Tax Preparation Tips; Why You May Want to Change Your Refund Method

The Reason the IRS Encourages e-Filing.

The chances of a tax return being 100% correct is increased greatly when accepted by the IRS e-filing system. It cuts down on errors and the work involved with documenting a tax payers tax information.

It is much much easier for the IRS to keep track of tax returns electronically.  The massive amount of paper generated when over 133 million individual tax returns show up over the course of the year can be overwhelming.

And believe it or not, keeping up with tax payers, using the computer makes it easier for everyone.  Different IRS employees can access different tax payers records, when permitted by the system, and can note the account so the next IRS employee will know exactly what is happening with the account.

Tax Preparation, Do You Have to e-File?

No.  However tax preparation professionals are required to attach a Form 8948, Preparer Explanation for Not Filing electronically, to the tax payers tax return.  Tax Preparation professionals are not required, yet, to send this information to the IRS.

Potential Problems With Refunds Placed in Bank Accounts

Tax payers who have received a refund for years have no problem providing the IRS with their bank account numbers in order to have refunds placed into their accounts.  And this is safe and fast way to get a refund.

However, what happens when one year, you get a "big"increase in income, and you end up owing the IRS a lot more than you expected?

No, the IRS, usually won't levy your bank account without going through the proper procedure, but the truth is, they already have your bank account information.  Now, this is NOT a serious problem, because, when they really want to know where a taxpayer banks, they can find out.

The fact is, there is added stress for the tax payer, because the IRS knows more about your private banking habits then you would like for them to know, after your annual income has doubled and for some tax payers, tripled!  (Everything changes when you become one of the high earners)

This is not a serious issue, however, for taxpayers who are planning on moving up the corporate ladder, it's something to think about.

Tax preperation tips has been brought to you by Taxes Will Travel - Online Tax Service for unfiled and current year taxes.

Education Credits, American Opportunity Credit vs. Lifetime Learning Credit

Qualified school deductions are important for students and parents who pay for college expenses.  The trick is to remember that room and board are NOT qualified expenses.  However, any expenses which are required for the student to be enrolled in an accredited learning institution, is tax deductible.  Below the IRS has provided details concerning the American Opportunity Credit and the Lifetime Learning Credit.

 

Back-to-School Tips for Students and Parents Paying College Expenses

 

Whether you’re a recent high school graduate going to college for the first time or a returning student, it will soon be time to head to campus, and payment deadlines for tuition and other fees are not far behind.

The IRS offers some tips about education tax benefits that can help offset some college costs for students and parents. Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.

• American Opportunity Credit. This credit, originally created under the American Recovery and Reinvestment Act, is still available for 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education at an eligible institution. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you don't owe any taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment.

• Lifetime Learning Credit. In 2012, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student.

You can claim only one type of education credit per student in the same tax year. However, if you pay college expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. For example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for the other student.

• Student loan interest deduction. Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, you may be able to deduct interest paid on a qualified student loan during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.

These education benefits are subject to income limitations, and may be reduced or eliminated depending on your income. For more information, visit the Tax Benefits for Education Information Center at IRS.gov or check out Publication 970, Tax Benefits for Education, which can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Tax Preparation for Unfiled Tax Returns, and Substitute Returns

Tax Preparation is the key when you have unfiled taxes.  The IRS will send you notices in an effort to get you to file your return(s) and when you don’t respond they will prepare what they call a Substitute Return and regardless of what you say, this will become the amount that you will owe the IRS.

They can then garnish your wages, levy your bank account and require that you pay what the Substitute Return says you owe.

The ONLY way to change what the Substitute Return says is to file your OWN tax return.  This is when tax preparation becomes key.  Your tax return has to include all income which is in your tax file.  This is not the time for your tax return to say something different then what the IRS has on file.

Your tax preparation must match the income on file and can include the legal and reasonable deductions which you are entitled to.  This unique work does not require a high priced law firm.  What is needed is a tax preparation service which has extensive experience in filing and preparing past due tax returns.

You can contact http://taxeswilltravel.com now and view the fees for tax preparation on the home page.  The service is licensed, bonded and registered with the IRS and provides confidential online tax preparation

Hot Shot Gamblers and the IRS, Tips to Help You File Back Taxes and Current Taxes

This information is for hot shot gamblers, who have won money gambling.  Yes, the money you won is tax deductible, however, so are your losses, up to the extent of your winnings.  To read the exact tax law as provided by the IRS, continue reading

 

 

Five Important Tips on Gambling Income and Losses

 

Whether you roll the dice, bet on the ponies, play cards or enjoy slot machines, you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling losses…but only up to the extent of your winnings.
Here are five important tips about gambling and taxes:

1. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.

2. If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings. The payer must give you a W-2G if you receive:

• $1,200 or more in gambling winnings from bingo or slot machines;
• $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
• $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
• Any other gambling winnings subject to federal income tax withholding.

3. Generally, you report all gambling winnings on the “Other income” line of Form 1040, U.S. Federal Income Tax Return.

4. You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.' You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.

5. Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings. Refer to IRS Publication 529, Miscellaneous Deductions, for more details about the type of information you should write in your diary and what kinds of proof you should retain in your records.

For more information on gambling income and losses, see IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income, both available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
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If you or friends, or love ones need to file back taxes, please visit us at Taxes Will Travel.com

invoice Lines of Credit for Construction Projects and Sub-Contractors

Sometimes, it’s the sub-contractors who have the worst cash flow months, in the history of the company while working one of the largest commercial construction jobs ever.  This is a common scenario for many small to medium size construction sub-contractors who work for extremely large commercial construction contractors.

When working Government construction contracts, a bond is often times required, which helps to eliminate the possibility of getting Accountants Receivable Funding.  But with the sub-contractor, in most cases this is NOT the issue.  There are Lenders who are looking for commercial construction sub-contractors who have payroll and other obligations which must be met on a weekly and monthly bases.

This is the sub-contractor who can be helped by Invoice Lines of Credit.

What exactly is Invoice Lines of Credit for Commercial Construction Contractors or Sub-Contractors?

It is when you sell your Invoices at a discount for “immediate working capital” to meet your obligations in a timely manner.  Some Commercial Construction Accounts Receivable Lenders get more involved with a client’s business than others, but the end result is the same.  The construction company stays on target with payroll and other obligations, no matter what is happening with the General Contractor or the direct Client who is financing the construction project.

Your credit is usually not an issue.  The credit of the General Contractor or the major client is the determining factor.  And, your Invoice Line of Credit or Accounts Receivable Lender will advise you against working with a client who may not be able to pay.

 

To learn more and be connected with a major Commercial Construction Invoice Line of Credit, Lender, answer six easy questions, and we will find you a suitable Lender.  Visit: http://taxeswilltravel.com/Application.htm now, for action today.

Can't Figure Out Where to Travel Next?

I remember several years back, I knew I wanted to travel to Africa, but what I couldn’t figure out was which part of Africa.  I had a choice of visiting the Ivory Coast to learn more about the side of the family which had migrated from there against their will.  Then after much study and meditation, I learned that it had been the Africans themselves alone with Europeans who had laid the ground work for the ships with human cargo.

It was then that I decided that I wanted to visit the “top” of Africa and learn more about the Egyptians.  Something within me made me realize that most of my questions would be answered if I went to Egypt, rather than to the Ivory Coast.  I told myself, that with the information I learned in Egypt, I would be able to return to the West Coast of Africa in the future.

I made the right decision, for me, however, there was one major mistake.  There was no way that I was suppose to visit Egypt, cruise the Nile and remain in Africa for 10 days, without visiting Israel, while I was in that region of the world.  There is a reason why the travel industry promotes Egypt as a side trip when tourist, travel to Israel, and, visa verse when tourist travel to Egypt.  I didn’t study ‘all’ of the Travel Information, or I would have known that it would have been a good idea to visit the place where the Jews left from and the place they ended up, after 40 years!

I fully realized before I left the US, that ‘Travel is Education at It’s Best,’ and learning more about the journey from Egypt to Israel would have been extremely educational.  But as it was, the information was so powerful and overwhelming from my journey to Egypt, I’m not sure I could have handled the emotional outcome of visiting both places.

I thought it was only me who had a problem making a decision as to where to go next.  But as it turns out, the keywords: ‘places to travel’ is searched over 800,000 times a month on just one major  search engine.

Travel Information and travel classifieds goes a long way in helping travelers to learn more about where they might want to travel next.  Sure hundreds of thousands of people know they want to go to Hawaii, but which Island?  Do you want to fly, or cruise?  Or, fly to Hawaii and cruise the Islands for seven days?  What about the Mexican Riviera cruise? (Beautiful)

Or would you just rather go to Las Vegas?  And what about that trip to Disneyland that you promised the kids?  And since the cruise industries recent incidents, the cruise companies are almost giving away cruises, to get new people to cruise.  (Those of us who are repeat customers of the cruise industry, rarely allow incidents to stand in our way of a cruise – we understand that for the most part cruise ships are safe)  And you only have to unpack once, all meals included?  Visit three, four or five ports, two or three countries. Too many decisions, not enough vacation time. 

To gain insight on different places to travel, visit T360 Travel Classifieds and just browse through the travel categories.  There you will find some amazing travel tours, vacations, romantic travel, and much more.

Asset Based Business Loans for Staffing Agencies, No Financial Required

Staffing Agencies are a crucial part of the economy rebuilding itself.  Employers would rather use a temp-staffing agency for a number of reasons, the most important being that it is always better to rent an employee before actually hiring.

Staffing Agencies can experience sudden growth periods, which some may not be ready for, when it comes to paying new employees.  In most cases, the Staffing Agency is required to provide the talent, and then Invoice the employer for the hours worked.  However, the staffing agency must pay their staff every week or every other week.

This can create a cash-flow concern, if the payroll is larger than the current Invoices which have been paid.

One of the ways small Staffing Agencies have eliminated this problem is to “factor” their Invoices.  This is when a company sells its Invoices for immediate working capital.  The Lenders make money by charging the small business owner a fee for providing immediate cash.  (All fees are 100% tax deductible)  The Lenders also provide assistance in making sure the small business owner is doing  business with reputable companies who will pay their Invoices in a timely manner.

The fees can be negotiated and usually there is no need to sign an on-going contract.  The decision to  factor a Staffing Agencies Invoices, usually is dependent on the credit worthiness of the small business owner’s clients.

This is the way small staffing companies have become “big” staffing companies.  When you have control over your cash flow, you can expand your business.

Invoice Lines of Credit transactions also work well for manufacturing companies, suppliers, and commercial construction Invoices.  Usually, financial statements are not required.  Setting up an Accounts Receivable Line of Credit "before" you actually need it, is a safe and wise decision.  Visit now, short app only six questions:  AR Invoice Line of Credit

EIC Credit Can Provide Large Refunds, Even If You Legally Did Not Have to File

EIC - Earned Income credits, even filed up to three years late, can result in high IRS refunds, due to the EIC credit.  The credit helps low income parents who have children.  It can be between $1500 and $3500 per tax year.  A young mother filing 3 years of back taxes could easily see a refund check for $8000 to $9000 depending on her circumstances.

Get help at Taxes Will Travel

Forget Travel If You Owe the IRS?

Taxpayers may want to learn more about this new bill which is being, or has been introduced to Congress:  The bill proposes that if you owe the IRS more than a set amount that you won't be able to travel.

Please read the entire article on the Forbes website, cause when you repeat this information to your friends, you want to get it right.  Forget Travel If You Owe the IRS

Tax Lopphole #21

Tax Loophole #21

A loss from one business will reduce your profit from another business!  Form 1040 Schedule C

Comming Soon, before November 1, 2012 $1.99 for Twenty One Major Tax Loopholes, on your nearest Amazon dot com store. 

What Never Ever Do, If You Are Being Examined by the IRS

     1.       Review the letter and attachments which the IRS sends you.

2.      Agree or not, to the IRS proposed changes

3.      Do NOT sign anything unless you understand exactly what you are signing.

4.      If you disagree with the IRS’s proposed changes, and have the documentation to prove your case, NEVER send your original document to the IRS.  Make a copy, explain and send to the IRS

Be sure to respond to the IRS by the deadline given in the letter they send to you.

If you agree with the proposed changes, then sign the agreement page of the letter and pay any additional tax, penalties and interest you may owe.

Using Invoice Lines of Credit to Get Your Invoices Discounted

Cash discounts are amounts your suppliers let you deduct from your purchase invoices for prompt payments.  In order to take advantages of these cash discounts, a company must have a positive cash flow in order to pay all expenses which occur before another Invoice is paid.

Some companies who don't have a problem with this process and can pay all expenses in advance.  Other companies due to the economy, higher cost of materials and a vast number of other reasons, at some point during the year may not be cash flow positive.

Accounts Receivable Funding eliminates this problem and allows a company to control the cash flow on, a month to month bases, without incurring more debt and filling out a mountain of papers for a Line of Credit at the bank.

Invoice Lines of Credit are usually made without regard to your credit.  However, the company who owes you is the credit whoes credit is of importance to an Accounts Receivable Lender.

If you are in need of an Industry Leader in Invoice Lines of Credit, visit AR Business Funding for more information

Moving? Tax Write Offs, Under Certain Conditions

You may qualify to deduct your moving expenses if certain conditions are meet.  The list below will give you insight into weather your moving expenses are tax deductible.  Basically, only moves which are required by your work, qualify for tax write offs.

This list was provided by the IRS, and leaves little room for negotiations.

1. Expenses must be close to the time you start work Generally, you can consider moving expenses that you incurred within one year of the date you first report to work at a new job location.

2. Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous main job location was from your former home. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home.

3. Time Test Upon arriving in the general area of your new job location, you must work full time for at least 39 weeks during the first year at your new job location. Self-employed individuals must meet this test, and they must also work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location. If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test. There are some special rules and exceptions to these general rules, so see Publication 521, Moving Expenses for more information.

4. Travel You can deduct lodging expenses (but not meals) for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay, but you can only deduct one trip per person.

5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property, including the cost of shipping household pets. You may be able to include the cost of storing and insuring these items while in transit.

6. Utilities You can deduct the costs of connecting or disconnecting utilities.

7. Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, a drivers license renewal, costs of buying or selling a home, expenses of entering into or breaking a lease, or security deposits and storage charges, except those incurred in transit and for foreign moves.

8. Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your deduction for moving expenses, use Form 3903, Moving Expenses.

9. Reimbursed expenses If your employer reimburses you for the costs of a move for which you took a deduction, the reimbursement may have to be included as income on your tax return.

10. Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS.

T360Travel Classifieds, Travel Articles, Deals,

T360Travel Classifieds, Travel Articles, Deals,  New travel deals posted each day.  Can find the airfare comparison tool at: Airfare Comparison Sites Vs Travel sites

Here you will find an article on the top travel sites (2012) and the top airfare comparison sites and tools which are poping up.  Save time and money. 

How to Tell If Your, Tax Return May Be Audited, and How the IRS Selects Returns for Audit

Most tax returns are accepted by the IRS without a problem.  E-filing a tax return is an excellent way to reduce the chances of being audited. 

The IRS uses several methods to determine which returns that will be audited.  These methods include, random sampling, computerized screening and comparison of information received by the IRS such as Forms W-2 and 1099s.

Special note:  Once you have completed your return, ask your tax professional, or if you are preparing your own return, click on the report which provides “National Averages Comparison” – you want to be sure that your National Averages are in line with other tax payers in your same income bracket.  (AGI)

If your tax return is very different from the National Average, make sure you understand why.  There may have been a loss, or a gain, high medical bills, etc on your return.

 What every you do, be sure to maintain supporting documentation.

SEO On a Tight Budget, Learning More About SEO Web Hosting

Professional search engine optimization can be expensive, and there is no getting around the fact that you need someone who understands the existing search engine polices, in order to make a serious difference in the search engines.  And usually, this type of company can be expensive.

There are some things a small business owner can do to increase your exposure online: 

1.      You can purchase a short and catchy domain name which includes one of your keywords, as soon as possible.  The search engines don’t seem to like new sites as much as they like older sites.

2.      You can search Google for Google Places and activate your business listing. (Important)

3.      You can make sure your site or business card is hosted with a web hosting company that is compliant with the major search engines.

4.      You can post a classified ad, with 400 to 500 words using select keywords, onto several of the major (free) classified ad sites, such as eBay Classifieds, Oodle, Backpage and of course Craigslist.  (This one task when done correctly can create great results when it comes to the search engines.

5.      You can join the social networking band wagon and post information that includes your keywords in your post. 

6.      You can set up a free blog and ensure that the pinging option is enabled.

7.      You can locate an affordable pinging service and have you blog pinged. (Blogger includes a limited pinging service for free)

8.      You can take the time to post on major blogs which are in your same industry.

9.      You can learn how to write articles about your business, service or product and submit to a major article portal.  You will want to link your article back to your sit, blog or social networking site.

10.   You can stay away from unknown SEO tactics which can harm your relationship with the major search engines

11.   You can submit your site, free, to the search engines and directories.

12.    You can be patient.  The search robot engines are really busy.  Be patient, and one morning you will wake up and find that your efforts have really paid off.

In addition to the above suggestions, there are some really high quality SEO services online, which are extremely inexpensive, and effective.  In fact, there are over two million site owners who swear by this one particular service, which is provided by one of the largest web hosting companies on the web.

You can find out more about SEO Web Hosting by clicking here: http://seoworkinprogress.com

You should also be aware that Blogger is owned by Google and when they find “good” quality content on a blog, they appear to have no problem indexing the post.  However, you may want to take a look at Wordpress.org.  This blog community has a lot of “Plug Ins” which can make life much easier.  It’s all a matter of what works best for you.

Tax Benefits, Lower Cost of Living in Retirement

Thinking of joining millions of Americans who are moving offshore in order to live a better quality of life on a set retirement income?  You are not alone.  And this is fast becoming a really hot topic.

For more information on offshore tax havens, cheap and safe places to retire, how to manage your money in offshore retirement, health care and much more, you can visit our sister site: http://forgottosaveforretirement.com/   If you look to the far left of the page, you will find a link which thousands of visitors to this site have clicked on.  It's entitled:  "44 Things You Must Know Before Retiring or Investing Offshore.

We are not encouraging the "investing" offshore until you know what you are doing, and your state side Attorney has has an opportunity to look at the paper work.  However, we are saying that a decision to move offshore, or even to make your primary home offshore, could have some serious and positive end results when it comes to taxes.  Learn more: http://forgottosaveforretirement.com/

Why Do the Wealthy Set Up Offshore Accounts in the First Place

Someone sent us an email and asked "Why would a taxpayer set up an offshore account if they plan on paying the taxes, no matter what?"  Click here to read the original post on why the wealthy set up offshore accounts  (Plus you have to remember that some offshore accounts are set up in countries where there are NO taxes for individuals or corporations - And, the right hand doesn't always need to know what the left hand is doing!)

This is a valid question, and surely comes from someone who uses the Tax Charts to determine their tax liability each year. 

When you are blessed with a seven figure asset base, and an annual income to match your seven figure asset base, your taxes are calculated a little differently then a regular W-2 or 1099-MISC tax return, which does not include capital gains.

A lot more tax laws come into play and sometimes, there are disagreements on what the intent of the tax law actually is.  If the IRS views the tax law one way and your tax attorney viewed the law another way, and prepared your taxes accordingly, the IRS would send a letter adjusting the amount of taxes owed, and it you didn't comply within a set amount of time, they can and will levy your bank account. End of discussion!

The less money you earn, the more secure you are in how much you owe or don't owe the Department of Treasury.  Wealthy people have a lot of concerns when it comes to how much they can save in taxes.  And, some times these issues can end up in court.  And, we are almost sure, attorneys  may test the IRS, in order to see if they can save the client millions in taxes

This subject is above my pay grade, however, I hope I have answered the questions to your satisfaction. www.taxeswilltravel.com

Make the US Gov Your Client, Factor Your Invoices, Increase Working Capital

On any given day you can find anywhere from 28,000 to 35,000+ Government Opportunities at www.fbo.gov and from there you will understand that the US Government pays out millions and millions of dollars each work day to small, medium and big business.

They are RFP (Request for Proposals) for everything to buttons for US Army uniforms to feed for pigs, not to mention moving companies, truckers, cooks, administration, te100chnology, research, defense contracts and a vast host of other contracts and services.

If business is slow, you have the largest buyer in the world placing hundreds of thousands of contracts on a web site, waiting for you to bid and be awarded the contract.  Well it's not that simple, but it might as well be, because that is exactly what happens.

Lets say you are a small business who manufactures widgets.  The US Government wants to purchase your widget, lets say 100,000 a month.  Because you are a small company, you don't bid on the contract because you are short on working capital, especially for the delivery of the second 100,000 widgets.

The little know secret that many government contracts won't share with you is:  Congress voted in the Assignment of Claims Act in 1986.  What Law says is:  Government Contractors can factor their Accounts Receivables for immediate payment.

What?

Factoring is the act of turning your Invoices into working capital, immediately after you have sent the Invoice to your client.  And in this case, your client would be the US Gov.

So as a small manufacturer, you won't have to wait 30 days for payment, you can get paid after you have delivered the widgets to the US Gov.  (Note:  You will need to set up your Accounts Receivable Financing in ADVANCE, in order to be paid ASAP.)

Need business financing?  Visit: http://taxeswilltravel.com/Application.htm  Financials or Credit not an issue - no fee for placement. 

Need more clients? Defense Department, Veteran Affairs, Hud, Federal Reserve?  Visit: www.fbo.gov

Secrect to $500,000 (Married Filing Joint) Exclusion of Gain When Selling Your Primary Home

OK, you are ready to retire and you fully realize that selling your home and moving to a smaller retirement community, or not, you want to sale.  The upkeep is too great, the utility bill is much more than you can afford to spend, during your retirement years, plus you want to travel the world, and a big house is NOT in the picture.

This short list of ten tax tips for individuals selling their home, will help you to stay out of hot water with the IRS and reduce your tax liability if done correctly.

What the IRS forgot to explain in this famous top ten list, is there are conditions for excluding up to $500,000 (a half million dollars) of the gain from the sale of your home.  The conditions basically say that you must have lived in the home for two years, during the five year period before the sell of the home.  And, of course, you must have owned the home.

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The Internal Revenue Service has some important information for those who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may be able to exclude all or part of that gain from your income.

Here are 10 tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the full exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale of your home on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude. Most tax software can also help with
this calculation.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523, Selling Your Home, for details.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.  www.irs.gov

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The IRS leaves NOTHING to chance.  And if someone uses a tax loophole which they don't have a tax code for, guest what?  It is only a matter of having Congress vote on a new tax law!

Note:  If you have a summer home and you would like to sell it as well, we suggest that you retire, and live in the summer home for two years in order to qualify for the exclusion.  These are decision that would best be made with the help of your tax professional.  Cautious tax payers do not buy or sell ANYTHING, without checking with their tax professional first, because once you sign your name on the bottom line, you are held accountable for the tax liabilities which the transaction can create. www.taxeswilltravel.com

Do I Have to Report Illegal Activity Income on My Tax Return?

Answer:  YES.  ALL income must be reported, including income from illegal activities, including blackmail, theft, embezzlement, kickbacks, etc.

You include this income on Form 1040, line 21, or on Schedule C or Schedule C-EZ, if you are self-employed in illegal activities.

Publication 17 - Chapter 12
http://irs.gov

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Conversations On the Internet In Reference to the Above Subject:

Report all your income and after you weasel your way out of the criminal charges, you can't be accused of tax-evasion.

FATCA Act Will Allow Offshore Accounts to Take 30 Per Cent Out of Your Foreign Bank Account?

 

Foreign Account Tax Compliance Act (FATCA) and Form 8938

The following information is extremely important to tax payers who have offshore assets, accounts and dealings.  It is highly suggested that you read, and contact your Tax Attorney if this applies to you.  Congress is playing “big brother” and countries who do not play, may become “the capital” of offshore accounts Feels like money is shifting. ----

The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts. Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season. In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

To properly comply with these new reporting requirements, an FFI will have to enter into a special agreement with the IRS by June 30, 2013. Under this agreement a “participating” FFI will be obligated to:

(1)   undertake certain identification and due diligence procedures with respect to its accountholders;

(2) report annually to the IRS on its accountholders who are U.S. persons or foreign entities with substantial U.S. ownership; and

(3) withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a U.S. person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial U.S. owners.

The above information can be found on the IRS web site at: http://www.irs.gov/businesses/corporations/article/0,,id=236667,00.html

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Important Note:  It is NOT illegal to have an offshore bank account or offshore assets, however, it IS illegal not to put this information on your annual tax return. 

Taxpayers who are legal often times are NOT trying to hide money from the IRS, they simply have placed the money in accounts where the IRS or no other agency, can touch!

To date, if the IRS sent a bank levy order to an offshore bank account, very little if anything would happen.  However, if that same levy is sent to an U.S. bank, the money would be taken out of your account and sent to the IRS.

Of course when the IRS knows that you have assets in an offshore account, we believe, they may be lest tolerant of your delay to pay your tax liability when requested to do so. 

This sort of information is above our pay grade.  Please contact your tax attorney to discuss how this will affect you.

The Following Tax Credits Count Really Big

Any of the following tax credits, you may be able to SUBTRACT from your income tax.  Review them mid-year to see if you might qualify by the end of the year:  (A small step in tax planning)

Alternative motor vehicle

Alternative fuel vehicle refueling property

Child and dependent care

Child tax credit

Credit to holders of tax credit bonds

Education

Elderly or disabled

Electric vehicle credits

Foreign tax

Mortgage interest

Prior year minimum tax

Residential energy

Retirement savings contributions