Income tax

Tax

Issues Spouse-owned Businesses Should Consider

One of the advantages of operating your own business is hiring family members. However, the employment tax requirements for family employees may vary from those that apply to other employees. How Spouses Earn Social Security BenefitsA spouse is considered an employee if there is an employer/employee type of relationship, i.e., the first spouse substantially controls the business in terms of management decisions and the second spouse is under the direction and control of the first spouse.
Tax

Texas to Offer Taxpayer Amnesty

Taxpayers in Texas will have the opportunity to take advantage of a tax amnesty program this summer.Between June 15 and August 15 the Comptroller will waive penalties and interest on all delinquent tax payments except unclaimed property and the Public Utilities Commission gross receipts assessment.Not surprisingly, amnesty will not be granted for taxpayers currently under audit or review, or those who have already been contacted by the Comptroller about a possible deficiency.
Tax

Phase-Out of Credit for Toyota, Lexus Hybrids

An Internal Revenue Service review of Toyota Motor Sales USA, Inc.'s, 2007 first quarter sales will allow purchasers of Toyota and Lexus vehicles to continue to claim the Alternative Motor Vehicle Credit. Based on the number of vehicles sold, the phase-out period for Toyota vehicles began on Oct. 1, 2006.Toyota sold 61,369 qualifying vehicles to retail dealers in the quarter ending March 31, 2007. This brings the cumulative sales of qualified Toyota hybrid vehicles sold from the period of Jan. 1, 2006, through March 31, 2007, to 273,442.
Community News

IRS Extends Deadlines for N.Y. & N.J. Storm Victims

The Internal Revenue Service announced tax relief for New Jersey and New York taxpayers in the Presidential Disaster Area that was struck by severe storms and flooding April 14-18, 2007.The disaster area consists of the following counties: Bergen, Burlington, Essex, Passaic, Somerset and Union in New Jersey and Orange, Rockland and Westchester in New York.Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after April 14, 2007 and on or before June 25, 2007 have been postponed to June 25, 2007.In addition, the IRS will waive
A&A

S Corp Still Learning Experience

According to the Journal of Accountancy, life with the popular S Corporation structure can still be a learning experience. By some accounts, the advent of S corporations in the late 1950s was the most notable revolution in American tax policy since the Revolution. And it’s easy to see why: S corporation owners can protect themselves against personal liability and have their income and gains taxed only once, as opposed to the double exposure of C corporations and their owners at the corporate level and again on individual returns.
Tax

IRS Grants More Deadline Extensions

Taxpayers living in the path of the major storm that affected several Northeastern states on Monday, April 16 will have until Thursday, April 26 to file their federal tax returns, the Internal Revenue Service said. Filers in the storm region were originally given until April 19 to file, but Sen. Charles Schumer of New York said many people were still dealing with the aftermath of the storm and needed more time than the original two-day extension. IRS Commissioner Mark Everson announced the extension during a Senate Finance Committee hearing Wednesday.
Tax

Casework: Beating the Clock on Refunds

Three court cases provide guidance on when to claim tax refunds, according to the Journal of Accountancy Most taxpayers know when to file their annual tax return. But they may be less sure of how much time they have to claim a refund. Three decisions last year may help clarify the rules.In the first, Wachovia Bank (Wachovia Bank v. U.S., 98 AFTR2d 2006-5111 (CA-11)) was trustee for the George C. Nunamann Trust, which was created in 1984 and became a charitable trust in 1991.
Tax

IRS Extends Turbo Tax E-filing Deadline

Taxpayers who were unable to e-file their tax returns Tuesday using Intuit Inc. software products have until midnight on Thursday, April 19, to file their returns, the Internal Revenue Service announced Wednesday.Potentially up to several hundred thousand last-minute tax filers were affected by company server problems on Tuesday evening, and they or their accountants may have been unable to electronically file returns.
Tax

Effects of Accrued Payroll Tax Liability Rulings

New court rulings state payroll tax liability is deductible even if compensation is deferred under Sec. 404, reports The Tax Adviser.A recent ruling states that accrual-method taxpayers may deduct payroll tax liability incurred in the current year, for compensation deferred and deductible in the following year, under Sec. 404, provided the all-events test and recurring-item exception of Sec. 461 are met.FactsX, a corporation, uses an accrual method of accounting and files its Federal income tax returns on a calendar-year basis.
Tax

IRS Submits Taxpayer Assistance Blueprint

In response to a congressional mandate for the development of a five-year plan, the Internal Revenue Service submitted to Congress the completed Taxpayer Assistance Blueprint.The Blueprint is the result of extensive IRS research conducted into the needs, preferences and behaviors of taxpayers and partners who assist them in complying with the tax laws, such as volunteer and paid tax return preparers.The plan includes a variety of specific recommendations for improving IRS services for taxpayers and partners, an important element of a comprehensive strategy to reduce the tax gap by helpin
Tax

IRS Q&A: Withholding Compliance

The Internal Revenue Service is stepping up its withholding compliance program by making more effective use of information reported on W-2 wage statements to ensure that employees have enough federal income tax withheld from their paychecks. In the past, employers were required to submit all Forms W-4 that claimed complete exemption from withholding when $200 or more in weekly wages were regularly expected, or claimed more than 10 allowances. Employers are no longer required to routinely submit potentially questionable Forms W-4 to the IRS.
Tax

When is the Dog Deductible?

Telling the IRS that your client's dog ate their return won’t get them off the hook for paying 2006 federal income taxes, due April 17 this year. And even though she depends on your client for all of her support, you are really asking for trouble if you try to claim the pooch as a dependent says the National Association of Enrolled Agents (NAEA). Nevertheless, love and loyalty may not be all the benefits your client can get from owning their dog—in the right circumstances, they may be eligible for some dog-related tax deductions, as well.
Tax

Illinois Tax Scam Promoters Indicted

A prominent Southern Illinois automobile dealer and three promoters of a tax fraud scheme in the U.S. Virgin Islands were charged with a variety of tax and wire fraud-related charges in an indictment returned last Friday and made public today, the Justice Department and the Internal Revenue Service (IRS) announced.A federal grand jury in East St. Louis, Ill. returned the 21-count indictment, which charges James A. Auffenberg Jr. of Swansea, Ill., Peter G. Fagan of De Leon, Texas, James W. Ferguson III of Amarillo, Texas, and J. David Jackson of St. Croix, U.S.
Tax

Clients Who Save the Planet Can Save on Taxes

As April 17 draws near, taxpayers across the country are taking a last look at their returns to make certain they claim every last exemption, credit or deduction they have coming to them. If 2006 was the year your clients “went green,” you may find that in addition to doing their part for the planet and cutting back on their energy costs, they are eligible to claim numerous tax credits created to reward efforts to save energy.
Tax

IRS Reveals Most Common Errors

The Internal Revenue Service urged tax preparers and taxpayers to review their tax returns for common errors that could delay the processing of returns and refunds.Here are some ways to avoid common tax return errors:File electronically. If you choose to e-file, many of the common errors are avoided or corrected by the computer software. If income is under $52,000, you may be able to e-file for free using IRS Free File.Use the peel-off label if you choose to mail a paper return. You may line through and make necessary corrections right on the label.
Tax

Justice Dept. Levies $75M Tax Shelter Fine

The Justice Department last week announced that, as part of an agreement with the Texas-based law firm, Jenkens & Gilchrist, it will not seek a criminal indictment of the firm for its involvement in the creation and sale of aggressive tax shelters and that the firm will pay a fine of $75 million to the Internal Revenue Service.One former partner in Jenkens & Gilchrist’s Chicago office, Paul Daugerdas, earned $93 million in fees from tax shelter work, making him one of the single wealthiest participants in the tax shelter business, according to the New York Times.Jenkens & Gilchrist, wh
Technology

Cell Phones Eligible for Excise Refund

The Internal Revenue Service reports that a large number of cell-phone users are overlooking the telephone tax refund mistakenly believing that the one-time refund only applies to land-line customers. According to the IRS, most cell-phone users qualify for the federal telephone excise tax refund. In most cases, the refund is also available to land-line, fax and Internet phone customers as well. The method of phone signal transmission does not affect the refund.
Technology

IRS Enhances Online Payment Application

Two recent enhancements provide added functionality to the Internal Revenue Service’s Online Payment Agreement application. The first permits individuals who have not yet received a bill to establish pre-assessed agreements on current tax year Form 1040 liabilities. The second allows practitioners with valid authorizations to remain in the application to request agreements for multiple clients.
Tax

Benefits, Dangers of Paying Taxes with Credit Card

Individuals and businesses may choose to pay taxes with one of the major credit cards through service providers that have contracts with the Internal Revenue Service (IRS) and earn miles, points, rewards or money back from the credit card issuer. For taxpayers whose returns contain an unpleasant surprise, the credit card option allows some time to pull together the cash he needs to pay the tax bill.But preparers should warn their clients that interest on credit card balances is generally higher than interest paid to the IRS on underpayment of taxes (currently 8 percent).
Tax

Health Tax Credit Tips for Pension Clients

If you have clients receiving pensions from the Pension Benefit Guaranty Corporation or benefits under the Trade Adjustment Assistance programs, they may be eligible for the Health Coverage Tax Credit (HCTC). The HCTC pays 65 percent of qualified health plan premiums for eligible individuals. These individuals can choose to have the 65 percent credit applied either monthly directly to their health plan as their premiums become due, or yearly on their federal tax return as a refund or credit against taxes owed.

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