Tax news

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
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.
Tax

IRS Issues New Publication With Info for Terrorist Victims

The IRS has released Publication 3920, "Tax Relief for Victims of Terrorist Attacks," which provides details of guidelines and tax issues specifically related to victims and others affected by acts that are declared to be terrorist attacks.
Tax

PwC Sells Its Tax Lobbying Unit

In the midst of a growing controversy over tax-audit conflicts, PricewaterhouseCoopers (PwC) sold its federal tax lobbying group to Clark/Bardes, a NASDAQ company that plans to list on the New York Stock Exchange next month. PwC was believed to be the largest tax lobbying firm in the year 2000, when it earned approximately $9.5 million for tax lobbying. The tax lobbying group is led by Ken Kies, former Chief of Staff to the Joint Committee on Taxation of the U.S. Congress. One of Washington's best known and most outspoken tax lobbyists, Mr.
Tax

Alternative Minimum Tax

Before mailing your federal income tax return, check to make sure you aren't subject to the alternative minimum tax (AMT). The IRS says that in recent years, more and more people have found themselves subject to the AMT.The tax law gives preferential treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from these provisions of the law may have to pay an additional tax called the alternative minimum tax.
Tax

IRS Adds Protection on Taxpayer Shelter Disclosures

Midway through the 120-day window of opportunity for people to disclose tax shelter transactions, the Internal Revenue Service has taken new steps to protect the right for taxpayers to assert attorney-client and work-product privileges when they voluntarily disclose tax shelter transactions."Some taxpayers have indicated that they want to make a disclosure, but they are concerned that the production of certain documents and opinions may be a waiver of the attorney-client and work-product privileges.
Tax

Holocaust Survivors May Exclude Restitution Payments From Income

Holocaust survivors, their heirs or estates will receive the full benefit of any restitution payment made by governments or industry.
Tax

Enron Reopens Pandora's Box of Tax-Audit Conflicts

Last month, as the post-Enron audit-reform talks escalated, Bernard Wolfman warned Harvey Pitt, chairman of the Securities and Exchange Commission (SEC), that a Pandora's box of potential conflicts of interest can arise when an accounting firm provides tax products or advice to an audit client. Bernard Wolfman is the Fessenden Professor of Law at Harvard Law School and one of the nation’s foremost experts on legal ethics in tax practice.
Tax

Changing Your Address? Notify The IRS

Have you changed your home or business address? If so, you may want to notify the IRS to ensure that you receive any refunds or correspondence. The IRS is now using the Postal Service's change of address files to update taxpayer addresses, but you may want to notify the IRS directly.There are several ways to do this. You may correct the address legibly on the mailing label that comes with your tax package or write the new address in the appropriate boxes on your tax return when you file. When your return is processed, the IRS will update your address in its records.
A&A

IRS To Review Employment Tax Compliance Programs

A General Accounting Office (GAO) report, "IRS's Efforts to Improve Compliance with Employment Tax Requirements Should Be Evaluated," takes the Internal Revenue Service to task over the agency's follow through procedures for helping businesses pay their employment taxes in a timely fashion.While businesses that file form 941 receive notice of errors, interest, and penalties within five weeks of filing the form, businesses that fail to file form 941 are not notified of a problem for 14 to 28 weeks.The GAO is encourag
Tax

It's Official: Frequent Fliers Need Not Fear The Tax Man

Were those frequent flier miles you earned on that flight business miles or personal miles? What about the ones you earned with your credit card? What about the ones you earned with your long distance service? Can't figure it out? Well, neither can the IRS, and Wednesday they finally admitted it.
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 years out of the five years prior to its sale.
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 (i.e. wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than: $160,000 Married Filing Jointly. $ 10,000 Married Filing Separately (and you lived with your spouse at any time during the year).
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, 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 subtract only your capital losses on investment property, not personal property.Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it.
Tax

New Tax Line Results in Over 1 Million Errors

The new line on this year's tax return, the Rate Reduction Credit, is for taxpayers who are entitled to the 2001 tax rebate but who did not receive the rebate in the summer.
Tax

Earned Income Tax Credit

Working parents earned it. Don’t forget to claim it. The Earned Income Tax Credit lowered federal tax liabilities for 19 million lower-income working parents by more than $31 billion last 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. Earned income includes all income from self-employment and wages, even though some wages may not be taxable.
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 student, per year. It does not apply to graduate and professional-level programs.
Tax

Patriots' Day Gives Certain Taxpayers Extra Day to File Return

April 15 - known to most citizens as the day tax returns are due - is a state holiday in Maine and Massachusetts. The Patriots' Day holiday celebrates the battles that began our nation's fight for independence. The real Patriots' Day is April 19, but the day is officially celebrated in these two states on the nearest Monday, which this year is April 15.It was actually on April 18, at 10 p.m., when the famous lanterns were lit in Boston's Old North Church signaling to Paul Revere the movement of the British up the Charles River to Cambridge.
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.
Tax

Bush Promotes Expanded MSAs, FSAs

President Bush, on February 11, outlined his administration's health care agenda, which includes proposals to expand both Medical Savings Accounts (MSAs) and Flexible Savings Accounts (FSAs) and to provide refundable health tax credits to low- and middle-income individuals and families who do not have employer-provided insurance. The president also supports legislation to provide temporary health tax credits for workers who have lost their jobs during the recession.

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