The IRS Deductions Blog

Archive for April, 2008

Question: If I form an LLC for my rental property for tax deduction purpose, do I have to transfer the prop. to the LLC?

Answer: Yes, and also consider if you are the guarantor of the LLC you may still have some interest in the property from a taxation standpoint.

Items on Amazon Right Now for Llc Tax Deductions:

Tax proceedings still a concern for businesses

The World Bank issued its report Doing Business 2010 last September, ranking the business climate in 183 economies worldwide.

Annual Meetings – Just A Minute, LLC

Question: Should we get a tax credit/deduction for adopting pets from shelters and for spaying or neutering our pets?

Millions of dollars are spent to kill unwanted animals. Millions of pets are being warehoused in shelters. We need to do something to encourage sterilization and shelter adoptions.
A draft law has been posted at this site:

http://www.instituteforanimalrightslaw.org/statute_spay-neuter_tax-deduction_printable.htm

Answer: No in my opinion

Items on Amazon Right Now for Pet Deduction On Taxes:

Tips to avoid tax-filing disasters

Two things are true about taxes: We’d rather see a refund — or at least not owe a lot of money. And we don’t want any trouble. So with the Thursday filing deadline near, pay attention to the 1040 land mines to be sure you get everything to which you’re entitled and avoid a complicated tax mess.

Dog Park Chronicles: Mom, we’re on the news!

Question: How does 7.5% medical tax deduction work as compare to regular tax deduction?

Is this how it work?
1. You fill out your tax form with no other deductions, and this will result in the “amount of money return to you.”
2. Add in the 7.5% medical expense (deduction) and that amount will be added to the ” amount of money return to you.”?
=======================
Or is it that after the 7.5% medical expense deduction, you compare it with the standard with no deduction, and whichever results the highest is the amount of money you get back?

Answer: Short version: To the extent your medical expenses are less than 7.5% of your income, you have to eat them with no tax benefit.

Items on Amazon Right Now for Medical Expense Deductions Taxes:

Bill Baker: Spoof Predictions for 2010 and Beyond

With each New Year, predictions thought out to be sagacious and sometimes offbeat are advanced by the gurus of Wall Street. The consensus this year…

Tax Grants Stimulus Plan – Get Your Free Government Grant

Question: How can I deduct WA sales taxes from my 2006 return?

Hi, I am a WA state resident. I just learned I can deduct my big purchases sales taxes on my 2006 return. However, I just realized IRS Schedule A which people can use for Itemized Deductions is only for Form 1040, and I qualify only for Form 1040A.

Question: How can I file using Form 1040A and same time deduct my sales taxes (e.g. I bought a car).

Answer: You can’t “only” qualify for 1040A – anyone who files is allowed to use 1040. And to take the sales tax deduction, you have to itemize which can only be done by filing a 1040. Unless your total itemized deductions are larger than your standard deduction, you would not itemize.

For the sales tax deduction, you can either take the actual amount you paid (then you’d need to have receipts for what you took) or else the amount in a table that’s provided, plus any sales tax you paid on a car or boat.

Items on Amazon Right Now for Sales Tax Deduction New Car Purchase:

Deadline looms for deductions

The hours are ticking away to qualify for 2009 Tax Deductions. However, some people might be able to take advantage of certain tax extensions, according to tax preparers and real estate agents.

2003 LEXUS ES 300 4dr Sdn Sunroof Carfax Certified

In the wake of the UBS AG fallout and IRS Offshore Settlement Initiative, the IRS continues its pursuit of tax evaders with undisclosed offshore accounts with their requests of FBAR (Foreign Bank Account Reporting) of suspected violators.

What can be expected from the IRS?

In 2009, a highly publicized investigation into Swiss bank UBS AG and U.S. account holders was launched by the IRS and U.S. Department of Justice against those who failed to come forward with their assets to the U.S. Government. However, the investigation did not end with UBS. To encourage taxpayers to come forward, the IRS instituted the Offshore Settlement Initiative Voluntary Disclosure Program (the Initiative) where undisclosed offshore account holders could disclose their foreign assets in exchange for reduced penalties. However the deadline to take part in the Offshore Settlement Initiative has since passed. The IRS has made it is known that offshore tax evasion will remain a top priority. So, those U.S. taxpayers with undisclosed offshore accounts that failed to meet the Offshore Settlement Initiative deadline of October 15, 2009 can expect to be contacted by the IRS.

As the IRS continues its pursuit, Taxpayers may receive a Form 6564 or Information Document Request (IDR). These IDRs will focus on offshore bank accounts. In order for IRS examiners to validate a tax return they will need to secure the necessary books, papers, and other information. The Information Document Request is a formal and structured process for the IRS to request and secure information from taxpayers, including information regarding offshore bank accounts. Although less formal than a subpoena, an IDR still carries with it consequences for failure to comply and can lead to deeper inquiry and possible sanction.

The IRS will focus Information Document Requests on U.S. taxpayers with offshore assets and accounts that failed to disclose these interests to the U.S. government on their Form 1040, U.S. Individual Tax Returns, and file a corresponding Form TD F 90-22.1, Foreign Bank Account Reporting (FBAR). If IRS agents discover that a taxpayer has not reported an interest in an offshore account or income accruing on such accounts during the course of an audit, the IRS may impose steep penalties including the greater of $100,000 or 50% of the offshore account balance for willful failure to file an FBAR for each account. These penalties, compounded with interest and fraud penalties, can essentially wipe out the taxpayers foreign assets.Additionally, taxpayers could be subject to criminal prosecution and jail time for tax evasion.

The issues surrounding these IDRs are exceptionally delicate and should be met with caution. Taxpayers who have been issued an Information Document Request by the IRS are best served by calling on a tax attorney who is adept at resolving disputes with the IRS quickly. An attorney can direct the taxpayer how best to respond to an Information Document Request and will be able to plan with his attorney the best strategy for a course of action. Otherwise the Internal Revenue Service can seek considerable penalties and possible criminal prosecution against those U.S. Taxpayers believed to be hiding money in undisclosed offshore accounts

Items on Amazon Right Now for Irs Deductions Self Employed:

Being an independent contractor can be tricky

Q: Dear Rick: In 2008, I was laid off from my job. In 2009, I got a part-time job and have been working on and off all year. A co-worker told me we are not considered employees, but rather independent contractors and there has been no withholding for Social Security and other types of payroll taxes. He told me I could be in trouble with the IRS. I don’t make a lot of money, can you help?

Self Employment Tax Tips : 50 Percent Rule for Self Employment Tax