What Is Considered for Tax Debt Relief


Finance & Investment Each time a financial debt originating from property mortgage loan is in fact terminated due to shell out, the worthiness acquired through this type of settlement is made to be taxable. However, the inner Revenue Service enables home owners in order to make the most of tax debt relief in this particular situation. Which means that, the owner's earnings pursuant to get from property foreclosure as well as settlement will never be susceptible to tax. You can do this through independent application or using the guidance of the tax professional as an IRS tax attorney. On the other hand, this specific aspect to consider within debt relief system merely relates to principal residence standing. Any types of financial debt termination of various other residence kind aren't likely to be regarded inside the tax debt relief program. However, some other kinds of financial obligations which had been terminated or resolved may also be omitted from taxation. For example, your debt have been twenty five thousand following that a debtor has acquired of the negotiation to merely just pay ten thousand. The remainder of the fifteen thousand will become an earning and is also particularly taxable. However, in case this type of negotiation was taken advantage using a personal bankruptcy declaration, stated amount will never be taxed with the tax debt relief plan. Nonetheless, this specific settlement is relevant just to main residence loan problems; personal debt simply cannot obtain any type of pay outs. Declaration of financial distress is another probably prospect for tax relief. Each time a person's property worth is simply not a lot more than it's terminated financial obligations, then there isn't any reason for taxation. This specific individual's value being poor, meaning you will find truly simply no earnings to begin with for taxation. Therefore in this situation, a tax debt relief is completely just and humane. Debt due to farming engagement may also be eligible for tax debt relief. The government seems to choose farming here, but it's actually easy to comprehend. Select farming debts whenever specifically useful for farm procedure will never be susceptible to taxes. This runs specifically true in case source of income for the period of time is in fact via farming. Which the foundation of greenbacks due comes from financing company. This specific act of forgiveness from your IRS to farmers is just fitting considering the area of the farmers in providing food. Nonetheless, remember that only certain farming debts might be utilized, personal financial obligations of farmers will never be regarded. As well as be skeptical of tax relief scams. Nevertheless, this actively activly works to the farmer's benefit because virtually all their earnings come from farming. What exactly is susceptible to tax then might actually be earnings from over and above farming, and terminated financial obligations beyond farming cost. For more information about Tax debt relief,simply visit our website.

Property Tax Appeals and Protests


Finance & Investment Should you ever wondered how you can enact a winning property tax appeal you'll find your solution below in this post where all you'll ever have to put figures and property tax appeal facts together, authoritatively and inexpensively, happen. Finally! Obtain a property tax guide that will show you with pinpoint accuracy how you can value your house and show your municipal authorities just what they desire to find out. Demonstrate to them the format which will ring the bell. Focus on the "right comparable adjustments" and you'll get the appeal within the winners circle. And, it won't cost much, especially when compared to "professionals." Homeowners use professional representation. I talk to these folks at hearings and get what it really costs to appeal. I recieve lots of answers, however the average cost for any lawyer within my state was around $250 one hour they (the attorney and you also) needed to be present at municipal hearings or tax court. You don't know whenever your case is heard. It may be morning or afternoon … the attorney's meter is running.

The first appraisals (performed by an expert appraiser) cost about $400 (the least expensive they might find was $390) plus $350 for his or her appraiser turning up to testify for approximately 4 hours (anything spanning a half-day is extra). And others scour the magazines and internet for just about any hint they could find regarding how to crunch the numbers and technique. The local government uses what is known as mass appraisal process to value you home. They obtain valuation quickly and often inefficiently by obtaining cheap fast results. They spend huge amounts about this to capture the few people that added a deck, patio, shed or small addition without having a building permit. Often times the greatest-priced homes are utilized being a gauge from the neighborhood's value. The easiest way would be to roll over previous information. Erroneous information causes it to be way around the property record card. While economical (so that they think) towards the tax collection authority, it is really not fair to some large part of homeowners. Consumer Reports (Nov.1992 v57 nil p.723) published that property tax records show a mistake rate of 40% exists in estimating property taxes. The National Taxpayers Union ("How You Can Fight Property Taxes" 2004 p.1) writes that up to 60% of homeowners have ended-assessed rather than consistent with their house value. Whenever you win a home tax appeal your tax win continues: Your home tax assessment savings rolls over every year - it's not only a one shot deal! In the event you lower your taxes say $one thousand for your year, that savings is yours every single year up until the next blanket reassessment … that could be for an additional 5, 10, 20 or even more years.

The right vocabulary is the fact that one appeals their assessments. Appealing your taxes is really a political issue. In the event you don't such as your taxes, your protest them! The nonsense of tax increases is essentially the consequence of spineless government officials that are hooked on spending rather than cost cutting. I live on a tight budget and thus should my government! Period. The Village of Skokie, Illinois has kept promise to help keep taxes flat since '90. It may be done! It's no surprise that Skokie trustees produced a promise in 1990 to keep the fishing line on taxes. What's surprising would be that the promise still stands. The Village Board is scheduled to vote Monday on the 2006 tax levy of $15.5 million, exactly the same amount it levied in 1990. That's 16 consecutive years without any new property taxes. Had the village increased its levy each year simply to take into account inflation, as based on the customer price index, Skokie's 2006 tax levy will be $23.3 million, said Robert Nowak, director of finance. For more information about Property Tax appeal,simply visit our website.

Login Online Lacerte Cloud Computing to File The Taxes

Lacerte is a professional tax software application loaded with suite of features, tools and methods to file the tax returns easily. The application can be used for personal or for an enterprise file return; it is suitable for both the purposes. Intuit crafted this agile application to eliminate the manual process of tax returns. Small and medium enterprises use this Software to operate their tax requirements of their company for filing the taxes each year. Tax planning and execution is time taking and complex for users as it requires intense knowledge, expertise and time to make tax return process accurately. With robust tax software , the process has become automated and businesses file the taxes quickly.

Lacerte is a full-fledged application by Intuit that runs for the enterprises to make their tax returns simple and faster. Accountants, CPAs and bookkeepers manage multiple customers with this application software. The simplified this software is easy for users to understand this process as Intuit has designed the application flow in simple form therefore users can file the returns flawlessly. The application calculates taxes accurately and makes correct tax preparation for its customers. It is efficient for local, federal and state tax return process as businesses and users can file the returns with this application.

Lacerte software for tax filing:

Intuit Lacerte is available as free trial software for users to get learning of the tax application. One can easily install the free trial version which is active for 30 days only. The free trial is good knowledge source for less knowledged users. When the trial session of the application ends, users can go through webinars, videos and tutorials. Customer can purchase Lacerte license from Intuit to get full access to tax file return application to make the financial returns anytime.

New customers get discounts with free advice from expert accountants to get easy start with the application. Lacerte is compatible software therefore it can run and install on mobile, laptop or tablet. Users can install the app on any device to get full access to tax return updates. Lacerte online app delivers instant updates on tax filing to customers. Lacerte tax application can integrate with any application of Microsoft, MAC, Linux and UNIX thus making data integration and access easier from any defined data source. Company owners or professionals can decide on the method of hosting and file the tax solution with Lacerte. Lacerte can be hosted on desktop and cloud server. Lacerte cloud computing is online web hosting of the application while desktop is on premise hosting.

Lacerte cloud computing is running from cloud servers that is available anytime anywhere which means professionals can work from office, home, cafe or during the business travels. Desktop hosting of Lacerte is on premise application access to authorized users or professionals. Lacerte cloud computing application requires user login with a secure internet connection and a web browser on smart device. Lacerte tax solution on cloud is web application which is managed by hosting providers at low cost with backups on schedules, data management system and recovery.

Salina Smith is an accountant in SageNext InfoTech LLC; a company that provides world class cloud hosting services including Lacerte cloud computing and Atx tax software hosting other application hosting solutions.

Ombudsman Can Resolve Your Income Tax Issues

To resolve Income Tax related tax issues of the taxpayers, the Government has created office of "Income-Tax Ombudsman". The officer designated as "Ombudsman" hold independent jurisdiction and work as autonomous authority.

The Government has so far set up twelve offices of Ombudsmen. They are stationed in Mumbai, Pune, New Delhi, Ahmedabad, Chennai, Bangalore, Kolkata, Hyderabad, Kanpur, Chandigarh, Bhopal and Kochi.

The jurisdiction of the ombudsman is highly restricted; however, they can help the taxpayers in resolving issues such as – (i)Income Tax Refunds matters. (ii)Refusal to acknowledge letters / communications sent to the department. (iii)Erroneous demand matters / assets attachments causing harassment to assessee. (iv)Scrutiny selection procedures and failure to communicate reasons thereof. (v)Cases related to interest waiver, rectification applications, appeal effects etc. (vi)Release of books of accounts and asset after the completion of the proceedings. (vii)Issues relating to refusal to allot Permanent Account Number. (viii)Tax credits and adjustment relating to TDS. (ix)Conduct of proceedings beyond working hours at the IT offices. (x)Impolite behavior of the officials. (xi)Matters concerning circulars of Central Board of Direct taxes about the Income Tax administration.

However, the ombudsman will not interfere in the proceedings if the issue requested to be settled is already under an appeal, revision, reference or writ.

Application to Ombudsman – The Ombudsman reconciles disputes / issues between the department and assessee. The decision of Ombudsman is referred as ‘Award’. The application to resolve an issue can be filed by the aggrieved assessee himself or through his representative. The application should be signed by the taxpayer or his legal representative bearing the name, address and permanent account number of the complainant. The application should also state the details of the official against whom the complaint is filed. The reasons for the application of complaint should also be mentioned therein. The necessary documentary evidence can also be submitted along with the application. The application must contain the details about the date on which the assessee first complained to the income-tax authorities and its result. The application can be filed through personal submission / post / E-Mail. E-Mail complaints can be signed at the time of proceedings in the office of Ombudsman.

As a prerequisite, the applicant must first prefer compliant to higher authorities of the official being complained. The assessee must wait for at least 30 days for the action of the superiors before approaching the office of Ombudsman. Assessee should also restrain from filing compliant which is frivolous or vexatious.

The complaint should be filed within one year from the date of the reply of the department to his representation. If no reply is received, it should be filed within thirteen months from the date of representation to the Income Tax Authority.

On receipt of the complaint, the Ombudsman will send a copy of the same to the concerned officials and try to reconcile the issues through mutual understanding of both the parties. If amicable settlement is not working then, Ombudsman can pass a decision called "Award". The award should be in line with the documents available on record and the tax laws. The Ombudsman can also instruct the concerned officials to release payments and also to apologize to the taxpayer. Ombudsman can also award monetary compensation upto Rs. 1,000.00. The Income-Tax authorities are given one month’s time for the implementation of the award.

The compensation amount which is subject to a maximum of Rs. 1,000.00 is paid by the Income tax department out of the budget allotted.

The decision pronounced by the Ombudsman should be accepted by the I-T department. However, to comply the order, complainant must send his acceptance to the order within 15 days of the receipt of the award letter. Otherwise, the award shall lapse and be of no effect.

The ombudsman keeps record of various taxpayer problems. The information is periodically submitted to the Central Board of Direct Taxes and the Finance Ministry. Ombudsman also reports to the CBDT about the officials found to have defaulted in their regular duties.

Details of Ombudsman offices

1.Delhi: 011, Room No 251, Central Revenue Building, I.P. Estate, New Delhi-110002, Email: delhi-itombuds@nic.in

2.Kanpur: 0512 (U.P&Uttarakhand), 110/25-26, 80 Feet Rd., Kanpur, Email: kanpur-itombuds@nic.in

3.Kolkata: 033, Aayakar Bhawan, P-7, Chowringhee Square,Kolkata-700069, Email: kolkata-itombuds@nic.in

4.Mumbai: 022., 115, Mittal Tower, B-Wing Nariman Point, Mumbai-400021, Email: mumbai-itombuds@nic.in

5.Kochi: 0484, Income Tax Ombudsman, 7th Floor, Kera Bhavan, SRV H.S. Rd., Cochin-682011, Email: kochi-itombuds@nic.in

6.Hyderabad: 040, Room No. 819, Aayakar Bhawan, Basheer Bagh, Hyderabad-4, Email: hyd-itombuds@nic.in

7.Chennai: 044, Income Tax Ombudsman, R.No. 317/319,3rd Floor, Aayakar Bhawan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai-34, Email: chennai-itombuds@nic.in

8.Bangalore: 080, 4th Floor, ‘A’ Wing,Kenderiya Sadan,Koramangala, Bangalore-34, Email: bnglr-itombuds@nic.in

9.Ahmedabad: 079, Room No. 104, 1st Floor, Nature View Bldg.,Ashram Road, Ahmedabad-380009, Email: ahmd-itombuds@nic.in

10.Pune: 020, Aayakar Bhawan, 12, Sadhu Vaswani Road, Pune 411 001, Email: pune-itombuds@nic.in

11.Chandigarh: 0172, C.R. Building, 3rd Floor,Sector 17E, Chandigarh, Email: chd-itombuds@nic.in

12.Bhopal: 0755, E-7/511, Income Tax Guest House, Areara Colony, Bhopal-16, Email: bhopal-itombuds@nic.in

The Author, A. K. Jain, can be contacted at, 21, Skipper House, 9, Pusa Road, New Delhi – 110005, Mobile No. – 98-100-46108, E-Mail: copindia@hotmail.com

Related Articles - Ombudsman, Income Tax, Taxpayer, Assessee, Award, Tax issues, Refund Matters, Demand Matters, TDS, Ombudsman Offices,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!

One Stop Shop Form For All Your Heavy Vehicle Tax Needs- Form 2290

Form 2290 is one such form, which play dual roles or more. Lets count them later. Form 2290 is a form filed by heavy vehicle drivers and owner operators with a gross weight of 55,000 pounds or more, using the public highway are mandatory to file and pay tax as per the federal regulations.

Today, we are going to tell you the dual roles played by form 2290.

Filing form 2290:

Let be a heavy vehicle or suspended, you need to file form 2290 before the due date in order to report and register your vehicle VIN. Based on the weight, your vehicle is categorized.

The tax season is approaching in a 15 days, and it is advisable for taxpayers to get ready with their documents. And if you are looking out for some consession with the efiling service fee, Tax2290.com is the best option to narrow down your needs. You can pre file your tax return online now, with utmost ease and avail 10% discount on efiling service fee by applying coupon code "KICKSTART15"

Request A Refund For Already Filed HVUT:

If your heavy vehicle is destroyed, stolen or sold before June 1st or for one that used 5,000 miles or less (7,500 miles or less for agricultural vehicles), a refund for tax paid can be claimed n the subsequent form 2290 filed. Form 8849- schedule 6 can also be used to claim the refund. Go through the form perfectly before you file a claim/ refund.

However, you need to wait till the end of the HVUT tax period to file form 8849. For instance, tax paid for the period July 1, 2014 through June 31st 2015 for a vehicle used 5,000 miles or less during the period, a refund on Form 2290 (or refund on Form 8849) cannot be claimed until after June 30, 2015.

Sale Of Vehicle:

If your vehicle was sold, you as the taxpayer who filed a return previously and pay tax can claim for a credit.

Receiving Schedule 1 Copy Immediately:

When you efile, you are likely to receive schedule 1 copy in minutes, almost right after you transmit your return online. However, if you choose pre filing form 2290, you are likely to transmit your return to the IRS, but you will receive your schedule 1 copy right by the first week of June. And if you have queries building up in your mind, you can feel free to shoot ‘em to us. You can always get in touch with our Tax Experts right through email, phone or even chat. Simply dial 1-866-245-3918 or simply drop in a mail to support@taxexcise.com. We are here for you, for better back-end support.

What If I Don’t File Form 2290:

As per the books of the IRS, you are liable to report form 2290 with penalties and interest, if you’re even late by a day. False filing or fraudulent return will be penalized.

Unsigned Tax Return:

If you submit a return without signing, the return will be sent back to you for signing. Your unsigned return will be considered as filed return.

So what are you wondering? Are you shocked that form 2290 can do so many things at one time? Well, this is it. If you efile/ pre file with Tax2290.com, you can experience a whole new world and file with ease.

Related Articles - form 2290 online filing form 2290, efiling form 2290, application filing, easy filing, easy efiling, form 2290, tax2290, 2290 online, smart ways,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!

Nomisma – The Best Accounting Software for Income Tax Computation

Nomisma is a user -friendly, white-label, cloud-based accounting software in the UK which is widely used by small businesses, start-ups, freelancer, contractors and individuals to manage their accounting, financial and taxation related data. It is also a very useful software for income tax computation. Professionals of finance and accountancy departments find it very helpful because it can help to track, calculate, generate, forecast and pay income tax securely.

It is very unique software in the sense that it updates data uploaded from any device continuously throughout the financial year and reminders can be activated automatically via Nomisma's CRM module. It has a unique 'cash counting facility' for businesses and 'techno- facility' for CIS contractors. One of the striking features is it generates all types of reports at the press of a button. The Nomisma's integrated system is very efficient. You enter random data, and it can collect all the relevant information from it. Thus you can access and generates reports of all kinds. It is also attractive in terms of its price, capability, and usability.

Essential Functions of Nomisma

Customer Relationship Management (CRM): CRM can guide small business to deal with the change, monitoring and managing the business process they do not need to rely on any other CRM systems because Nomisma can give you the best features of small business accounting software. Nomisma solution is compliant with administrative processes, and it helps small businesses to cross all the barriers to go smooth.

Payroll: All businesses must pay their employees and manage payroll. There was a time when small business companies used to keep this on papers manually, but now when the business is growing and cannot manage by few employees, then you need such payroll accounting software like Nomisma.

Integrated Accounting Software: There are many accounting software that is available with lots of complex reports with a high price, but Nomisma is low-priced software that provides basic applications for accounting tasks. It provides a user-friendly interface, real-time updates moreover it provides support throughout the lifecycle of your business. In short, it is useful software for small business owners with bookkeeping facilities which includes journals, payroll, CRM and much more.

Cloud Based Software: The main benefit of cloud-based accounting software is upgrades and data backups which are managed by the software provider. It is cloud based accounting system so you can access it anytime, anywhere and on any device like a laptop, computer. Nomisma empowers the users with real-time updated financial information about their business, which is very useful while making important decisions.

Income Tax Computation: Nomisma's most prolific function is its assistance to the user with income tax calculation, filing income tax returns and payment of various types of taxes. It is especially useful in the case of accountancy firms which have to handle income tax related matters for a broad range of clients. Nomisma is fully compliant with the guidelines of HMRC and Companies House and is able to handle self-assessment filing by just a click of a button.

Unique features for Income Tax Computation in Nomisma

Nomisma can automatically update and calculate the income tax liabilities of a user and with its CRM module can send regular reminders regarding the same.

Nomisma provides all the key stakeholders with regular information as to how much tax is owed and to whom.

Nomisma's cloud accounting software for income tax calculation is integrated with the bank statements, invoicing section and all other relevant sections of the software. This enables it to accurately calculate various types of taxes including income tax for different kinds of businesses.

Along with the taxation alerts, Nomisma also provides regular notifications as to what type of tax is due and to which authority it has to be paid to.

Nomisma also enables the users to pay their income tax and other taxes from within the software

Reasons, why Nomisma is called a highly useful software for income tax computation, are-

Its bookkeeping and accounts productions are very detailed.

It is one of lowest priced comprehensive online accounting software. You can customize your package and pay for what you need.

This is perfect software to create invoices, track sales and expenses, fetch financial details and access your business information easily.

It is integrated with a user-friendly dashboard. With just a click you can create particulars of any module. You can connect bank account with it and categorize income expenses for tax reporting.

It is specially designed keeping in mind the need of today's business.

Designed to meet the highest standard specifications, Nomisma is the most useful software for income tax calculation. With a broad range of services that it offers to the clients, Nomisma has emerged as the best software for income tax computation in the UK.

All in one accounting with NomismaSolution . Manage payroll/auto enrollment, bookkeeping, self-assessment, income tax calculation and all the things in single accounting software. Nomisma is simple online accounting software used by freelancers, contractors, small business, startups to manage their finance and account.

What is the Utility Sales Tax

Running a business is hard work. It takes a lot of time and effort to keep your business running smoothly. It also takes a lot of money, both coming in and going out. One of the most confusing aspects of running a business is taxes. It can be difficult to determine exactly what taxes you need to pay, how often they need to be paid and to whom those payments are made. One example of this confusion is the utility sales tax exemption in Iowa. Depending on your business, you may be able to exempt part of your utility usage from sales tax. Let’s take a look at what this means.

When you turn on a light switch or faucet, you are charged a sales tax on your use of that utility. The more of a certain utility you use, the more you are expected to pay in sales tax. The amount of tax you are paying can typically be found on your bill or statement for the month. Larger businesses could be paying a significant amount of this tax each month.

Depending on your business, you may actually be exempt from paying utility sales tax on a percentage of your utility use. While it varies from state to state, the general rule is that if the utility is being used for manufacturing or processing, then it is exempt from the utility sales tax. In states like Iowa, this also applies to food processing and cooking, which means that restaurants can benefit as well. Once you have determined that you are eligible, there are several things that you need to know in order to take advantage of the non-taxable portion of your utility use. -After confirming your eligibility, the next step is to determine how much of your utility use is dedicated to manufacturing or processing. If you are unsure, it may be best to bring in outside help to make sure that you get accurate numbers. For restaurants, anything that is used to actually make the food – water and heat (through gas or electricity) – should be included. -Next you will want to consult a tax professional. Once you know the percentage of your utilities that are used in manufacturing, you should sit down with a tax professional to go over what is needed to submit to the state or local government. He will be able to guide you through the process and verify whether or not there is additional information that you need to provide. -Once you have confirmed that everything is in order, you will need to file the paperwork for the exemption. This paperwork may be filed with your utility provider, your local or state government, or both. The tax professional will be able to help you make sure that you file it correctly.

Once you have completed the process, you will be able to save a significant amount of money on sales tax. Larger manufacturing plants can use significant amounts of utilities each day to create products. As a business owner, it is in your best interest to do the research and figure out exactly what percentage of your utilities are going into manufacturing and processing. Once you are armed with this information, you may be able to reduce your utility bill each month. The less money you need to spend, the more you can invest into your company to grow and expand even further. So if you are not taking advantage of the utility sales tax exemption in Iowa, you need to get the process started today so that you can improve your bottom line.

Related Articles - Utility, Sales, Tax, Exemption, Iowa,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!

Recent Changes in Rules Relating to the Capital Gains Tax in India

The capital gains tax rate has recently increased from 15% to 20%. Now it combines with the new Health Care Act Investment Tax of 3.8%, which makes the overall rate increase to 23.8%.

If someone intends to sell out his or her stock this year, he or she will have to pay further 8.8% tax on it compared to those who have completed a transaction in the last year.

Now there is certainty about the amount to be paid in taxes. It should be known that the tax rates will not change in the future.

You can calculate it yourself: Now you can do the calculation of your tax to be paid yourself. The capital gains will be taxed at 23.8%. A notable feature in the increased capital gain rate is that now, the leftover capital loss accumulated carryovers are now worth more. It means that capital losses and capital loss carryovers will now trigger a transaction.

Capital gains tax is now exempted to foreign banks converting into subsidiaries:

The government has exempted the foreign banks from paying capital gains tax when their branches are converted into wholly owned subsidiaries in India. This had been a remarkable favor towards the foreign banks done by the Government of India.

The new changes tend to help the companies running in loss:

The changes in the capital gains tax rules regarding the decrease or cancellation of debt aims to provide tangible tax relief to companies in financial crisis.

The change in the taxation laws reduces the capital gains tax liability initiated by the cancellation or the reduction of debt.

Previously the reduction or cancellation would have initiated an immediate capital gains tax, but the recent changes have given the opportunity to lower down the cost of an asset on which capital gains tax are going to be levied.

There are many instances where the tax burden had been decreased.

The amendment in TDS provisions as proposed by the Budget 2012-13:

In Budget 2012 some minute changes has been made in the rates of Tex Deducted at Source (TDS) and cut off amounts. But at the same time some new items have also been introduced on which TDS is required to be deducted.

Section 194LC has been introduced in the Income Tax Act. It is a new section in the Income-tax Act w.e.f. 1-7-2012. It deals with the deduction of tax at the concessional rate of 5% along with surcharge on interest paid to a non-resident, other than a foreign company. This interest relates to any sum borrowed by any Indian company from the nonresident on or after 1-7-2012 but prior to 1-7-2015 in foreign currency from a source outside India. This borrowing requires being under a loan agreement or through an issue of long-term infrastructure bonds approved by the Central Government. Moreover the rate of interest should not be more than that approved by the Government of India norms.

ITR Today is growing as a leading website to provide updates on filing taxes online, income tax forms and service tax forums. Get your tax related queries answered by our income tax consultants.

Related Articles - capital gains tax, new rules relating to tax, Budget 2012-13,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!

Reducing Your Tax Liability for Independent Consultants

As an independent consultant, you’re in business for yourself, and therefore have all the increased tax burdens that come with being a business owner. Fortunately, there are strategies that can help reduce your tax liability.

The biggest tax burden associated with being a business owner is the self-employment tax, which is basically the portion of social security and Medicare tax that would be paid by an employer if you were working for someone else. Since you are self-employed, you are responsible for payment of both the employee and the employer portion of social security and Medicare taxes, which is currently equal to an additional 15.3% of your earnings.

Choose a legal structure that makes sense for your business. There are several legal structures to choose from, and it’s advisable to speak with an attorney to determine which structure makes the most sense for you. While some structures will leave you subject to paying self-employment taxes, other structures could be subject to something called, "double taxation," in which the corporate entity is taxed on earnings, and then wages paid to employees, including yourself, are taxed again on a personal tax return. Speak with a professional to determine which type of business structure will allow you to maximize your take-home earnings.

Working with an employer of record could help to reduce your tax liability. A portable employer of record can serve as a corporate infrastructure for independent consultants, and eliminate both the need to set up a formal business entity and reduce self employment tax liability. When working through a portable W-2 employer of record, you still have to pay for employer side taxes just as you would if you were on your own, however this business structure option can greatly reduce your tax liability on retirement contributions and other benefits programs.

Maximize your itemized deductions to reduce your taxable income. Reducing your total taxable income by taking credit for every deduction for which you’re eligible will reduce your total tax liability. Many individuals fail to take deductions for any out-of-pocket medical expenses that they incur. This can mean medical premiums, co-payments, over-the-counter medications, and even procedures and tests not covered by insurance.

If you’re in business for yourself (as a sole proprietor, LLC or S Corp), your out-of-pocket expenses will have to be equal to or greater than 7.5% of your adjusted gross income before you would be eligible to take these deductions. A consultant earning $80,000 per year could probably easily meet this threshold, which would equal about $6,000. On the other hand, a consultant earning $200,000 per year would have to have a significant amount of out-of-pocket medical expenses in order to be eligible for this deduction, approximately $15,000.

Working with an employer of record might allow you to deduct all of your out-of-pocket medical expenses up to a given limit, without the need to qualify by meeting a threshold. Not all employer of record companies operate the same – some are geared toward independent consultants and some are not -- so complete your research before signing on to see what strategies they can offer you to help reduce your taxable income.

It’s also possible to take deductions for the cost of dependent care, which includes both child care and elder care. The amount of these deductions that can be taken is limited, typically up to $5,000 per year. If you’re working with an employer of record organization that offers an expense reimbursement program, sometimes this limit can be higher, even up to $10,000 annually. Most people are aware that childcare costs can be deducted, but not many realize that elder care is included in the dependent care category. If you’ve got a parent in a personal care home, assisted living facility, nursing home or even an adult daycare setting, you can easily rack up $5,000 to $10,000 a year in expenses.

Don’t forget about your miscellaneous deductions. Items such as professional organization dues, certain education expenses, professional books and trade magazines, home office expenses, work clothes and uniforms, mileage, business travel, lodging, and 50% of business meals are tax deductible, some of which are deductible only if the total exceeds 2% of your adjusted gross income. Working with an accountant can help you make sense of all the various deductions, and help you reduce your total tax liability by advising you how to keep track of your deductions. Also, some employer of record organizations even offer a simplified process of keeping track of and taking business deductions, so be sure to ask about business expenses when investigating this option.

Related Articles - independent consultant, tax liability, tax reduction strategy, tax burden,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!

Robert S. Kerr What Goes Around Comes Around

Robert S. Kerr: What Goes Around Comes Around

Written by: Joshua D. Mosshart, Certified Estate Advisor

Oil man and politician Robert S. Kerr was born in a log cabin on September 11, 1896 in what is now Ada, Oklahoma. He first held elective office when he became Oklahoma's governor in 1942. During World War II, he presided over a vigorous economic expansion and directed a remarkably efficient state administration. One year after leaving the governor's office, in 1948, Kerr was successful in his first attempt at the U.S. Senate. He was reelected to two more terms. Often considered one of the finest orators that Oklahoma ever produced or that the Senate ever heard, Kerr gave the keynote address at the 1944 Democratic National Convention that nearly won him the second slot on President Roosevelt's ticket. Kerr thereafter devoted his energies to building his Senate career. He served on several key committees, most notably the Finance and Public Works committees. A partner in Kerr-McGee Oil & Gas Corp, Kerr increasingly became known as a key champion of southwestern oil and gas interests. Of course, he did not hesitate to use his influence for Oklahoma's behalf. Millions of dollars were diverted to military and civilian projects in the state. But most importantly, he supported tax legislation that empowered Congress to confiscate up to 55% of a person's assets in estate taxes.

In 1978, Senator Kerr died unexpectedly. At the time, his estate was worth approximately $20 million. Unfortunately, Kerr passed away without the most basic estate-planning tool--a living trust. As a result, his heirs had to deal with many difficult problems as well as make a number of difficult decisions. But nothing as monstrous as the federal estate-tax bill he helped create in a number of ways. The IRS wanted $9 million, and they wanted it in cash--in nine months! I guess you could say that what goes around comes around and that the Senator got his just due, considering he helped formulate the federal estate-tax rules. Kerr's heirs faced a problem common to many inheritors: how to find the necessary cash to pay the IRS in such a short time frame. Luckily, they were able to raise $3 million in cash without much difficulty. The problem was that the rest of Kerr's estate was tied up in real estate, which was not liquid. Since the family would be forced to liquidate the properties, they faced the high probability that they would have to sell at highly sacrificial prices. After much debating the family decided to take out a $6 million loan. This only served as a temporary Band-Aid, since not only did the loan have to be repaid with after-tax dollars, but the family also had to pay a substantial amount of interest. What could have been done differently?

If Sen. Kerr were alive today he could have taken advantage of several estate planning techniques that would have saved his heirs from having to mortgage the estate. As an example, he could have set up a Family Limited Partnership or FLP to hold the real estate. That could have created a discount on the value of the real estate at his death. But, more importantly, he could have gifted or sold shares of the FLP to his heirs at a relatively deep discount from fair market value, moving the assets out of his estate prior to his death and freezing the growth of his estate by moving some of the appreciating assets into the estates of his heirs. This is an important tool in modern estate planning when family businesses or commercial real estate is involved.

Furthermore, Kerr could have taken advantage of the tax laws to make annual cash gifts to his heirs. Currently, that amount is $12,000 per person. Supposing the senator had four children; he could have gifted $48,000 per year into a trust for the benefit of his children. Over the course of 10 years, he would have transferred $480,000 to his heirs out of his taxable estate, reducing his estate tax. In addition, if the $48,000 per year had been properly invested, it could have created enough wealth to cover all the estate-tax liability.

Joshua D. Mosshart CHFC,CASL, CEA Chartered Financial Consultant, Chartered Advisor for Senior Living, Certified Estate Advisor, President Mosshart Wealth Management Group, www.Mosshartwealthmanagement.com Joshua D. Mosshart is principle and a registered representative with and offering securities and financial planning through Linsco/Private Ledger (LPL) Member FINRA/SIPC. California Insurance # 0C90229

Related Articles - Robert, S., Kerr, Estate, Plan, Estate, Planning,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!