Tax news

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.
Tax

IRS Warns Taxpayers of Home-Based Business Tax Avoidance Strategies

The Internal Revenue Service wants taxpayers to be aware of a tax reduction promotion being marketed by scam artists who claim that you can deduct most or all of your personal expenses, including most of the cost of operating your home, as a home-based business deduction.The people marketing these deceptive tax-saving schemes suggest that taxpayers can create a bogus home-based business, deduct the cost of operating the home, and then take deductions for payments to children for non-business activities such as answering the telephone or washing your car, costs associated with operating your
Tax

IRS Online Refund Feature Not Living up to Expectations

Where's My Refund? This question, posed on the home page of the Internal Revenue Service's Web site, leads taxpayers to a page where they can enter their Social Security number, filing status, and the amount of refund they expect. Status information regarding whether or not the tax return was received and whether or not a refund has been processed is provided online, instantaneously.
Tax

Educator Expenses

Starting in 2002, if you are an educator, you may be able to deduct up to $250 of expenses you paid for purchases of books and classroom supplies even if you don’t itemize your deductions, according to the IRS.The new deduction is available if you are an eligible educator in a public or private elementary or secondary school. To be eligible, you must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.You may subtract up to $250 of qualified expenses when figuring your adjusted gross income (AGI).
Tax

Busy Season Stress Busters Part Two

In Stress Busters Part One, we offered some ideas on ways to reduce the stresses of tax season. Here are some more great ideas from the readers of AccountingWEB.com – Part Two On nice weekend days, teens can come to the office parking lot and wash all the cars.  
Tax

Taxability of Social Security Benefits

The IRS says that whether your Social Security benefits are taxable depends on your total income and marital status. Form SSA-1099, which Social Security recipients receive by January 31, shows your total benefits, but determining your taxable benefits requires putting pencil to paper.Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.

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