Tax news

Tax

IRS: Spending Millions To Collect Hundreds

A recently completed audit by the General Accounting Office shows that the IRS routinely sends notices to millions of Americans about mistakes in their returns, often involving amounts due of less than $5 or refunds of less than $1.Depending on the circumstances, it costs the IRS between 42 cents and $14.32, including staff labor, to prepare and send each of these notices, the GAO estimated.The IRS has indicated that it is upgrading its communications systems to avoid duplicate notices and past due notices that have already been paid.But by law, the IRS is required to notify taxpayers
Tax

$500,000 Profit in 90 days

We tried to tell you.Back on the 20th of January, AccountingWEB ran a story on the auction of the domain name www.taxes.com.At the time the asking price was just $260,000.Here we are 90 days later, and the current bid for the domain name is at a whopping $700,000!Some quick thinking deep-pocketed firm could have made a nice windfall this quarter. So, the price is now $700,000.
Technology

H&R Block Site Down for Short Time

Tax filing giant H&R Block just can't get a break.This week--when electronic filing will be at an all-time peak--the H&R Block Web site, which has catered in the past few months to thousands of electronic tax filers, accidentally went down for two horus during routine maintenance.Two hours doesn't seem like a long time to the average person, but if you are trying to file taxes and cannot access the site, it seems like an eternity.Naysayers are commenting that this is evidence of the tremendous power of Internet in allowing the filing capability onl
Tax

NYC Repeals Commuter Tax Worth $360 Million

What's good for the goose may not be good for the gander - the New York Court of Appeals ruled Tuesday that the city of New York must tax every one of its commuters, or none at all.
Workplace Fitness

More Busy Season Stress Busters

Welcome, I'm glad you took time out to join us! Is it stressful in your firms?Jane: I have many ideas to share!Session Moderator: Great, Jane! Why don't you get us started.Jane: Well, we have stress-busting (called "Hoopla") every Friday here. It usually involves food!Session Moderator: Can you share details - how does it work?Lara Niles: FOOD! Our office too seems to deal with stress with food! We call it the tax season 10 (meaning 10 lbs.!)Jane: That is so true!Coy: We bring lots of food as well!
Tax

IRS Highlights Top Errors So Far

The Internal Revenue Service is always looking for ways to assist tax preparers and has set up a web site highlighting the top errors paid preparers are making on this years tax returns.The "Top Ten" list covers paper returns for 1040's, 1040A's and 1040EZ's.From the IRS' list, here are the Top Ten mistakes on 1040 returns so far this tax season:Taxpayer identification numbers or names for dependents didn't match IRS or SSA records. We didn't allow the exemptions.
Tax

OrrTax Offers Credit Option

OrrTax Software, the Washington state-based provider of tax services, including the popular IntelliTax service, is one of a handful of companies certified by the IRS to process credit card transactions for taxpayers.Anticipating the approval for some time, the ability to process payments already is included in current versions of the software.Orrtax is partnering with Official Payments Corporation (OPC, formerly US Audiotex), to process transactions on American Express, MasterCard and Discover.
Tax

St. Patrick's Day Green: IRS is Hiring

Finding the pot o'gold at the end of the rainbow has reached the IRS, who asked Congress on Thursday for approval to hire 2,000 more employees as part of the Service's proposed 9.5 percent budget increase.Several thousand more employees would enable the IRS to step up its audit investigations, and without the increase, Commissioner Rossotti said more taxpayers may be forced to cheat on their taxes.Overall projected budget is $8.8 billion for fiscal 2001 for an increase of $769 million dollars.
Tax

E-Returns Expected to Grow to 50 percent of Total by 2007

According to recent statistics suggested by the IRS, basic tax returns that are filed electronically in 2007 are expected to total almost 50 percent of all returns filed during a typical tax season. Last year the total was 125.1 million returns.In 2000 alone, it is expected that 33.6 million returns will be filed over the Internet for 26.5 percent of the total.
A&A

Local CPAs Compete With Larger, Online Preparers

It's finally happened: a group of CPAs think they build a better mousetrap--or online tax preparation service--than the big guys like H&R Block, Intuit and H.D. Vest.The company is based in Encino, CA, and is called Taxes4Less.com. It is run by Russell Gotlich and Gregory Yulish, both formerly with Arthur Andersen.One of the main differences between their company and the larger ones is the ability to personally attend to tax returns and complete the electronic transaction.
Technology

Analysis Says TurboTax is Killer App

CPAs and accounting professionals often are asked about the advantages of filing online. Here's a new angle to an already crowded playing field: Annette Hamilton of ZDNet News has christened Intuit's TurboTax the next "killer app."The accounting news channels have been filled with story after story of online preparation sites, including H&R Block, H.D. Vest and Intuit.
Tax

IRS Features Missing Children on Tax Forms

No white space allowed here; the IRS is delivering a quality public service by featuring the photos of missing or lost children on the blank pages of its forms.Some could say this is an effort in conjunction with the Service's child tax credit, now worth $100 more than it was in 1998 at $500.In other tax news, IRS officials say there is nothing truly new in 1999 forms, just changes in figures here and there. Taxpayers and tax preparers are urged by the IRS to review the numbers carefully for potential pitfalls in preparation.
A&A

3,500 Trades on Schedule D!

How many CPAs have ever seen a tax return with 3,500 trades on Schedule D? In this escalating time of the "day-traders," more and more accounting professionals may one day be faced with a similar situation.David Goehl is a 31-year-old, self-employed lawyer, who traded 3,500 times in 1999 for a net profit of $85,000, which averages to trades worth about $1,000 per day after taxes, commissions, rent on the apartment where he performs the trades and even a portion of his cable service.Schedule D is often difficult for any tax preparer given a small number of trades, let alone 3,500.
Tax

Electronic Filing Outweighs Paper System

It seems that at long last, electronic filing has caught on with a fury, what with the surge of online filing at Kiplinger, H&R Block and Quicken Web sites, as well as sending returns directly to the electronic IRS. Still, clients may ask CPAs and accounting professionals for advice as to why electronic filing has its advantages.The IRS has set an ambitious goal of having 80 percent of all individual tax returns (not corporate) filed by 2007.
Tax

Reporting Wages for Domestic Help

Remember the contoversy surrounding the appointment of a Supreme Court judge and other elected officials over the so-called "nanny" tax?Clients often approach tax preparers with questions regarding compensation for help like nannies, yard men, babysitters and others.
Tax

Death Benefits Excluded

Death benefits, accidental death benefits, burial benefits, and death benefits payable from an employee welfare benefit plan to a retiree on a spouse's death constitute excludable insurance contract benefits according to the IRS’ PLR 200002030. This determination was made when an issue involving an employee who received benefits under a collective bargaining agreement from an employer-established welfare benefit plan arose.
A&A

Auto Write-Offs: Bigger is Better

Tax season is the time of year when clients invariably try to take as many deductions as possible--within the extent of the law. One area commonly overlooked, especially for self-employed individuals, is the allowable deductions for a car.Brushing up on the rules will benefit your client (and perhaps you, too!).Naturally, if a car is used primarily for business, the IRS allows taxpayers to deduct a maximum $3,060 each year. But now that cars cost more, and more of us yearn for a luxury car--even a gigantic SUV--how does the car depreciate over time?Slowly, for sure.
Tax

Self-employed health insurance deduction on the rise

How much of my health insurance premium can I deduct and how does the deduction work? I am self-employed and I understand only some of the premium can be deducted as a business expense. Does the rest count as an itemized deduction? L.G., Muncie Congress has been fooling with the deduction for health insurance premiums for the self-employed for a long time. Last year's sweeping changes to the tax laws affected the rules in this area once again.
Tax

After 3 years, go ahead and clean out those files

I've been trying to find some extra space in my house lately, so this seems like a good time to think about which tax records I can safely dispose of and which ones I ought to keep around in case the IRS wants to ask me some questions about my tax returns. At a minimum, I've always been told to save everything for three years. That statement sounds innocuous enough, but what constitutes "everything" and when do I start counting to determine "three years?"
Tax

Hobby costs are miscellaneous expenses on 1040

I design and create porcelain dolls. I make the dolls from scratch, pouring the porcelain into molds I have made, I sew their clothes and make their shoes from little pieces of leather. Everything is first quality. My dolls have won awards, and I have displayed them at shows across the country. Because I'm actively engaged in the business of making dolls and am established, I assume my costs are tax-deductible. Does the information about my doll business go on a Schedule C or is it considered miscellaneous itemized deductions?

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