Income tax

Tax

Failed Venture Prompts Wealthy Investors to Sue KPMG

A Houston investment fund, which started as a promising money-maker for a group of wealthy, well-connected acquaintances, has ended in a Texas district court with accounting firm KPMG on the hot seat.Investors include the Staley family, founders of the Chicago Bears, the man who brought Nintendo to America, the Cullen family and a former Harris County (Texas) District Attorney, who have all made wise investments in the past.
Tax

AL Preparers Falsified Information To Increase Earned Income Tax Credit

The Justice Department announced late last week that it has asked a federal court in Montgomery, Alabama to bar Larry Baxter, his tax-return-preparation company, and a former employee from preparing federal income tax returns. According to the government’s complaint, Baxter, his company Baxter and Associates Office of Accountancy, P.C., and former employee Anita Dawkins claim inflated earned income tax credits on customers’ tax returns.
Tax

IRS Tip: Choosing a Tax Return Preparer

Most tax return preparers are professional, honest and provide excellent service to their clients. But if you pay someone to prepare your tax return, choose that preparer wisely, advises the IRS.
Tax

Judge Rules BDO Arbitration Clauses Unenforceable

A federal judge has ruled that because contracts BDO Seidman LLP had with tax-shelter clients were fraudulent, the contracts' arbitration clauses are unenforceable, which means the case will be heard in court, the Wall Street Journal reported.U.S. District Court Judge Shira Scheindlin of New York signed the ruling on Jan.
Tax

Five Tax Preparers Brought Up on Charges for Falsifying Client Returns

The Justice Department this week asked a federal court to bar five Louisiana residents from preparing federal tax returns. The government’s complaint alleges that Eddie Ferrand, of Monroe, prepares false or fraudulent tax returns through his business, “Mr.
Tax

California to Offer Amnesty to Tax Cheats

When you are the state of California and you're $8.6 billion in debt, it's going to take a mighty big bake sale to close the gap.
Tax

'Survivor's' Hatch Faces Jail, Fines in Tax Evasion Case

Richard Hatch might have been television's first “Survivor,” but the IRS has a different name for Hatch: alleged tax cheat.The Associated Press reported that Hatch, a resident of Newport, RI, was charged last week with failing to report his $1.01 million earnings from the show as well as some $321,000 he was paid by a Boston radio station for 2001 appearances.
Tax

Justice Dept. Bars TN Woman From Preparing Tax Returns, Demands Client List

The Justice Department announced this week that a federal court has permanently barred Linda Hendrieth, of Memphis, Tennessee, from preparing income tax returns or claims for refunds. The final judgment, requires Hendrieth to notify her customers of the judgment and to provide to the government the names, addresses, and taxpayer identification numbers of her customers. "People who prepare false or fraudulent tax returns cheat their customers and unfairly shift the tax burden to honest American taxpayers," said Eileen J.
Tax

IRS Tax Tip: What Is Your Filing Status?

IRS Tax Tip - Your filing status on your federal tax return is a category that identifies you based on your marital and family situation, according to the IRS. It is an important factor in determining whether you must file a return, the amount of your standard deduction and your correct amount of tax. If more than one filing status applies to you, you may choose the one that gives you the lowest tax obligation.There are five possible filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child.
Tax

IRS Tax Tip: Should You Itemize?

IRS Tax Tip - Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. According to the IRS, money paid for medical care, mortgage interest, taxes, contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.For tax year 2004 and 2005 itemized returns, you have a choice of claiming a state and local tax deduction for either sales or income taxes.
Tax

Demo: Roth IRAs

SAMPLEConfused 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

Demo: Seven Ways to Avoid Problems at Tax Time

SAMPLELooking for ways to avoid the last-minute rush for doing your taxes? Here are some tips: ORGANIZE YOUR TAX RECORDS. Tax preparation time can be significantly reduced if you develop a system for organizing your records and receipts. Start with the income, deduction or tax credit items that were on last year's return.DON'T PROCRASTINATE. Resist the temptation to put off your taxes until the last minute.
Tax

Demo: Capital Gains and Losses

SAMPLEAlmost everything you own and use for personal purposes, pleasure or investment is a capital asset. 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

Demo: Alternative Minimum Tax

SAMPLEBefore mailing your tax return, check to make sure you aren't subject to the alternative minimum tax (AMT). In recent years, more and more people have found themselves subject to the AMT, according to the IRS.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

Avoid Headaches, Prepare Tax Returns Early

Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.There are seven easy ways to get a good jump on your taxes long before the April 15 deadline rolls around:Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don’t forget to save a copy for your files.Get the right forms. They’re available around the clock on IRS.gov in the Forms and Publications section.Take your time.
Tax

Law Firm to Pay $81.55 Million to Settle Tax Shelter Claims

The national law firm of Jenkens & Gilchrist, PC, has agreed to pay $81.55 million in a class action settlement to resolve claims against the firm related to its tax shelter work. This week's settlement concludes negotiations that took over 14 months to complete and represents two significant modifications to the initial settlement, reached in April 2004.
Tax

Defendants Hindered Tax Collection With 'Empty Shell' Corporations

The Justice Department announced this week that a federal court in Oklahoma has permanently barred four Oklahoma City residents -- Joseph Wolf, Cecil Fisher, Louise Qualls, and Eric Wolf -- from operating or working for so-called “professional employer organizations” or “employee leasing” companies. Judge Joe Heaton of the U.S.
Tax

Retirement Savings Contributions Credit: IRS Tax Tip

This tax credit, which will be available only through 2006, could help you offset the cost of the first $2,000 contributed to IRAs, 401(k)s and certain other retirement plans.The Retirement Savings Contributions Credit applies to individuals with incomes up to $25,000 ($37,500 for a head of household) and married couples with incomes up to $50,000.
Tax

Tax Tip: 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, such as stocks, 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 deduct only your capital losses on investment property, not personal property.A "paper loss" – a drop in an investment's value below its purchase price – does not qualify for the deduction.
Tax

Tax Tip: Taxability of Social Security Benefits

Whether your Social Security benefits are taxable depends on your total income and marital status. Form SSA-1099, which Social Security recipients should 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.

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