You know that "nothing is certain except death and taxes," as Benjamin Franklin once said.
This is true whether you have earned income from a job, or whether your income is the result of financial investments.
The good news is that investment income can be more efficient than earned income in some cases -- if you plan ahead and you are careful about building a tax-efficient portfolio.
One of the best things you can do for your finances and your tax efficiency is to take a look at your tax options near the beginning of the year, and see what might be available.
One of the reasons that many people make purchases online is the lack of sales tax. Technically, consumers are supposed to declare their online purchases (and purchases made out of state) on their state tax returns and then pay at the sales tax rate. This is known as the use tax.
When you work from a home office, you incur a number of costs to keep your business going. The good news is that many of these home office costs are tax-deductible. Even if you don't run a home business, but you telecommute, it's possible to deduct a number of your home office costs on your taxes.
What Can You Deduct With Your Home Office?
First of all, you need to realize that you can't just deduct anything that resembles office supplies. In order to deduct home office items on your taxes, they need to be used solely for business. Additionally, they have to be costs that you aren't reimbursed for elsewhere. So, if you telecommute and your employer gives you a stipend to cover some of your home office costs, you can't deduct them.
The latest IRS Factbook is out, and among the interesting bits of information is that the IRS or Federal tax offer in compromise program grew in many ways from 2011 to 2012. Interesting is that not only did the the number of requests for offers rise, but so did the acceptance rate (see below, figure 1.2 below).
Growth in Offer In Compromise Acceptance Rate and Submissions
The acceptance rate for the IRS Offer In Compromise program increased 3.60% to 37.5% for 2012. This marked a 10.63% increase in the growth of the acceptance rate from 2011 (see figure 1.1 and 1.2). Moreover, while the number of submissions grew by 8.47%, the number of OICs accepted grew by 20%.
The IRS just released just released data providing information about all things tax collection. Included in the data they released is information about tax liens and tax levies. It looks as though fewer taxpayers were assessed liens and levies in 2012 than in 2011.
What are Tax Liens and Tax Levies?
Tax liens and tax levies are consequences associated with non-payment of taxes. If you don't pay your taxes, the IRS has recourse to try and get the money from you. This can include garnishment of wages, or withholding future tax returns. But the IRS can also file tax liens and serve tax levies.
As tax season winds down, and as you put the finishing touches on your tax return, it's important to review the information you offer, and make changes if necessary.
One of the most important items to review is your tax filing status. Your tax filing status is the classification that influences your marginal tax rate, as well as what credits and deductions you are eligible for.
There are 5 options when it comes to your tax filing status:
During tax season, many of us complain about the current system. Now, you have the chance to do more than just tell your friends and family how frustrated you are. Congress is tackling tax reform, and asking for your suggestions.
The House Invites Public Comment on Tax Reform
Last month, the Senate Finance Committee announced that it would start a conversation about tax code reform. Meetings to discuss topics related tax reform have been underway since March, and are expected to continue.
The recent drama surrounding Cyprus and its bailout situation is subsiding a little bit. However, the debates over what to do did bring up something new to many: The idea of taxing bank deposits.
In order to meet requirements to qualify for a bailout from the European Union, Cypriot politicians were encouraged to pass a law allowing for a one-time tax of bank deposits. The measure was referred to a vote by citizens, and it (unsurprisingly) did not pass.
Not too long ago, the IRS announced that taxpayers are owed more than $917 million from 2009. The refunds are due to taxpayers who might not have filed returns in 2009 - and more than half of the refunds are likely to be for more than $500.
Reasons that some taxpayers might have unclaimed refunds include:
- Had money withheld from a paycheck or paid quarterly taxes, but didn't make enough money to be required to file, so didn't claim the refund.
- Didn't claim refundable credits (like the Earned Income Tax Credit) that they were eligible for, and can file, or amend a past return, to reflect credits.
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