Tax news

Tax

Beware: IRS Does Not Approve IRA Investments!

Some investment promoters are trying a new tack this spring, touting their Individual Retirement Accounts (IRAs) as being approved by the Internal Revenue Service. Apparently some people are getting sucked in by the ads, or at least the government is afraid people won't know the ads are hype. On Wednesday the Federal Trade Commission (FTC) issued a consumer alert warning the public that there's no such thing as an "IRS-Approved" IRA.Technically, every IRA is IRS-approved, in that to be an IRA, an investment account has to meet certain standards promulgated by the IRS.
Tax

Selling Your Home

If you sold your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return, according to the IRS. This exclusion is allowed each time that you sell your main home, but generally no more frequently than once every two years.To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale.
Tax

Enron Report - Tax Schemes Even the IRS Doesn't Understand

Last Thursday, the U.S. Senate's Joint Committee on Taxation published a three-volume, 2,700 page report describing what the committee had learned of the tax shelters used by Enron Corporation to reduce and in some cases avoid paying U.S. corporate income tax. The year-long investigation into Enron's shenanigans produced a high level of awe from Senators who knew big corporations use tax shelters to lower their tax bills but didn't know quite how much of an industry the practice is.
Tax

Credit For The Elderly or Disabled

You may be able to take the Credit for the Elderly or the Disabled if you are age 65 or older, or if you are retired on permanent and total disability, according to the IRS. Like any other tax credit, it’s a dollar-for-dollar reduction of your tax bill.
Tax

Capital Gains And Losses

Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. The IRS says that when you sell a capital asset, such as stocks, the difference between the amount you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. While you must report all capital gains, you may deduct only your capital losses on investment property, not personal property.A “paper loss” – a drop in an investment’s value below its purchase price – does not qualify for the deduction.
Tax

Paid Tax Preparers May Need Licenses

In this year's annual report to Congress by the Taxpayer Advocate Service, an independent organization that operates within the Internal Revenue Service and serves as a watchdog to make sure the IRS is handling taxpayer problems efficiently and effectively, one of the more progressive themes is the concept that there should be a push to license paid tax preparers.Currently it is estimated that at least half of the nation's taxpayers pay to have their tax returns prepared by someone else.
Tax

Roth IRAs

Confused about whether you can contribute to a Roth IRA? The IRS suggests checking these simple rules:Income:To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses).
Tax

IRS Gets a New Soldier in War Against Tax Shelters

Nicholas J. DeNovio, a former PwC partner from the National Tax Office in Washington, D.C., has joined the IRS staff to help sniff out and eradicate abusive tax shelters.Part of Mr. DeNovio's role will be to coordinate the anti-tax shelter efforts of many departments of the IRS. His investigatory responsibilities will include gathering data from audits, taxpayer disclosures, and tax shelter documents to quickly identify shelters that the agency may challenge.
Tax

Tips And Taxes

Do you work at a hair salon, barber shop, casino, golf course, hotel or restaurant or drive a taxicab? The tip income you receive as an employee from those services is taxable income, advises the IRS.As taxable income, these tips are subject to federal income, Social Security and Medicare taxes, and may be subject to state income tax as well.You must keep a running daily log of all your tip income.
Technology

Controversy Over TurboTax 2002

The reviews of Intuit’s TurboTax 2002 are in and most users are giving the perennially popular income tax software two thumbs down. At issue is C-Dilla software, commonly known as spyware, which Intuit installed to stop illegal copying of TurboTax.Intuit’s move has caused many new and long-time users to post their concerns online.
Tax

New Tax Laws Favorable to Home Office Workers

In 1997 there were changes made to the tax law regarding the taxation of gains on the sale of a personal residence. Now, the Internal Revenue Service has issued regulations that clarify those 1997 changes. The tax rules now in effect are much more favorable for taxpayers who take the home office deduction on their tax returns.
Tax

What if You Can't Get a Social Security Number?

If you are not eligible to get a Social Security number but have to file a tax return, you will need to use Form W-7, "Application for IRS Individual Taxpayer Identification Number" to get this number, known as an ITIN.An ITIN is a 9-digit number issued by the IRS, beginning with the number "9." It may look a bit like a Social Security number, but an ITIN is used only for federal income tax purposes and has no effect on your work or immigration status in the U.S.Each person who files a federal tax return or is listed
Tax

What to do if You Haven't Received a Form 1099

If you received certain types of income, you may receive a Form 1099 for use with your federal tax return. You should receive these forms from the payer by early February, according to the IRS. Payers have until January 31, 2003, to mail these to you. If you have not received an expected 1099 by a few days after that, contact the payer. If you still do not get the form by February 15, call the IRS for help at 1-800-829-1040.In some cases, you may obtain the information that would be on the 1099 from other sources.
Tax

New Report Says State Tax Systems Need Revamping

A new report, "The Way We Tax: A 50-State Report," produced by the staff of Governing magazine, points out weaknesses in state tax systems across the country. "The vast majority of state tax systems are inadequate for the task of funding a 21st century government," the authors begin. "Many of those tax systems are also unfair."The report claims that tax policies among the states, which vary greatly from state to state, are based on decisions made during the depression era. While economic conditions have changed, taxes, for the most part, have not kept up with the change.
Tax

What to do if You Haven't Received a Form W-2

You should receive a Form W-2, "Wage and Tax Statement," from each employer you worked for to use in preparing your federal tax return. According to the IRS, employers must furnish this record of 2002 earnings and withheld taxes no later than January 31, 2003 (if mailed, allow a few days for delivery).If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect or incomplete address, so be sure to verify your address.
Tax

Creating a Stress-Free Busy Season

by Sandra L. Wiley, COO, Boomer Consulting, Inc.You can thrive, not just survive, during this upcoming busy season. You just need to do five things:- Keep your expectations rational. - Take care of yourself. - Take control of your time and limit your commitments. - Create a positive work environment. - Embrace your family and friends.These tips will help you reduce stress, relax, and breeze through the busy season feeling rested, grounded, and in control.Keep Your Expectations Rational
Technology

Amnesty Program Leads to Online Sales Tax Collection

Pressure by cash strapped states with increased state tax collecting authority has resulted in an amnesty program for some major retailers turning a new chapter in the development of the Internet. On February 3, 2003, some online retailers began voluntarily charging sales tax for online purchases, regardless of the state of residence of the customer. Retailers that are part of the new plan are apparently being given an amnesty of sorts from previous taxes that might have been levied on past sales.
Tax

Sprint CEO Fears Losing Everything in IRS Audit

William T. Esrey, who recently resigned as CEO of Sprint Corporation, fears for his financial future as he places his fate in the hands of the Internal Revenue Service. Although the former executive expects Sprint to pay him $1 million per year for the next three years, that sum won't go far if he is charged a projected $63 million in taxes as well as interest and penalties.The IRS is investigating participants in a tax shelter sold by Big Four firm Ernst & Young.
Tax

Firms Face More Lawsuits Over Tax Shelters

Big Four firms Ernst & Young and KPMG are being sued by clients for selling tax shelters that have been found by the Internal Revenue Service to be illegal tax evasion strategies.In December we reported that four Indiana residents along with 45 other clients of E&Y sued the Big Four firm for $1 billion, alleging that the firm induced them into entering into what were known to be illegal tax shelters.
Tax

Earned Income Tax Credit Available For Certain Workers

Workers earned it. Don’t forget to claim it, says the Internal Revenue Service. The Earned Income Tax Credit lowered federal tax liabilities for 19 million lower-income workers last year.Some taxpayers may be eligible to claim the EITC for the first time, especially if there were changes in the family such as a new child, divorce or decrease in earnings during the past year.To qualify for the EITC, taxpayers must have earned income during the year. Married taxpayers who file a joint return may qualify if at least one spouse has earned income.

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