Monday, October 28, 2013

Earned Income Tax Credit May Increase Your Refund


Earned Income Tax Credit, more commonly referred to as EITC or EIC, increases your income tax refund. If you file as single taxpayer or are head of a household, with one or more dependents, and earn a low to moderate amount of gross income during a tax year, you are eligible for this tax credit. Unlike income adjustments or deductions that change the amount of your gross income, a refundable tax credit increases your tax refund literally dollar for dollar. EITC, created through Congressional legislation in 1975, has grown into a significant reporting function in our US income tax system. Taxpayer information supporting an EITC claim has grown more complex and onerous over the years. This tax credit even has its own Internet web page at EITC Central. This resource, separate from the IRS website, provides eligible taxpayers and those who prepare tax returns important help following the rules and regulations (collectively called due diligence) in reporting eligibility information associated with this single tax credit. The requirements are documented in IRS Publication 596, Earned Income Credit. If you are eligible for EITC, you need to understand the growing set of rules imposed by tax authorities and follow them carefully to insure receiving your full tax entitlement.
Earned Income Tax Credit eligibility factors
EITC is based on income you earn. According to the Internal Revenue Service, earned income comes from a person, company, or agency you work for or from a business activity you operate or own. Wages, salary, or compensation, are all considered taxable income and are combined in order to determine the amount of the earned income tax credit. This government credit is a generous incentive to low to moderate income earners. Maximum gross income limits pertaining to eligibility are however imposed. Taxpayers require a valid Social Security number and must be either a US citizen, resident alien or a nonresident alien filing jointly with a US citizen. You cannot have any source of foreign income nor can you have unearned sources of income like savings account interest or stock dividends that exceed specific dollar limits. These limits can change from year to year. It is best to review current EITC income limits, maximum EITC amounts, and related tax credits like child tax credit (especially if you file Head of Household) on the official IRS website, irs.gov.
Earned income and unearned sources of income cannot exceed specific EITC eligibility dollar limits.
Income tax filing status is also a factor. If you are legally married as of December 31 of a tax year and claim the earned income tax credit, you cannot file an income tax return as Married Filing Separate (MFS). In addition, you can not be considered or file with someone considered a qualified child (QC) of some other person. If you file as Head of Household and claim one or more dependents, there are eligibility "tests" regarding age, relationship, and residency of these dependents during the tax year. These eligibility factors are an important part of your EITC claim in the 2011 tax year. Another valuable resource is IRS Pub 501, Exemptions, Standard Deduction, and Filing Information, which has the most current source of IRS rules that relate to filing status and dependency for the current tax year.
An Earned Income Credit checklist
You must provide sufficient documentation to answer EITC eligibility questions. This tax credit is calculated on how much earned income you report on your individual income tax return, your filing status for the tax year, and the number of dependents you support. Both you, as an eligible tax payer, and your tax preparer, are responsible for fulfilling all the information requirements when completing your individual income tax return. In fact, you can find IRS Form 8867, Paid Preparer's Earned Income Credit Checklist, on the official IRS website. It includes specific questions that must be answered when completing your eligibility information. Failure to meet any of these requirements will result in significant financial and/or tax-related consequences to both you and the person preparing your income tax return.
Tax incentives like the Earned Income Tax Credit are ways government agencies offer incentives to those who work but, despite their best efforts, earn low to moderate amounts of money. The EITC helps, for example, hardworking single parents responsible for others who depend on them for support. This tax-free money added directly to your income tax refund boosts not only your personal standard of living but, in fact, the entire economy. The significant size of this government-funded entitlement however has brought about a complex set of rules and regulations. Seek professional tax advice especially when filing an income tax return. An EITC checklist covering specific eligibility factors will help you, and the person who prepares your income tax return, remain in compliance with changing tax definitions and specific rules of due diligence documenting your eligibility for this valuable earned income tax credit. For annotated citations, please visit one of my tax-related blogs.


Article Source: http://EzineArticles.com/6832455

Friday, October 25, 2013

Tuesday, October 22, 2013

Haven't Filed a Tax Return in Years?



If you haven't filed a tax return in the past few years, find out how you can get all caught up with your taxes.

Saturday, October 19, 2013

Do I Have To File a Tax Return?



Learn about the requirements for filing a tax return, including income limits and age, and why you may want to file even if you don't have to file.

Wednesday, October 16, 2013

Owe Taxes But Can't Pay?



If you owe money but can't pay by this year's tax filing deadline, you'll want to check out this video.

Sunday, October 13, 2013

Letting You Know How Outsourcing Bookkeeping Could Boost Your Small Enterprise

Bookkeeping work is difficult, lengthy and sensitive. It entails accurate and constant record-keeping of all financial transactions that take place during business hours. It must also include any other transaction that could occur outside the business premises or during the weekends. Every transaction should be recorded as it appears on the source document. Have you come across the term outsource bookkeeping services yet?
If not, you could be missing a great solution for your small enterprise. Those who outsource bookkeeping services have peace of mind and are happy about their business performance. Outsourcing allows you to delegate difficult tasks to an outsider. This outsider could be a freelancer or a bookkeeping firm. Many people, including me, would advice you to stick to bookkeeping firms. These are duly registered according to USA business laws and have a tangible license to proof their legitimacy.
As you seek to outsource bookkeeping services, remember to scrutinize your business properly. Perhaps there is more work than you think that needs to be done quickly. Besides, you must have some goals that you wish to achieve through a great independent bookkeeper. There must be benefits to outsourcing that you desire to obtain. For instance, farming out excess work could help unlock your time and freedom. Instead of sitting in the office all day supervising a few employees, you could dismiss those whose skills will be rendered redundant by outsourcing. After they are gone, your managerial burden will become more manageable.
Because your time will also be freed, you can attend more business seminars, workshops, conferences and meetings. In other words, you can now focus on the core areas of your small enterprise. To outsource bookkeeping services will also change your normal office overheads. Independent bookkeepers have their offices and they take care of their bills, salaries and other costs. They do not need your office furniture, computers, software, electricity or any other facility. What they will ask for is their service fee. At the end of the month, you will have saved money that is normally consumed by the bookkeeping office.
The money you normally spend because of that office can be used for marketing. If the business is marketed more, then it will receive more customers, more transactions and more money. If your business grows abruptly, because of effective marketing, you can outsource bookkeeping services to third parties. They normally have a big team of professionals. They are experienced with different industries and will be glad to assist you. Like those who outsource bookkeeping services, you need value for your money.
As much as farming out work is thought to reduce your operational costs, it could not go as planned if you are not careful. Some bookkeepers could be too expensive in the long-run even if their prices may seem fair to you. Cheap is always expensive in the end. Instead of choosing to outsource bookkeeping services on the basis of price, consider quality. What is the use of paying little money for a task that would later on be repeated in your office?



Article Source: http://EzineArticles.com/7820214

Thursday, October 10, 2013

Advantage And Disadvantage Of Taxes When You Own Your Business

Owing your own business is a lot of fun, it brings many freedoms. You can control your own income and you also have the ability to choose your own working hours. But still it does not exempt you from paying taxes. You still have to pay taxes for yourself and even perhaps for your employees as well. It is important to mention, that you manage your taxes very different than an employee because you are a business owner.
There are lots of advantages and disadvantages when you own your own business. Some of the things which you should consider before opening your business are:
Responsible for own taxes - employees don't have to ever worry about their taxes, deductions etc. They know that their employer will be working on this vertical for them. They don't have to save money for the year end etc. Having said that a business owner has to understand this and needs to follow the precautions from day one of his business.
Owing a business requires a lot of patience as well as discipline towards tax and their deadlines. The amount which you own to the IRS depends upon how much profit you are making on per year basis. If you do not do these calculations on the regular basis, you may end up paying tax as well as the penalties with that.
Medical Deductions - while it looks very daunting to pay your own taxes and also to save for them till the year end, people who own business have the privilege of enjoying a variety of deductions to help undo some of their tax liability. Employers have to pay a percentage of their employees' healthcare costs. However, if you are self-employed you are responsible for your own premium payments. IRS allows the business owners to deduct 100 percent of their healthcare premiums and some other medical costs to facilitate the rebate to business owners in tax liability.
Home and business Deductions - running your own business is not an easy job, it can incur other related costs as well. Operating your business from home can cause for high electricity as well as telephone bill. Even if you are not operating your business from home, there are other costs as well which you need to consider if you running your own business. These costs include office supplies, computer equipment, travel expenses, computer costs etc.
IRS understands this and to help reduce your tax cost, you can show all these expenditure under business expenses. Save all your purchase receipts which later you can use for your tax advantages.
Other Deductions - you can reduce your tax liability by writing off your mortgage interest every year. As per the law you can't write off your mortgage payment if you are running a business out of home however, you can still deduct whatever you spend on mortgage interest.
At the end, it is very important to decide whether you want to do business or you want to be a salaried employees. They both have their own advantages and disadvantages. Chose well after considering all your options.



Article Source: http://EzineArticles.com/7897748

Monday, October 7, 2013

Small Business Tax Filing Options

Different Tax Return Filing Options
Every wage earning citizen of the United States of America is required to pay their income taxes; for that matter, also Medicare and Social Security taxes too. Further, almost every citizen pays taxes in some fashion or other regardless of wag earnings in the forms of sales tax, property taxes or even vehicle registration. However, when it comes to corporations however, there are distinct differences in preparing taxes for big corporations and businesses. Small business tax returns are often complicated and complex. The following tips may prove to be useful in filing a business' tax return.
Though many business owners prefer to personally file their tax returns, it is possibly to the best interest of an organization to have professional tax preparers to be in charge of the tax organization. There are instances where a small business' taxes are very complex because of the numerous billable services, and inexperienced business owners with no accounting background are confused to no end. A professional tax preparer will be able to adequately prepare each small business tax return with accuracy. Yet several small business owners prefer to deal with the expertise of Certified Public Accountants (CPAs). A CPA can keep a business' financial ventures in order, clearly underlining the problem areas and discrepancies. What's more, CPAs with expertise in small business taxes are in perfect position to suggest tax credits and deductions which can lessen a business' annual tax. By hiring professionals, a small business' tax return can be prepared in a short period of time, giving allowances to make adjustments if there are inconsistencies with the record.
Yet there are business owners who are uncomfortable to having other people conduct their monetary business for them, and prefer to prepare the taxes on their own. At such, it is a wise move for business owners to enlist themselves to basic tax courses. These lessons are available at local colleges and tax preparation businesses. Once business owners are equipped with the technical knowhow of the most common tax regulations and laws, and how to properly file their reports, then they can take advantage of the tax preparation course for a lifetime.
Another option for business owners would be to obtain tax software programs, which enable them to prepare their taxes with ease and speed. Tax software's are user friendly and offer step-by-step procedures for easy and hassle-free tax preparation. The softwares are usually free and offer pertinent forms, but small business owners may have to purchase the software since the small business forms are only available in paid versions. Software programs also enable small business taxes to be transmitted through the internet to be sent to its proper taxing agency.
Overall, business owners can prepare their own tax returns or ask for the help of CPAs and other professional tax preparers. They can also enroll in tax preparing courses and invest in tax software programs. Whatever the case, business owners should never forget that they are eligible for several tax deductions and credits. If properly credited, a business can have thousands of dollars in savings. These deductions come in the form of allowances, health care benefits, loans, charity donations, and the likes. The IRS offers these deductions to give businesses the opportunity to keep more of their income for more financial ventures and growth in the future.



Article Source: http://EzineArticles.com/5330100

Thursday, October 3, 2013

Breaking News: The IRS Is Currently Closed.


IRS Operations during the lapse in Appropriations.

Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urges to file electronically, because most of these returns will be processed automatically.

No live telephone customer service assistance will be available, however most automated toll-free telephone applications will remain operational. IRS walk-in taxpayer assistance centers will be closed.
While the government is closed, people with appointments related to examinations (audit), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.
Automated IRS notices will continue to be mailed. The IRS will not be mailed. The IRS will not be working any paper correspondence during this period. Here are some basic steps for taxpayers to follow during this period.
How does this affect me?
1. You should continue to file and pay taxes as normal. Individuals who requested an extension of time should file their returns by Oct. 15, 2013.
2. All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The payroll tax deadlines remain in effect as well.
3. You can file your tax return electronically or on paper - although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.
4. Tax refunds will not be issued until normal government operations resume.
5. Tax software companies, tax practitioners and Free File will remain available to assist with taxes.
What IRS services will be available?
1. For taxpayers seeking assistance, only the automated applications on the regular 800-829-1040 telephone line will remain open.
2. The IRS website, www.IRS.gov, will remain available, although some interactive features may not be available.
3. The IRS Free File partners will continue to accept and file tax returns.
4. Tax software companies will continue to accept and file tax returns.