Tax news

Tax

Early Distributions From Retirement Plans

An early distribution from an Individual Retirement Account (IRA) or a qualified retirement plan need not be a "taxing" experience, according to the IRS.Any payment that you receive from your IRA or qualified retirement plan before you reach age 59½ is normally called an "early" or "premature" distribution. As such, these funds are subject to an additional 10 percent tax. But there are a number of exceptions to the age 59½ rule that you should investigate if you make such a withdrawal. Some of these exceptions apply only to IRAs, some only to qualified retirement plans, and some to both.
Tax

Treasury Department Will Remove Abusive Tax Shelter

The Treasury Department has announced that Internal Revenue Service officials will begin challenging transactions that generate losses with the use of certain loan assumption agreements.The agreements at issue typically involve an offshore partner who borrows money to purchase assets, then sells a portion of the assets of a value just enough
Tax

Gambling Income and Expenses

Hit a big one lately? With more and more gambling establishments, the IRS reminds people that they must report all gambling winnings as income on their tax return.Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.Generally, if you receive $600 or more in gambling winnings, the payer is required to issue you a Form W-2G.
Tax

Tax on Child's Investment Income

Part or all of a child's investment income may be taxed at the parent's rate rather than the child's rate, according to the IRS. Because a parent's taxable income is usually higher than a child's income, the parent's top tax rate will often be higher as well. This special method of figuring the federal income tax only applies to children who are under the age of 14. For 2001, it applies if the child's total investment income for the year was more than $1,500.
Tax

Deductible Taxes

Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can if you file Form 1040 and itemize deductions on Schedule A. There are three types of deductible non-business taxes:State, local and foreign income taxes; Real estate taxes; and Personal property taxes. You can deduct any estimated taxes paid to state or local governments and any prior year's state or local income tax as long as they were paid during the tax year.
Tax

2001 Tax Forms Change as Deadline Approaches

In the wake of the new Job Creation and Worker Assistance Act of 2002, the IRS has announced plans to change two 2001 tax forms and related instructions to allow for retroactive changes to the tax law.Form 4562, Depreciation and Amortization, will change to reflect the new 30% bonus depreciation. Taxpayers are entitled to additional depreciation of 30% of the adjusted basis of certain property acquired on or after September 11, 2001.
Tax

Businesses Need to Act Fast to Take Advantage of Tax Breaks for 2001

The following article is provided courtesy of CCH, Inc.Small Businesses Stand to Gain From Job Creation ActAfter months of political battling and partisan gridlock, Congress finally got their act together and, in a flash, passed an economic stimulus tax package.
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.

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