Let?S Talk Taxes

Let?S Talk Taxes

With tax time here, now is the time to consider how you want to claim — the standard deduction or file an itemized income tax return.  Why should you do this? It’s simple.  Often overlooked deductions can make a HUGE difference in lowering your tax bill if you decide to itemize.

The standard deductions are fine for those who have an uncomplicated tax situation.  But the amount of your mortgage interest payments, state taxes, property taxes, charitable contributions and hurricane losses, if any, could be more than the standard deduction that is given.  What does this mean? If you do not itemize, you may not save as much as you are entitled to. With this in mind, you should take a look over the following list of often missed credits and reductions before you start the process of completing your 2009 tax return:

1. Education Expenses: There are many education related deductions and credits available to you if you are making tuition payments, paying off your college degree or student loan interest or just saving for your child’s education.  You then owe it to yourself to check out the explanation of education tax benefits available on the IRS website.

2. Deductions for Home Office: Are you self employed? Is your home office your principal place of work?  Is your gross income more than your related deductions? You should then be able to claim this deduction.  Are you employed by a company? If so you can deduct the home office ONLY if it is for your employer’s convenience.  You MUST also pass the “exclusive use” rule to qualify for deducting a portion of your home’s expenses, including mortgage interest, real estate taxes or rent, utilities, property maintenance (mowing, snow removal) or even repairs.  Caution, this is a RED HOT issue for the IRS so be certain you pass the “exclusive use rule”.  If you don’t have an office in your home, you may still deduct your mortgage interest and real estate taxes on both your main residence and any second home.

3. Deductions for Charity: You can deduct all that you have given to charity, especially if you have given cash gifts, or in-kind donations of clothing, toiletries, food or appliances that you can then deduct at fair market value.  You should go through your receipts and your credit card statements to make sure you don’t forget all that you have given.  Only donations to 501 (c)3 organizations qualify.  If you donate items other than cash and the amount is over 0, you must have a receipt from the organization who received your donation.  Also remember that the IRS will want to see proof of cash donations, such as checks, stubs or statements from the charity.

4. Miscellaneous Expenses: Did you know that gambling losses, job search expenses, safe deposit fees, subscription to investment publications and even tax return preparation expenses could be claimed as tax deductions?  Also, unreimbursed business expenses may be eligible to be claimed as a deduction.  Your total miscellaneous expenses, however, must exceed 2% of your adjusted gross income to qualify.

5. Don’t pay in cash: Cash may be convenient but it’s also practically guaranteed to be forgotten come tax time, unless you’re one of those folks who’s great at writing down every single purchase. In some cases,  if you do not  get a receipt when you pay in cash, you will be unable to make a deduction.  When you can, write out a check or use your debit card so you can prove the purchases for the doctor visit, charitable donations and business expenses; the IRS considers a canceled check or credit card/debit card receipt to be appropriate for purposes of record-keeping.

6. Other itemized deductions: Florida doesn’t have an income tax, so for the year 2009 Form 1040, you may deduct sales taxes you pay.  You can either use your actual sales taxes paid or use the IRS table.  If you don’t itemize, and use the IRS table, then you can also deduct the sales tax you paid on big ticket items such as Cars, Furniture household items like a new kitchen.  Also, if you are a teacher, you may deduct up 0 for any school supplies you purchase.  This year the energy tax credit has been extended, so if you purchased  a new water heater, air conditioner, solar device,  or impact windows, you might be entitled to a 00 tax credit

7. Capital Losses: With the market downturn in 2009, you can deduct up to 00 in NET losses on investments.  Any losses in excess of that may be carried over to 2010.

8. Earned Income Credit:  Those taxpayers whose income is below a certain level and who have dependents may also qualify for additional tax credits. If the credit results in a refund, the IRS will mail it to you.

9. Education and Child Care Credits: Depending on your circumstances, you may be eligible for tuition payments for your dependents’ college expenses.  For those of you who have children in daycare, there is also a credit for the amount you pay to your daycare provider.  You MUST have a receipt from the provider listing their name, address, amount you paid and their Tax Identification Number.

10. Medical deductions: Be sure to include your payments for medical insurance if you receive Medicare.  You may also be able to deduct medical insurance premiums, co-pays, other out of pocket expenses, hospital, doctor, dentists and any other medical visits.  Remember that there is a 7 ½% take away before you can itemize.

11. LASTLY: Be sure to include ALL your W’2’s, Form 1099’sand any other documents which report income to you, such as bank  or brokerage statements.

Credit Counseling

Tax Deduction Checklist
The best tax deductions checklists are found in three places:

Your past years’ tax returns 2) With your tax professional 3) Through an online tax website

The IRS website provides plenty of useful information on tax filing which could end up saving you a lot of money on this year’s tax return.  Take a few minutes to go over all the information you have on taxes so you can save yourself the most in the end.

CHOOSE YOUR TAX FILING METHOD! You may wish to hire a tax professional if you have had any major changes to your income such as an inheritance, lottery winnings, an investment windfall, or the like, or simply feel overwhelmed at the thought of the task.  On the other hand, if your goal is to prepare your own tax return, there are great software programs for help with tax preparation, such as TurboTax, Quicken, or TaxAct. These programs are inexpensive and will walk you through your tax return with a series of questions that make it a relatively painless process.
INFORMATION PROVIDED ABOVE MAY NOT BE OF USE TO YOU AND THEREFORE YOU SHOULD CONSULT A TAX PROFESSIONAL CONCERNING YOUR ELIGIBILTY TO USE A DEDUCTION.  EVERY PERSON’S SITUATION IS UNIQUE.

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Related Past Year Tax Articles

Getting Free Tax Help Can Save You a Bundle

Getting Free Tax Help Can Save You a Bundle

You can not avoid taxes.  That is why you have to pay your taxes diligently so that the IRS will not knock on your doors.  However, getting your taxes in order can be very costly.  From preparation and filing process to settling your past due taxes, all these entail considerable expenses.  That is why it would be a welcome relief if you can get free tax help.  This is particularly important if you need help with past due taxes.  Fortunately, there are many ways how you can get free tax support services.   

One of the easiest ways to find free tax help is to use the Internet.  There are lots of online tax service providers that will give free tax advice for you.  However, not all online tax support services are reliable.  You have to choose wisely so you will not be scammed by so-called tax experts.  To make your life easier, you can check the services of Free Tax Support.  This is one of the most trusted and leading tax support service providers today.  It can offer you free tax advice and provide help with past due taxes.  Signing up with Free Tax Support is very easy.  The best thing is that you can get a free tax kit from Free Tax Support.  The Tax Kit includes free tax forms, guides on how to reduce your taxes, and documentations on how to handle tax issues with the IRS.  

You can also fill up an online form provided by Free Tax Support.  For example, if you have problems with your tax payments and you want help with past due taxes, then you can specify these problems and submit your query online.  The professional tax agents of Free Tax Support will contact you and provide free tax help for you.  So aside from the free kits that you can easily download, you stand to benefit from the free tax advice given by certified tax agent of Free Tax Support.  This is probably the best service that you can get today.  And if your problems are too complicated and involve legal actions, then the service can refer a good tax attorney for you.  Having a tax attorney will speed up the process of resolving your tax troubles.  

You can also get free tax help right from the website of the IRS.  If you simply want to understand some tax issues that are bugging you, simply search the website of the IRS and you might get the answers you need.  The IRS also provides free tax forms if you ever you need them.  However, if your problem concerns tax delinquency and you need specific help with past due taxes, then using the IRS website may not be enough.  You have to consult a tax professional so you will know what options you have and the necessary steps you need to take in order to solve your problems.   That is why you will be better off getting the services of Free Tax Support because a professional tax agent will provide real help for you in order to solve your complicated tax problems.

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How Your Bookkeeping Can Boost Your Tax Deductions

How Your Bookkeeping Can Boost Your Tax Deductions

One of the keys to bringing your tax strategy full circle is your bookkeeping. It’s one thing to know what’s deductible and how to maximize your business deductions, but unless that gets reflected in your bookkeeping, it’s as if the tax planning never happened at all. Use this checklist!

Use this checklist to make sure your bookkeeping is maximizing your travel, meals and entertainment deductions.

____ Get reimbursed for business expenses you pay for personally. Ever been to a restaurant that only takes cash? Or taken a taxi that only accepts cash? Or misplaced your business credit card and had to use your personal credit card? These are just a few examples of when we have to pay our business expenses with personal funds. It’s easy to miss these expenses so keep an envelope handy and put all of your receipts in this envelope. Then you’ve got it handy when you complete your expense report.

____ Code meals that are 50% deductible to a separate account to keep them distinct from other expenses that are not subject to this 50% rule. Many times I see just one meal account in the chart of accounts. The problem with this is that while meals are generally only 50% deductible, some meals are 100% deductible. The mistake that I see most often when I review a prospect’s prior year tax return, is all meals are treated as only 50% deductible (because they are all coded to one account) and there is no strategy to identify meals that are 100% deductible.

____ Code meals that are 100% deductible to a separate account to make sure these are deducted in full and not combined with meals that are only 50% deductible.

____ Code your entertainment expenses to a separate account from meals and travel.

____ Code your travel expenses that are not meals and entertainment expenses to a separate travel account. Too many times I have seen an account named “Travel, meals and entertainment” (it happens to be a default account in a popular bookkeeping software) and everything gets lumped into this account. Business travel is 100% deductible so separate it out as part of your bookkeeping system. Otherwise, you will have to sort through that account at the end of the year, or worse, you may forget to sort through that account and everything in the account is treated as only 50% deductible!

____ Use the memo section in your bookkeeping software to make notes about who, what, when, where, how much and the business purpose of your travel, meals and entertainment expenses. This is a great way to strengthen your documentation.

How does your bookkeeping match up?

Proper bookkeeping will boost your tax deductions, particularly for travel, meals and entertainment. This is an area where deductions are regularly missed and not properly documented, but once you know the rules and use my system, you’ll find more and more deductions!

** Important Tip! **

Keep your bookkeeping current! What does current mean? One easy way to make sure you are staying current is to review your Balance Sheet and Profit & Loss Statements once a month. Do this review when you receive your monthly bank statement. Simply reconcile your bank statement and then review your financial statements.

Knowing how to maximize your deductions for travel, meals and entertainment is a key part of a successful tax strategy.

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What if I lost my last year tax return?

What if I lost my last year tax return?

It happens every year. Just when you get motivated to get rolling on your taxes, you realize you can’t find the return you filed last year.

First off, don’t panic if you can’t find the return. Yes, you need it to know what you claimed last year and how those claims relate to this year’s return. All is not lost, however. The IRS will provide you with a copy of your past tax returns if you ask nicely. Here is how to go about it.

The IRS will not send you the actual income tax return. The agency, however, will send you their version of it. This is known as a tax return transcript and is a layout of the information you provided.

It is essentially your return, but doesn’t look like it. You can rely on the transcript as though it was your original return.

When you contact the IRS to get the transcript, it is important to understand there are two types available. As is usual with the IRS, there are two choices just to confuse you. The first is the tax return transcript that is essentially the return you filed. The tax account transcript is your original return as modified by any changes made by the IRS or you. Which one is the correct one? If the IRS has not contacted you about an issue with the return, it is the tax return transcript. If they have, it the tax account transcript.

The IRS will give you any return for the past three filing years. The service is free. To get the copy, you can call the IRS at 800-829-1040. Alternatively, you can get a copy by filling out and mailing in IRS Form 4506-T. It takes two weeks to a month for the agency to get the copy to you. If you discover you have a problem just before the relevant filing deadline, file for an extension so you don’t run afoul of filing laws. Remember, you have to pay any taxes due regardless of the extension, so try to guesstimate what you will owe.

If you lose a past tax return, there is no need to panic. The IRS will be happy to send you a copy. After all, an audit agent probably has the file on their desk as we speak!

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Three (3) Secrets to a Successful Tax Return!

Three (3) Secrets to a Successful Tax Return!

How do you find a tax preparer that is right for you?

First, not all tax preparers are the same. I wrote an article about this last year titled: Tax Returns: Are They All Created Equal?

HOW DO YOU FIND A TAX PREPARER THAT IS RIGHT FOR YOU?

First, not all tax preparers are the same. I previously wrote an article about this last year titled: “Tax Returns - Are they really all created equal”, and you may be as surprised as other readers about just how much tax return preparation can vary.

In fact, I calculated the average savings I typically find from annual tax savings, reducing professional fees and audit assessments. In total, the average savings are:

- ,750 Annual tax savings

- ,000 Audit defense savings

- ,000 Reduced audit assessment savings

- ,000 Reduced legal fees

- ,000 Reduced tax return preparation fees

This is a total average potential savings of ,750! Your tax preparer does make a difference! How much more could you do with these savings?

Second, the right tax preparer for you depends on what is important to you. Take a minute to answer this question:

WHAT MAKES YOUR TAX RETURN SUCCESSFUL?

How you answer this question will impact what type of tax preparer you need on your team. I’ve asked this questions to clients, prospects and colleagues. I have compiled the most popular answers and what it means to you as you find the tax preparer for your team.

ANSWER #1: Paying the least amount of tax legally

Your tax preparer needs to:

- Know the tax law very well and know how to be creative legally.

- Ask you a lot of questions about your situation in order to understand your situation and goals.

- Have a review process where at least one other person reviews your return solely for the purpose of how to reduce your taxes legally.

HERE ARE SEVEN (7) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER TO DETERMINE IF IT’S A GOOD FIT:

Q1: Can you tell me about the other ___________ (your industry) you service?

A: Your tax preparer needs to know how the tax law applies to your situation. Having other clients in your industry or with similar investments indicates that the tax preparer is likely to be familiar with the tax laws that impact you.

Q2: Who will be working on my tax return?

A: It’s very common (and a good business practice) for tax preparers to have staff prepare your tax return. You want to make sure the other people working on your return have the same level of expertise.

Q3: What is your tax return review process?

A: Tax preparers who are focused on reducing your taxes will have this built into their review process. Usually it involves having another experienced tax preparer review the return solely for the purpose of finding ways to reduce your taxes.

Q4: What would you have done differently on my past tax return?

A: Show the tax preparer you are interviewing your prior year tax return. Creative tax preparers will be able to give you at least one idea of what you can do to reduce your taxes by looking at your tax return for just a few minutes. If it’s creativity you are after, this is a great question to ask! But don’t expect the tax preparer to give you all the details right then and there - that’s why you pay them!

Q5: How much can you save me in taxes?

A: While it’s difficult for any tax preparer to answer this in just a few minutes of looking at your past tax return, it is possible for them to know if they can save you taxes after spending 30 minutes with you.

Q6: What deadlines do you impose on clients?

A: This may seem like an odd question for minimizing your taxes but it has a direct impact. If your tax preparer allows you to provide your information a week before the tax return is due, it’s very unlikely that the tax preparer will have the time to focus on your return to truly minimize your taxes. Tax preparers that want to reduce your taxes want your tax return information early and will communicate that to you.

Q7: What recent tax law changes should I be aware of? A: To minimize your taxes, your tax preparer needs to know the tax law inside and out, which includes the latest changes. Your tax preparer needs to be able to answer this question without hesitation.

ANSWER #2: Minimizing tax return preparation fees Your tax preparer needs to:

- Focus on the tax work and recommend someone else for the non-tax work (such as bookkeeping).

- Request tax information in a certain format.

- Require you to input your information online.

HERE ARE TWO (2) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER REGARDING MINIMIZING RETURN PREPARATION FEES TO DETERMINE IF IT’S A GOOD FIT:

Q1: What can I do to reduce my tax return preparation fees?

A: To minimize your tax return preparation fees, your tax preparer always needs to have your fees in mind. Ask your tax preparer what you can do to reduce your fees. If you don’t get at least 2 suggestions, your tax preparer probably isn’t thinking about how to keep your fees low.

Common suggestions include:

- Have someone other than the tax preparer do your bookkeeping. I am always skeptical when a tax preparer does the bookkeeping. First, they either charge an arm and leg or if they reduce their rates to accommodate you, it means they don’t spend their time entirely on tax issues, which could indicate their tax skills aren’t up to par.

- Organize your information. Don’t bring your tax preparer a shoebox! A tax preparer that is really focused on keeping your fees down will have forms, spreadsheets and other tools available for you to use to organize your tax return information.

- Enter your information online. Many tax preparers now require clients to input their information online. Accurately entered information can help reduce fees. Caution: Information that is entered inaccurately can increase your fees!

Q2: What is your fee structure?

A: Your tax preparer needs to be able to answer this question with confidence. Any wavering could indicate that the tax preparer knows the fees are too high for you but just doesn’t want to tell you. Unfortunately in these situations, you find out too late!

ANSWER #3: Reducing audit risk Your tax preparer needs to:

- Know the tax law very well and how to properly report your activity.

- Understand the IRS’s current “hot buttons” or “red flags.”

- Offer an audit defense plan.

HERE ARE FOUR (4) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER IN REGARDS TO REDUCING AUDIT RISK TO DETERMINE IF IT’S A GOOD FIT:

Q1: How many audits have you been through and what triggered the audit?

A: The most important part of this question is what triggered the audit. If it was triggered by how something was reported, then that may be something the tax preparer had control over (and may be a bad sign for you).

Q2: What was the outcome of the audits you have been through?

A: A return can be randomly selected for audit or selected because of a certain activity (even though it was reported correctly). So it’s important to understand the outcome of the audits. Was additional tax assessed or were there no changes? Additional tax may indicate that something was not reported properly.

Q3: Do you offer an audit defense plan?

A: Tax preparers that are confident in their work will offer an “insurance” program that covers their professional fees to handle your audit if your return is selected for audit.

Q4: What is your tax return review process?

A: Although tax returns can be selected randomly for audit, many are selected due to how items are reported on the tax return. Tax preparers who are focused on reducing audit risk will have a review process that includes another tax preparer reviewing your return solely for accuracy of reporting.

Be selective with the tax preparer you put on your team. The average savings I find for my clients is over ,000! Your tax preparer makes a difference!

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What if I lost my last year tax return?

What if I lost my last year tax return?

It happens every year. Just when you get motivated to get rolling on your taxes, you realize you can’t find the return you filed last year.

First off, don’t panic if you can’t find the return. Yes, you need it to know what you claimed last year and how those claims relate to this year’s return. All is not lost, however. The IRS will provide you with a copy of your past tax returns if you ask nicely. Here is how to go about it.

The IRS will not send you the actual income tax return. The agency, however, will send you their version of it. This is known as a tax return transcript and is a layout of the information you provided.

It is essentially your return, but doesn’t look like it. You can rely on the transcript as though it was your original return.

When you contact the IRS to get the transcript, it is important to understand there are two types available. As is usual with the IRS, there are two choices just to confuse you. The first is the tax return transcript that is essentially the return you filed. The tax account transcript is your original return as modified by any changes made by the IRS or you. Which one is the correct one? If the IRS has not contacted you about an issue with the return, it is the tax return transcript. If they have, it the tax account transcript.

The IRS will give you any return for the past three filing years. The service is free. To get the copy, you can call the IRS at 800-829-1040. Alternatively, you can get a copy by filling out and mailing in IRS Form 4506-T. It takes two weeks to a month for the agency to get the copy to you. If you discover you have a problem just before the relevant filing deadline, file for an extension so you don’t run afoul of filing laws. Remember, you have to pay any taxes due regardless of the extension, so try to guesstimate what you will owe.

If you lose a past tax return, there is no need to panic. The IRS will be happy to send you a copy. After all, an audit agent probably has the file on their desk as we speak!

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Dealing With Past Due Taxes ? A Matter Of Perspective

Dealing With Past Due Taxes ? A Matter Of Perspective

Federal, state, county and local governments all run off of the taxes we pay. As you probably have noticed, they get a bit touchy when you don’t pay the amount you owe or do it on time. If you owe past taxes, you are going to have to deal with the problem sooner or later. How you do it is a matter of perspective.

Every single tax agency is a massive government machine that grinds along day after day after day. Practically speaking, this means the agencies are generally very slow to react. Once they do, however, the collection effort can be hard to stop and you can easily get trampled into the ground under the assault of agents and audits.

If you don’t pay your taxes this April, the IRS is not going to be knocking on your door the next day. In fact, the agency probably isn’t going to do much of anything other than send out computer generated correspondence if even that. I will give you a classic example. My accountant filed my personal return for 2005 electronically. The IRS did not get it. It wasn’t until 2007 that I heard about it. Yes, a full two years.

While it took a bit, the agency did track me down and it was not pleased. The first notices were for tens of thousands of dollars and I nearly fainted. After much discussion and copies of tax returns, the agents finally realized I was not trying to play funny with the money as they say. I ended up paying some penalties and interest and that was it. It was an extremely stressful time and the only thing that really saved me was I had paid the original taxes on time.

This example should give you a clue on how important perspective is in these matters. If the IRS starts hunting for you, fending the agency off is going to be difficult, stressful and expensive. If you voluntarily come forward and try to deal with the issue, the agency is much more willing to work out arrangements with you. You don’t have to live with past due taxes hanging over your head.

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Changes to tax in the past year may affect you and your return - find out what has changed

Changes to tax in the past year may affect you and your return - find out what has changed

It is time to start organising yourself for 2008-09 tax return preparation and lodgement. The past financial year has seen some changes to the taxation landscape that will certainly make a difference to lot of Australian taxpayers this “tax time”.

Changes include education tax refunds and family tax benefits as well as changes in the Medicare levy surcharge threshold and claiming donations to charity.

Education tax refund
Eligible parents who incurred education expenses for primary or secondary school students in their care on or after 1 July 2008 are able to claim a tax refund for a proportion of the incurred expenses.

Generally, eligible parents are able to claim 50% of their education expenses for the year. The maximum claimable amount for primary and secondary school children is 0 and 00 respectively. This results in a maximum refund of 5 for primary school children and 0 for secondary school children. Parents can claim the full refund for each child who meets the schooling requirement. Independent students under the age of 25 who are undertaking primary or secondary school studies are also eligible to claim a refund on some of their education expenses.

You should be aware that not all expenses can be claimed. Purchases such as laptop and home computers and school text books are able to be claimed, whilst school fees and uniforms are not. The most important thing is keep you receipts in order to verify the eligible purchases in your return.

Family tax benefit
Effective from the 2008-09 financial year you are no longer able to claim the family tax benefit in your return. In order to claim the benefit for both current and existing years you must claim it as either a fortnightly or a lump sum payment through the Family Assistance Office.

Family Assistance Offices are located in Medicare Australia offices and Centrelink Customer Service Centres around the country or you can contact them on 13 61 50 for assistance with your family tax benefit queries.

First home saver accounts
First home saver accounts were introduced in October 2008. For those with a first home saver account the Government will make an annual contribution to that account based on contribution amounts for the year. You are not required to pay tax on any earnings by the account and as a result you don’t need to declare any income from this account on your tax return. If you are not required to lodge a tax return, you will need to lodge a First home saver account – notification of eligibility form before the Government will pay any contributions.

Medicare levy surcharge thresholds
For the previous financial year, 2008-09, the Medicare levy surcharge thresholds have been increased for both single persons and families. For single persons who earned above ,000 during 2008-09 and did not have private patient hospital cover a surcharge of 1 percent for any period during the year that they did not have the cover will be levied. For families the threshold is increased to 0,000.

For the 2008-09 financial year only, you are considered to have been covered by private hospital cover all year if you took out an appropriate policy some time between 1 July 2008 and 31 December 2008, and then continued to be covered from 1 January to 30 June 2009.

Claiming donations to charity
As a result of the dramatic events of the past year, such as the Victorian bushfires and Queensland floods, many taxpayers made donations to fund-raising and charitable organisations.

You are able to claim a tax deduction in your 2009 tax return for any gift or donation if the organisation is a registered deductible gift recipient.

When claiming the deduction you should be sure to keep your receipt as evidence. For donations made via the web, over the phone or through a third party such as a bank or retail outlet web receipts or credit card statements are acceptable. Additionally, for any ‘bucket donations’ made during the year you are able to claim a tax deduction equal to your contribution up to without being required to produce a receipt.

The team of accountants and tax agents at The Quinn Group are able to advise you on all of the deductions and refunds that you are eligible for in your 2008-9 tax return. We will work with you to legally minimise your tax liability and get you the maximum return that you are eligible for. Contact us on 1300 QUINNS or click here to submit an online enquiry.

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Business Losses, Tax Refunds for 2008, 2007, 2006

Business Losses, Tax Refunds for 2008, 2007, 2006

As we come to the conclusion of 2008, many businesses have lost money in this year. The economy for 2009 looks very volatile and some industries may start to recover in 2009, while others may take a little longer. One positive area to bring to the table is that the price of oil has decreased significantly and regular gas prices have come down below .00 or so per gallon depending upon your location.

The question through this difficult year where losses have mounted up, why do you have to tax plan? If you were profitable in year 2006 and/or 2007 and paid business taxes in those years, you may be entitled due a tax refund in 2008 to recover part or all of these monies paid in previous years. This tax recovery is called a net operating loss carryback claim…This situation applies to proprietorships, corporations, limited liability corporations, and so forth.

The first part of this discovery phase is to identify whether you are a qualified individual and/or company to recapture monies paid in from prior years…It would be a good idea to obtain from your accountant, bookkeeper, CPA, or your own in house books an updated balance sheet and profit and loss statement for 2008. Additionally, you may want to locate your 2006 and 2007 either personal and or corporate tax returns and review the past years information. If you have paid business taxes in those past years and are in loss situation for 2008, there is a good chance you will be able to recover either partial or all monies paid to the
government for 2006 and/or 2007.

.If you are a farmer and have losses in 2008, you should locate your 2003, 2004, 2005, 2006, and 2007 prior years tax returns because your eligible carryback years extend back for five years. Everybody else, for the most part, can carry back their business losses two years…

Once you have located your prior years tax returns and reviewed the business taxes paid into those years, compare this to the 2008 Profit and Loss Statement. It is good idea that your 2008 information should be current and accurate because it could have a major effect on your decision making. Assuming you are in a loss situation for 2008, you may want to plan you year end cash flow accordingly. For

this illustration, we will assume everyone is on a cash not accrual basis accounting system. Because of your tax situation and the possibility of recovering a tax refund back in early 2009, you may, if cash flow permits, pay more bills in December 2008 than the normal January 2009 payment cycle. The bottom line here is that a qualified professional should be assisting you at this stage because of the cash flow and tax effect though the period ending December 31, 2008. The professional cost vs tax recovery benefit could be a big plus to you.

This carryback claim process is important because it can generate needed working capital if the economy hasn’t recovered in your niche for 2009. Additionally, with all the available acquisition and financing deals available for commercial vehicles, construction trucks, office equipment, computer systems etc, these monies could be used as a down payment or a combination of working capital and acquisition funds.

These carryback claims can be carried back two years, except for farmers, five for them, and if needed carry forward for twenty years. It doesn’t matter what your business structure is…There are exemptions to these rules and you should consult your tax professional for advise on these carry back and carry forward rules.

For illustration the types of industries that would qualify for these carryback losses include construction, trucking, farming, restaurants, all retail shops, mail centers, franchise operations, consulting firms, manufacturers, wholesalers, service providers, This is obvious a partial list of qualified businesses. In addition, the type of entity doesn’t play a role in these carryback claims. There are a few exceptions to the rules, therefore consult a good tax adviser.

In addition to the carry back rules, there are numerous business and individual tax changes for 2008. It would be a good idea to get a head start at the end of this year to understand them and see if there are any you want to take advantage of before December 31, 2008.

In conclusion, 2008 was a trying year for many, but this recapture of tax monies shouldn’t be ignored. If done properly, you can get a head start on 2009 and have a profitable and less stressful year… … Who says Tax Planning is boring

Prepare Prior Year Taxes Now

How to Get Help with Past Due Taxes

How to Get Help with Past Due Taxes

There are times when you will find it hard to pay your income tax.  There are several factors why this problem happens.  One of the primary causes is economic hardship.  Your current finances may not be enough to pay your taxes.  In case you skipped paying your taxes in the previous years, it is very important for you to seek tax help.  There are several ways how you can get help with past due taxes.  You can consult a tax attorney or if you want to get free advice, you can simply sign up with the tax support services of Free Tax Support.   

It is in your best interest to pay taxes on time because the amount of penalties imposed by the IRS can be very staggering.  So before you experience much trouble, you have to seek tax help as early as possible.  Sometimes, the reason why you can not pay your taxes is that you are overpaying the IRS.  There are several items in your tax returns that could be eligible for deductions.  But because you are not aware of it, you will pay higher taxes which should not be.  In cases when you have to pay back taxes, you have to be aware also that the IRS has several tax relief programs.  So it is best to consult a professional tax support service so you can get help with past due taxes.  You never know, you may qualify for the tax relief programs of the IRS so you can resume paying your taxes and avoid legal issues.  

When getting help with past due taxes, you must understand that there are several tax help and relief options available for you.  First, you can take advantage of the Tax Relief Settlement.  This is a negotiated settlement with the IRS.  You will only be required to pay a certain percentage of the taxed owed to the government.  The terms of the settlement will depend on your income level, assets, and expenses.  You will be able to save a lot of money if you take this tax relief option.  Another option that you can take is the so called Offer in Compromise.  This relief program was mandated by Congress to help taxpayers in settling their debt with the government.  The IRS will offer you a settlement agreement where you will pay just a fraction of the original amount that you owe.  

In getting help with past due taxes, it is really important to consult a tax professional.  You can hire a tax attorney which will represent you.  This is a costly option but can be very advantageous for you because you might get favorable settlement deals.  Another route you can take in getting tax help is to get free tax advice from Free Tax Support.  The agents of Free Tax Support are experts in handling tax problems.  Free Tax Support can also provide you with comprehensive documents and free tax kits detailing the process on how to handle tax issues and problems with the IRS.

Prepare Prior Year Taxes Now

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