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Taxes


 Patrick O''Connor Finance/Real Estate 2007-10-05
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The basics of executing a tax-free exchange are fairly simple. You must identify the replacement property within 45 days of the time you sell your property. You can identify up to three replacement properties or an unlimited number of replacement properties whose market value does not exceed twice the value of the property you sold. The replacement property must be purchased within 180 days of selling your property. A qualified intermediary must handle the exchange. To defer all of the gain, the market value, debt and equity of the replacement property must be equal to or greater than the market value, debt and equity of the property that was sold. Rules for like-kind exchanges are rigid, but there are experts who can guide you and allow you to legally defer substantial amounts of income.

A casualty loss for real estate investment property could include fire, flood, hurricane, tornado, or mudslide. Real estate owners incur both financial and emotional distress following this type of casualty. There's also a significant amount of work involved to coordinate with the insurance adjuster, tenants, contractors, vendors and lender. Even if the owner has complete insurance for building repairs and business interruption, a casualty loss deduction can legitimately be taken.

Casualty losses provide the opportunity to depreciate a large portion of the cost basis of real estate. The basis for calculating a casualty loss is the value of the property immediately before the casualty versus the value of the property immediately after the casualty plus insurance proceeds.

Consider the following example: a 200 unit apartment complex in Beaumont Texas was flooded with 3 feet of water on the first of two stories. The owner has casualty insurance expected to cover 100% of the cost to recover repair the property. He also has business interruption insurance to cover lost income while construction occurs and the property is leased. The initial reaction in reviewing this situation may be there is no casualty loss since the physical repairs and lost rents are covered. However, the market value of the property immediately after the casualty is substantially less than the market value of the property before the casualty. It is highly unlikely someone would purchase the property and agree to undertake the work required to negotiate with the insurance company, contractors, tenants, vendors and the lender without expecting a profit for their work. The magnitude of the casualty loss would have been much larger if the owner did not have business interruption insurance. In either case, a real estate investment group seeking to purchase the property immediately after the casualty would likely require an appropriate return for their capital and an entrepreneurial profit for the effort to renovate and lease the property.

Operating expenses are a tax deduction. Increasing operating expenses reduces taxable income and income taxes. Reviewing all cash expenditures annually can reveal operating expenses which have inadvertently been coded as a capital expenditure. Correcting this error prior to filing a tax return increases current year deductions. A fixed asset review can uncover errors which allow for substantial current year deductions. It is possible to claim current year depreciation or deductions after correcting a fixed asset listing. Corrections can be as a result of classifying operating expenses as capital expenditures. Another option for generating current year deductions is identifying assets which have been ascribed in excess of depreciation life. For example, if the cost to install substantial new landscaping was given a 39 year life, depreciation can be increased by correctly assigning a 15 year life and catching up previously under reported depreciation. Combining business and personal travel can increase deductions. Perhaps you need to schedule a business trip. If you add several days for leisure, the cost of the business trip can still be deductible. Scrutinizing personal expenses for lawful deductions can generate additional deductions. Any costs related to investment activity are deductible. This can include a computer at home for maintaining records for rental properties, mileage related to maintaining rental properties and memberships and publications related to investment activity.

Perhaps the most distasteful type of tax is the estate tax. For that tax, advance planning is necessary to substantially reduce estate taxes. While the current year exemption for 2006, 2007 and 2008 is $2 million, those with the states substantially in excess of $2 million need to consider detailed planning to minimize estate taxes. Options for reducing estate taxes include gifts during your life, partial interests, gifts upon death, bypass trusts, and a variety of other options.

Real estate investors are subject to income taxes, capital gains taxes, estate taxes, property taxes, and sales taxes. Real estate investors are fortunate that federal tax laws provide more opportunities to reduce income taxes than are available to most other business owners. In some cases simply consulting with a tax preparer may allow real estate investors to minimize taxes. However, in most cases utilizing a team of tax advisers with specialized knowledge enhances the investor's ability to minimize taxes.

O'Connor & Associates is a national provider of commercial property real estate consulting services including cost segregation studies, due diligence, insurance valuations, abandonment studies, business personal property valuations, commercial real estate appraisals, financial modeling, highest and best use analyses, and income taxes.

Our services benefit owners of all commercial property types including multi-family housing, retail stores, hospitals, hotels, industrial properties, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping plazas and warehouse/distribution centers. ">Taxes

Taxes are a levy imposed upon people or legal entities by a governmental entity. There are many forms of taxes including income taxes, property taxes, capital gains taxes, consumption taxes, excise taxes, retirement taxes, sales taxes, tariffs, toll taxes and transfer taxes. This article focuses on reducing income taxes for real estate owners.

Income taxes often seemed unavoidable. However, real estate investors have multiple opportunities to defer and reduce federal income taxes. Real estate owners receive income tax breaks not available to investors for many other asset classes. These include depreciation, income tax rate reduction, and the like-kind exchange. This article discusses how real estate owners can reduce income taxes by increasing the level of depreciation, using tax-deferred changes, casualty losses, maximizing expenses and planning to minimize estate taxes.

Depreciation is a non-cash expense which can both defer and reduce the level of federal income taxes. In some cases, depreciation actually eliminates federal income taxes. When an owner claims depreciation, and does not sell the property before it passes into his estate, the income deferred by the depreciation is never taxed.

Most real estate owners know depreciation defers federal income taxes. Few know real estate depreciation also reduces federal income taxes. The common perception is that depreciation simply shifts payment of income taxes from when income is earned until property is sold. However, depreciation often changes the character of income from ordinary income to capital gains income.

Consider the following example: George purchased an apartment complex in 2005. After obtaining a cost segregation study, approximately 20% of the cost basis of the improvements was allocated to 15 year property, such as landscaping, paving, sidewalks, parking lot striping and exterior signs. If George sells the property in five years, one-third of the cost basis of the 15 year property will have depreciated. Isn't it also reasonable the market value of this property will be one- third less than when the property was purchased?

More often than not, tax preparers believe the market value of short-life property is similar to the remaining basis when property is sold. This means there is no gain upon sale. Hence, additional depreciation was taken for short-life property (which could be used to reduce income taxable as ordinary income rates) while George owned the property. At time of sale, the portion of the gain equal to the short-life depreciation is taxed at the capital gains rate. This is how cost segregation reduces federal income taxes. Hence, federal income taxes are both deferred from the time income is earned until a sale occurs and the tax rate is reduced from the ordinary income tax rates to the capital gains rate.

Cost segregation can lead to meaningful deferral of federal income taxes. However, its most significant power is its ability to convert income taxed at the ordinary income rates to income taxed at the capital gains rate.

A like-kind exchange allows you to defer recognizing gain after selling of property if you purchase a "like-kind" property. Most exchanges of real estate for real estate qualify as a like-kind exchange. It is not possible to exchange real property for personal property and receive the benefits of a like-kind exchange. There may also be some limited interests in real estate, other than a fee simple interest, which do not qualify as real estate for purposes of a like-kind exchange. This might include exchanging the interest in leased land with five years remaining on the lease for fee simple title to another parcel.

The basics of executing a tax-free exchange are fairly simple. You must identify the replacement property within 45 days of the time you sell your property. You can identify up to three replacement properties or an unlimited number of replacement properties whose market value does not exceed twice the value of the property you sold. The replacement property must be purchased within 180 days of selling your property. A qualified intermediary must handle the exchange. To defer all of the gain, the market value, debt and equity of the replacement property must be equal to or greater than the market value, debt and equity of the property that was sold. Rules for like-kind exchanges are rigid, but there are experts who can guide you and allow you to legally defer substantial amounts of income.

A casualty loss for real estate investment property could include fire, flood, hurricane, tornado, or mudslide. Real estate owners incur both financial and emotional distress following this type of casualty. There's also a significant amount of work involved to coordinate with the insurance adjuster, tenants, contractors, vendors and lender. Even if the owner has complete insurance for building repairs and business interruption, a casualty loss deduction can legitimately be taken.

Casualty losses provide the opportunity to depreciate a large portion of the cost basis of real estate. The basis for calculating a casualty loss is the value of the property immediately before the casualty versus the value of the property immediately after the casualty plus insurance proceeds.

Consider the following example: a 200 unit apartment complex in Beaumont Texas was flooded with 3 feet of water on the first of two stories. The owner has casualty insurance expected to cover 100% of the cost to recover repair the property. He also has business interruption insurance to cover lost income while construction occurs and the property is leased. The initial reaction in reviewing this situation may be there is no casualty loss since the physical repairs and lost rents are covered. However, the market value of the property immediately after the casualty is substantially less than the market value of the property before the casualty. It is highly unlikely someone would purchase the property and agree to undertake the work required to negotiate with the insurance company, contractors, tenants, vendors and the lender without expecting a profit for their work. The magnitude of the casualty loss would have been much larger if the owner did not have business interruption insurance. In either case, a real estate investment group seeking to purchase the property immediately after the casualty would likely require an appropriate return for their capital and an entrepreneurial profit for the effort to renovate and lease the property.

Operating expenses are a tax deduction. Increasing operating expenses reduces taxable income and income taxes. Reviewing all cash expenditures annually can reveal operating expenses which have inadvertently been coded as a capital expenditure. Correcting this error prior to filing a tax return increases current year deductions. A fixed asset review can uncover errors which allow for substantial current year deductions. It is possible to claim current year depreciation or deductions after correcting a fixed asset listing. Corrections can be as a result of classifying operating expenses as capital expenditures. Another option for generating current year deductions is identifying assets which have been ascribed in excess of depreciation life. For example, if the cost to install substantial new landscaping was given a 39 year life, depreciation can be increased by correctly assigning a 15 year life and catching up previously under reported depreciation. Combining business and personal travel can increase deductions. Perhaps you need to schedule a business trip. If you add several days for leisure, the cost of the business trip can still be deductible. Scrutinizing personal expenses for lawful deductions can generate additional deductions. Any costs related to investment activity are deductible. This can include a computer at home for maintaining records for rental properties, mileage related to maintaining rental properties and memberships and publications related to investment activity.

Perhaps the most distasteful type of tax is the estate tax. For that tax, advance planning is necessary to substantially reduce estate taxes. While the current year exemption for 2006, 2007 and 2008 is $2 million, those with the states substantially in excess of $2 million need to consider detailed planning to minimize estate taxes. Options for reducing estate taxes include gifts during your life, partial interests, gifts upon death, bypass trusts, and a variety of other options.

Real estate investors are subject to income taxes, capital gains taxes, estate taxes, property taxes, and sales taxes. Real estate investors are fortunate that federal tax laws provide more opportunities to reduce income taxes than are available to most other business owners. In some cases simply consulting with a tax preparer may allow real estate investors to minimize taxes. However, in most cases utilizing a team of tax advisers with specialized knowledge enhances the investor's ability to minimize taxes.

O'Connor & Associates is a national provider of commercial property real estate consulting services including cost segregation studies, due diligence, insurance valuations, abandonment studies, business personal property valuations, commercial real estate appraisals, financial modeling, highest and best use analyses, and income taxes.

Our services benefit owners of all commercial property types including multi-family housing, retail stores, hospitals, hotels, industrial properties, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping plazas and warehouse/distribution centers.


2

Payroll Taxes


 Matt Bacak Business/Business 2008-05-05
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If you have employees, you are responsible for payroll taxes. This is a term that lumps all the different forms of employment taxes into one category known as “payroll tax�. In reality, payroll taxes encompass Federal and state income tax withholding, social security and Medicare taxes (also known as FICA), Federal unemployment tax (FUTA), as well as any state and local unemployment taxes assessed.

Payroll taxes are deducted each pay period from an employees gross pay. The remaining money distributed to the employee is what is known as “net payâ€�. Along with any taxes deducted from an employeeâ€TMs wages, there is a social security and Medicare liability incurred by the employer. You must match the social security and Medicare amounts withheld on each employee.

This is the employer paid contribution. Until recently, most employers reported and paid payroll taxes quarterly. With the advent of the EFTPS, or Electronic Federal Tax Deposit System, taxes are now paid on a monthly basis by all employers. The payroll taxes may also be paid via a tax coupon that is taken to your bank and presented with the monies to cover the payroll taxes due.

Every quarter, a Form 941 (or 943 for Agricultural employees) must be filed with the IRS. The amounts reported on the 941 should reconcile to the amounts turned in each month via the tax coupon or the EFTPS. At the end of the tax year, a Form 940 or information return must also be filed. If you are a small business with employees, or you plan to begin operating a business with employees, you need to understand your tax responsibilities as an employer.

The IRS provides links to all the relevant Forms and Publications via their internet site at www.IRS.gov . Here you will find definitions and terms associated with employees from the onset of hiring, to termination. W-4â€TMs, W-2â€TMs, I-9â€TMs, all the employment taxes you will be responsible for reporting, all the rates associated with those taxes.

The IRS also provides you with information concerning recordkeeping, employment eligibility verification, benefit and retirement plans, and even the definition to be used in order to determine if someone is an employee.

There is a tremendous benefit to be had by investing the time and resources necessary to understand and comply with all the federal, state, and local regulations concerned with employees and payroll taxes. However, you should frequently seek the advice of a qualified tax professional, your accountant.

Copyright (c) 2007 The Powerful Promoter


3

Employees taxes


 Matt Bacak Business/Business 2008-05-05
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Copyright 2006 The Powerful Promoter

Understanding Employee Taxes

Employee taxes can be one of the most difficult to understand areas of running a business and hiring employees. If you don’t understand all of the complexities involving employee payroll tax, it can also get you into a heap of trouble.

The first employee tax factor you should understand is what taxes you are responsible for as an employer. There are three employee taxes that you will be responsible for paying.

The first is Medicare and Social Security tax. This is often referred to as FICA and provides welfare benefits funding for senior citizens. As an employer you are responsible for paying half of the FICA taxes and withholdings for your employee while the remaining half is withheld from their paycheck.

You are also responsible for paying federal unemployment tax. This tax funds the state unemployment benefits and the administrative costs associated with those benefits. It is important for you to know that you must pay federal unemployment tax on the first $7000 earned by each person you employ during the calendar year.

In addition to federal unemployment tax, you must also pay state unemployment tax. These taxes are based on the location and size of your business as well as the number of employees you employ. Due to the fact that each state operates its own unemployment program, these rates do tend to vary; so it’s best if you check with your own state’s unemployment division for specific details.

In addition to the taxes you must pay as an employer, you are also responsible for withholding employee tax. Even though this is the employee’s contribution, it is your responsibility to handle the employee tax withholding. You will need to pay close attention to the employee tax form, or W-4, completed by the employee in order to know exactly how much money you need to deduct from the employee’s paycheck. Usually the amount of money you must withhold will depend on the number of withholding allowances claimed by the employee, their marital status and any exemption from withholding taxes that the employee might claim.

It is very important that you stay on top of your employee’s tax forms because they have the right to change them by submitting a new W-4. If an employee submits a new employee tax form, thereby changing the amount of their withholding and you fail to deduct the correct amount of money, you could be subject to penalties by the IRS.

You will need to deposit both the taxes that you are responsible for paying along with the employee tax withholdings in an authorized depository for Federal taxes. You can do this by either mailing or delivering your check or money order. These taxes will be due either semi-weekly or monthly. Your employee tax withholding due dates will be determined by the size of your payroll, dictated by the schedule. Usually, however; if your payroll is less than $2,500 every three months, you can file quarterly. If your employee taxes are larger, you’ll need to file more often.

In addition to the employee taxes named above, recently there has been much discussion in the media regarding a proposed employee health tax. If instituted this tax would impose a $3000 tax on employers for each employee who is not covered by health insurance. The intend of the proposed bill is to force employers to cover more employees by health insurance; however critics of the bill claim that the proposed employee health care tax will only lead to more unemployment.

Summary: As most employers know, employee taxes can be a real headache. Unfortunately, the employee payroll tax problem is a headache that simply must be endured. With a little understanding and careful attention to detail; however the hassle of filing employee tax withholdings can be a little less of a bother.


4

Online Taxes


 wtm Finance/Finance 2008-03-19
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Attitudes on Taxes and Wealth shows that the domestic issues of tax complexity, fairness and burdens continue to weigh heavily on the minds of the American people.
Tax Info
Paying school taxes is no different from paying taxes for other services that not everyone uses, Ghan said. For those Downtown condo buyers who are unable to qualify for the abatement, the current three-year abatement program adopted by the three taxing bodies is still available. adults believe the federal tax code is complex, that the federal income taxes they pay are "too high," and the federal tax system needs major changes or a complete overhaul. "Unfortunately, the property tax in the last five years has gone up a huge amount. "We all pay taxes to support police and fire services, but hopefully we never have to use them.
Forms

The Turbo tax deadline for submltting any claim forms for a partlcular plan year has also been extended to April 30 ot the following year. You will need the free Adobe Acrobat Reader software to view and print forms/publications/reports.
Tax Breaks
The companies that benefited from those abatements were to have invested more than $82 million in the city, in real or personal property and inventory, as a condition from receiving the tax breaks. Originally intended to help farmers and businesses that needed heavy vehicles, the tax break has been used to give tax breaks to dentists, Realtors or any other business that buys a vehicle weighing over 6,000 pounds.
Act
A land tax based on market value, notvarying with actual use, is a fixed cost that sharpens marginalincentives.
Property
State lawmakers are considering an amendment that would allow local governments to give homeowners a rebate on their property taxes and many homeowners say its needed relief.
Roughly half (48 percent) say they are willing to give up some federal tax deductions if such broadening of the tax base were coupled with an across-the-board cut in tax rates. Special interests will, as always, push tax policies that favor themselves at the expense of other taxpayers.


5

Estate Taxes


 Patrick O''Connor Finance/Real Estate 2007-10-26
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Estate taxes are often referred to as the death tax. Few Americans are subject tp estate tas due to the exclusion on the first$2,000,000 of an estate (2006,2007, and 2008). Taxpayers with estates substantially in excess of this amount should consider planning to minimize estate taxe. For family businesses it is important to ensure adequate liquidity is available to pay estate taxes. For family businesses it is important to ensure adequate liquidity is available to pay estate taxes (so the business does not have to be sold to pay the taxes).

Estate taxes can be sharply reduced or eliminated through advance planning. Options to reduce estate taxes include trusts, family limited partnership, gifts prior to death, gifts at death and skillful use of partial intrest. This article focuses upon partial intrest.

Partial interest valuation values the ownership of a portion of a property, limited partnership, general partnership, corporation, LLC or LLP. Partial interest valuation is more complex than most valuation problems and requires intense analysis and seasoned judgment. Reasons for performing a partial interest valuation are typically related to estate tax valuation or estate tax planning but could involve divorce, business dissolution or valuation of collateral for a bank.

Partial interests are almost always worth less than an undivided interest. This is because they are illiquid and lack control. Partial interests are illiquid since it is difficult to sell a limited interest in a property or nonpublic company. In addition, the sale of a partial interest in many entities is subject to approval by other owners. In many cases, other owner’s can choose to not allow the sale in their sole discretion without providing a reason.

The owner of a partial interest has less control than the owner of the entire property or entity. Even if someone owns a controlling interest their actions are subject to review and scrutiny by the owners of the balance of the property or entity. The owner of a noncontrolling interest typically has very limited ability to control decisions or influence the management and policies for a property or entity. Following are some of the detrimental effects of not having control of a property or entity:

  • Cannot make decisions regarding selling the property, perhaps in advance of a declining market or for personal reasons;
  • Limited or no ability to impact the quality of management or to choose a different management company;
  • Limited or no ability to impact business policies;
  • Limited or no ability to impact strategies or tactics;
  • Limited or no ability to impact refinancing the property;
  • Limited or no ability to impact the level of financial leverage.
  • Discounts for a partial interest are often 20% to 50% of the proportionate value of the entire property or entity.

Some of the factors determining the degree of discount for a partial interest include the percentage of ownership, whether it is a controlling interest, asset performance, the number of partners, the relationship between the partners, issues with the property (such as risk, condition and financing), market conditions and trends, and the quality of the general partner.

The steps involved in a partial interest valuation are as follows:

  1. Value the entire property or entity;
  2. Calculate the value of the proportionate share in the property or entity (value of the entire property times percentage owned);
  3. Determine the appropriate discount for the partial interest; and
  4. Calculate the value of the proportionate share after the discount for a partial interest.

O’Connor & Associates is the largest independent appraisal firm in the southwestern US and has over 40 full-time staff members engaged full-time in partial interest valuation and market study assignments. Their expertise includes valuing partial interests, business personal property, real estate, business enterprise value, purchase price allocation for businesses, valuation for property tax appeals, estate tax valuation, expert witness testimony and valuation for condemnation. They have performed hundreds of partial interest valuation assignments.

To obtain a quote or further information for a partial interest valuation, contact George Thomas or Craig Young at 713-686-9955 or fill out our online form.

O'Connor & Associates is a national provider of commercial property real estate consulting services including cost segregation studies, due diligence, insurance valuations, abandonment studies, business personal property valuations, commercial real estate appraisal, financial modeling, highest and best use analyses, and income taxes.

Our services benefit owners of all commercial property types including multi-family housing, retail stores, hospitals, hotels, industrial properties, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping plazas and warehouse/distribution centers.


6

Real Estate Taxes


 Martin Lukac Finance/Taxes 2007-04-13
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Everyone pays taxes all their lives. We pay taxes on our purchases as well as property tax to cover the road in from of our homes, the school down the street and the value of our home.

Taxes can be costly but it is important when you are buying or own your own real estate property. Real estate property is based on the value of your home the higher the value is the more your property taxes are going to be each year.

Every state, county, school system, or city has individual tax percentage rates that we pay on property. The rates are calculated by the state, county, school, and city as individual taxes and than calculated accordingly. If your area school needs more money to accommodate, the children that attended the facility, your taxes might be higher than the property owner down the road in a different school district. The percentage rates depend on the area that you live in.

Some states cost more to live in than others. The more state parks, schools, population and even the weather have a lot to do with our taxes. For instance the taxes might be higher in Florida that in Michigan because of the tourist that come through there making living expenses higher as well as taxes.

Michigan might have many ski resorts to attract more people but Minnesota might have more so their taxes would be higher than Michigan. Factories and different workplaces will increase the value of your home because people will move to the area where job are more plentiful than somewhere else will. The more lake property around you that attracts people from other places will increase your property taxes because it will takes more money for the state to keep them up. All of the above will increase your property taxes because they make your property value go up.

The more buildings on your property and the sizes of them will increase your property. The larger the building the more money it is worth to you and the state so the more the property taxes are going to be. The looks of your buildings will increase your taxes because looks mean a great deal to the value.

Landscaping around your property is a big and when it comes to selling and buying property. One tree planted or a couple of shrubs will increase the value tremendously. Trees are nature and very expensive but when you sell the property you will make money because it is worth more each year that it grows.

The value of your property may bring up you taxes but in the end, you can profit from the high taxes because of the increase of the property value as a whole.


7

History of Taxes


 Celeste Yates Finance/Taxes 2007-11-28
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Originally it was the Egyptians who invented the system of Taxes. They appointed Tax Masters, whose job it was to increase the burden on the slaves under the Egyptian domination. Tax collectors, also known as Scribes, were drawn on tomb paintings dating as far back as 2000 B.C.

They taxed simple things such as the use of cooking oil in family meals, as well as other aspects of daily life. They accomplished this by auditing households and checking that the correct amount of cooking oil was being consumed. They also ensured that residents were not using methods of cooking other than the taxed oil.

Greece adopted the tax system from the Egyptians and used it in Athens during times of war. They created a tax, known as eisphora, which was used to pay for special wartime expenditures. They stopped the tax system once the emergency war was over. Once additional resources were gained by the war effort they refunded the tax. Greece is one of the few societies that managed to maintain this system. Foreigners where taxed in Athens under the metoikion tax.

Ancient Rome took on the tax system and included sales taxes, and inheritance tax, as well as tax on imports and exports. Caesar Augustus is considered as one of the best tax strategists of the Roman Empire. During his reign as “First Citizen”, he made cities responsible for collecting taxes, instead of allocating the task to tax collectors from central government. He created an inheritance tax of 5%, which resulted in all military costs being paid for. This inspired the English and Dutch to make similar taxes in later years.

During Julius Caesar’s reign, sales tax was enforced. Caesar Augustus changed Julius Caesar’s sales tax of 1% to 4% for slaves and 1% for everything else. The first tax-free shipping port at Delos was created in the 4th century B.C. The shipping port is known as the first “Tax Haven” in history. It diverted traffic from Rhodes. Roman Emperor, Vespasian, expanded taxes during the 1st century A.D. He created the Fiscus Judaicus, known as the Tax on Jews, as well as a tax to use urine for cleaning or tanning leather. An inheritance tax of 10% was enforced on all Roman Citizens in 212 A.D.

The Queen of Englia, Boadicea led a revolt, which can be credited to corrupt tax collectors in 60 A.D. The revolt allegedly killed over 80,000 people, including all the Roman soldiers within 100 miles. She managed to seize London during the process and raised an army of 230,000. Emperor Nero finally managed to stop the revolt and appointed new administrators for the British region.

Lady Godiva caused a bit of disturbance herself in the 11th Century. According to legend she rode through town naked on horseback, as part of a deal that she had made with her husband, Leofric, the Earl of Mercia. He had promised to reduce the taxes if she went through with the dare. The residents of Coventry, where the tax was reduced, honoured her for her courage.

From then on countries battled and fought over different types of taxes. Eventually each country began editing its own tax system to suit its needs. They expanded the tax system, dropping smaller taxes for bigger ones, until eventually we have the system we have today.

Celeste writes for an online company whose client is Financial and Insurance News, who specialize in news about insurance, networking and tax.


8

Reduce your Taxes


 Martin Lukac Finance/Taxes 2007-01-14
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When it comes to taxes, we all want to reduce the amount we have to pay in. There are three basic ways to minimize your taxes: reduce your income, increase your deductions and take advantage of tax credits.

Your Adjusted Gross Income is a key in determining your taxes. Your tax rate and tax credits depend upon your AGI. In fact, your AGI is a powerful number. Lenders will want to to know your AGI when you apply for a large loan or mortgage. If your child is to qualify for a college financial aid program, it depends upon your AGI. Your AGI is considered your true income level.

It is also where you should start your tax planning. There are many parts to your AGI. Basically, your AGI is your income from all sources minus any adjustments to your income. The higher your income, the higher your AGI. The higher your AGI, the more taxes you will pay.

It works the other way as well. If you lower your total income, you lower your AGI and the amount of taxes you pay will be lessened. This is the number one way to reduce your taxes.

How can you reduce your AGI? The best way is to contribute money to a 401(k) or similar retirement plan at work. These contributions reduce your total wages, therefore reducing your taxes bill.

You can also reduce your AGI through various income adjustments. These adjustments are simply deductions that don't have to be itemized. They include contributions to a traditional IRA and alimony paid.

You can also take a close look at your family's income situation. If one spouse earns significantly more than the other, it could be beneficial for only one to work. In many situations, a stay-at-home spouse or parent not only reduces the tax burden, but can save money through reduced work-related expenses. In my own family, my income was just enough to boost us up into a higher tax bracket -- which deducted from the benefits of working.

You can also reduce your taxes by increasing your tax deductions. Taxable income is a key element in your taxes. This is the amount left over after reducing your AGI by deductions and exemptions. Most people take a standard deduction, but quite a few people are able to itemize their deductions.

These deductions include expenses for health care, personal property taxes, mortgage interest, gifts to charity, job-related expenses, tax preparation fees and investment-related expenses.

The easiest method to itemizing your expenses is to keep record of them throughout the year using a spreadsheet or personal finance program. Then you simply compare your itemized expenses with your standard deductions. You simply take the higher deduction.

It is wise to reduce your taxable income by keeping track of your itemized deductions. The three largest deductions include mortgage interest, state taxes and gifts to charity.

So many people don't take advantage of tax credits. Tax credits reduce your tax. There are credits available for college expenses, adopting children and saving for retirement.

There are two education-related tax credits available. The Hope Credit is for students in their first two years of college, while the Lifetime Learning Credit is for anyone attending college classes. The classes can be in anything you wish -- they don't have to be related to your work or career.

Another way to limit your taxes is to avoid additional taxes. For example, an early withdrawal from an IRA or 401(k) retirement plan could result in an addition to your taxable income and penalties for early withdrawal. Not only are you reducing your retirement savings, you are increasing your tax obligation.

If you find that you have to pay in a large amount each year, you need to adjust your withholding. It will be much easier to make these payments each month rather than all at once in the spring. More money comes out of your paycheck, but you won't have to pay when you file your taxes. The goal is to be flush or have a small refund or small payment when you file your taxes.

Reducing your taxes is possible through these three simple steps. All tax planning basically falls to looking at all of your options and keeping organized records throughout the year. With a little forethought, you can lower your taxes.


9

On Death Vs. Taxes


 Elea Almazora Finance/Taxes 2008-04-19
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Benjamin Franklin once said that “nothing can be said to be certain, except death and taxes”. This may very well be true – you can expect to be taxed on any given day for any given (or, perhaps “bought” is a more appropriate word in case of sales taxes) thing just as easily as you can expect to die on any possible moment because of any possible, fatal, reason.

The difference (most point out) is the regularity and the net amount of suffering that either inflicts on individuals concerned. Never mind the entire thing about one being more about humanity and mortality while the other is more about society and (so they say) civil duty. Sure, FAIR ENOUGH. You can look at them as separate facts of life. But that's just it: whether we like to admit it or not, death and taxes are BOTH facts of modern life. We learn to live with both, and in some ways have come to accept them, albeit a bit begrudgingly. We complain and gripe about them, throw fits, but nevertheless accept them.

But I digress. The more pressing point here is that because neither death nor taxes could be truly, properly avoided (without, at least, being subject to cutting-edge medicine in the case of death or being hunted down by the authorities in the case of taxes) and the immortal, albeit re-phrased phrase “nothing is certain but death and taxes”, there have been some rather banal, but nevertheless entertaining arguments on whether death or taxes would be the worse certainty. I believe that somewhere in the world wide web, someone has actually posted a fictional match of wills between the Grim Reaper and the folks at the IRS – wherein the personification of Death of course came out triumphant as the more “bad-ass” of the two factions. But that's probably because the Grim Reaper is way cooler than an army of auditors wearing suits.

Some of my acquaintances think that taxes should have had a better chance against death. After all, death only happens ONCE to an individual (if you don't count the death of relatives) while taxes – particularly income taxes – tend to be experienced on a yearly basis, often more tedious than we care for. At least death gives you the option of it being quick and painless. Taxes require you keep records of receipts, billings, previous tax returns and the like for reference, just in case. And you have to do that again and again and again until (as a friend once said) you are compelled to either break the tax laws, resort to loopholes – which you will need to constantly keep track of – or just shoot yourself in the head.

On the other hand, when you die, you're dead. It's done. There is no life after dying but taxes allow you to live on, perhaps in an improved and more secure place. I'm not taking back what's been said about death and taxes being equally horrible as facts of life, but I also wonder why the argument should always have to be “which one is worse”. Both death and taxes have their good points: death allows us to appreciate our lives while we have them while taxes lets us live a life of belonging – a place, a community, a country that protects us. They have purpose, metaphysical and practical both. It is these purposes that create meaning in things such as this, not the flaws or shadows.

For a change, I would like to see a more positive spin on the argument “death vs. taxes” or at least another way of approaching the popular catchphrase that Franklin had unwittingly coined. Because, I think, there is something to be said about focusing on the good things instead of the bad things. That way, we might be able to understand the whys and wherefores – and maybe, just maybe, death and taxes won't seem so horrible, and become easier to live with.


10

Death and Taxes


 sands Finance/Taxes 2007-09-04
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You know that they say there are only two things in life that are certain: death and taxes. Well that is entirely incorrect; there are lots of things in life that are certain. Like it’ll rain after you’ve washed your car for the first time in three months, that call you’ve been waiting for will come as soon as you go to the loo, your best friend will pop in for a quick visit during your favourite TV programme, your dog will jump muddy paw prints on your clean pants, you will spill coffee on your white shirt, you will fart at yoga, you will snort when you laugh on a first date, you will trip on the pavement in front of a motorcycle gang, the list does go on but that is a point well proven.

Let us pick the worst on that list and expound on it. Farting at yoga. Ok, that’s a joke, it’s embarrassing but not the worst, neither is snorting on your first date although that wouldn’t exactly be an action of choice either. Taxes, they’re the real killer; two certainties for the price of one, you probably wouldn’t get a rebate on death though, you’d have to pay for it somehow. Its not enough that we pay tax every day on everything that we buy and use. From things that really shouldn’t be taxed like books and vegetables and bread to things that maybe we shouldn’t mind paying tax on like alcohol and tobacco and DVDs. Yet every year we still have to fork over a large percentage of our earnings, our earnings, to the government so that they can do, whatever it is that they say they do. This is, however, not a tirade against tax, this merely about tax.

More specifically about paying taxes if you live in one country and work in another. There is this perception that if you work for less than 183 days in another country you are a tax non-resident, which means that you don’t pay tax in that country. This is largely a false perception as you have to meet certain other criteria as well and even if you do meet all the criteria you should still be paying tax on the income that you earn in that country. The laws are quite complex. It is strongly recommended that you hire a tax consultant who knows exactly what is going and keeps up to date with the rules and regulations governing international tax law as well as the tax laws of the countries concerned. If you work over 185 days in a country you are considered to be a tax resident and you can then be taxed on your total income, this includes investments etc.

You need to be careful about paying double tax i.e. in your home country and the country where you are earning money. Some countries have a double taxation avoidance treaty and this is good news for you. If the country that you’re in doesn’t have a double taxation treaty, it could mean bad news for you. Again, this is why you need a taxation consultant, someone who knows all the ins and outs of tax law and who can explain it all to you in terms that you will understand and who might be able to find some loopholes for you. Not that we’re advocating you cheat on your taxes, just that if there is some way that makes it easier on you payment wise, then go for it.

Taxation consultants do more than just help you with laws and loopholes. They take on all the paperwork and administration involved in taxes (and goodness knows there are a lot of forms) so that you are free to focus on your business or carry on with your private life with the minimum of stress and hassle. They provide a single point of contact thus reducing costs and allowing you to easily keep in contact and track progress. They provide reliable information quickly and efficiently. They assess you situation and tailor make a solution to fit your needs. You are assured of confidentiality and costs are all inclusive.

Taxes are daunting at the best of times, but there never is a “best of times” for tax. Most face them and dread the worst. Some may even prefer to face death as the friendlier and warmer certainty, the cuddlier option. Unfortunately it is not to be avoided. The best we can do is face it well armed with grit, determination, a sense of humour and a supreme tax consultant by our side.

11

Paying Overdue Taxes


 Carson Danfield Finance/Taxes 2007-12-29
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It is top priority to pay all your overdue taxes as soon as possible due to the compounding problems that occur.

With penalties and interest on overdue taxes it doesn't take long for the total to mount up where you will be paying more for those than the original amount outstanding.

Federal taxes are one of your most important debts to clear as there is no one quite as ruthless at recovering debt than the IRS. They have more powers than anyone else to recover debt.

They can take assets to cover the debt and that even includes your home so you don't want to be messing with the IRS.

If you know that you won't be able to pay your tax when it falls due then you will need to look at all alternatives and that might even include the necessity to use your credit card to pay your account simply because that will be an easier debt to manage than the IRS and the interest and penalties that they will impose.

If you have enough equity in your home then that is another solution because the interest you will pay on your home mortgage will be a lot less that the IRS interest for late payments.

You will probably be reluctant to use your house to borrow the money, and rightly so, however in the case of federal taxes you could stand to lose your house if you didn't pay anyway.

If you have already incurred penalties and interest for outstanding taxes then it is possible to come to an arrangement with the IRS where they will reduce some of these charges provided you can offer them some reasonable explanation as to why this happened. An example of this would be an illness that stopped you from working and earning enough money to make payments.

Often you can arrange a payment plan with the IRS to pay off your debt and if they agree to that use your budget to work out how much you can reasonably afford to pay without getting in difficulty and defaulting. Once you get a payment plan sorted you won't want to miss any payments under any circumstances.

12

Making Taxes Less Taxing


 Molly Winters-Hughes Finance/Taxes 2008-04-05
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April 15th can be the most stressful day of the year for many Americans. The date when federal taxes are due can strike fear into the hearts of the most serious taxpayers. Writing that yearly check to Uncle Sam can be quite distressing, especially if we find we owe more than we thought we would.

What can be especially troubling is that the stress can stay with us, year in and year out. However, for many people, the stress begins long before the filing deadline. It may occur as early as December when the tax forms first arrive in the mail. On the other hand, it may happen when our W-2 form comes across our desk at work. It may happen when we hear about tax season on television. Even getting our yearly interest statement from our bank might be enough to put us over the edge.

We may know some people who seem completely relaxed when tax time comes around. It seems that they have everything in order, and they have little with to be concerned. For such people, tax day seems to be a virtually stress-free experience. We will find them whistling through the hallways at work' while we are hunched over our calculator, wondering whether we can pay our tax bill.

We need to realize that we can handle the stress of tax season without going ballistic. However, this means that we must be pro-active when it comes to handling our taxes. A little bit of planning can go a long way to reducing our taxes and our stress level.

To begin with, it could help us immeasurably if we seek the services of a financial planner. He or she can help us to take control of our finances, which can reduce our stress level considerably. In addition, the financial planner can help us to employ certain strategies, which will enable us to reduce our tax bill.

Next, we have to seriously consider whether it will do us any good to do our taxes ourselves. While figuring out our own tax bill can give us a feeling of control, it can also increase our stress level tremendously. Therefore, we might seriously consider hiring a tax accountant to handle the stress of our taxes. While such a move will not eliminate our stress, it can seriously reduce it.

Keeping folders of all the documents we need for filing our taxes can also lessen our stress. If we keep the folders current throughout the year, we will not be in a mad rush at tax time to find the papers we need to file our return. We might consider color-coding the folders for easy reference. Also, keep the folders in a central location.

While a filing cabinet might be the best solution, we might also consider a hope chest, an end table, or a desk drawer. In addition, be sure to keep all our records for at least three years in case a question arises about our return later on.

Another strategy for reducing our stress is putting an end to procrastination. While it might be tempting to wait until the last minute to file our taxes, it only increases our stress level. If we file our taxes long before the due date, we can rest easy when April 15th comes around. We might be amazed at how much easier it is to deal with tax season when we have done some advanced planning. If we find ourselves facing a large tax bill, chances are we will feel stress, no matter what time we file. Therefore, we might consider opening a savings account specifically earmarked for taxes. This way, we can save for tax day throughout the year.

Another option is to increase our withholding on our weekly paycheck so that we do not have such a huge bill to pay at the end of the tax year. There is no reason to become overly stressed over taxes. They are a natural part of American life, the means by which the government is able to function. If we take a few pro-active steps, we can significantly reduce tax-related stress. It may be hard at first to break old habits. However, once we do, we might be amazed at how relaxed we feel when April 15th comes around.


13

Taxes and Divorce


 Antonio Fricano Reference Education/Legal 2007-03-19
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The truth is, most family law lawyers don't have a firm grasp on the tax consequences of divorce. One reason we went to law school instead of to medical school was because we didn't want to take the extra math classes. Instead, hoping to leverage our talents for writing, negotiating and public speaking we decided to enter into one of the most litigation intensive specialties within the law.

Still, these lawyers can provide effective representation for their clients. The reason is that most opposing attorneys are of the same mindset. This mindset is; "I am a family law attorney and if my client needs tax advice they should seek the advice of a tax professional." This is good advice, but seldom clients actually abide by it.

The tax consequences of a divorce can have a tremendous impact on the actual (as opposed to stated) value each side receives in a property division or support order. This leaves those lawyers with an understanding of tax law in a superior bargaining position. The following article will discuss a couple areas where family law and tax law intersect.

Support Orders

The bargaining chips here are the exemptions and filing status. Exemptions are a tax deduction so they are a benefit for the spouse receiving them. Two ground rules to keep in mind is that a custody split should never be 50/50, (because neither party will get the exemption) and the court can't order parties to take a particular filing status.

The advantages of taking certain tax positions can be analyzed by the DissoMaster software. Once the exact benefits to both sides are calculated, the negotiating begins. Generally, the tax deductions should be negotiated towards allocating them to the higher earning spouse. In that way both spouses collectively pay fewer taxes. Another result is that the higher wage earning spouse has a higher net income which will result in a larger order of support to the receiving spouse. All of this is, of course, is negotiable and can even be conditioned on certain events. For example, an agreement might have a provision that Wife sign the IRS form allocating the exemption to husband by January 15th each year, provided that she receive increased spousal support of a certain amount. These tax aspects can have a major impact on a client's future finances and should be a point of negotiation.

Property Division

This is an area where a basic understanding of tax law is crucial to obtaining a fair result for the client. Family law courts have two fundamental rules here:

1)The court does not take tax consequences into account when determining value

a.Example: If you are awarded the family residence and plan on selling it after the divorce, the court will not reduce the value it puts on the house just because you will have to pay taxes on the gain from the residence

2)Pursuant to IRC 1041, property transfers subject to a divorce are not taxed

a.Example: If you sell your interest in the family home to your spouse, you will not be taxed

California community property law states that each spouse shall get an equal share of the community property. This can be more complex than it seems. As an example, let's say that we are awarding stock to Wife with a fair market value of $200,000 and we are awarding husband cash from the community bank account equaling $200,000. While this might seem equal, it probably is not. The stocks are subject to taxes, either a loss or a gain. If Wife has to pay taxes on $100,000 of the stocks when she sells them, she has gotten the short end of the stick.

Calculating Loss or Gain

The loss or gain for tax purposes on any property is equal to the selling price minus the basis. Basis is the purchase price of the asset, plus improvements, plus fix up costs, minus depreciation and deferrals. Obviously it can get complicated trying to figure out all these factors, so attorneys need their clients to take an active role in providing this information.

The situation gets even more complex when dealing with pensions. Pensions have early withdrawal penalties and other serious tax implications for divisions.

Also, a loss or gain may be avoided entirely with some estate planning. For example; if the spouse was awarded the residence and lived in the residence until his or her death, then the basis for whomever he or she willed it to, would be the fair market value at the time of the transfer.

Solutions

How can you split everything equally when you are comparing apples and oranges? One way would be to take the King Solomon approach and divide everything in half, giving each side half an orange and half an apple. Sell the house and divide the proceeds. Each spouse takes half the stocks. If the pension or IRAs are unequal, roll some over from wife's IRA to husband's IRA or vice versa to make them of equal value.

However, the best course of action for clients is to hire an attorney that has a basic understanding of the tax implications of divorce. Clients can test prospective attorneys in this regard with a few preliminary questions during the initial consultation. An attorney with this basic understanding can save clients lots of headaches down the road.

Copyright (c) 2007 Antonio Fricano

14

Taxes for Gamblers


 Richard A. Chapo Finance/Taxes 2007-03-14
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The federal government wants their hunk of meat regardless of how you earn money. This is true even if you don’t think of it as working, such as when you are gambling.

To say that gambling is a big time money industry is a minor understatement. From playing the ponies to traveling to Las Vegas for a weekend, there is little doubt that a lot of cash changes hands. The IRS, however, views it as an even larger industry than you might think. While casinos and the horse track are obvious gambling niches, the IRS also includes lotteries and raffles in the mix. This effectively means many people who don’t view themselves as gamblers actually are. If you buy a lotto ticket every once in a while, the IRS considers you one.

If you gamble, you are responsible for reporting your earnings and paying taxes if you won more than you lost during the year. If you lost more than you won, you get to right off the winnings. Unfortunately, the IRS will not let you claim a loss from gambling. In short, the house always wins with the IRS being the house.

If you have gambling winnings, the tax process can a bit annoying. You must file the 1040 form for your taxes because it is the only one that allows for the reporting of earnings. You want to report the winnings on Line 21.

If you have losses, you can deduct them to the extent they cancel out your winnings. Unfortunately, you can only deduct them if you itemize. In this case, we are talking about line 27 of Schedule A.

Regardless of whether you won or lost, you must keep tax records of your gambling efforts. Much like proving business mileage, you need to maintain receipts regarding payouts and the money you spent. The records should include the time and place you did your gambling. As with most tax records, you should keep these for a minimum of three years.

15

Income Taxes (How Real Estate Investors Minimize Taxes)


 Patrick O''Connor Finance/Real Estate 2007-08-31
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Income Taxes (How Real Estate Investors Minimize Taxes)

Tax tips and tax help to assist taxpayers by describing options
for tax reduction and tax cuts through lawful tax deductions.

Income taxes are too high. However, real estate investors have found many options to reduce the level of federal income taxes. Congress has provided a number of income tax benefits for real estate investment. These include depreciation, cost segregation, tax-free exchanges (1031 exchanges), casualty losses and capital gains treatment. Real estate investors who utilize these income tax benefits are able to reduce or even eliminate federal income taxes. Tax reduction reduces the risk endured by real estate investors since they have more liquid capital.

Income taxes are calculated based on taxable income. Taxable income is calculated by deducting allowable expenses from revenue/income. The amount of revenue for real estate investors is generally a fixed number. There may be modest variances for cash basis versus accrual basis. However, it is typically difficult to materially modify the level of revenue. However, there are many options for judgment in calculating expenses. These include whether or not to capitalize or expense repairs, the level of debt and interest, and depreciation. The resultant tax cut can be substantial.

Depreciation is a non-cash expense which increases total expenses and reduces taxable income. Real estate depreciation is based on the concept that improvements to land physically deteriorate overtime. Real estate owners are allowed to depreciate a portion of the cost basis to account for this physical depreciation. (In reality, the market value of improvements typically appreciate in value over five or 10 years even though depreciation is recorded for accounting purposes.)

Real estate depreciation both defers and reduces federal income taxes. Depreciation defers income taxes from the time income is earned until the property is sold, or a gain from the property is recognized. (Real estate investors may defer recognizing the gain on the sale of property by utilizing a 1031 exchange.) Depreciation reduces federal income taxes by converting the character of income from ordinary income to capital gains income. The maximum income tax rate for ordinary income is 35% while the maximum income tax rate for capital gains income is 15%. Although some depreciation is recaptured at a 25% rate, it is possible to have much of the income shielded by depreciation recaptured at 15%. Furthermore, even if depreciation simply reduces the tax rate from 35% to 25%, and defers payment of taxes for a period of years, the savings are meaningful.

Cost segregation is a specialized service real estate investors use to maximize depreciation. Cost segregation is typically performed by real estate appraisers or engineers to fine tune the real estate depreciation schedule. Cost segregation identifies and quantifies up to 130 components which qualify for short-life depreciation. The building structure is depreciated over 27.5 years (rental residential property) or 39 years (commercial property). Short-life property is typically depreciated over 5, 7 or 15 years. Obtaining a cost segregation report often allows real estate investors to allocate 20 to 40% of the cost basis to short-life depreciation. Shifting a significant portion of the cost basis from long-life components to short-life components can increase depreciation by 50% to 100% during the first five to seven years of ownership.

Depreciation is a powerful income tax reduction tool specifically available for real estate investors. Real estate investors can magnify the benefits of depreciation by utilizing cost segregation.

Click here for a FREE preliminary analysis of tax savings resulting from your property.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.

City:
  • New York, NY
  • Bridgeport, CT
  • Hartford, CT
  • San Francisco, CA
  • Memphis, TN
  • Boston, MA
  • Los Angeles, CA
  • Baltimore, MD
  • Orlando, FL
  • Denver, CO
  • Birmingham, AL
  • Sacramento, CA
  • Honolulu, HI
  • Bakersfield, CA
  • Lakeland, FL
  • Dayton, OH
  • Milwaukee, WI
  • Santa Rosa, CA
  • Portland, OR
  • Jacksonville, TN
  • Colorado Springs, CO
  • Fresno, CA
  • Greenville, SC
  • Worcester, MA
  • Richmond, VA
  • Austin, TX
  • Louisville, KY
  • Albuquerque, NM
  • Springfield, MA
  • Syracuse, NY
Cost segregation produces tax deductions for virtually all property types.

Property Type:
  • Research and development
  • Auto salvage yard
  • Manufacturing/processing
  • Used car lot
  • Movie theatre
  • Night club
  • Motel
  • Truck stop
  • Commercial building
  • Greenhouse
Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:
  • Golf courses and country clubs
  • Building supply dealers
  • Truck transportation
  • Printing activities
  • Publishers
  • Chemical manufacturing
  • Warehousing and storage
  • Mineral product manufacturing
  • Food manufacturing
  • Computer and electronic manufacturing
O'Connor & Associates is a national provider of commercial property real estate consulting services including cost segregation studies, due diligence, insurance valuations, abandonment studies, business personal property valuations, commercial appraisals, financial modeling, property taxes, and tax reduction.

Our services benefit owners of all commercial property types including multi-family housing, retail stores, hospitals, hotels, industrial properties, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping plazas and warehouse/distribution centers.


16

Filing Your Taxes Online


 Mark Jackson Finance/Finance 2007-10-04
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An easy way of filing your income tax return this year is electronic filing. Filing online is an easy and hassle-free way of filing IRS tax forms. Even if you have no prior experience with filing your income tax return you can do it with tax cut software. Tax software will help you to complete the income tax process in a quick and affordable method.

For many people the tax season is a very stressful period. Understanding the IRS tax forms can be a very difficult and frustrating thing to do with all the complex codes and deductions on the IRS tax forms. However, you can still file you taxes with an easy process by going with online taxes. Electronic filing is a way to file your taxes yourself with very little stress and there are quite a few advantages to filing online.

The first thing you must decide is whether you are going to go with an accountant or file online taxes. If you plan on filing online yourself then you should decide if you are going to use an e-file program or tax software. E-filing programs is quickly becoming one of the more common ways for individuals to file their taxes. Even many tax professionals are starting to use electronic filing since it is a quicker method for them. By choosing to file online you will also receive your refund quicker. If you are using tax software you will even have the choice of saving your information from previous tax seasons so you can easily gain access to it for future tax seasons.

However, when filing online there are some things you should always remember. The most important of these is to always read your W-2 form. Before you start electronic filing you should read the back of the W-2 form and make sure you know what each of the boxes means and what they are for. Even when doing online taxes you should always print a copy of the taxes for your personal records. You should also print out the confirmation that the tax software gives you showing that your tax forms have been received by the IRS.

If you are unsure about doing your own taxes because you don t know about the income tax laws then you don t have anything to worry about with online taxes. Many of the tax software programs will provide you with additional advice if you need it. Even if you have done taxes before or believe you know how the income tax system works, it is still a good idea to read over all the information that the software gives you to be safe. The information may contain valuable tips including additional deductions that you may not have thought of before. This is just one of the many benefits you can get by filing your taxes online.


17

Defer Property Taxes in TX


 Curtis Reddehase Finance/Real Estate 2007-12-13
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Did you know that certain elderly and disabled homeowners may defer or postpone paying the property taxes on their homes until their death or until they move from the home? Many of our elderly and disabled homeowners are living on fixed-incomes, this option may be appropriate for some homeowners. Interested agents and homeowners can get more information on tax deferral from the county appraisal district office but the information below should give you a basic understanding.

Texas law says a homeowner age 65 or older, or disabled may defer or postpone paying any taxes on their home for as long as they own and live in that home. To postpone tax payments, the homeowner must file a "tax deferral affidavit" with the county appraisal district. The deferral is for all property taxes on the person’s home. This includes the school district taxes, county taxes, city taxes, junior college district taxes or any other taxing unit that taxes the person’s home.

It is important to note that a tax deferral only postpones a person’s property taxes. It does not cancel them. The taxes will accrue interest, but not penalty, at a rate of 8 percent a annually. The interest is simple interest. Taxes delinquent before the homeowner applies for a deferral may have accrued penalty and interest. The delinquent penalty and interest remains and becomes due when the deferral period ends. If taxes are not delinquent when you file the affidavit, they do not become delinquent during the deferral period. In addition, the homeowner may pay their taxes at any time, however the deferral remains until the owner dies or the property is no longer their homestead. Once the owner or their surviving spouse no longer own or live in the house, the deferred taxes and interest become due 181 days later.

What if the tax office has already filed suit against the homeowner to collect the delinquent taxes? Filing the tax deferral document also prevents the tax office from getting a court order to sieze the home and sell it at a delinquent tax auction. However, the homeowner needs to file the deferral document no later than 5 days before the date of the tax sale. The deferral affidavit may be filed at the appraisal district office, tax office or with the delinquent tax attorney representing the tax office(s). After filing the deferral, the tax office cannot sell the home at a tax foreclosure auction until the 181st day after the homeowner or their surviving spouse no longer own and occupy the home.

The homeowner should file the completed affidavit with the county appraisal district where the home is located. You can go to the State Comptroller’s website (Texas) for the documents or view their website for more information on this property tax law. I am a native to the Austin Texas area. I grew up in Lago Vista and enjoy the opportunities in Austin for out-door fun, like sailing on Lake Travis with my family. I truly enjoy my career in selling Austin Real Estate. I also enjoy helping REALTORS grow there business in other parts of Central Texas such as Lakeway and Cedar Park.


18

Preparing Your Annual Federal Taxes


 Hernando Quevedo Finance/Taxes 2008-02-10
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Prepare your annual federal taxes, is a task that comes every year when it is time for spring. Spring-cleaning is not the only task that you should be doing at that time. No, you need to prepare your annual federal taxes.

All Americans that have a work need to do this. It is better to fill out a tax return, even if you do not have a work, so that the government does not get suspicious.

Please note that, the government uses many of the information that they get from your federal taxes forms in order to check people and to make sure that they are not breaking the law. This may sounds weird, but it is definitely understandable.

They are already getting your tax information so as to pay of the national debt and handle the taxes of goods. It would make sense that they would use that valuable information for other purposes as well. Whatever be your opinion about what they do with the information that you put in your federal taxes forms, it is still necessary that you fill them out. Every American needs to do that and that is the duty that you are instructed with.

Some people do not want to fill out federal taxes forms, and they end up getting in trouble for it. It is possible the some people even get sent to jail and have to pay hefty fines. It is clearly better that every year you do your federal taxes the right way, than to have to go through something like that.

You have several options in order to do your federal taxes:

1. You can do your taxes by yourself, or
2. You can use professional services provided by a company or a tax accountant, to do them for you.

Keep in mind, that when someone else does your federal taxes forms, it will cost you money. Depending on where you go and how complicated your taxes are, it can cost anywhere from fifty dollars to several hundred.

Now, this may not be a problem for someone who is rather wealthy, but can be pretty expensive to most of us. If you do not want to spend that kind of cash, you can always do your federal taxes yourself. You will end up saving a lot of money.

You must be careful with this method, though. For starters, doing your own taxes can be a lot of hard work, especially if your taxes are very complicated.

Only do it yourself if you are up to this kind of challenge. Otherwise, stick with the professionals.


19

Taxes Levied In California


 Kris Koonar Travel Leisure/Destinations 2007-03-08
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In California, state taxes have always played an important role. At the end of the 21st century, the state of California spent a large amount of money to provide public services to the residents of California and the local businesses. The money spent has been provided by the state taxes. Three-quarters of the state treasury and one-half of the local shares are all provided by taxes.

The taxes levied by California State are all included as State Taxes. The personal income tax or PIT, the sales and use tax or SUT, the bank and corporation tax and major motor vehicle-related levies account for a major share of California's own-source revenue.
The income tax, the sales tax and the bank tax finance the state's General Fund. The largest single tax that is generated by the residents of California is the PIT. This Tax accounts for over half of the General Fund revenue.

The rest of the state expenditure is taken care of by the special funds. These special funds are generated by the motor vehicle-related taxes. Special funds include tobacco-related taxes and sales taxes. These funds support health programs and local governments.

Personal Income Tax:

Established in 1935, the personal income tax or PIT is the state's single largest revenue source. In the year 2000, California collected over $35 billion as income tax. This tax accounts for roughly 40 percent of all revenues and half of General Fund revenue.

The Personal income tax is levied on both residents and nonresidents. Non-residents pay taxes on income derived only from California sources. In 1998, there were over 13 million PIT returns filed, which include 600,000 from nonresidents. Personal Income Tax also applies to proprietorships, partnerships, estates and trusts.

The income offered by the Sub-chapter S corporations is subject to PIT taxation. Wages and salaries, interest, dividends, business-related income and capital gains are also included in the Income Tax. One of the key articles that make California Income tax unique is that single taxpayers only account for 45 percent of total filed returns, but only 26 percent of tax liabilities. Married-filing-joint taxpayers constitute 40 percent of total tax returns, but over 68 percent of tax liabilities.

Bank and Corporation Tax:

California taxes corporate profits. The Bank and Corporation Tax or BCT is the state's third largest source of General Fund revenue. The tax raises annually an estimated $6.1 billion or 9 percent of the total. The BCT applies to all corporations that earn income derived from or that is attributable to sources in California.

Except for the first two years of operation of a firm, the basic tax rate on profits is 8.84 percent and an $800 minimum tax. Banks and financial institutions are exempted on local levies, but pay a higher rate of tax, which is 10.84 percent. Banks and corporations are also subjected to an Alternative Minimum Tax or AMT, which is similar to the personal income tax or PIT. This Alternate Minimum Tax has a slightly lower rate of 6.64 percent. Sub-chapter S corporations are subjected to a reduced tax rate of 1.5 percent. California offers a share of the domestic or worldwide business income for multi-state and multinational corporations.


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Auto Insurance Taxes News


 Eden Ali Finance/Insurance 2007-08-03
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Eden

The question is how existing auto insurance taxes would help to pay off debts. To save money on auto insurance raters new insurers could benefit from auto insurance taxes break established for now. Insurance taxes breaks will come in from tax credits in range about defined percentage from car cost. Estimation for auto insurance taxes is called to compare the saving for each model.
This auto insurance taxes break won’t last forever. The new auto insurance taxes credit sets a limit of 60,000 hybrids for the carmakers. As well as mark becomes a hit (this is available for hybrid vehicles and not only manufactured and delivered to dealerships, but also actually sold), the credit will begin to phase out for a year. Reducing the chance for next year buyers to keep the insurance taxes.

As well there are basic requirements that need to be satisfied in order to qualify for auto insurance taxes credit: purchase and take delivery of a qualifying vehicle, the vehicles are new, not used and not re-selling.

All this discounts really make a difference to car buyer as for auto insurance taxes. The Hybrid dealers are able to report long keep waiting lists and fast selling. Same company having auto insurance taxes report that the affordable car brings a lot more benefits and as soon as possible. You can get discount for hybrid car. Auto insurance taxes break gives possibility for new manufacturer to sell their machines. Sounds like you have to be lucky to get your hands on one of these money saving machines! If you do, auto insurance quote comparison tools can help you get new hybrid discounts as they become available by comparing taxes/>auto insurance rates from many insurance provider partners.

Keeping in your mind this information about taxes/>auto insurance taxes you can get same discount and buy an affordable car especially for you.


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