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Tax news

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.
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 looks a lot 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 a
Tax

H&R Block Wants to Do More Than Taxes

Hoping to build on the large client base that brings one in seven of the nation's taxpayers to H&R Block each spring, the company has announced plans to market year-round financial services to its clients.H&R Block, with more than 9,000 offices around the country, has expanded its services to include financial planning, home mortgages, brokerage services, and private wealth management.Brokerage services are provided by H&R Block Financial Advisors, a brokerage launched in 1999. The company's mortgage division filled $6.5 billion in mortgage loans last year.
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 Jan. 31 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

Do Tax Services Impair Auditors' Independence?

As Enron’s tax shelters come into the public eye, the media have begun to focus new attention on an old question, “Do tax services impair auditors’ independence?” Some Tax Experts Say “Yes"A sampling of press accounts shows some informed sources would reply in the affirmative, particularly when it comes to auditing tax shelters: “If you are auditing your own creations, it is very difficult to criticize them,” says Robert Willens, a Lehman Brothers tax expert who disapproves of the accounting profession’s recent move into selling aggressive tax shelters.
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 2001 earnings and withheld taxes no later than January 31, 2002 (if mailed, allow a few days for delivery).
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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

IRS Extends Deadline for Household Employees' W-2 Forms

The IRS has announced that W-2 forms for household employees are due this year on February 15 instead of the original January 31 deadline. The change is due to the fact that the booklet that contains the forms and instructions for household employee W-2 forms, Package H, was not mailed until January 25, giving employers little time to meet the January 31 deadline.Employers cannot download forms suitable for filing from the Internet - the forms must comply with IRS rules for paper and ink.
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.

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