Tax news

Tax

Charitable Contributions

The Internal Revenue Services advises that when preparing to file your 2001 federal tax return, don't forget your contributions to charitable organizations. Your donations can add up to a nice tax deduction if you itemize on IRS Form 1040, Schedule A.Here are a few tips to help make sure your contributions pay off on your tax return. To be deductible, contributions must be made to qualified organizations. Organizations can tell you if they are qualified and if donations to them are deductible.
Tax

Gift Giving

If you give any one person gifts valued at more than $10,000 in 2001, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift. For 2002, the amount rises to $11,000.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.
Tax

Don't be Taken in by Tax Scams

The IRS reminds taxpayers not to fall victim to a variety of tax scams. These schemes take several shapes, ranging from promises of special tax refunds to illegal ways of "untaxing" yourself. If people think something may be unscrupulous, they can report suspected tax fraud to the IRS at 1-800-829-0433.The IRS urges people to avoid these common schemes: AFRICAN-AMERICANS GET A SPECIAL TAX REFUND. Thousands of African-Americans have been misled by people offering to file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law.
Tax

Do You Have a Deductible Home Office?

Whether you are self-employed or an employee, if you use a portion of your home for business purposes, you may be able to take a home office deduction, according to the IRS.You can deduct certain expenses if your home is the principal place where your trade or business is conducted. You can also take a deduction for business use of the home if that is where you meet and deal with clients or patients in the course of your business.
Tax

New Law Boosts Economy Through More Tax Breaks

On March 9, 2002, amid signs the U.S. economy is starting to recover, President Bush signed into law the long-awaited economic stimulus law, now known as the Job Creation and Worker Assistance Act of 2002.
Tax

IRS Eyes Offshore Funds and Credit Card Schemes

Accounting firms of all sizes may need to brace for more problems, as the long arm of the law and the glare of public scrutiny are extended to thousands of secret bank accounts tucked away on the sun-drenched islands of the Caribbean.
Tax

IRA Contributions Can be Made Until Tax Filing Deadline

If you haven't put any money into an Individual Retirement Arrangement (IRA) for tax year 2001, or if you've put in less than the maximum allowed, you still have time, according to the IRS. You can contribute to either a traditional or Roth IRA until the April due date of your tax return.If you make a contribution for the previous tax year, tell the IRA trustee which year the contribution is for. Otherwise, the trustee may report the contribution as being for the year in which it was received.You may contribute up to $2,000 of your earnings for 2001 to an IRA.
Tax

Tax Assistance for Individuals With Disabilities and the 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

E-Filing: Faster, Cheaper, Safer

As tax professionals head into the home stretch of their most hectic time of year, one thing will surely ease some of the pressure that they face: e-filing. The IRS may not have known what a blessing it was bestowing upon practitioners and enrolled agents when it first initiated the electronic filing system nearly a decade ago, but most tax pros affirm today that it has saved them time, money, and anguish since they have begun using it. Despite the apparent convenience that e-filing provides, not all tax professionals have made the transition from paper to computer.
Tax

AICPA's New Ads - Will the Media Get the Message?

The American Institute of CPAs (ACIPA) has announced the launch of a new advertising campaign to help restore confidence in the profession. New print ads will begin to run on March 10, 2002 in the Wall Street Journal and other major newspapers. These ads will emphasize the roles of CPAs away from the headlines, engaged in the daily routine activities of auditing financial statements, providing tax services and delivering business insight.
Tax

IRS Notices: What To Do

It’s a moment any taxpayer dreads. A letter arrives from the IRS — and it’s not a refund check. But don’t panic. Many of these letters can be dealt with simply and painlessly.Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issueabout your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.
Tax

Bomb-Sniffing Dogs Added to IRS Staff

The IRS service center in Cincinnati has added four bomb-sniffing dogs and six dog handlers to its security program. The dogs and handlers are provided by McLean, Virginia-based MVM Inc. which also supplies electronic security devices and guards at the Cincinnati center.Bomb-sniffing dogs are trained to recognize scents of military and commercial explosives as well as homemade bombs. When a bomb-sniffing dog smells a bomb, the dog sits or lies down at the bomb location.The contract for the bomb-sniffing dogs is a long-term contract that extends beyond the current tax season.
Technology

IRS Strikes Deal on Web-Filing for 1065s and 1041s

An estimated five million businesses will be able to file their business tax returns via the Internet this year, thanks to an agreement between Internet Programming & Consulting (formerly Taxsoft) and the Internal Revenue Service (IRS). Internet Programming & Consulting (IPC) announced the deal on March 4, 2002. Under the terms of the agreement, IPC will promote the electronic filing of business tax returns, including Form 1065, U.S. Partnership Return of Income, and Form 1041, U.S.
Tax

Don't Overlook Home Mortgage Points

Did you buy or build a new home in 2001? Many new homeowners don't know that they can deduct points paid on home mortgage loans. The IRS reminds homeowners that this can really pay off because some home mortgage points are fully deductible in the year they are paid.To fully deduct mortgage points in the year paid, the following requirements must be met: Your main home secures your loan. Paying points is an established business practice in your area. The points paid were not more than the amount generally charged in that area.
Tax

IRS Offers Ice Storm Extensions - MO & KS

The kinder, gentler IRS has issued tax deadline relief in 72 counties in Missouri and Kansas that were declared eligible for federal disaster assistance as a result of a devastating ice storm on January 30.Farmers, business owners, trusts, and tax-exempt organizations that normally are required to file tax returns in February and early March have until March 15 to file tax returns, including some federal excise, employment, and highway use tax returns.
Tax

Coverdell Education Savings Accounts

COVERDELL EDUCATION SAVINGS ACCOUNTS CAN MAKE EDUCATION COSTS LESS TAXINGThe 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, starting in 2002; the limit was $500 before this year.
Tax

Federal Court Takes Action Against Illegal Tax Promotions

A federal court in Tampa, Florida has obtained a permanent injunction against tax-avoidance promoter Joseph N. Sweet and his organization, EDM Enterprises, of Bradenton, Florida ordering them to cease selling and promoting tax avoidance plans and tax shelters.
Tax

E-Filing Increases, As Do Tax Return Processing Costs

The IRS continues to encourage taxpayers to file tax returns electronically, hoping this year's total will reach 45 million returns, compared with 40 million returns for the 2001 tax filing season. But while the number of electronically filed returns has increased by 78% in the past four years, the number of returns filed on paper in the same period of time has only fallen 5%, according to a General Accounting Office report.
Tax

File 1998 Tax Returns Now or Give Up Refund

The IRS wants to remind taxpayers who have not yet filed 1998 tax returns that they will be ineligible to claim a refund for 1998 if the tax return is not filed by midnight, April 15, 2002.According to the IRS, more than $2.3 billion in unclaimed refunds is awaiting tax filings from approximately 1.7 million taxpayers who have yet to file their 1998 tax returns. Any refunds not claimed by April 15, 2002 will become the official property of the U.S.
Technology

IRS Computers May Land in Afghanistan

Last month, AccountingWEB reported on some inventory control issues at the IRS ("IRS 'Misplaces Over 2300 Computers" - January 9, 2002) that led to congressional calls to halt the IRS budget until they are found.Now, the Bush administration is proposing to take 1,000 of the IRS' two year old laptops and desktop computers and ship them to Afghanistan to help the new government in its modernization efforts.The situation in Afghanistan is desperate, because the outgoing Taliban regime apparently looted government offices before they left, leaving behind

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