Easy Access to Five Key Income Tax Credits For 2009
Aug 29, 2009 Tax Management, Tax Strategies
Easy Access to Five Key Income Tax Credits For 2009
A tax deduction lowers the amount of reported income a taxpayer reports on page 1 of the (long) IRS Form 1040 BEFORE any tax liability is calculated. In comparison, a tax credit directly reduces the tax liability dollar-for-dollar. A tax credit is much better than a tax deduction. Most tax credits lower your tax liability to zero. Two tax credits listed below, the Earned Income Credit and the additional Child Tax Credit, however, are more valuable; they are refundable. This means you receive whatever remains (the balance) of the credit after all tax liabilities are paid. You can request that a paper version of an IRS publication be mailed to you by contacting the IRS by phone 800-TAX-FORMS (1-800-829-3676) or ordering the publications online at the IRS website, irs.gov An easy way to directly access ANY IRS publication (in PDF format) for viewing or download is to use the following subdirectory address: /pub/irs-pdf/pXXX.pdf. Replace the XXX with the publication number for a direct hyperlink to the publication.
Tax-Related Decisions When Starting a Business
Aug 28, 2009 Business Idea, Tax Strategies
Tax-Related Decisions When Starting a BusinessHave you decided to start your own business? The Internal Revenue Service (IRS) has some specific requests you need to fulfill when starting a new business. This checklist is a good place to start implementing your action plan. Even though you might have heard it before; begin with the basics by writing a business plan. The act of writing down your purpose (mission plan), your goals, your strengths, and your weaknesses is more than just a silly, time-consuming exercise. Imagine sitting across the table from several venture capitalists. Explain to them what type of business entity you propose to establish? What distinguishes your ideas from those of the competition? But then, drill down to the nitty-gritty. How soon do you expect to make money in your planned endeavor. How much do you expect in initial profits in the next three months? By the end of the year? Are you offering a product or services? Will you carry inventory? Do you plan to work alone or is this a joint venture with a partner? Do you expect to hire employees?
What Do Title 11, Chapter 7, Section 179, and Pub 17 Really Mean?
Aug 27, 2009 Tax Management, Tax Strategies
What Do Title 11, Chapter 7, Section 179, and Pub 17 Really Mean?All the permanent federal laws of the United States called the US Code (USC) are organized into 50 books or “Titles”. Each Title or book is further subdivided into chapters and sections. The Internal Revenue Code is in the 26th book hence it is alternatively known as Title 26 of the US Code. Legal “stuff” pertaining to bankruptcy is found in the 11th book of the US Code, hence Title 11. Provisions, for example, of the specific part of the US bankruptcy law that pertain to individual reorganization of debt are described in Chapter 13 of Title 11, USC. Similarly, Chapter 7 of Title 11 of the USC describes the process of liquidation of assets under straight bankruptcy; Chapter 11, (typical) business reorganization, Chapter 12, family farmer reorganization.
Keep a Daily Business Journal as a Management Tool
Aug 27, 2009 Tax Strategies
Keep a Daily Business Journal as a Management ToolI have found, as a consultant (and owner/manager) for over fifteen years, that the habitual practice of recording all my business tasks, my short/long term TODOs, and any other business related fact (e.g., city/client location, mileage markers, etc.) is an indispensible management tool.
Do I Need Tax Representation?
Aug 27, 2009 Tax Management, Tax Strategies
Do I Need Tax Representation?Bad things happen to everyone especially if they are self-employed and run their own small business. When financial problems grow beyond control, there are typically significant tax consequences. The best strategy is to hire a tax attorney, certified public accountant (CPA), or authorized tax advisor called enrolled agents (EA), to represent you in resolving tax issues you might have with the Internal Revenue Service (IRS) or other tax authorities. Details regarding standards and practices are available in IRS Circular 230. It is especially important to have a practiced tax professional handle tax disputes. Instead of causing more problems for yourself, let a third party present your side of a disputed issue. Select a tax representative that has experience dealing with your specific issues. A tax professional provides assistance by “removing” you from the stress of the immediate situation and presenting your “case” for you directly to the IRS. Choose a tax professionals that has practiced dealing directly with the IRS. They know all the legal and tax technicalities that could save you money. Regardless of how you feel or how serious the matter is, both you and the IRS want to resolve the dispute by finding a mutually agreeable solution. If you have received an inquiry regarding how you filed a return, an audit notice, or owe taxes to any tax authority, you need tax representation as soon as possible. Under many circumstances, it is better to NOT contact the tax authority on your own.
