There is a common adage that says the only two things that are certain in life are death and taxes. While death is definitely not certain when it comes to a home business, taxes assuredly are. If you are going to operate a home business, there are some things you need to know about taxes or you may find yourself in a world of trouble.

?

?

?

I can not think of one person I know who likes paying taxes, doing taxes or talking about taxes; but the fact of the matter is taxes are an inevitable part of life and if you start a home business, they are probably going to be an even bigger part of your life than they were before.

?

?

?

When you work for someone else, your taxes are taken out of your paycheck and then at the end of the year, you simply file your tax return and you either pay money to the IRS or you get money back. Paying home business taxes gets to be quite more complicated than that. While income taxes are the main concern of those employed by others, home business owners need to worry about use taxes, sales taxes, employment taxes, income taxes and a number of other taxes that may apply to their business.

?

?

?

The first thing you need to take care of in terms of home business taxes is the process of getting an EIN number. A business’ EIN number is much like a social security number for your business. It is the number that is used when reporting taxes to the IRS. Once you have your EIN number and your home business starts generating income, you are going to have to start making estimated tax payments to the IRS.

?

?

?

Unlike the annual tax returns you filed when you were employed by someone else, home business owners have to pay taxes on a quarterly basis. For example, you are going to have to pay taxes on the money you make from January through March in April and for the money you make in April through May, you have to pay taxes on in June. The IRS provides home business tax payers with the Electronic Federal Tax Payment System in order to make paying your quarterly taxes more convenient.

?

?

?

If your home business has employees, you are also going to have to take care of your employees’ income taxes. When you have employees, you are required to withhold their income tax from their paychecks and you must pay that income tax to the IRS. If you have less than one-thousand dollars in income tax liability each year, you can do this annually. However, if your employees’ income tax liability is going to total up to more than one-thousand dollars a year, you are going to need to pay the IRS either monthly or semi-weekly.

?

?

?

Remember, this only applies to you if your home business has actual employees. Independent contractors are not considered employees and taxes do not have to be withheld from payments made to independent contractors.

?

?

?

Home business owners also have to pay self employment taxes. Self employment taxes are taxes self employed people pay to Social Security and Medicare. This tax allows you to receive Social Security and Medicare benefits when you retire.

?

?

?

If you are not sure how to manage your home business taxes, you should hire a small business accountant to consult with you on the best way to approach your tax requirements. Hiring an accountant who is willing to teach you how to do your own home business taxes can be much more cost effective than hiring an accountant who insists on doing all of your taxes for you without any explanation of what is being done.??

We are always in search of some easy ways to pay our tax. It may involve quicker submissions, improved accuracy and up-to-date methods.
Initially, when technology was not so advanced, you might have sent the required documentation to the IRS by the US Postal Service. But things have changed today and you can make use of the available technology and file the returns electronically, by downloading and retrieving information from the IRS. IRS e-file is an excellent service that provides the facility of electronic filing.
Before you file your tax return please remember the points listed below:
. First understand your state taxes.

. Check the due date.

. Check on the required documentation.

. Enquire about the tax form applicable.

. Choose an appropriate tax professional.

. Keep in mind that tax law changes for individuals.

. California conformity to federal law.
Paying your tax
. You can pay tax online

. Pay tax by credit card

. For banks and corporation use electronic funds transfer.

. You can request for an installment agreement

Once the tax return is filed
. Check the account balance

. Check the refund status

. Check the e-file return status
Electronic payment options for Individuals and Businesses
This is the most convenient, secure and safe method for paying taxes or user fees. Those who like to pay tax by this method can use their credit card and enroll in the Electronic Federal Tax Payment System of the US Treasury. Taxpayers can pay by check or money order. Payments can be made 24 hours a day, 7 days a week. Paying through electronic funds and EFTPS options are free.
IRS E-Filling
The IRS e-file program provides you some easy and adequate alternatives to file your returns on paper.
Choose the method of e-filing that works for you:
Try a Tax Professional
When you choose a tax professional in order to prepare your returns, always remember to ask for IRS e-file. Refunds are fast and in case of direct deposit, they are even faster. These tax professionals may charge you for the tax preparation and sometimes they may also ask for additional fees to provide the IRS e-file.
Make use of a Personal Computer
You can always choose your computer with a modem or Internet access and tax preparation software in order to file your taxes. It is very convenient to e-file from home 24 hours a day, 7 days a week.
Free File
It is possible to prepare and e-file your federal income tax returns free of charge. Commercial tax software companies provide these online free file services. But, you need to know the criteria for the option.
Income Tax Payments for Individuals
Federal (Internal Revenue Service)
In this case, as you earn or receive income during the year, you also need to pay the tax. You can pay in two ways.
Withholding: In case you are an employee, your employer withholds tax from your pay. Tax is also applied to certain other income like gambling winnings, commissions, pensions and bonuses. The amount withheld in these cases is paid to IRS in your name.
Estimated Tax: Generally people who are in business need to pay estimated tax. Also those who receive income from dividends, rents, capital gains and royalties may have to pay estimated tax. It includes not just income tax, but also self-employment tax and alternative minimum tax.

If you are excited at the prospect of doing your taxes, you are one of the few lucky ones. For most of us mere mortals, our taxes are an incredibly intimidating and complex beast.
Needless to say, the U.S. tax code does not make for a light read. Nonetheless, you are still obliged to file and pay your taxes, no matter how daunting the task may be. Fortunately, help may just be a phone call away.
This article will discuss various methods you can use to make filing your taxes as stress-free as possible.
Using professional tax preparation tools (people and software)
What is the most important benefit to having a tax professional prepare your tax return? Not having to prepare your tax return yourself.
It is as simple as that; preparing and filing your own tax return will take up a lot of your valuable time, and could end up causing you a huge amount of stress and annoyance in your life. And no matter what, it is bound to be a perplexing and confusing process. Using a tax professional will take away most of your tax related stress (but not all of the stress, unfortunately you will still have to wait for your tax bill).
You will also have the added benefit of knowing that will be able to rest easy with the knowledge that someone who actually understands the U.S. tax code is preparing your taxes. This is especially important if your tax situations is particularly complex, or if you want to plan an aggressive tax strategy as part of a larger financial plan.
What professional solution is right for you?
You have two main professional solution choices: people or software. If your tax situation is especially complex, or if you are a small business owner, than you should consider getting either an Enrolled Agent (EA) or a Certified Public Accountant (CPA) to prepare your income taxes.
The advantage of using either of these professionals is that you will avail yourself of the services of someone who has been certified to prepare people’s taxes, by either the state for CPAs or the IRS for EAs. This is important if you have a complex tax situation and you need to know that it is being handled properly.
If you just cannot take any risks, then hiring a professional is the way to go. If you face a more straightforward tax situation, you could probably get by using one of the many walk in services that fill the airways with advertising come tax time. As a final alternative, if you are more confident in your skills you should considering using tax filing software to finish your taxes off yourself.
With most software, it will just involve answering a series of questions; you will not just be left with an electronic version of the long form to fill out from scratch! And if your adjusted gross income is $52,000 or less, you will be able to find a software package to file your taxes for free under the government’s Free File program.
In the end, no matter what option you select, just be sure to plan ahead and file on time!

Basically, federal income tax is the percentage that the federal government takes from an individual’s or business’ earnings. The amount of that percentage will be based on the amount one earns. This percentage will be the payment of the citizens of the United States to the various services the federal government provides, like construction of roads, schools and other infrastructures intended for the general good of the public.
Federal income tax covers areas of concerns like import duties as well as the taxes being paid certain commodities and those asked of from employers and employees. Computing for your annual tax returns can be an added confusion from the already convoluted world taxation.
Regardless of how much the concepts are presented and how much detailed the explanations are, most of the laymen will surely get confused on what they are doing when they accomplish their tax preparations. It is therefore quite a bit unfortunate that tax preparations is required by law and one could be imprisoned for not filing a proper one.
To assist taxpayers in preparing their annual dues and forms, a number of software manufacturers have developed tax preparation software that will assist taxpayers. By purchasing the software, one can easily calculate their income tax returns avoiding the hassles of computing manually or hiring expensive professionals to prepare their taxes for them. The various tax software programs available are able to calculate quickly and accurately the taxpayer’s annual returns, estimates, extensions as well as amended returns.
Not only can the software prepare straightforward tax returns but they are well capable of providing the needs of those big insurance companies and C-corporations whose tax returns are a lot complicated with various return types like the 1120, 1120-L, 1120-PC, 1120-F and 1120-RIC to accomplish.
Regardless of the manufacturer, what the software does is that it streamlines the calculations. By doing so, the processing is made simpler especially through the aid of computers. Tax software can even perform a full-blown, one-step consolidation.
But for the year 2006, initial reviews indicate that the best federal income tax software so far is the TurboTax by Intuit. The software was reviewed to have a rather easy interface and quite powerful computation tools. Following Turbo Tax in terms of popularity is the H&R Block’s TaxCut.
It is said that the TurboTax has an edge over TaxCut on the areas of complicated tax preparations especially when it comes to filing a Schedule C. Moreover, with the Turbo Tax upgrade, users can now complete W-2 and 1099 forms for employees. But these are just two of the wide number of tax software available today.
There are several electronic income tax filing software programs now available for you. Different programs offer a number of features that allow you to make your tax preparation and filing more efficient and convenient. Here are some of the basic electronic income tax filing software features that you might encounter as you check out the different software programs available for you out there.
1. Interview Mode- this feature found in most electronic income tax filing software programs provides a step by step guided interview that asks you all the pertinent questions as the program automatically fills out your tax return depending on your answers. With this feature, it is like having an accountant by your side helping you out filling out your return forms step by step.
2. Automatic Rollover Feature- it can sometimes be troublesome trying to fill out returns with data that you have already filled up last year. With an electronic income tax filing software program with his feature, you never have to again fill up previous data into your current income tax return. Such information is rolled over from the previous year, sometimes including prior year balances, prepayments, overpayments and other important data. All you need is to add up new data for the current tax year.
3. Comprehensive Error Checking - this feature allows you to reduce the number of errors on your income tax return. You may commit a number of errors by doing your tax returns manually. Some errors may escape your notice but can cause great complications later on. With an electronic income tax filing software program, you never have to worry over this as the powerful software will ensure that you eliminate committing as little errors on your tax return as possible.
4. Complete Tax Return Templates- eliminates the need for you to look for the right forms when you need them. Most electronic income tax filing software programs already have a list of complete forms that you may need in your different tax situations. A guide is also usually available to help you in using the right federal forms to fill out.
5. “What If” Scenario Feature- this is especially helpful if you wish to know how your tax returns will fare out when you find yourself in a different situation. Some income tax software programs offer you comprehensive predictive techniques in a wide range of what if scenarios to show you where you stand on your tax situation.

A very important part of personal financial planning is tax planning. This article will help you take the mystery out of personal tax Planning by providing a financial planning perspective for your overall tax situation.

1. Be aware of the different types of taxes

Many people are not aware of the different types of tax systems that we have. Income: Federal, State and Local. Real estate tax. Tax on Investments: Dividends, interest, capital gain, and passive income on stocks, bonds, mutual funds, and investment real estate. Estate or Inheritance Tax: Federal and state tax due on the estate or the inheritor. Gift tax: tax on giver of large gifts. Entitlement Tax: Social Security and Medicare (FICA), Federal Unemployment (FUTA). Sales, self employment, and corporate taxation.

2. Consider working with a Qualified Tax Professional

Tax planning can be complex for many people, therefore it may be wide to work with a trusted professional tax advisor.

Tax advisors not only prepare your taxes but can help make decisions that will affect your future. They can serve as advisors for a whole host of matters and they can represent you if you face the dreaded audit. Consider the following when selecting a tax professional:

- Local: Someone that you can easily meet with face to face

- Personable: Someone that you can interact with and who cares about you

- Proactive: Some tax preparers simply look at your previous year’s return and plug your current numbers into last year’s format. This of course assumes that last year’s preparer knew what he/she was doing. Try to find a preparer who knows your situation. A proactive professional will ask questions that will help you anticipate changes in your tax situation to help you properly plan in advance

- Reputable: Find a professional with a good reputation. Ask people you admire for a referral.

- Skilled: Look for an accountant that is very competent. You have to be smart to obtain a degree in accounting or law.

Fees: Find out up front what they estimate their fees to be, what they charge to file electronically and whether they will represent you in an IRS audit. Avoid any ‘early refund’ ploys. Some well known tax preparation companies ‘provide’ this service which charges a hefty fee (with a lot of small print) and a lot of advertised hype for you to get your refund ‘early’. It is basically a high-interest loan. Just waiting for your actual refund will save you a lot of money.

3. Remember, tax preparation entails both art and science

The science involves the mathematical calculations that in most instances can be figured using calculators and software, and the infinite number of complex tax laws.

The art of tax planning comes into play with interpretation of any special circumstances. There are some areas of tax law that leave the government’s intentions unclear. No law can completely anticipate each person’s situation. You could call a dozen different IRS agents with the same question and get as many different answers. A proactive planner will research any unusual circumstances you may have and help you plan a course of action.

4. Doing Your Taxes Yourself?

I firmly believe in getting professional tax assistance. However, I realize that many people prefer to do their own taxes perhaps to save money, or perhaps you have cleaned up the mess a ’store front’ preparer made of your taxes and vow to do your own. It has been my experience that often the professional tax preparer has saved us the amount of their fee in our taxes. The peace of mind that the taxes are done right has a value all its own.

However, people who have prepared their own taxes at least once with paper and pencil or software usually understand taxes much better. If you self-prepare your taxes, consider having a qualified accountant review them before you send them in. They may find things you or the software might have missed.

If you made less than $54,000 in 2007, you can file your taxes electronically for free through the irs.gov website www.irs.gov/efile/. If you use tax software and wish to e-file be aware of the fees so that you can budget and compare prices properly. For example, a download of Turbo Tax Home and Business Federal and State for 2006 cost just under $100 and the filing fees cost around $30. Some States allow you to ‘phone in’ your State return for free.

If you choose to mail your return, go to your local post office and send it ‘Certified Return Receipt’ mail to insure that you have a record that the IRS received your paperwork. This will cost around $10 or less and will be worth every penny should the IRS contest the receipt of your return.

5. Keep great records

If you are already very organized you may read this section just to feel great about your organization skills or skip to the next section. If, however you have heard ‘get organized’ many times before and if you are the type of person who balks at the idea of organizing that mess of receipts just remember how you felt last year as tax time approached. You could become organized in only one evening of television viewing with the right tools. Arm yourself with an accordion file with at least 16 sections. Label them according to your situation or use the following sections: Auto, Bank, Business, Credit Cards, Dental, Medical, General Receipts, Grocery, Income, Insurance, Mortgage, Utilities, School, and Taxes. Now sort your receipts into these sections. Organizing your receipts will help you “Take the mystery out of…” your financial situation. Use a new accordion file every year. Not only will this help you find needed information, it will also help you find a receipt in case you need to return an item you purchased. . Your tax professional will be sending you a tax organizer the end of December or the first of January. In this organizer will be a list of information that you will need to gather. Becoming organized will help you easily gather the information you need to fill out your tax organizer.

6. Start early

Do not procrastinate on your taxes. Tax professionals are unbelievably busy January through April. Firms who prepare business returns also have a crazy March 15 business deadline. We are providing this information because we want you to get the most attention from your preparer during their craziest season. As soon as you get your organizer, begin gathering the needed papers. If you are only missing one or two pieces of information return the organizer to your accountant with a note that says what is missing. They will begin entering the information in their software. Try to get a January or February meeting with your accountant. These months are the best to meet because they will have more time to spend with you and they will be able to think proactively. If you are looking for a professional, start looking now.

Another reason to start early is allowing yourself time to look for records, ask financial institutions for copies of lost information, or calling investment companies for statements.

7. Judicious Paycheck Tax Withholding

Many people like to overpay their taxes, so that they get a nice refund in time for vacations or other wants and needs - Kind of like a forced savings. Overpaying taxes is like a giving the government an interest free loan of your money.

Good financial management involves developing savings habits so that you set aside money in an interest bearing account from each paycheck for future needs, wants and emergencies. This helps you to avoid using credit cards for those things and not having to wait until refund time. Secondly it then allows you to manage how much you can afford or are able to put into 401(k) plans at work. This accomplishes two things, first you are managing your money better and you are saving for retirement. Saving for retirement in tax deductible retirement plans like 401(k)s will also lower your taxes, enabling you to save more for retirement and everyday needs and wants.

If you want to lower the taxes that are being withheld from your paycheck, file a new W-4 form with your employer to claim an additional withholding. Make adjustment for getting married, divorced, having children and for increasing contributions to tax deductible retirement plans. Your accountant will help you estimate this.

8. Tax planning is not the tail that wags the dog

Taxes consume a large if not the largest single percentage of your income, therefore good financial planning should strive to lessen them, by whatever means possible as allowed by law.

However, tax planning is not the only core issue of good financial planning. Tax planning works in concert with your overall goals and your individual situation.

Did you know that it is easier nowadays to prepare your own tax returns even without the help of a tax attorney?? All you have to do is to use tax preparation software.? With the increasing sophistication of software development, automated tax tools also became more accurate and less complicated.? Gone were the days when you have to spend countless hours just to prepare your taxes.? It is also easier nowadays to get tax advice free provided by competent online tax support services.? ?

One of the first things that you have to do if you want to file your taxes electronically is to search for the appropriate software that you will be comfortable with.? Searching for the right software can be a little difficult because there are numerous products available in the market today.? That is why before you purchase tax software, you should seek tax advice first from online tax support services.? You can sign up with Free Tax Support.? This is one of the most trusted and reliable online tax support services today.? It also gives tax advice free.? All you have to do is to fill up an online form where you can specify your tax concerns and its competent tax agents will contact you to resolve your problem.? It is like having a virtual tax attorney.? Once you clarify your tax issues, you can now confidently choose a tax preparation program that you can use. ?

To get the best results, you have to look for tax software that has a friendly and simple user interface.? This means the program should have easy to find tools and applications so you can reduce the time studying how the software works.? The software should also have a wizard that will guide you through the step by step process of preparing your taxes.? In fact, some of the best tax preparations tools out there can perform thousands of calculations so you can determine if you are qualified for several tax deductions.? The software can also provide tax advice free and will point items eligible for deductions or rebates.? If it is the first time that you will be using tax software and you want to be sure that you prepared your returns correctly, you can get the temporary service of a tax attorney to double check your returns. ?

You will be amazed that the output of tax software will pass the scrutiny of the most meticulous tax attorney.? So for your next filing, you can confidently prepare your taxes by yourself using tax software and file your returns electronically.? Even the IRS is encouraging taxpayers to file their returns electronically.? You can save a lot by using software and it is more rewarding to prepare your taxes all by yourself.? In case you encounter tax problems or issues in the future, you can simply consult the tax agents of Free Tax Support and get tax advice free.? Free Tax Support will point you to the right directions so you can keep the IRS off your back.

This article is based on the assumptions that 1) You are a small business owner or self-employed person (including home-based and part-time business owners) and 2) You don’t like to pay taxes. In fact, whenever you think about paying taxes, you get so mad you end up all worked up with nowhere to go.

Now, if paying taxes makes you so upset, what have you done about it lately? Why was your tax bill so high last year?

You paid too much tax last year (and the year before that, and the year before that . . .) because you have probably been an innocent victim of many popular myths about taxes.

Here they are. Get rid of them or you’ll be stuck paying too much tax forever.

Tax Myth #1: “I don’t make enough money to worry about reducing my taxes.”

Nothing could be further from the truth. People at all levels of income can pay less tax.

Tax reduction strategies are not just for the rich and famous. No matter how much money you make, you can pay less tax than you currently pay.

In fact, if your business has a loss, you can use that loss to offset other sources of income, such as wages from a regular job, your spouse’s wages, investment income, rental income, and other business income.

And if your business loss is so great that it more than offsets all your other income, you can take advantage of a special rule that lets you: a) Carry back that excess loss to the two prior years, thereby entitling you to a refund of taxes you already paid for either (or both) of those two prior years; and/or b) Carry forward that excess loss to the next 20 future years, so that any income you earn in the future will be reduced by that excess loss.

Tax Myth #2: “Tax reduction strategies are too complicated for me to use.”

Again, hogwash. There are plenty of ways for you, the average American, to lower your taxes.

Tax reduction is not just for the wealthy who pay high-priced attorneys to finagle their way out of paying taxes with sophisticated tax-avoidance schemes, like off-shore trusts and foreign bank accounts.

The average small business owner has plenty of tax reduction strategies at his/her disposal. You just have to know what they are and how to use them.

Tax Myth #3: “I had my return prepared by an accountant, so I know I paid the right amount of taxes.”

There are thousands of excellent, hard-working accountants doing a great job. And if you use a tax professional, maybe he/she has done everything possible to reduce your taxes to the legal minimum.

Based on my own experience, however, I’m convinced that many taxpayers who use professional tax preparers are overpaying their taxes, sometimes by thousands of dollars each year.

Why is that? Well, there are many reasons. The most obvious one is this: Many professional tax preparers are just that: tax preparers and tax preparers only.

A good tax accountant may know how to prepare a tax return in his/her sleep. He knows the forms backwards and forwards. He knows what numbers go on which form perfectly.

But that’s it. That’s all he/she knows.

A good tax preparer is not necessarily knowledgeable in tax reduction strategies. There’s a big difference between a good tax preparer and a savvy tax reduction specialist.

When you look for a good accountant, make sure you find one who doesn’t just “do the returns”, send out a bill and say “Next, please.”

Tax Myth #4: “My tax situation is OK because my BLANK (fill in the blank with a family member or other good friend) takes care of my taxes.”

There are various versions of this myth. Do any of these sound familiar?

“My brother-in-law takes care of my taxes.” “My uncle takes care of my taxes.” “My college buddy takes care of my taxes.”

And of course, the same problem exists with Myth #4 as Myth #3. Even when someone you know and trust does your returns, how do you know that this person is a good tax reduction specialist?

And often, many of these family members or “buddies” are not even professional tax preparers. This person just happens to be “The Family Accountant.” Just like every family has one person who knows a lot about cars (or mutual funds, or carpet cleaning, or whatever), many families have someone who “knows enough to be dangerous” with regard to taxes.

And even if your “Family Accountant” is a professional tax preparer, he’s probably not charging you for the return. He’s doing you a favor. He prepares your return; you change his oil.

My first reaction to this kind of situation (when someone is getting his/her return prepared for free) is this: You get what you pay for. When a family member does your return for free, how much attention can he give to your need for tax reduction strategies? Probably very little.

Tax Myth #5: “My tax situation is OK because I prepare my own returns.”

If this statement applies to you, then perhaps you are a “do-it-yourself-er”. Money is tight and you are used to doing things yourself anyway, so why not save a few bucks each year and do your own returns?

So you’ve spend countless hours over the years pouring over the forms and instructions, trying to figure out how to do the returns. And you’ve done OK. No letters from the IRS, no audits. Hey, pat yourself on the back!

And now that tax preparation software is so readily available and affordable, doing your own return is a breeze. Just key in a few numbers here and there, push the print button, and presto, you’ve got your return done in record time. And now you can even e-file your return with your own computer.

Have you ever heard of the book, “The Millionaire Next Door” (by Thomas J. Stanley and William D. Danko)?

This book describes the common characteristics of millionaires in our country. My favorite millionaire characteristic is this:

Millionaires become millionaires by minimizing their taxes and getting their tax & other financial affairs in order.

Now comes the Million Dollar Question: How do you think millionaires get their tax affairs in order? By doing their own tax returns? Of course not. Millionaires don’t prepare their own tax returns. They have more productive things to do with their time.

Instead, what millionaires do is spend time and money each year on tax planning and tax reduction strategies, not figuring out what number goes on which line of Form XYZ.

So my challenge to you is this: What are you going to do this year to reduce your taxable income?

Are you a believer in any of these myths? Now’s the time to get rid of them, once and for all. Your financial well-being depends on it.

Property taxes are a substantial expense for Texas homeowners, averaging about $3,600 annually. To reduce this expense, property owners should annually review and consider appealing property taxes. While there is no guarantee that an appeal will be successful, a recent survey conducted by O’Connor & Associates indicates that 70% of property tax appeal are successful.

Since the mortgage company typically disperses payments, property taxes tend to be a stealth tax. Although the homeowner writes a check, including taxes and insurance monthly, the property tax component is not evident. The property tax component can become quite evident when the homeowner is asked to fund a deficit in the escrow account.

Although 70% of property tax appeal are successful, only 7% of homeowners appeal each year. Research indicates five primary reasons homeowners do not appeal:

1. The process seems overwhelming and they do not know how to appeal,

2. They do not think an appeal is likely to be successful,

3. They think their home’s assessed value is below market value and there is no basis for appealing,

4. They do not understand they can appeal on unequal appraisal,

5. They are busy and do not want to set aside time, given the presumption that “you can’t fight city hall”.

Why appeal?

Consider an appeal for a $150,000 house where the property taxes are reduced by 5%. This would reduce the assessed value by $7,500 and the property taxes by $225, based on a 3% tax rate. Since the typical appeal hearing takes less than an hour, these are meaningful savings for the time involved. Regularly appealing your property taxes will minimize the value, so you are assessed for less than most of your neighbors. Most of the property tax appeal are resolved at the informal hearing, which is the first step in the process.

How to appeal

The first step to appealing annually is to send a written notice to the appraisal review board (ARB) for the county in which your home is located. Even if you have not received a notice of assessed value from the appraisal district, file a notice of appeal by May 31st for the following reasons:

1. The notice of assessed value can get lost in the mail,

2. A notice of assessed value is not necessary unless your assessed value increases by $1,000, and

3. You should appeal annually

You can file a notice of appeal by utilizing the Comptroller’s form available at www.cutmytaxes.com or by sending a letter to the ARB. The letter to the ARB simply needs to identify the property being appealed and the basis for your appeal. You should always appeal on both market value and unequal appraisal. Since the appraisal district staff is extremely busy during late May and early June, sending any data on the value of your property tax is probably a waste of time. At the same time you send your notice of appeal to the ARB, send a “House Bill 201″ request to the chief appraiser at the appraisal district. The House Bill 201 request will provide you a volume of information at a modest price.

Reasons for obtaining House Bill 201 information

Since most homeowners are not familiar with House Bill 201, you may be wondering what it is and when it became available. House Bill 201 is the term used by property tax consultants to describe provision 41.461 of the Texas Property Tax Code. This section reads as follows:

“at least 14 days before hearing on a protest, the chief appraiser shall: … inform the property owner that the owner or the agent of the owner may inspect and may obtain a copy of the data, schedules, formulas, and all other information the chief appraiser plans to introduce at the hearing to establish any matter at issue.”

The property tax code further provides the chief appraiser the right to charge up to $15 for each residence, and up to $25 for each commercial property owner for this information. However, there are limits on the cost per page an appraisal district can charge. Practically speaking, the maximum charge is $1 to $2 for a residence. In Harris County, most homeowners can print this information from the appraisal district’s web site once an appeal has been filed using the “I file” system.

This section of the tax code was added in 1991, but many appraisal districts have attempted to ignore this section of the property tax code for years and some still do. After discussing this section of the Texas Property Tax Code on a radio show in 2005, several listeners called back a week or two later to report certain appraisal districts were claiming to be unaware of this section. When O’Connor & Associates sent House Bill 201 requests to appraisal districts in 2005, some called us and said “what do you mean you want our information, we plan to use your information at the hearing to prove our value.” While these examples seem quaint and cute, it is surprising that 15 years after taxpayer friendly legislation has been passed, that appraisal districts are still ignoring property owners and tax consultants who ask for this information.

There are at least seven reasons to utilize House Bill 201 to obtain the information the appraisal district will use at the hearing:

1. It is an effective way to obtain information regarding both market value and unequal appraisal for your property tax appeal,

2. You will receive the appraisal district’s information regarding the size, condition and other qualitative and quantitative data for your house,

3. The information can be obtained for a nominal cost,

4. It is helpful to know what information your adversary will be able to use at the hearing,

5. Making the request limits what information the appraisal district can present at the hearing. If you do not request their information prior to the hearing, they can use any information available to them at the hearing. However, if you request the appraisal district information using a House Bill 201 request, they may only use information previously provided to you,

6. If they do not provide you information on market value or unequal appraisal in the House Bill 201 request, you win by default at the ARB hearing, and

7. In many cases, the appraisal district House Bill 201 information clearly supports a lower value.

Preparing for the hearing

When you receive the appraisal district House Bill 201 information, start by reviewing the appraisal district’s description of your home and ask yourself these questions:

1. Is the year built accurate?

2. Are the qualities and amenities accurate?

If the appraisal district overstates either the quantity or quality of improvements to your property, this is an excellent means to reduce your property taxes both for the current year and subsequent years.

Filing a 2525c Appeal

If the appraisal district has overstated the size of your home by more than 5% to 10%, even if you did not file a property tax appeal in previous years, consider filing a 2525c appeal. This will allow you to reduce the assessed value of your property for the current year and for prior years.

/article.asp?id=49