Is Your Income Taxable?
Generally, under IRS rules, all incomes are taxable, except if they are specifically excluded from income. Taxable income includes money earned, like wages and tips. It also includes bartering, an exchange of property or services
Certain incomes are usually excluded from income, such as
• Gifts and inheritances
• Child support payments
• Welfare benefits
• Damage awards for physical injury or sickness
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses
Under certain conditions, the following income may not be taxable::
• Life insurance. Proceeds paid to you because of the death of the insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that you get that is more than the cost of the policy is taxable.
• Qualified scholarship. In most cases, income from this type of scholarship is not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. On the other hand, amounts you use for room and board are taxable.
• State income tax refund. If you got a state or local income tax refund, the amount may be taxable. You should have received a 2014 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.
What Happens when Your Receive a Tax Summons?
Other than receiving a refund check, correspondence with the IRS is usually a stressful experience to say the least. However, as understandable as it is to ignore the notice for as long as possible, the truth is that you will need to open it immediately to see the request that the IRS is making. So, do not ignore an IRS request as it will lead to even more expenses or worse depending on the nature of the request.
What is a Tax Summons?
Mayor of London pays US taxes for selling London Home
One would not normally think that the US could impose taxes on a home that was sold in London, especially when the home was sold by the Mayor of London. However, this is exactly what happened late last year.
Originally, London Mayer Boris Johnson said that he would not be paying the tax lien that was placed on him by the United States, but earlier this year changed his mind. Now, reports say that he plans to pay the fee just before he takes a planned trip to the Boston area.
How Should You Respond to a Notice of a Tax Audit?
There are few things as disconcerting as receiving the notice that the IRS will be conducting a tax audit on your return. Such a notice can be very upsetting and understandably so when it is totally unexpected. However, instead of panicking or believing the worst, it is important to remember that the IRS will often conduct random audits every year which mean that your filing may actually be fine.
How to handle Tax Summons
Typically, when you are receiving anything from the IRS, the experience is very stressful. Of course, there is the positive experience of receiving a refund check, but when people receive anything other than this, great stress is typically involved. Many people even take steps to avoid opening the document altogether.
However, avoiding the situation can be very dangerous and will only work to escalate the situation even further. Most of the time, the IRS will request information through a particular form called an Information Document Request, Form 4564. Surprisingly, you actually have no legal obligation to respond to this form, but by avoiding it, you may find yourself in an even more stressful situation.
Tax Credits for Employers Hiring Veterans by Dec 31
IRS Urges Employers to Hire Veterans by Dec. 31, Save on Taxes
Employers looking to hire sometime soon are urged to consider hiring veterans. Such hiring may entitle the employer to claim the federal Work Opportunity Tax Credit worth thousands of dollars. Employer must however act soon…the WOTC is available to employers that hire qualified veterans before the new year.
Some key facts about the WOTC include:
1. Hiring Deadline. To qualify for the WOTC, Employers must hire qualified veterans before Jan. 1, 2014. Though the credit was previously set to expire at the end of 2012, the American Taxpayer Relief Act of 2012 extended it for one year.
Disappearing Deductions
Disappearing Deductions
As tax planning for the oncoming year 2014 get into full swing, it may be helpful to highlight some of the popular deductions that are currently slated to become unavailable to taxpayers by year-end. Of course, your New York Tax Attorney can give you fuller details and tell you how each of the deductions specifically apply to you.
1. A $250 deduction available to taxpayers, for expenses related to their jobs, is currently set to expire by December 31, 2013.
IRS Fast Track Settlement Program
Yesterday, November 6, 2013, the IRS expanded nationwide, its streamlined Fast Track Settlement program (FTS), which aims to help small businesses and self-employed individuals under audit settle their differences with the IRS over their tax debts more quickly. The Fast Track Settlement program is designed to help small businesses and self-employed individuals who are under examination by the IRS.
The FTS program uses alternative dispute resolution techniques to help taxpayers save time and avoid a formal administrative appeal or lengthy litigation. As a result, your New York Tax Lawyer can resolve audit issues within 60 days, rather than months or years that it otherwise may take. Taxpayers nonetheless retain all of their rights to appeal even if they take advantage of the FTS program and they are not pleased with the outcome.
Tips to Start Planning Next Year’s Returns
Tips
to Start Planning Next Year’s Tax Return
It’s certainly not too early to begin planning for next year’s tax return. Though, for most taxpayers, the deadline for this year has just recently passed, the countdown for next year has already begun. Planning for next year should start now. The
earlier you begin preparing for the next tax filing season, the better prepared you will be, maximizing your deductions and tax credits. Being organized and planning ahead also will save time and money in 2014. Here are six things you can do now to make next April 15 easier.
Top Ten Biggest Tax Breaks
A lot of speeches have been given of late about tax cuts, tax breaks, deductions, etc. So, who gets the biggest tax breaks? According to New York Tax Attorney at Thorgood Law Firm, the Top Ten tax breaks are:
- $181 billion – Employer contributions towards workers’ medical insurance premiums and medical care
- $165 billion – Various retirement plan contributions and earning not taxed
- $101 billion – Mortgage Interest deduction
- $84 billion – Lower tax rates on long-term capital gains and qualified dividends
- $69 billion – Deduction for state and local taxes
- $46 billion – Deduction for charitable contributions