Tax news

Tax

Child and Dependent Care Credit

If you paid someone to care for a child or a dependent so you could work, you may be able to reduce your tax by claiming the credit for child and dependent care expenses on your federal income tax return, according to the IRS. This credit is available to people who, in order to work or to look for work, have to pay for child care services for dependents under age 13.
Tax

Child Tax Credit

With the Child Tax Credit, you may be able to reduce the federal tax you owe by $600 for each qualifying child under the age of 17, according to the IRS. A qualifying child for this credit is someone who:– Is claimed as your dependent,– Was under age 17 at the end of 2001,– Is your son, daughter, adopted child, grandchild, stepchild, or eligible foster child, and– Is a U.S. citizen or resident.The credit is limited if your modified adjusted gross income is above a certain amount.
Tax

Dependents

So your daughter is off to college and you're wondering if you can still claim her as a dependent? To be claimed as a dependent, a person must meet the following five tests, according to the IRS:Member of Household/Relationship Test — the person must be a relative or live in your household all year.Joint Return Test — the person can't file a joint tax return with someone else except to claim a refund of tax withheld.Citizenship Test — the person must be:– a U.S.
Tax

Watch Out For These Twelve Biggest Tax Scams!

The Internal Revenue Service issued a nationwide alert to taxpayers warning them not to fall victim to one of the "Dirty Dozen" tax scams. These schemes take several shapes, ranging from false claims of slavery reparations to illegal ways of “untaxing” yourself."These ‘Dirty Dozen’ schemes surface each year as tax filing season begins. Con artists shamelessly take advantage of people, charging fees for their illegal tax schemes," IRS Commissioner Charles O. Rossotti said. "People should be on-guard for these scams.
Tax

Rate Reduction Credit And Rebate

The IRS says there's a new line on the federal income tax form this year, but many people won't have to use it. This line - line 47 on the Form 1040, line 30 on the 1040A and line 7 on the 1040 EZ - is for the Rate Reduction Credit.Use this line to claim any additional amount you qualify for if you did not receive last summer's Advance Payment (sometimes called the "rebate") in the maximum amount for your filing status.
Tax

Alimony Payments Have Tax Implications

When the end of matrimony leads to the start of alimony, how does it affect your taxes? Alimony payments you receive are taxable to you in the year received, according to the IRS.The amount is reported on line 11 of Form 1040. You cannot use Form 1040A or Form 1040EZ. The person making the payment may claim a deduction in the year paid on Form 1040. You must give the person who paid the alimony your Social Security number or you may have to pay a $50 penalty.If your decree or agreement calls for both alimony and child support and specifies amounts for each, only the alimony is taxable.
Technology

IRS Unveils New Web Site

It's back to the classroom for people who knew their way around the old IRS Web site at www.irs.gov.
Tax

Recently Married or Divorced? Check Social Security Records

If you are a newlywed or recently divorced, make sure the names on your tax returns match those registered with the Social Security Agency (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill and reduce the size of any refund.For newlyweds, the tax scenario can begin when the bride says "I do" and takes her husband's surname, but doesn't tell the SSA about the name change.
Tax

CCH's Annual Review of the Strangest Court Cases

COURTS PLAY HOST TO ANOTHER CAST OF UNUSUAL CHARACTERSIt’s Not Tax Fraud . . . It’s FargoAlthough tax law is not regarded as exciting by most, every so often the creative interpretation of the rules by taxpayers can make even a mundane tax case most interesting, if not downright entertaining, according to CCH INCORPORATED (CCH), a leading provider of tax law information.
Tax

Reservists, New Enlistees May Gain 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 is 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

IRS Instructions for Reporting Rebate Confuse Taxpayers

The 2001 federal individual income tax forms contain a new line this year - "Rate Reduction Credit" - designed to provide those taxpayers who did not receive a rebate last summer, or those who did not receive the entire rebate to which they were entitled, with an opportunity to claim the rebate on this year's tax form.
Tax

NCCPAP Leaders Speak Out On Enron & Accounting Issues

The leadership of the National Conference of CPA Practitioners (NCCPAP) announced today their concerns regarding the fallout from the events surrounding Enron. The leadership of the organization believes that this situation has the potential to permanently tarnish the reputation of this country’s Certified Public Accounting community.“Measuring the damage suffered by hard working taxpayers may take months, but make no mistake, the damage is substantial.
Tax

Charitable Donations to Victims of Terrorist Attacks

If you made a charitable donation to a qualified organization providing disaster relief to victims of the September 11, 2001 terrorist attacks, include the amount with your other contributions listed on Schedule A of Form 1040.According to the IRS, for each contribution of $250 or more, you must obtain a written statement from the charity acknowledging the contribution amount and stating whether or not the charity provided you with goods or services in return for your contribution.For contributions of less than $250, cancelled checks or credit card receipts are the best evidence.Your
Tax

IRS Auditor Arrested in $200,000 Bribery Case

On Thursday, authorities arrested Herbert Wein, 67, of New York, a veteran auditor for the Internal Revenue Service, after he accepted a $200,000 bribe from an attorney from the Wego Chemical and Mineral Corporation, a company that he was auditing.According to the New York Times report, Mr. Wein allegedly solicited the bribe initially back in November when he suggested to Stephen Gilbert, Wego Chemical's lawyer, that the company's tax liability could be reduced from $1.2 million to $15,000, in exchange for a $200,000 payment to Wein.Mr.
Tax

President Bush Signs Victims of Terrorism Bill

On Thursday, President Bush signed the Victims of Terrorism Tax Relief Act of 2001 (H.R.2884), which provides tax relief to families of people killed in the terrorist attacks of September 11, the anthrax mailings that occurred after September 11, and the Oklahoma City bombing.The bill provides relief on several levels:Income and payroll tax for victims is waived for the year of death and the preceding year. If the total waived income tax is not at least $10,000, a minimum benefit of $10,000 for the two years will apply.
Tax

EFTPS-Online: Pay Your Taxes Over The Internet

If you’re going to owe taxes when you file your federal tax return, consider paying over the Internet through the Electronic Federal Tax Payment System (EFTPS). EFTPS-OnLine is fast, easy, convenient, and secure. The government does not charge for this service. You can enroll in EFTPS-OnLine via an official government site on the Internet, using a user-friendly Web interface. After enrollment, you will receive a confirmation kit by mail with instructions for obtaining an Internet password. For added security, a unique Personal Identification Number (PIN) will be mailed to you.
Tax

IRS To Simplify Accounting For Intangibles

Tax practitioners are cheering the IRS plans to simplify the tax rules that apply to intangibles. In an advance notice of proposed rulemaking (REG-125638-01) released on January 17, 2002, the IRS announced its intent to propose new rules that would provide descriptions of the specific types of expenditures that must be capitalized, along with broad-based rules for exceptions.
Tax

Faster Refunds Through Direct Deposit

Want a faster refund? The IRS says that more taxpayers are choosing direct deposit as the way to get their federal tax refunds. The payment is more secure - there is no check to get lost. And, it's more convenient - no special trip to the bank to deposit a check! To request direct deposit, follow the instructions for "Refund" on your tax return.Nearly 34 million people had their tax refunds deposited directly into their bank accounts during the 2001 filing season, a 15 percent increase from the year before.
Tax

Where's My W-2? New Worry for Employees of Bankrupt Companies

With the IRS' January 31, 2002 W-2 mailing deadline fast approaching, W-2 forms will be arriving soon at the homes of millions of employees across the nation. For most, this form is the bedrock on which the 1040, 1040A or 1040EZ income tax form is completed.
Tax

Forms and Publications: How To Order

The Internal Revenue Service has many forms and free publications on a wide variety of topics to help you understand and meet tax filing requirements. These forms and publications are available on the Internet, on CD-ROM, through fax on demand, over the telephone, through the mail, at local IRS offices, at some banks, post offices and libraries, and even at some grocery stores, copycenters and office supply stores.If you know what form or publication you need, call the IRS toll-free order number at 1-800-TAX-FORM (1-800-829-3676).

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