your Refund Status

If you have already filed your federal tax return and are due a refund, you have several options for checking on the status of your refund, says the IRS.A new option this year is Where’s My Refund?, an Internet-based service available on the IRS Web site.
Tax

Schedules B and 1

You may be one of about 15 million taxpayers who no longer have to file Form 1040’s Schedule B or Form 1040A’s Schedule 1, according to the IRS.
Tax

E-File Now, Pay Later, Despite Alabama Warning

Alabama taxpayers who thought they were doing the right thing by filing tax returns electronically, even though they owe money on those returns, got a bit of a surprise last week.While the Alabama taxpayers saved paper and the time of state employees who would have had to process written tax returns manually, their reward for such efforts was a collection letter from the Alabama state government telling them they'd better pay their taxes within 10 days.The recent trend has been to encourage taxpayers to file early and electronically with the incentive of receiving their refunds more quic
Tax

Sierra Club Pushes IRS For SUV Audits

As one of the country’s leading conservation organizations, the Sierra Club often asks the Environmental Protection Agency to enforce federal laws to protect the environment. Now, the club wants the Internal Revenue Service (IRS) to step up its auditing efforts on certain SUV owners and to help the environment in the process.In a press release last month, the San Francisco-based Sierra Club explained its directive to the IRS.
Tax

Reservists, New Enlistees May Get Deferral For Back Taxes

The IRS reminds reservists called to active duty and new enlistees in the armed forces that they might qualify for a deferral of taxes owed if they can show that their ability to pay taxes was impaired because of their military service. The Soldiers and Sailors Civil Relief Act provides this benefit.The Act covers active duty members of the military services — Army, Navy, Air Force, Marine Corps and Coast Guard. Reservists must be placed on active duty to qualify.
Tax

Jock Tax: Big Bucks For States, Bigger Headaches For Accountants

Budget deficits have forced some states to get very creative in pursuit of tax revenue. In January, AccountingWEB described some unusual use tax collection initiatives being pursued by some states. This month we focus on the "Jock Tax," usually reserved for highly paid athletes but recently extended to target lawyers, professional speakers, consultants, and yes, even accountants.Recently, some states have added to their tax collecting efforts by collecting big tax checks from traveling superstars who earn their money on the road.
Tax

Busy Season Stress Busters Part Three!

Here are some more great ideas from the members of AccountingWEB.com – Part Three 
Tax

Retirement Savings Contribution Credit

This tax credit, which will be available only from 2002 through 2006, could help you offset the cost of the first $2,000 contributed to IRAs, 401(k)s and certain other retirement plans, says the IRS.The Retirement Savings Contributions Credit applies to individuals with incomes up to $25,000 ($37,500 for a head of household) and married couples with incomes up to $50,000.
Practice Management

IRS Increases Criminal Investigations of Tax Return Preparers

The Internal Revenue Service more than doubled the number of criminal investigations of preparers of federal tax returns in 2002 compared to the previous fiscal year, according to figures released by IRS Criminal Investigation.In Fiscal Year 2002, 254 investigations were initiated, compared to 116 the year before. More cases were referred to the Department of Justice for prosecution – 89 in FY 2002, up from 73 the year before.
Tax

Clean Fuel Tax Deduction For Hybrid Vehicles

If you are the original owner of a qualifying hybrid vehicle – one that combines an electric motor with a gasoline-powered engine – you may be eligible to claim a one-time tax deduction on your federal income tax return, says the IRS. There are three Toyotas – the 2001, 2002 and 2003 Prius models – and four Hondas – the 2000, 2001 and 2002 Insight and the 2003 Civic Hybrid – that qualify for this tax deduction.The maximum allowable deduction amount is $2,000.
Tax

Education Credits Can Help at Tax Time

Are you footing the costs of higher education for yourself or your family? The IRS says that education tax credits can help offset those costs. The Hope Credit and the Lifetime Learning Credit are education credits you can subtract in full from your federal income tax, not just deduct from your taxable income.The Hope Credit applies only for the first two years of post-secondary education, such as college or vocational school, and it can be worth up to $1,500 per eligible student, per year. It does not apply to graduate and professional-level programs.
Tax

Treasury Finalizes Anti-Tax Shelter Regulations

"By issuing final regulations, we are putting the promoters that sell questionable transactions and the taxpayers that participate in them on notice." These words, spoken by Pam Olson, assistant secretary for tax policy at the U.S. Treasury, mark the start of a new hunting season on tax shelters.Last Thursday, the Treasury Department issued final regulations that require additional disclosure of tax shelter activities.
Tax

Coverdell Education Savings Accounts Can Make Education Costs Less Taxing

The Coverdell Education Savings Account is an incentive to help parents and students save for education. Up to $2,000 may be contributed to a child’s Coverdell ESA each year; the limit was $500 before 2002. Earnings on contributions will be distributed tax free, provided that they are used to pay the beneficiary’s elementary or secondary school or college education expenses.Any individual who meets adjusted gross income (AGI) requirements can make a non-deductible contribution on behalf of a child under the age of 18.

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