MORE INTERESTS

ASTROLOGY
LOW CAL FOOD GUIDE
DATA RECOVERY
ONLINE CERTIFICATION EXAMS
CURRENT TECHNOLOGY
INVESTMENTS
STOCKS AND TRADING
CURRENCY TRADING
MAKING MONEY FROM FRANCHISEE
NETWORKING
MANAGEMENT
BRANDING
ADVERTISING
RELATIONSHIP
WORK FROM HOME
DATING

HOME PAGE

Vat Registration

Businesses become liable for vat when sales reach the vat threshold set on 1st April 2007 at £64,000 p.a. regardless of whether that business has registered for vat purposes. Businesses whose customers are vat registered should consider opting for voluntary vat registration as sales would not be affected by vat registration and registering would permit that business to also reclaim vat input tax on purchases. Businesses with mainly non vat registered customers may wish to delay vat registration until the point is reached at which liability to vat tax becomes inevitable. Consideration should be given to maintaining sales below the vat threshold provided this does not result in a significant loss of profit. When the vat threshold of £64,000 p.a. is exceeded Customs & Excise should be advised. It may be possible to delay vat registration if sales breached the vat threshold due to an abnormal sales period that may not necessarily be repeated in the foreseeable future.

Having reached the point of vat registration consideration should be given to the various vat schemes which are available to either simplify the vat calculation or smooth the vat tax liability.

Choose the right vat scheme for your business

Unless a vat scheme is adopted then the standard inputs and outputs vat scheme would be applied. This involves charging all customers vat on sales known as output vat and paying this amount to the Vat office each quarter. Vat Registered businesses can also deduct from the vat liability the input vat on purchases that suppliers have charged the business. It is important to ensure all sales and purchase invoices are retained and an audit trail from the individual transactions to the vat tax liability is maintained as Customs & Excise do inspect vat records, the frequency of those visits, often once every three years can increase dramatically if the vat records are considered inadequate. Accounting Software can provide a solution to record keeping and DIY Accounting produce automated vat calculations from the basic data entry of sales and purchases on excel spreadsheets.

Vat Schemes

Vat Flat Rate Scheme

The vat flat rate scheme can be adopted by businesses that have an annual turnover excluding vat of under £150,000 p.a.

Instead of paying the difference between vat on sales and vat on purchases businesses that have adopted a vat flat rate scheme pay vat at a percentage of sales in line with the average for that trade sector. Vat is not reclaimable on purchases under the flat rate scheme. The Customs & Excise website contains details of the vat flat rate percentages for each sector.

Customers are charged vat at the normal vat rate, 17.5% if standard rated goods. The actual vat payable is then calculated at the appropriate percentage of the total sales figure including vat. An adjustment to the accounts would then be required to adjust for the difference between the vat paid and the amount payable if an inputs and outputs basis had been used. DIY Accounting software automates this flat rate calculation by automatically calculating the vat on sales at the flat rate and expensing the vat input to the purchase accounts.

Businesses in their first year of vat registration also receive a 1% reduction in the vat flat rate for their trade sector which can save tax.

Annual Vat Accounting Scheme

Not suitable if you receive repayments of vat, the annual accounting scheme is based upon an annual estimate of the vat bill which is then paid in monthly or quarterly instalments throughout the year with the balance payable or received at the end of the year when the annual vat return has been submitted.

The vat threshold for this scheme is businesses with a sales turnover not expected to exceed £1.25m.
The main benefit of the annual accounting scheme is to smooth the vat payments over the year.
Vat Cash Accounting Scheme

Under the vat cash accounting scheme the vat return and liability to pay vat is based upon the date sales were received and the date purchases were paid rather than the invoice tax points.

The vat threshold for the cash accounting scheme is businesses with a sales turnover excluding vat of under £1.35m.which can be extended for existing users to a turnover of £1.6m and left in place for up to 6 months after the vat threshold has been breached. Accounting for vat using the Cash Accounting Scheme may require businesses to record sales and purchases on cash received and paid basis and adjust accounting records for accruals. Alternatively, sales and purchases can be entered into the Accounting records based upon the invoice tax points and a quarterly adjustment made for debtors and creditors at the beginning and end of each quarter. Such accounting adjustments would not be suitable for everyone.

Vat Retail Schemes

Retailers selling to the general public may not easily be able to produce vat sales invoices to individual customers and there are various vat retail schemes available on the Customs & Excise website that retailers can adopt.

The main benefits of the vat retail schemes are to dispense with every customer being issued a vat invoice unless requested.

Vat retail schemes can be used in conjunction with both flat rate schemes and the annual vat accounting scheme.

THE POSITION OF ACCOUNTANT IN YOUR FINANCIAL LIFE

In the view of most people, the accountant is just someone filling out tax returns. This is really a narrowing of the potential help your accountant can give you.

The best way to understand the role of the accountant is to understand the nature of accountancy. Accountancy does not involve the creation of something new and unique. It would not be considered an artistic field. What accountancy involves is the determination of reality. It examines the real situation that exists. For example, if an accountant is doing an inventory of the total number of widgets in your warehouse for an audit, they will arrive at the exact numbers that are there. If that number does not match the number you would like it to be is not the concern of the accountant. It is the real situation with which they are concerned.

This is where too many people go astray. They are expecting the accountant to give them answers and what they are going to get is information. This is not to say that the accountant with their experience and training cannot answer questions about options. They can be a good source of counsel, but they are not the decision makers. The accountant license requirements are very specific about Profession Ethics and this is for good cause.

The Certified Public Account has followed a program of education, experience, and examination to become certified. Along the way, they have come to understand ethics and they are subject to several legal penalties for malpractice. Although, they can offer guidance and advice that can be helpful, they can't take the responsibility for the ultimate decisions that impact your life. The client should not ask them to do this nor expect it of them. Decisions about such critical matters are always left to the clients with the accountant providing advice and information.

The area of taxation has become so complex. The accountant has a role in the preparation of tax reports and can set up tax shelters. The tax implications of just about every major financial management decision that you make will have an impact on your future. An accountant who can keep you abreast of these implications is extremely valuable. Never overlook the tax role of your accountant.

Many people view the role of the accountant as something for richer Men and bigger business. This is a mistake. The most important financial decisions are the ones that impact you and your own personal situation. Long term management and such things as taxation and estate planning are not for the very rich only. The role of the Certified Public Accountant is to be the accountant of the public.

ACCOUNTANT OVERVIEW

Taxes can be insanely confusing, so it is vital that you get all the help you can. An accountant is a good choice in most cases. Here is why.

Accountancy is the measurement of financial information. It also deals with the concept of assurance of accuracy with this financial information. To put this in more simple terms, accountancy is the method by which we compile and transmit an accurate picture of a given financial situation. If you were to count the money in your pocket, making sure you had included every penny and then made a record of the total that was accurate and reflected the exact amount counted, you would have done accountancy on the status on your cash in hand.

Most people are familiar with the accountant. They view him as a person who does their taxes or works in the accounting department at their job. The image of the accountant in popular culture is of someone with a calculator in their hand; thick glasses from studying rows of figure; and a rather disciplined respect for accuracy in everything. Although, the calculator and thick glasses are a mistake, the respect for accuracy is much closer to the truth.

Accountants work in both the public and the private sector. They are involved in many aspects of financial management beyond the accounting departments of business. They include tax specialists and top executives in the business sector. The field is fairly extensive and growing larger. The advent of the computer and its ability to process and store information has changed the field of accounting greatly in some ways. In other ways, the basic principles of accounting and accountancy have been unchanged since early history.

There has always existed a need to generate accurate pictures of financial situations and conditions. The dual entry bookkeeping methods still used as the basis of business accounting may have been developed and used since biblical times. It is important to understand that the accountant does not create the business situation. Their role is to present it in a manner that represents it reality at any given time. It is like taking a snapshot of a particular situation at a particular moment in time.

The field of accounting is growing and the opportunities within are greater now than at any time in history. The world is merging into a massive global economy and accurate and trustworthy accountancy of this new financial mega structure is critical. Auditing and accountancy creates information that gives managers the knowledge that they need to make current decisions and future plans. Too many view accountants as only dealing in the past. They are really the ones who give us the information we need to plan for the future.

BACK TAX DEBT

Many taxpayers owe back tax. If you are one of them, maybe you are thinking if you ignore this problem, it will go away. Maybe you are afraid that if you do something it will create even more problems. We know that IRS Problems can be scary. This is a serious matter. You must deal with this immediately so you are not assessed with even more debt with the addition of the interest and penalty charges. Let our firm help you reduce and/or solve your IRS Problems. Do not wait another day. Start the process now so you and your family can start a new chapter in your lives.

To help you understand how to deal with back taxes, it is important to know what tactics the IRS uses. These tactics include written or face-to-face audits, federal tax liens, wage garnishments or levies, seizures of property and bank accounts, and even the possibility of jail.

Did you know that you can negotiate with the IRS? Negotiate you say? Yes, you can negotiate with the IRS. Negotiating with the IRS may help to reduce the amount you owe. If this figure can be reduced to a size that you can afford to pay, your IRS Problems are gone. Among the options we can consider are Offer in Compromise, installment agreement, wage garnishment release, currently not collectible status, bank levy release, and innocent spouse relief if applicable.

These steps will help you get your back tax debt in order:

• Get all your tax documents together: tax forms, W2s, etc.
• Prepare your tax returns: either by yourself or with the help of a tax professional
• Protect your refunds: yes, you might have a refund waiting for you
• Pay your tax debts in full: create a plan to accomplish this
• Plan ahead for next year: find strategies to reduce your taxes for next year

It is important to remember that when filing back taxes that you have to file on paper and they need to be mailed to the IRS. You cannot file electronically. If you have multiple years to file, mail each year in a separate envelope and send them Certified Mail. This will give you proof that they were received by the IRS. You can also hand deliver your tax returns. This is especially important if there is a time factor. If you take along copies of the first page of each return, you can ask that they be stamped as received so you have evidence of receipt.

WILL I GET AUDITED ?

It's the dread of every US taxpayer - the IRS audit. Most of citizens only have a vague idea of what an audit is and how to prepare for it. Everyone has heard nightmarish stories of audits - lost receipts, probing questions about deductions taken years ago, and, the worst, owing huge sums of back taxes. The audit has been called the financial equivalent of a rectal examine.

The odds of being audited by the Internal Revenue Service are really quite slim. Of 131 million returns received by the IRS for the 12 month period ending October 2005, only 1,216 were audited. But it's a perpetual possibility for which everyone must be prepared.

Many taxpayers take the standard deductions and will never have to worry with the years of old receipts and financial records from the past. In fact if the IRS decides to take a look at the tax history of a citizen who has only taken standard deductions, chances are she will never know that she was investigated. The IRS agents will simply look at her past returns, see that she took the standard deductions, and move on to the next taxpayer.

But anyone that claims deductions beyond the standard deductions should be prepared to defend their tax return. Self-employed worker, small business owners, anyone claiming investment losses or virtually any other financial circumstance beyond the usual salary minus standard deduction scenario should be prepared.
Taking deductions or claiming that certain expenditures are business expenses reduce the total taxes owed. The IRS expects make taxpayers to make such claims. Deciding what is a legitimate deduction or business expense is left largely up to the taxpayer and her advisors. Deciding whether to accept them is up to the IRS and, in the case of an audit, the auditing agent. Therefore surviving an audit depends on being prepared to defend the deductions taken.

Good record keeping is the key to being prepared. Save all receipts and keep them in an orderly way so that if an audit ever happens locating them will be easy. Keep records of all transactions that affect each year's taxes - both income and deductions. Make sure that all transactions are clear, traceable and can be explained. Maintaining honest and straightforward financial records will offer most taxpayers the ability to survive an audit.

CONSEQUENCES OF NOT FILLING A TAX RETURN - WILL I GO TO JAIL ?

You will have instant IRS Problems if you do not file a tax return. The Tax Code has specific time lines or statutes of limitations set out that allow the IRS to pursue nonfilers.

Criminal: Criminal charges can be brought against you only within six years of the date that the tax return was due.

Civil: There are no deadlines but civil penalties can be imposed. The penalties and interest can be assessed on the taxes you owe forever.

IRS policy: The IRS does not usually pursue a nonfiler after six years from the filing due date.

If you owe taxes and do not file a tax return, it is a crime. You can be fined up to $25,000 per year and/or sentenced to one year in prison for each unfiled year.

If you file your tax return and it states that you owe taxes and do not pay them, there is no criminal penalty. Your unpaid taxes will be assessed penalties and also accrue interest though.

Ways the IRS pursues nonfilers include:

• The Computerized Information Returns Program (IRP). This program matches information documents against tax returns you have filed. If there is no information found indicating that you filed a tax return, the IRS initiates a Taxpayer Delinquency Investigation (TDI). You will receive notices from the IRS, then phone contacts or more letters, and finally a revenue officer might start looking for you.

• The IRS has four different ways to notify nonfilers. If you do not respond to one method, the other methods will be tried. o Written request from the Service Center. You will receive three notices within a 16 week period. o Phone call or letter from a taxpayer service representative. At this time, you will be given a deadline to file your tax returns.o Call or visit from a revenue agent or officer. You will be given a deadline to file your returns with the officer or they will offer to help you prepare your returns. (If you still do not file your returns, the IRS can legally prepare them for you.)o Visit from a special agent. If this happens, it means you are subject to a criminal investigation.

DEALING WITH IRS APPEALS

If you have been experiencing IRS Problems you may have reasons to consider appealing a decision made by the IRS if you disagree with the outcome of any of the following:

• Tax audit results

• Penalties assessed

• Interest accrued

• Tax lien placement

• Tax levy placement

• Asset seizures

• Offer in Compromise rejections

If you have been the recipient of one of the above actions, you should receive a notice from the IRS letting you know that you have the right to appeal an IRS decision. If you do not agree with the IRS then do not sign the agreement form that is sent to you. Your next step is to request an appeals hearing.

Do not consider an appeals hearing if you owe the IRS money but cannot afford to pay the bill. If the notice you receive from the IRS is an actual bill there may not be mention of the possibility of appeals.

Be prepared to show your reasons for disagreeing with the IRS decision. You will need to be able to back up your reasons with documentation.

Read the notice to find out how to prepare your request for an appeal, where to mail the request, the deadline for receipt of the request, and what information should be included with the request.

It should be noted that filing a request for appeal does not stop the interest and penalties from accruing on your bill.

Appeals hearings can be done in an informal manner, by correspondence, by telephone, or in person. You will be happy to hear that most disagreements with the IRS are settled in appeals.

The type of case you are appealing and how long it takes the IRS to review the file will determine how long it will be before your case goes to Appeals. A typical time frame for hearing from the IRS is approximately 90 days after you have filed your request. You should contact the office you sent your request for appeal to if you have not heard from the IRS after 90 days. They will be able to tell you the date your appeal was forwarded. The 90 days time frame will start from that date.

DON'T NEGLECT AFTER TAX SAVING FOR RETIREMENT

We are almost all familiar with retirement savings and investment programs that are pre-tax like 401k's, 403b's and IRA's. These programs give you a tax break today, since the amounts you contribute today is on a before tax basis. This means your taxable income is reduced for the year by the amount of the contribution, subject to the statutory annual limits. Income earned in these "before-tax" accounts is not taxed until normally withdrawn (after age 59 ½) and then it is taxed at the rate you are subject to in the year of withdrawal.

Retirement plans that are classified as after tax work in the opposite way of their "before-tax" brethren. They are called Roth IRA's and are funded with money after you have paid the income tax on the income in the years that you make your contribution. This "after-tax" contribution does not help you pay fewer taxes in the year you make the contribution. However, within the account the income is compounded year after year and you pay no tax on the yearly income or when you begin the normal withdrawal at age 59 ½.

This is a significant tax benefit during your retirement. Further, there is no mandatory withdrawal beginning at age 70 ½ as with the "before-tax" plans. The "after-tax" dollars you contribute to your Roth IRA are not taxed when you make a proper withdrawal. Importantly, all the income you've earned in the account is not taxed when it is withdrawn. This can be a significant amount.

Let's just look at the actual benefit in just one years "after tax" contribution. Assume at age 30 you invest $4000 (the maximum for your age in 2007, if over age 50 you can contribute $5000 in 2007 as a "catch-up" provision.) and you invest it in two above average mutual funds. Their earnings over the 35 years lets assume are 8% compounded monthly. The total in you account at age 65 would be about $65,170 or the original $4000 would have grown by $61,170. You can let it grow or just take out the earnings of about $5000 a year; the principal would stay about the same and regardless of your other income you would pay no income tax on the $5000 or whatever amount you choose to withdraw.

And remember this is only one year of contributions into your "after-tax" account. For many individuals who start early enough, and make regular contributions into their Roth IRA, the amount in their account at age 65 can be staggering. You might make a Google search for "compound interest calculator" and find an online calculator then plug in numbers consistent with your age, years to retirement, assumed return on your money and possible amount of contribution each year.

So, contributing to an after tax savings account today helps reduce the amount of taxes you'll pay during your retirement. This is to you benefit because most of us plan to live on a smaller income during our retirement years, however start early enough and you'll have greater income when retired than when working. This greatly improves your quality of life during retirement and opens up a myriad of options during your retirement years.

For a relatively small monthly after tax contribution each during your working years, you can be accumulating a large tax free account to use during your retirement years. In the end, you won't pay income taxes earned amount in your "after-tax" account. This is in contrast to traditional IRAs and 401ks, where you're really just delaying the payment of taxes since you eventually will pay taxes on every bit of money in these accounts, even the income that has accrued.

Many financial experts recommend that you plan for your retirement using a combination of before tax accounts like 401ks or 403bs along with after tax savings accounts or Roth IRAs. Using this combination helps you to save for your retirement in a way that helps you avoid some taxes both today and during your retirement years. This combination is one of the best ways to save taxes now and have a financially secure future.

MORE SMALL TAX HELP - MUST-SEE TAX DEDUCTIONS

In an earlier article, I talked about how you, as a small business owner, can rightfully claim many small business deductions as a way to reduce your taxes. In this article, I'll present several more. Check to see if you have included these in your tax planning.

1. Deductions for Travel

If you fly somewhere on business and you are not reimbursed for that expense, you can claim a write-off. As always, keep a detailed log or diary of your expenses. You can claim associated expenses such as taxi fares, subway tokens -- and even stuff like dry-cleaning expenses. As for meals, you can write off half your meal expenses.

You can even write off expenses you incur for employees and/or business associates that you are traveling with (friends and family members are out). Consult your tax professional for more details.

2. Deductions for Software

If your business uses customized computer software you can claim the expense of that software as long as you spread out the deduction over three years.

But...Section 179 of the IRS rules allow you take the write-off on computer software all in the first year, IF that software is "off-the-shelf," in other words, something like Microsoft Office. Consult your tax professional for more details.

3. Deductions for Charitable Contributions

When discussing this kind of deduction, the rules are a bit complicated. For starters, if your small business is a partnership, or if it is classified as an S corporation, or if you're organized as a limited liability company, your members will be filing the company's taxes on your personal forms -- including donations to charity that you have made. In other words, charitable donations are a "pass-through," as is the case with the company's income. C corporations are entitled to corporate deductions.

[Note: if you don't know what kind of classification you fall under, consult your tax professional or your attorney.]

OK, then, now that is out of the way, here are the rules:

You, as an individual, can write off 30-50% of your adjusted gross income as long as the organization you are donating to qualifies as a 501(c)(3)charity or foundation.

A corporation can write off up to 10% of their taxable income.

If you donate more than $250 you'll need to have a letter from that organization that confirms your contribution. Make sure you read IRS Publication 551 as well as the rules set forth in Section 179. Consult your tax professional for more details.

4. Deductions for Advertising

It's true: you'll either advertise your company now, or when you have your going out of business sale. Either way, advertising and marketing expenses are deductible -- if they are directly related to your business. They fall under the "Miscellaneous" category of write-offs. Check out IRS Publication 535 and consult your tax professional for more details.

5. Deductions for Legal and Professional Fees

OK, I saved this one for last because it relates directly to the thing I've said many times already: "Consult your tax professional for more details."

Fact is, fees you pay to your attorney and/or accountant are deductible -- under certain conditions. For example, you can't write off professional fees you expend when you buy a business asset (e.g., equipment). In that case, you include the charges in the cost of the purchase.

If you are a sole proprietor you can deduct tax preparation fees on your Schedule C or Schedule C-EZ. Also for sole proprietors, use your Schedule A of your 1040. Consult your tax professional for more details -- and don't forget to ask them about deducting their fees from your tax return.

Conclusion

The US government wants you to succeed in business. So they offer lots of latitude in claiming expense write-offs. So make sure you get what's yours.

FEDERAL HELP THAT REDUCES YOUR INCOME TAX

When planning your tax strategy for the year, you'll be glad to know that you can significantly lessen (or even eliminate) your income tax liabilities if you know what deductions and credits are available to you. For example, retirement planning can have a net positive tax impact. Similarly, owning your own home has positive implications for you. And, although college is more expensive now than ever, you can send your children to college and garner substantial tax benefits at the same time.

Here are some things to consider:

Let's assume for the purpose of discussion that you're married, with three kids (two in college) and you're employed full time. Your annual income is $76 thousand. And let's assume that you are making these plans at the beginning of the tax year, so that you have an entire 12 months to implement it.

One significant tax break you can get is by putting money into a 401k Plan.

If both you and your spouse each put five thousand dollars into your 401k account, that would reduce your annual taxable income by ten thousand dollars. This means that your adjusted gross income is $66 thousand. That will yield a substantial tax savings. Another significant tax break comes to you when you buy a house -- and itemize all your deductions.

Let's say you paid mortgage interest to the tune of $16 thousand. In addition, you paid real estate taxes of five thousand dollars. You also made charitable donations totaling $3500 to your church, synagogue, mosque or some other eligible organization. For purposes of discussion, let's say you live in a state that charges you income tax and you paid three thousand dollars.

Your itemized deductions equal $27,500. Now, your adjusted gross income is down from $66 thousand to $38,500.

If you claim 5 personal exemptions, your taxable income is reduced another $15 thousand to $23,500. Your income tax bill is going to be approximately three thousand dollars.

Now, let's see if we can whittle that down some more. How about using some relevant tax credits? Since two of your kids are in college, let's assume that one costs you $15 thousand in tuition. There is a tax credit called the Lifetime Learning Tax Credit -- worth up to two thousand dollars in this case. Also, your other child may qualify for something called the Hope Tax Credit of $1,500. Consult your tax professional for the most current advice on these two tax credits. But assuming you qualify, that will reduce your bottom line tax liability by $3500. Since you owed three thousand dollars, your tax is now zero dollars.

Not bad!

Lastly, since we are planning this strategy at the beginning of the tax year, you should go ahead and adjust your withholding amounts.

Since you've effectively done the planning ahead to reduce your tax liability to zero, you can go ahead and adjust your withholding to zero as well. But don't stop there: open up a Roth IRA (both of you) and put the excess cash there before you even have a chance to spend it. And if you have anything left over, set aside some money for your third child who isn't due to enroll in college for a few years yet.

Conclusion

With some help from the Federal tax code, you can reduce your income tax to zero. It just takes some knowledge, planning and action.

SMALL BUSINESS TAX HELP - GET TAX DEDUCTIONS

If you are a small business owner, you already know that you will pay a tax on what's left of your income after you've booked your expenses. So it's logical to make sure you have booked as many legal expenses as you can. That way your net income (and your resulting taxes) will be as small as possible. The IRS allows you a pretty wide range of small business tax deductions.

Here is a list of them. Check to see if you have included these in your tax planning.

1. Deductions for Start-up Costs

In your first year of small business, you are allowed to write off as much as $5,000 in start-up costs. In addition you can write off an additional $5,000 in organizational costs. Not only that: you also have the option of spread out expenses not deducted in the first year over a period of 15 years, beginning with when you opened your business. Eligible costs include things like market research, company advertising, training of your employees, travel for business, legal advice and other costs. Consult your tax professional for more details.

2. Deductions for Education

First stop: IRS Publication 970, "Business Deductions for Work-Related Education." For the most part, you can write off expenses related to your employees' education if the courses relate to their jobs.

In other words, if the course helps them keep pace with the marketplace demands (or improve their skills) or if they need the course to actually keep their existing jobs, then the expense may be a legitimate deduction. The bad news is that you can't take a write-off on any expense related to training in a new, unrelated field. A couple of other things to remember: You can also claim a write-off if you are self-employed. Deductions also include the cost of getting to and from the classes. Consult your tax professional for more details.

3. Deductions for Vehicles

Be careful here: the rules for deducting automobile expenses are pretty detailed and the Feds pay close attention to anyone claiming these deductions. So, for starters, keep clear and concise records. You can deduct expenses two ways:

The first option is to claim a deduction by counting how many miles you drove while on business. Currently, you can claim a deduction of 44.5 cents per mile. Check to make sure that is the current amount, as it does change occasionally. The other option is to track your total expenses incurred on things like gasoline, repairs and maintenance.

Remember: keep good records. If you're using your own personal vehicle for your small business, make sure you separate the times you use it for business from the times you do not. Include dates, destinations, purpose of the travel, etc. Read IRS Publication 463 for more info. And here's an important point: if your employees use a business vehicle while running personal errands, for example, you have have to show this as income to them on their W-2.

A couple of other things to remember: If you bought a new (or previously owned) car, you can take a write-off. You'll have to decide if it's better to take it in one single deduction or spread out over a period of time through depreciation. And if that car is a hybrid, you might be eligible for a tax credit. Read IRS Publication 8910 for more details. As always, consult your tax professional for more details.

4. Deductions for Equipment

You have the ability to take a write-off for small business equipment purchases. The write-off can be pretty large -- in 2006 it amounted to over $100 thousand. And the equipment can be used; the only requirement is that you use it at least half the time for your company. Allowable equipment includes things like computer hardware, machinery, office furniture, automobiles and other related equipment.

Make sure you read a current copy of IRS Form 4562 before planning your tax strategy on this point. If you decide you are not going to claim this write-off immediately, you can spread it out over a period of years by claiming depreciation on that equipment. Consult your tax professional for more details.

5. Deductions for Entertainment

The IRS definition of entertainment is pretty flexible. Generally speaking, if you attend a business meeting, for example, and you are not reimbursed for the expenses, you're allowed to write off up to half the entertainment expense. They do caution you that the "entertainment" must be in a business context. This means if you go to a seminar or conference, that's OK. Also, the entertainment should come immediately before or after the meeting. You get a break if you are self-employed; then, the 50 percent deduction cut-off does not pertain to you. Consult your tax professional for more details.

Conclusion

There are lots of ways to reduce your small business taxes. Generally it involves increasing the number and amount of allowable business deductions. Consult your tax professional for more details.

INCOME TAX FORMS - COMPLETING YOURSELF OR FARM IT OUT ?

The annual tax filing season will soon be here. It can't be avoided. Until the tax laws are changed and filing our federal tax returns will be done on one side of a post card it will remain a fact of life. The biggest source of confusion seems to be the many tax forms required to complete the process. With the tax code exceeding many thousands of pages it's no wonder we have all the tax forms to fill out and complete.

It seems to be an annual struggle for many to get their tax forms and the tax return completed accurately and on time. Not to mention that it can become confusing unless you know what you are doing. Many prefer to do their federal income tax forms and all of the other forms by themselves. Then there are others who prefer to get help, even through their only income is reported on one W-2 tax form.

Following are some reasons that many complete their own federal income tax forms:

• When you know how they were completed you will know what exactly is happening on the federal income tax forms. In other words, you will know what you owe or what you are getting back for your tax return. Not to mention the fact that you will know how the amounts were figured out.

• You won't have to worry about anyone knowing anything about your personal finances except the government. Some people prefer to keep their finances personal because they don't want others learning about their income and personal financial situation.

• You'll save money every year when it comes to tax time because you'll know how to fill out your own federal income tax forms and all of the others. You won't have to spend any money to hire someone to do it for you.
For those who hire a service or someone else to complete their federal income tax here are some reasons you might have to hire someone else to do the job for you:

• You may able to save yourself a lot of time and bother. You won't have to sit down and figure out how to fill in the federal income tax forms or any of the others, which can be difficult unless you're familiar with the process or have done it before. .

• You may end up getting more money back on your tax return because your tax preparer will know what tax deductions you can properly declare. There are other aspects of the tax law that they may be able to help you with that may save you additional tax dollars.

How you get your federal income tax forms completed is an individual decision. You might want to weigh the pros and cons of each one to help you decide how you want to do your taxes at the end of each year. Also, however you decide, be sure to carefully plan what you can do each year to minimize you tax liability. Take advantage of the full extent of your employers 401k or 403b and don't forget to fund your IRA's. Aside from saving on your taxes you'll be way ahead in planning your financial future. However you get the tax forms completed be sure you do it or get it done on time.

GET FAST TAX REFUND IN 24 HOURS

Each year, a number of U.S. taxpayers around the country get tax refunds even if they build on zero income tax. This is due to deducting calculations and the earned income tax credit. Because withholding is calculated on an annually basis, an individual just entering the work force or unemployed for a long period of time will have more tax than is owed withheld.

For a greater majority, however, tax refunds are simple 'savings' - money that the government kept for you that you are now going to get back for use in other things. Many Americans are pleasantly surprised to receive tax refunds each year. Most people use the money to pay off debts, beef up savings accounts, and even go on vacations.

To get your tax refund you have three options. You can either let the government directly deposit your tax refund into your bank account, have a check mailed to you, or apply your refund to next year's income tax.
There are several good reasons to prepare and file your taxes online

- If you expect a refund check, filing online is a great option. The IRS can process your return and issue tax refunds much sooner than if you mailed a paper return.

- Preparing and filing directly from your computer will cost you much less than going to a tax professional, and way less than going to a CPA.

- By using your computer, your forms will be much more legible than anything you could hand-write, which will help cut down on possible errors.

Join the millions of people who have discovered how easy, online tax filing can be. The cost will be much less, your tax forms will get to the IRS with no hand-written errors, and you'll get your tax refund in as little as 10 days.

IRS INCREASES ITS AUDITS

The IRS is increasing their audit efforts. From my experience, this has more to do with the efforts of the IRS to find weak areas in taxpayer documentation rather than any kind of statistical analysis. The IRS is increasing its audits of middle-class Americans this year. The claims that it expects that most taxpayers under audit will owe and additional $4,100. That is more than a months wages for most American taxpayers.

Since 2000, the Internal Revenue Service has tripled its audits of taxpayers making between $25,000 to $100,000.

Last year, nearly 436,000 taxpayers in this income range were audited by the IRS. That is an increase of 147,000 since the year 2000. The chances of being audit went from 1 in 377 to 1 in 140 for the taxpayers which filed last year.

According to Kevin Brown, IRS deputy commissioner, said the audits "were out of whack" in 2000, with far too little attention paid to the middle class and to the very highest income generators, those making $1 million or more. "We try to run a balanced audit program," he said in a recent article.

However, if your income is over $100,000, the odds of being audited were even higher, 1 in 59; and above $1 million, 1 in 16.Even people in lower income brackets and earned less than $25,000 faced a relatively high chance of audit, 1 in 94.

According to the IRS, the focus of these additional audits on the middle class are more designed to let the public know that big brother is watching rather than tax collection. In my analysis, it is through this fear and intimidation that the IRS hopes to get taxpayers to comply with the tax code and not take aggressive deductions or deductions in which the paperwork is lacking. Most of the new audits will focus on small business owners since there is little or no independent reporting of such income and deductions.

Furthermore, Congress has not been willing to implement any of the IRS proposals regarding independent contractor verification and tax withholding of i/c payments. So the way things stand under the new guidelines, a small business owner filing a Schedule C is three times more likely to be audited than just a year ago.

With this in mind and knowing that the agents are being trained to look for false statements during return examinations, it is becoming a much more serious business to file a tax return with severe consequences if everything isn't completely accurate. Before filing, taxpayers should discuss at length the documentation requirements required by the IRS with a competent tax professional and then only file once they know they have the proper documentation to support the deductions claimed on the return

OFFER - IN - COMPROMISE DOESN'T ALWAYS WORK OUT AS PLANNED

There has been a lot of hype over settling your tax debt with the IRS for pennies on the dollar. However, from my years of experience, settling your tax debt with the IRS is much more complicated and more difficult than explained in many of these ads from these so called magic firms which claim to get rid of your taxes for you with very little effort.

What these ads don't tell you is that you need to usually supply the IRS with at least two-three months of receipts for all your expenses. Furthermore, the IRS has published national standards for expenses. So depending upon the size of your family, your $2,000 monthly mortgage will far exceed the $1,200 amount the IRS will allow for your housing costs. Know that the IRS will tell you to move if it will free up $800 per month. They don't care where you live, just getting their tax money.

With an offer in compromise, at a minimum, the IRS is looking for as much disposable income as possible over a sixty month period plus the equity in your assets. This can amount to a sizeable amount of money in exchange for the IRS wiping off the balance of your tax debt.

Furthermore, if your offer is approved, you have to pay your tax bill on time for the next five years or else the amount written off by the IRS becomes due again. So be very careful before you spend thousands to hire a firm to wipe out your old tax debt. Make sure they explain everything to you in advance and if it sounds to good to be true, it usually is.

IRS LISTENS FOR FALSE STATEMENTS FROM TAXPAYERS

The IRS has recently announced that it will send more of its auditors through training on being able to determine false statements made during tax audits. The purpose of the program is to train lower level agents to be able to recognize false statements made by taxpayers during an audit examination so that these agents will be better able to refer these cases to the criminal investigation division of the IRS for prosecution.

The criminal division has generally focused on larger taxpayers in the past due to the cost of investigations. However, now it appears that the IRS is refocusing its efforts on smaller taxpayers because they seem them as easier targets.

Once a taxpayer is charged with making false statements, they are forced to either cut deals with the IRS or pay costly litigation fees to defend themselves. Most deals include pleading guilty to certain allegations, paying fines and serving some prison time. Recently the Department of Justice has stated that they think everyone that has committed a Federal tax crime should spend time in prison regardless of their lack of criminal history. Furthermore, most people plead guilty when charged because the cost to defend such cases can amount to hundreds of thousands of dollars.

As part of their training, agents are taught to ask questions in a variety of ways in order to then listen for answers which contradict each other. For example, the National Trial Lawyers Association offers courses to teach Attorney's these tactics for cross examination purposes. The Association then bring in actors to role play different trial scenarios. The Lawyer is then taught how to ask questions in such a way as to confuse the actor into making contradictory statements which would impeach his testimony at trial.

I find this new effort by the IRS alarming. Most taxpayers try their best to file accurate returns but most of the time lack good documentation for their deductions basically because they are poor record keepers. Now that they have to worry about not only paying more tax due to poor record keeping but also avoiding jail time for misstating something during an audit, I feel more people will drop out of the system and try to avoid paying taxes altogether.

7 LAST QUARTER STEP, TO LOWER YOUR TAXES

You can lower your upcoming tax liability by making the following adjustments during the last quarter in the year.

1. This year, employers may put up to $15,500 of their pretax income into a 401(k). Next year and the next, you will learn about the new and upcoming tax laws during this same period of time.

2. Will you be celebrating your 50th birthday by the end of the year? You can give yourself an extra $5,000 per year. Contributions for IRA, Individual Retirement Accounts are capped at $4,000 this year and for people 50 or older, $5,000 a year.

3. If you are self-employed or work as an Independent Contractor -- you can defer payment for your services until early next year. The best way to do this is to notify your vendor or client that you won't be billing them until late December. This way you can lower your income for 2007. (or in upcoming years)

4. Another tip that has been included in all the newspapers is to pay January's mortgage payment in December. Be sure your lender adds the payment to your Form 1098.

5. The old standard way to help lower your taxes is to make charitable contributions before December 31, 2007. This makes it easy for you to help those less fortunate have a good holiday. Be sure that you receive a written confirmation from the charity that your have provided cash, clothing, auto, etc, especially if the items are worth over $500.00. Some tax advisers strongly suggested that you include a qualified appraisal with your income tax return if the amount of the gift is over $500.00

6. Sell Loser Stocks to Offset Gains -- If you have stocks that are showing a loss - consider selling them to offset any gains. Be aware that these stocks may gain in value in the coming years.

7. Thing seriously about starting a legal home business. Think about what you love to do and what make you happy. Invest in learning materials, set up your office, plan your marketing, write your business plan -- keep good records of all of your startup expenses.

A home business is especially important to persons in a high income bracket with very few or no dependents or mortgage interest.

You can only report a lost on a home business for three (3) years before the IRS will question if you have a business or a hobby. So why not take advantage of this period of time that the IRS provides for new and small business owners?

BEWARE OF PROGRAMS CLAIMING TO REDUCE TAXES

For about the last seven years, the IRS and the Department of Justice have been aggressively seeking out and prosecuting taxpayers involved in tax reduction programs which were sold to them by either their Tax Attorneys, Financial Planners, Accountants and Life Insurance agents.

Most of these programs were first created by the largest firms in the country and therefore, most taxpayers who participated in these programs properly relied on these big name firms for the programs legal basis. I have even seen programs sold by the largest banks, largest life insurance companies and largest tax firms in the world.

I have even read articles in national magazines and newspapers touting the benefits of these programs.
But what I have come to learn during my many years of practice is that regardless of the legality of the program when it began, if the IRS and the Department of Justice wish to terminate a program sold to the public, they will come up with a way to make it illegal.

For decades, Legal Tax Firms, financial planning firms and insurance companies have made their money by coming up with new ways to reduce taxes for their clients. The theory has been to create a better program which takes advantage of certain tax laws in order to reduce one's income taxes, with the hopes that they can attract more clients due to the better mouse trap they've created. These programs are then sold to the public at very high prices or generate large commissions to make it worth while for the agents from these firms to participate in the marketing of these programs. It's a very competitive business world out there and to stand out above the rest, it's important to have something the competition doesn't have.

However, even though these programs were initially considered legal, once the IRS and the Department of Justice have determined to shut it down, I have learned that it takes very little effort for them to turn a legal program into an illegal one.

Furthermore, in my own personal experience, I have found that the very same firms which marketed these programs often later claim their fifth amendment rights and refuse to come to a taxpayers aid when confronted with a potential criminal indictment for the program they've either created or sold. In one case, I even had a life insurance agent refuse to even admit that he marketed a program in fear of being indicted for his participation. It really is like roaches scattering when the lights are turned on when these firms are challenged by the IRS and Department of Justice regarding the legality of their programs.

On the other side, I have even seen the Government completely ignore the legal documentation supporting the legality of a program and instead focus on the taxpayer for wanting to participate in a program to reduce his taxes. Then the Government challenges anything the taxpayer says regarding things they were told by the firms as heresay if the matter goes to court. Leaving the taxpayer with no defense at all!

After all, the Government doesn't like it when taxpayers take action to reduce their taxes, it's unamerican.
I even had one Attorney told me that they spoke to an agent for the Criminal Division of the IRS and was told that the IRS was shutting down one particular program because in the view of the IRS, they couldn't have a program out there teaching people how to reduce their taxes, because the Government would loose to much money.

Therefore, I have learned that there are so many ways to challenge the legality of a program that it just doesn't make sense to get involved in any program which hasn't been around for at least ten years and has IRS law identifying it and explaining it in detail. To do so otherwise, just creates a nightmare later on. The money spent defending a challenge by the Government will never even come close to the tax savings generated by the program itself.

Therefore, if you have an agent, attorney or accountant telling you that they have a new program which will save you money on taxes, run the other way!

SELF EMPLOYED TAX DEDUCTION HELPFUL GUIDELINE

A large number of workers are no longer provided with a work uniform; therefore, many individuals now have to buy their own work supplies. Work clothing that is required, but not paid for by an employer, can be listed as a tax deduction.

Itemizing individual purchases that are tax deducible may seem to be too complicated or take a long period of time, taking the time to itemize tax deductions, like a Self Employed Tax Deduction, is worth it for many taxpayers.

Each year Americans purchase items or services that are tax deductible. Tax deductible items, such as a Self Employed Tax Deduction, are commonly referred to as tax privileged items that offer many taxpayers a reduction in how much tax they pay the IRS.

Overlooked Internet Tax Deductions:

1. Monthly Hosting Fees
2. Annual Domain Costs
3. Design/Logo Fees
4. Internet access fees

Watch Those Auto Expenses Keep track of and deduct all actual business-related expenses. Be sure you get all the exact information that applies to your circumstances.

Internet Tax Deductions you might overlook:

1. Paid blogging platform charges (such as Typepad or WordPress)
2. Cell phone usage
3. Long distance usage related to your blog
4. Second phone line for business or fax
5. Design or word processing software like Photoshop, Illustrator and Word
6. Computers

For tax filers choosing to itemize potential tax deductions on their federal income tax return, there are a number ofsteps that must be taken. Most deductions are listed on a Schedule a form. This form is used to record each tax deduction. There are a large number of items, such as a Self Employed Tax Deduction, donations, and services that can be listed as tax deductible on income tax forms. A full list of these itemized deductions can be found by visiting the website of the IRS at www.irs.gov. An instructions booklet for the Schedule A, Itemized Deductions, also contains a large detailed list of items and services that are tax deductible and any restrictions that may apply to each. The Schedule A form and instruction booklet can be picked up from a local post office, library, financial institution, or it can be printed off the internet.

As is obvious from the theme of this article, even if your direct quest is Self Employed Tax Deduction, reading to the end will prove helpful, as this article has also helped those looking for information about car tax deduction, interest tax deduction, standard tax deduction, tax deductions mortgage, tax or even business deduction tax vehicle.
Many people that searched for a Self Employed Tax Deduction also searched online for income tax preparation, corporate tax deductions, and even irs tax return.

You might have found this article after searching for any of the misspelled version of Self Employed Tax Deduction, such as income tax dfduction, income tax deductioh, tzx deduction, kncome tax deduction or even income tas deduction. However, the content herein will prove useful.

The information we provide on this website is generally and specifically related to a Self Employed Tax Deduction. It also has articles that provide helpful information when searching for new tax deductions, medical expense tax deduction, federal income tax deduction, tax deduction car, income tax filing and IRS tax return.

I am certain you have learned one thing or another about this article that should help in your search for a Self Employed Tax Deduction or any other mortgage interest tax deduction, charity tax deduction, tax deductions, tax write offs, small business tax write offs or automobile tax deduction information.

FREE TAX HELP - HOW TO FIND IT

Finding free tax help is much simpler than you think. Even though there are a lot of ways to do your taxes, most individuals still try to do it on their own, without the assistance of professionals services. This may be a very good thing and is absolutely the most affordable way to file your taxes, but it also means that you have to face problems and questions on your own. Since errors on could be costly and long, drawn out problems, it is best to have the ability to seek the help you want beforehand. If you would like free tax help, know exactly where to go before tax time arrives. Reading all this about taxes is sure to help you get a better understanding. So make full use of the information we have provided here.

There are several people out there who do not know much about taxes. This is the reason we have compiled this article, to let them learn. The best place to begin for the free tax help that you need is right from the source. The IRS, or Internal Revenue Service, is perhaps the most reliable source of help you will find, if you do not mind waiting for assistance. There are phone numbers available depending on the kind of question or need that you have. You may also find local organizations to provide help that are branches of the IRS. Yet, perhaps your best source of information and free tax help is from the IRS's website at IRS.gov. It is a comprehensive web site that provides several tools for you to use including forms and instructions, tutorials, frequently asked questions and search tools. The more specific the kind of help you need, the simpler it will be for you to locate the free tax help you want from their web site.

There are also other places to get the kind of help that you need. During the months of February and March, you will often find tax preparation help locally from non-profit organizations. For senior citizens, this might be through the community center or those organizations aimed at seniors. This is a good way to work hand in hand with a professional, or a knowledgeable person, for your needs. This kind of free tax help is often available through local governmental offices and may also be used for city, state and county taxes. We are proud to say we have dominance in the say of taxes. This is because we have read vastly and extensively on taxes.

Perhaps the biggest source of free tax help is online. You will get a range of web sites offering help, but be careful. Outdated information or even mistakes may often be found on the web. Make sure that you know who is providing you the help that you need before you use it. After all, getting the assistance that you need, begin with someone having the necessary knowledge. For free tax help, begin with your own local organizations or go right to the IRS for their ability. This article was written with the intention of providing as much information on taxes to its reader. Hope this objective has been fulfilled.