Monday, March 31, 2008
“Sacramento-area tax attorney Roni Deutch has launched more than 170 Roni Deutch Tax Center franchises across the country, mushrooming beyond the 17 centers she debuted in a nationwide opening in January.
Long known as the ‘Tax Lady’ through her tax resolution legal practice and her many television appearances, Deutch stepped last year into a U.S. accounting and tax preparation market worth upward of $65 billion.”
You must file a return with the IRS before April 15. If you do not then you will face penalties and fees that will eventually catch up with you. Even if for some reason you cannot file a return, at least file for an extension using IRS Form 4868. If you are likely to owe the IRS money, also consider sending in a payment to avoid additional fees.
To become eligible for benefits under the economic stimulus package, you need to file a return this tax season – even if you do not normally file a return. The IRS is going to determine the names and addresses of those eligible for a stimulus check based off this year’s tax returns. Therefore, if you do not file a return you will not get up to $600 in payments.
Don't – Omit Any Income
One of the biggest mistakes taxpayers make when preparing their returns is to omit part of their income. Remember that the IRS requires you to report all income including wages, business profits, interest, dividends, capital gains, pensions, tips, and even gambling winnings.
Do – Seek Help
If your taxes are too confusing or you simply have a question about your return, then do not be afraid to ask for help. There are accountants and tax preparation offices all over the country to prepare your return for you. Most will answer simple questions for you over the telephone.
Don’t – Get Audited
Technically you are always at risk for an audit since there is a random element in the IRS’ audit selection process. However, below are five red flags you can avoid to decrease you chances of getting an audit.
1. Drastic changes in income
2. Too many charitable contributions
3. Excessive amount of credits taken
4. Inconsistencies between previous returns
5. Reporting a suspiciously low income
Do – E-file
If you are going to file your return yourself then you should e-file. Studies show that people who e-file make fewer errors. You will also have confirmation from the IRS within a few days of receipt of the return. Additionally, if you chose to have your refund direct deposited, then you will receive it in as little as 10 days.
Don’t – Throw Away Documents
Just because you have sent your return to IRS does not mean it is ok to throw away your important forms, records, and receipts. If you are ever audited you will need all of these documents. Please make sure to store them in a safe place.
Do – Save Your Refund
Although most taxpayers look at a refund from the IRS as “free money,” the smartest thing you can do with your refund is use if to pay off high interest debts. The average household has nearly $10,000 in just credit card debt and most Americans either have a home mortgage or an automobile loan. Instead of wasting your refund on something useless why not pay extra on one of these lines of credit?
Monday, March 17, 2008
You can take some comfort in the fact that audits are remarkably rare, hitting about 1% of taxpayers each year. However, the rate is rising, and if you happen to pull a few audit triggers, your chance of getting that ominous letter or phone call from the Internal Revenue Service can soar tenfold or more, experts say.
"I am hearing about more audits than I ever have," said Roni Deutch, a tax attorney in Northern California who has been practicing for 17 years. "People will try to alleviate your fears and tell you that an audit is not a big deal. It is a big deal. It's like having a root canal without Novocain."
The number of returns audited by the IRS jumped 7% last year to 1.38 million, up from 1.29 million in 2006.
"MLB did not include the compensation amounts for its other top officers in its most recent return. The names of MLB President Bob DuPuy and four executive vice presidents are listed but without pay totals. Those numbers appeared in prior MLB tax returns, with DuPuy pulling in a total of $4.875 million in the 2005 fiscal year.
Nonprofit tax experts said such omissions are not permissible under the current tax code. "The [tax return] instructions just couldn’t be clearer. The compensation of the officers, directors and key employees must be disclosed in the return," said Marcus Owens, former director of the IRS’s exempt organizations division and currently an attorney with Caplin & Drysdale in Washington, D.C., representing a variety of nonprofits.
Said DuPuy of that assessment, "We respectfully disagree."
Leaving out officer compensation in Part 5-A of the nonprofit return could be considered an incomplete return and could subject MLB to fines up to $50,000 per year from the IRS, Owens said."
Thursday, March 13, 2008
According to the IRS, one quarter of all individual tax returns so far this tax season are being processed by the IRS’ new, modernized computer system. It is called the Customer Account Data Engine, or CADE. It has already successfully processed over 15 million individual tax returns, or 25 percent of all those processed so far this year.
"This system is the centerpiece of our modernization efforts at the IRS," notes Richard Spires, IRS Deputy Commissioner for Operations Support. "CADE is handling significantly more tax returns each year. The long-term investment in this program is paying off with meaningful results for the American taxpayer."
CADE, which is at the core of the effort to replace many of the agency’s aging systems, dramatically speeds up internal IRS processing, permitting taxpayer accounts to update on a daily basis. The older system updates only on a weekly basis.
"This supports better customer service for the taxpayers, processes refunds quicker and helps the IRS better administer the nation’s tax system," continued Spires.
Are State gasoline taxes the best source of highway revenue?
IRS announces 2008 low-income taxpayer clinic grant recipients.
U. S. Senate holds hearing today on federal estate tax alternatives.
The Wall Street Journal examines Obama’s plan for fixing social security.
IRS using every trick in the book to track down those eligible for an economic stimulus check.
Friday, March 07, 2008
For more information check out 12DaysOfTaxes.com and signup for the newsletter.
Tuesday, March 04, 2008
A few things to consider when deciding weather to e-file or not.
Tax court rules against deductions for getting a Harvard MBA as an educational expense.
Reasons why everyone should file a tax return this year, even if you normally do not.
Medical expense deductions for embryo and cord blood storage.
Interest rates drop for the second quarter of 2008.
15 Tax Blogs Worth Reading
“E-filing continues to be the preferred way to file your tax return. It is the fast, easy, safe and more accurate way to file your tax return,” claimed IRS Acting Commissioner Linda E. Stiff.
As for the total amount of all refunds, $106.7 billion has been issued so far in 2008 with the average refund amount of $2,708, up two percent from the same time last year. So far this year, the IRS has directly deposited 33 million refunds out of the total of 39 million refunds. The direct deposit refunds were valued at just over $96 billion with the average amount of a direct deposit refund of $2,900.
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