Income tax

Tax

Tax Tip: New 1040 Checkbox Reduces IRS Notices

A new checkbox feature on this year's tax forms will give taxpayers the option of allowing their paid preparers to directly answer tax processing questions.
Tax

Tax Tip: Education Credits Can Help At Tax Time

Are you footing the costs of higher education for yourself or your family? Education tax credits can help offset those costs. The Hope Credit and the Lifetime Learning Credit are education credits which 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

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 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

Tax Tip: Don't Overlook Home Mortgage Points

Did you buy or build a new home in 2000? Many new homeowners don't know they can deduct points paid on home mortgage loans. The IRS reminds homeowners this can really pay off because some home mortgage points are fully deductible in the year they are paid.To fully deduct mortgage points in the year paid, the following requirements must be met: Your main home secures your loan. Paying points is an established business practice in your area.The points paid were not more than the amount generally charged in that area.You use the cash method of accounting.
Tax

Tax Tip: Marriage or Divorce-Check Your Social Security Number

The IRS reminds newlyweds and the recently divorced to make sure names on their tax returns match those registered with Social Security. A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill and reduce the size of any refund. For newlyweds, the tax scenario can begin when the bride says "I do," takes her husband's surname but doesn't let Social Security know about the name change.
Tax

Tax Tip: Where To Find Out About Taxpayer Rights

The Internal Revenue Service has created a special Web section for taxpayers seeking information about their rights when dealing with the nation's tax agency. The "Taxpayer Rights Corner" can be found at www.irs.gov under the "Tax Info for You" section.The section brings a variety of issues involving taxpayer rights issues into one convenient place. The Taxpayer Rights Corner includes topics ranging from basic taxpayer information to detailed steps on how to get help from the IRS.
Tax

Tax Tip: Avoid Headaches, Prepare Taxes Early

Earlier is better when it comes to working on your taxes. The IRS encourages people to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.Here are seven easy ways to get a good jump on your taxes long before the April 16 deadline rolls around: Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s.
Tax

Index of Tax Tips

Welcome to AccountingWEB's Tax Tips area. Each day between now and April 15 we will be adding a tax preparer tip, courtesy of the IRS.
Tax

Section 83(b) Election an Option for Tax Clients

Are you familiar with Section 83(b) of the tax code? It provides a method to save your clients money on their tax bill should they own stock options through their employer.With an election made under Section 83(b), the taxpayer agrees to pay taxes on the current value of shares after exercising the option, even if the taxpayer doesn't have full ownership of the shares now because they are restricted.
Tax

Tax Tips for High-Income Clients

In our new economy, the number of U.S. millionaires has risen dramatically to 7.1 million households compared to less than half that number just five years ago. While this is good news for the individuals, many of them don't realize the tax bite that they are about to face. What can the tax advisor provide to these individuals to reduce their tax liabilities?J.P.
Tax

Separating Death and Taxes

Separating Death and Taxesby Michael B. Allmon, CPAThe U.S. Congress, encouraged by popular sentiment, tried to separate death and taxes by voting to repeal the estate tax in July.
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?
Tax

Several options available when selling shares

When selling shares from a mutual fund, how do I know which shares have been sold, and how do I determine the cost of the shares in order to compute my tax on the sale? G.J., Indianapolis It's up to you, which shares you sell from a fund, and you have control over the costing method as well.
Tax

Uniform used only for work can be tax deduction

I have uniforms that I wear at work and I pay to have the uniforms laundered. I also pay for occasional repairs on the uniforms and I pay for work shoes that I have to wear in my job. Are all these expenses deductible as itemized deductions? B.C., Indianapolis If your work clothing constitutes a uniform in the eyes of the IRS, you will be entitled to a deduction. The uniform has to be clothing that is required by your employer, and (this is the gray area) not suitable for everyday wear.
Tax

Some camp fees do qualify for tax deduction

I sent my children to summer camp last month and want to know if I can take a deduction for the child care credit for the amount I spent on the camp. The camp lasted for two weeks and the fee for the camp included all food, lodging, and activities. I.I., Indianapolis
Tax

Taxes available for use as deductions are limited

I understand that a great amount of the price we pay for cigarettes and alcohol is made up of taxes. Are these taxes considered "other taxes" for purposes of itemized deductions? If so, how should we account for these amounts? The receipts for purchases don't list the taxes separately. D.S., Indianapolis
Tax

Tax reform cut long term gains and confusion

A year ago, Congress passed legislation that made massive changes to the tax laws. One of the most hotly debated areas of the tax legislation was the law regarding the taxation of capital gains. There are many people who believe this form of income should not be taxed at all, while others feel capital gains should be taxed as the same rate income that you earn at your job.
Tax

Changes should clear up Roth IRA confusion

Last year Congress enacted a rather sweeping tax act which changed several very visible areas of the tax law, notably the tax treatment of capital gain income (rates were lowered), the tax treatment on the gain from the sale of a personal residence (the tax was all but done away with entirely), and the inauguration of the new Roth IRA.
Tax

IRS throws foul ball into All American pastime

Last Tuesday, in a brief moment of glory, a nation of Americans forgot about the troubles of the world and held its collective breath while a little white ball spiraled into history.Mark McGwire's 62nd home run ball was picked up by Tim Forneris, a 22-year-old member of the Busch Stadium grounds crew, and the IRS was watching carefully, hoping no one would realize the great tax benefit that was carried across the stadium with that little ball.

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