With the evolution and revolution of information technology, life has come a long way. Thanks to the advancement of internet technology, it has actually enabled people to execute tasks without any hassle within a short span of time. In fact, many small and large organizations are opting for web based accounting services as it reduces both work force and other resources that are utilized while keeping a track of the financial transactions on a daily basis. Hence web based accounting is an answer to various bookkeeping woes.

One can say that web based accounting can be a key to more profit and less losses for many large and small business. The benefit of using internet for web based accounting services is that many people can access the server and manage the accounting records at the same time. In fact, many businesses can manage accounts with this kind of technology in a very cost- effective and convenient way. All they have to do is to be registered with any of the service providers and in turn, they will get the benefit of web based accounting services. Instead of paying huge amount of money to some other accounting service provider, businesses can get better services through web based accounting. Well, web based accounting is an effective way to manage and keep the financial records intact and also helps businesses to get more deals.

In fact, web based accounting can also be beneficial for the companies and firms that spend more time on internet. Acquiring web based accounting services is very easy for a firm or a person who has an internet connection along with access that a browser can use for the accounting services. This enables the web based accounting convenient for employees of a particular organization. After getting services of a web based accounting, one does not have to hire an accountant to handle their confidential financial records. In fact, one can access this service throughout 24-hrs and seven days a week. In addition, one can also monitor transaction records through certified staff and there is no additional cost for that as their cost is included in the monthly rental. With the help of web based accounting, browser, employees or any authorized person can log onto the computer and start recording the entries on a regular basis.

Web based accounting is a boon for people who have hectic schedules to look after and lack time for keeping the track of daily financial records. Now, they can make the entries as well as monitor the ongoing financial status of their work or business. It additionally cuts down the time as well, as these records can be managed through the web. Web based accounting is maintenance free and one does not have to worry about losing data due to technical snag; in fact web based accounting also offers back up solutions to its clients. With web based accounting, entries and back-up are maintained on daily basis which actually protects and prevents loss of data. In fact, web based accounting is the best solution to enhance one’s business, as it requires less time and gives a chance to churn out more profits.

Dignity is a man’s most prized possession and he would no doubt like to hold on to it till the very end of his life. A man works throughout his life to provide the comforts and luxuries for his family. He may also build some assets like a house and such a property is one of the most cherished belonging of any person. However once a person has crossed sixty and reached the retirement age he may suddenly find himself at a crossroad of life where the constant inflow of cash in the form of a monthly salary suddenly stops. This is a time when the retired person needs to be fully prepared and have sufficient amount of liquid cash to manage the regular and unaccounted financial needs that may arise. A Texas reverse mortgage in such a scenario could very well be the best support system that a retired person can own.

Any person above the age of sixty two can go in for a Texas reverse mortgage in that state. The concept of reverse mortgage is different from that of a regular mortgage on many different counts. A reverse mortgage allows the house owner to mortgage his property with a firm offering the facility in lieu of hard cash. The difference with a regular mortgage lies in the fact that in spite of applying for a Texas reverse mortgage on a house the owner can continue to own and occupy the house till the time of his death. The ownership remains with the owner in spite of getting a mortgage value in the form of cash and he can also sell the property on which a reverse mortgage has been paid. The amount of mortgage value can be paid to the owner either as a lump sum or in the form of regular installments as per the preference of the borrower.

Texas reverse mortgage does not require the owner to pay back the loan amount as long as he continues to pay the house taxes. After the death of the owner the property can be sold by the lending company and the excess amount remaining after paying of the mortgage value will be handed back to the next of kin. The concept of Texas reverse mortgage allows the retired person to continue leading his life with dignity till the very end where he does not have to ask for any financial help from anyone as long as he can mortgage his house. A steady cash income can also be maintained to manage the regular needs of the household in the form of installment payment for the mortgage amount.

Texas reverse mortgage ensures that your house is an invaluable asset in the true sense. The best part is the continued ownership of the property by the owner as this does not make him feel sorry about taking a loan by keeping his house as a mortgage. The Texas reverse mortgage is perhaps one of the best facilities provided by America to its senior citizens, by gifting them the right to live life in a dignified manner till the very end.

Now a day, where the ambiguities and problems in service tax are being settling down, two burning issues are still puzzling both the service provider and service receiver with regard to “Export of Services” and “Import of Services” respectively.

In this article we shall focus on Scope and dimensions of Import of Service on which recipient of services is liable to pay service tax in accordance with Section 66A of Chapter V of Finance Act, 1994, read with Rules [Taxation of Services (Taxation of Services (Provided from Outside India and received in India) Rules, 2006, (hereinafter referred as Import Rules)].

In this article we shall not discuss the purpose and login behind classification of services into three categories in Rule 3 of Import Rules, but we shall discuss the scope and depth of Section 66A itself.

Sub section (2) of section 66A read as:

“Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section.

Explanation 1.— A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country.

Explanation 2.—Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted.”

The provisions of Sub Section 2 of Section 66A are applicable to “Service Provider” as well as “Recipient of Such Services”

Example 1

For an example XYZ Ltd. a company incorporated in India is having its branch office (P/E) in USA. Now this P/E of XYZ Ltd. receives some services from a service provider situated in USA itself. In these circumstances, a question is bound to arisen that whether XYZ Ltd. is liable to pay service tax in India as per the provisions of Section 66A?

In terms of provisions of Sub-section 2 of section 66A, the P/E of XYZ Ltd. in USA and XYZ Ltd. in India both shall be treated as separate persons. Therefore, the P/E of XYZ Ltd. is to be treated as person situated out of India.

Accordingly the XYZ Ltd. shall not be liable to pay any service tax on services received by its P/E situated in USA. Further this situation will not change merely because, payment is booked in the accounts of XYZ Ltd. in India.

Example 2

If we take another example where ABC Ltd. incorporated in India does not have any office (P/E) in England. Now, ABC Ltd. receives services of “Management Consultancy” from a firm situated in England for a project proposed to be established in England or elsewhere.

In this case, ABC Ltd. would liable to pay service tax in the capacity of recipient of services in accordance with Section 66A read with Rules.

Similarly, there may be various permutation / combinations in which service tax liability is to be determined after considering the statutory provisions carefully.

(Also see: Ready Reckoner on “Import of Services”)

What is self employment?
Directors of companies are not self employed but employees of that company. In essence anyone who is in business either as a sole trader or part of a partnership and receives income that is not taxed under the PAYE system is effectively self employed. Occasional miscellaneous receipts would not be regarded as self employment and should be entered on the tax return as “All Other Income” however a regular source of receipts would be regarded as self employment income and anyone self employed should register with the Inland Revenue within 3 months of starting trading or risk being fined £100.

Keep a record of all transactions.
Sales turnover is the amount the business earns before deducting business expenses including receipts of any kind for goods sold or work done such as commission, tips, payments in kind, fees and insurance proceeds. Sales of fixed assets are excluded from sales turnover as are Business Start up grants which are entered in a different section of the self assessment tax return. DIY Accounting produce excel spreadsheets to record the sales income and bank receipts. Check the amounts deposited do not exceed the declared turnover which would indicate that you have understated your sales and your tax liability would at the least be increased unless you could provide a solid reason for the anomaly.

Ensure financial, purchase and sales records are compatible.
Compatibility will vary from business to business. Examples if you post 100 EBay items your records should show 100 items of income and 100 items of postage. Buy food for a restaurant for resale at four times cost, some wastage is inevitable but the underlying compatibility between sales generated and purchases should be reasonable. The average number of meals sold from a take-away shop should be compatible with the number of take-away cartons purchased. A taxi driver should not claim fuel receipts during his holiday period and the fuel bills should be compatible with the fares obtained. Unusual and incompatible expenditure declared on the self assessment tax return can and do trigger Inland Revenue enquiries. Many Inland Revenue enquiries result in a higher tax liability due to the scrupulous professional way in which compliance investigations are carried out.

Obtain receipts for everything.
Tax payers lose millions each year by not obtaining or retaining receipts for expenses. If you are claiming fuel costs for a business trip and fill up with £50 of petrol get a receipt. The tax saved by including that receipt in your accounts is £11 at basic tax rates and £20 at higher tax rates. If your business turnover is over the vat threshold of £64,000 p.a. for 2007-08 the receipt is worth even more. £16.81 vat and income tax at basic tax rate and £24.47 at the higher income tax rate. The same is true for all other business receipts. Obtain a receipt for everything. If you lose a receipt then still include that expenditure in your accounting records but if your tax return is enquired into by the Inland Revenue that expenditure may be disallowed unless you can argue and sometimes prove the expense was in fact incurred. May help to note in your records - receipt lost.

Do not mix business and personal.
The general rule is that items solely for business use can be claimed for tax purposes and the business proportion of personal expenditure may be allowed although the rules are applied quite strictly. If you purchase both business and personal items from a supplier the business expenses only can be claimed but if you obtained all the items on a single receipt you would be disallowed the cost of that journey as it was not solely for business purposes.

Claim business expenses incurred prior to trading.
Business expenses incurred up to seven years prior to trading actually commencing can be deducted from business turnover if these expenses were solely for the future business purposes. Enter such expenses in your accounting records as if they had been incurred on the first day of trading but show the actual purchase date.

Claim home costs if you work from home.
If part of your home is identifiable as solely for business purposes then home costs can be claimed. The cost allowed is the proportion of the total area of the home the business area occupies. For example, excluding shared facilities of kitchen and toilet if the home has three bedrooms, living and dining room and one bedroom is used solely as an office then 1/5 of home costs could be claimed. The home costs to claim would be heat and light, insurance, general and water rates and mortgage interest excluding repayment amounts. Where mortgage interest is claimed the revenue might also claim as a capital gain the increase in value of that proportion of the home, such Capital Gains Tax being subject to tapering relief over time. It may be safer not to claim mortgage interest as part of the home costs.

Take care if claiming a partner’s wages against profits.
Partner’s wages can be deducted as a business expense although there are rules which would be applied in such circumstances to ensure the amount paid is both real and reasonable. The business would need to operate a PAYE scheme for the partners’ wages, deducting income tax and national insurance, perhaps using a package such as DIY Accounting have available using Payroll Software to produce all the statutory requirements. The work carried out must be real not invented and the rate paid reasonable for the nature of the work and the time spent. Evidence may also be required that the partners’ wages were actually physically paid to that partner, for example in the form of a cheque.

Claim vehicle costs or mileage allowances.
Vehicle running costs and expenses such as fuel, excise duty, insurance, repairs and breakdown membership may be claimed as business expenses if the vehicle is used solely for business purposes. Travel from home to work is not business use and disallowed. The proportion of vehicle running costs and capital allowances which are claimable are dependent upon the proportion the vehicle is used for business and personal use. Parking fees for business purposes may be claimed. Parking fines and penalties for motoring expenses are not claimable as business expenses for tax purposes.
An alternative to claiming vehicle running costs and vehicle capital allowances would be to claim mileage allowances which at the time of writing are 40p for the first 10,000 miles and 25p per mile thereafter.

Write off expenditure against taxable profit unless the item is a fixed asset.
Depreciation is not allowed and replaced by Capital Allowances for the purposes of calculating the tax payable. Capital allowances are designed to write off the cost of purchasing a fixed asset over the life of the asset rather than in the financial year in which it was purchased thereby spreading the tax relief on the asset over those years. Many assets purchased by small businesses fall into a grey area as whether they are fixed assets or normal business expenses. Generally a fixed asset would be defined as an item that would be used by the business over several years and usually of significant value. 100% tax relief is obtained on items purchased which are not fixed assets.

Avoid fines and penalties by submitting tax returns on time.
Accounting records and Self assessment tax returns should be prepared well in advance of the first submission date of 30th September to enable the information to be checked and verified before submission to ensure all possible claimable expenses have been included. The final deadline for submission is 31st January with late returns and payments being subject to penalty fines and interest payments which should be avoided.

What is Business Turnover?
Sales turnover is the amount the business earns before deducting business expenses including receipts of any kind for goods sold or work done such as commission, tips, payments in kind, fees and insurance proceeds. The turnover to be included in your financial accounts is the date it was invoiced or earned and not the date it was received.

What is excluded from Business Turnover?
Sales turnover excludes sales of fixed assets such as premises, vehicles and plant and equipment. Also exclude business start up allowances which are entered separately on the self assessment tax return. Money introduced to the business is excluded being capital introduced and not sales turnover.

What business expenses are allowable?
All running costs incurred solely for the purpose of the business may be deducted as allowable business expenses including goods bought for resale, employee wages, premises rent and overheads, administration costs, vehicle running costs. Interest on loans and overdrafts can be claimed as business expenses excluding the capital element of repayments. Higher business expense levels accurately recorded can keep taxable profit below the higher tax rate.

Can the cost of buying and repairing plant and machinery be claimed?
Repairs and maintenance costs are allowable business expenses. The purchase cost including improvements and replacement costs are not allowable business expenses, these costs being subject instead to capital allowances. Depreciation is not allowed and replaced by Capital Allowances for the purposes of calculating the tax payable.

What are Capital Allowances?
Capital allowances are designed to write off the cost of purchasing a fixed asset over the life of the asset rather than in the financial year in which it was purchased. Capital allowances on the majority of assets are based upon a higher rate of allowance in the year of purchase, First Year Allowance with the balance of the cost being written off at a lower rate, Writing Down Allowance. The full cost of any asset may be claimed as an expense in the year it is sold or scrapped less the total of accumulated capital allowances that have been claimed against taxable profits. Any sales proceeds over and above the written down value after Capital Allowances is added back to net profits and becomes taxable. Cars are subject to writing down allowances but not First Year Allowances unless they are classed as commercial vehicles. DIY Accounting has accounting software templates that automate the calculation of capital tax allowances.

Can expenses incurred for both business and personal purposes be claimed?
No. HMRC only allow such expenses if the business expenses element of the cost can be separated from the personal element. If you claim the travelling expenses to buy business goods they can be claimed for tax purposes but would be disallowed if you also showed evidence of personal items being purchased on the same journey. Using your home phone is an allowable business expense if you claim specific identified business calls in which case you would also be able to claim a similar proportion of the rental cost.

Can vehicle costs be claimed when that vehicle is also used for personal use?
Vehicle running costs and expenses such as fuel, excise duty, insurance, repairs and breakdown membership may be claimed as business expenses if the vehicle is used solely for business purposes. Travel from home to work is not business use and disallowed. Vehicle running costs, and capital allowances on vehicles, are split between claimable costs and a disallowed cost depending on the proportion the vehicle is used for business and personal use. Parking fees for business purposes may be claimed, parking fines and penalties for motoring expenses are not claimable as business expenses for tax purposes.
An alternative to claiming vehicle running costs and vehicle capital allowances would be to claim mileage allowances which at the time of writing are 40p for the first 10,000 miles and 25p per mile thereafter.

Can Business trips be claimed?
Travelling expenses and modest lunch expenses may be claimed. Hotel and reasonable costs of subsistence may also be claimed. A subsistence allowance can be claimed if staying with friends or family as an alternative to an hotel. The cost of lunch may not be allowed when staying away overnight. Lunch with clients is regarded as entertainment and is not allowed. If you are accompanied on a business trip by family only your cost is allowable and specifically only if the trip was purely for business purposes. Expenses on combined business and personal trips are not allowed to be deducted as business expenses on tax returns.

Can home costs be claimed?
If part of your home is identifiable as solely for business purposes then running costs can be claimed. The cost allowed is the proportion of the total area of the home the business area occupies. For example, excluding shared facilities of kitchen and toilet if the home has three bedrooms, living and dining room and one bedroom is used solely as an office then 1/5 of home costs could be claimed. The costs to claim would be heat and light, insurance, general and water rates and mortgage interest excluding repayment amounts. Where mortgage interest is claimed the revenue might also claim as a capital gain the increase in value of that proportion of the home, such Capital Gains Tax being subject to tapering relief over time.

How do I treat business goods taken for my own use?
Any business goods taken for personal use should be added to sales at normal selling prices including items supplied to family and friends at less than normal prices. He cost of providing services for family and friends is not allowable as a business expense.

Can I deduct my salary or drawings as a business expense?
You cannot deduct your own wages, personal national insurance or drawings from the business as a business expense as these are distributions of the business income after net taxable profit has been calculated and not allowable expenses before tax..

Can I deduct my partner’s wages?
Yes partner’s wages can be deducted as a business expense although there are rules which would be applied in such circumstances to ensure the amount paid is both real and reasonable. The business would need to operate a PAYE scheme for that employee, deducting income tax and national insurance, the work carried out must be real not invented and the rate paid reasonable for the nature of the work and the time spent. Evidence may also be required that the amounts were actually physically paid to that partner, for example in the form of a cheque.

Should Tax Credits be included?
No these are excluded from business profits although the level of credit received may subsequently be changed in the light of the actual business profit earned compared with the amount declared when the Tax Credit was applied for. HMRC do check that the net taxable profit shown on the tax return is the same as that declared when the Tax Credit was claimed.

Can I claim expenditure incurred prior to trading commencing?
Yes business expenses incurred up to seven years prior to trading commencing can be claimed. The actual date of the expenditure should be recorded although all pre-trading expenditure is treated as having been incurred on the first day of trading.

Are pool cars taxable?
Company cars are taxable as a taxable benefit while pool cars are not taxable. To qualify as a pool car, private use should be incidental to business use, the vehicle should not normally be kept at the employee’s home and the vehicle must be available and used by more than one employee.

Tax Planning For A Bigger 2007 Refund

The time to start your tax planning strategies is earlier in the year rather that later.
In Canada, and from what I read in the newspapers and online, most taxpayers worldwide feel that they are paying too much tax.
And to add insult to injury, most of the taxes paid are not being put to good use.
Almost daily, we hear about the misuse of some huge amount of tax funds gathered from taxpayers.

While it seems we can do little about these transgressions, we can use effective tax planning strategies that will help us minimize our tax liabilities.

Tax planning does not involve convoluted tactics to hide or reduce income.
These will get you into big trouble with your tax collector and are not worth the effort, especially when there are legal and more beneficial ways to keep more money in your pockets and away from the Taxman.
A very effective tax planning strategy is to make charitable donations.
In Canada, the Canada Revenue Agency allows tax payers to donate up to 75% of their income.
Which means your income for taxes would be on just 25% of your earnings.
A very effective tax reduction incentive!
However, not many tax payers can realistic afford to do this.

Many Canadian tax payers do make charitable donations in an effort to be philanthropic as well as to receive the resulting tax credits.

Beware! Not all charities are created equal and some are downright suspect.
At the very least a charitable organization should be registered and have a verifiable tax ID number.

Not all charitable organizations adhere to the strict guidelines that make a good charity program effective and sustainable even when challenged by the tax collecting agencies.

When looking at tax shelter programs (this is what these tax reduction strategies are called) it is important that you inquire about how the program deals with issues of “valuation”, “advantages”, and “impoverishment”.

Valuation:

In Canada, recent legislation has established rules that prohibit tax payers from receiving a tax credit for donating property at an appraised price that is higher than the property’s purchase price. Previously, donors were allowed to acquire property at a low price and gift it to a charitable organization, receiving in exchange a donation receipt at the higher appraised value.
Under the new legislation, the value of the receipt must equal the original purchase price of the donated item provided that this amount does not exceed fair market value.

Advantage:

The value of any “advantage” (personal financial benefit) that you might receive from making your donation must now be deducted from the value of your donation receipt.
For example, those donors who purchase a $200 charity golf tournament ticket and received dinner, drinks and course fees valued at $140, would only receive a $60 donation receipt.

Impoverishment:

To claim a tax credit for a donation, donors must demonstrate they are impoverished financially after making their donation.
In other words, donors must be “out of pocket” as a result of the transaction.

To make your charitable donation effective as a tax planning ensure that any program you choose is compliant in all these aspects.

There is no point in using tax planning strategies that will not stand up to scrutiny or worse yet, have you accused of attempting to circumvent the rules of compliancy.

Located in the southern part of Spain, Costa del Sol is a small coastal town known for its natural beauty. As its English translated version “Sunny Coast” suggests, the entire island is naturally very beautiful and have rich cultural heritage. Hankered after mostly by tourists, the island is a prime tourist attraction. That is the reason why the island is witnessing a high rise in the property dealing businesses. Costa del Sol property is said to be one of the hottest property among all other located at different Spanish islands.

Entirely urbanised, Costa Del Sol is gradually becoming the subject of investment in the property market. Its streets are gradually being lined up by apartments, villas, beach resorts, golf resorts, etc. As the entire Spanish islands have been favourite on the tour itinerary of European visitors, a large number of foreigners are flocking to its islands to buy the property.

For UK people, Spanish islands have always been the most favourite when it comes to taking a trip. Costa del Sol Property, being one of favourite investment object for the people in the UK, has a lot of options for investors. Whether you are looking for a simple apartment, villa, resort, beach resort, beach side penthouse or a golf resort, Costa Del Sol has plenty of options to offer you. Located close to rich environs, all the prime locations are also quite close to places giving you all modern facilities like ATMs , hospitals, banks, golf course and sea beaches.

In UK, there are hundreds of property dealing agents who are willing to offer you several options to buy Costa del Sol property. Availing their service, you will have options to invest in property of your choice. Be it a luxury villa, beach resort, golf resort or beach side penthouse, these property dealing companies put you at ease to buy a plot of your choice. Even there is possibility that they will offer you the property at discounted price.

A millionaire’s lifestyle but without a millionaire’s price tag! Wondering how can this be possible! Well, come to Polaris world and live the life of a king; but pay as much as you pay for a modest living. Polaris World property promises you an excellent opportunity whether you are looking for profitable investment or for an ideal holiday retreat on the Mediterranean coast. And for permanent living, there can be no better place than this!

Located on the Costa Calida near the beaches of Mar Menor and the city of Murcia, Polaris World pioneering a lifestyle which may become the norm for the future generation. It is about high standard 21st century living and undoubtedly the place will work as a model for such projects in future.

With its aim to ensure an ideal lifestyle where the priorities are balanced, Polaris World will definitely remain the stamping ground for lover of designer living. The lifestyle this wonder world focuses on make the otherwise mundane tasks which we begrudge doing, simply enjoyable. So, in Polaris World works like cleaning, gardening, grocery delivery may become something that you will love to do.

Polaris World offers the best golf opportunity in Europe. The place has a group of 9 golf courses designed by Nicklaus Design, including 3 Nicklaus Signature courses designed personally by Jack Nicklaus. Homeowners there can play on the golf course of their own resort, as well as on the other courses belonging to the place. The unsurpassed design and superb view of the golf courses guarantee entertainment for every player and offer fresh challenges everyday.

However, the most extensive range of properties that Polaris World can boast of is the resorts. There are seven different resorts offering everything from modest frontline golf apartments to the most luxurious villas. The property in the resorts offers options for all tastes and budgets. Moreover, a multitude of services from Polaris World are available only step away from home.

Don’t let the upcoming tax season fill you with dread. With a little preparation, you can learn to navigate the tax return preparation maze with confidence. To get you started, here are the basics of what you need to know when filing your tax return:

There are two ways in which to file your tax return, by IRS e-file or by mailing a paper return to the IRS.

Electronic Filing
IRS e-file is the electronic transmission of your tax return to the IRS. As a result, the processing of IRS e-file returns is more accurate than the processing of paper returns. You must have a valid Social Security number for every person included on the return to qualify for electronic filing.

If you e-file, your return is considered filed on time if the authorized electronic return transmitter postmarks the transmission by the due date. The electronic postmark is a record of when the authorized electronic return transmitter received the transmission of your electronically filed return on its host system. The date and time in your time zone controls whether the electronically filed return is timely.

Paper Returns
If you do not e-file your tax return, you can mail your return in the envelope provided with your tax form package. If you do not have an addressed envelope or you moved during the year, mail your return to the appropriate Internal Revenue Service Center listed for your state in your IRS tax form package.

Your paper return is filed on time if it is mailed in an envelope that is properly addressed and postmarked by the due date. If you send your return by registered mail, the date of the registration is the postmark date. The registration is evidence that the return was delivered. If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt is the postmark date. The postmarked certified mail receipt is evidence that the return was delivered.

If you use a private delivery service designated by the IRS to send your return, the postmark date generally is the date the private delivery service records in its database or marks on the mailing label. The private delivery service can tell you how to obtain written proof of this date. IRS designated private delivery services are listed below:

* Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service
* DHL Worldwide Express (DHL): DHL Same Day Service and DHL USA Overnight
* Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First
* United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express

Filing Late
If you do not file your return by the due date, you may be subject to a failure-to-file penalty and interest. To avoid penalties and interest, file for an extension by before this date. If you were due a refund, but you did not file a return, you must file within three years from the date the return was originally due to obtain that refund.

Filing an Extension
When you file an extension, you can postpone filing your return until October 15. However, if you do not pay any tax owed by the due date, you will accrue penalty and interest charges. Complete Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to file for a six-month extension. If you estimate that you have a balance due, include this payment with the form.

For example, James and Sally Gaylord are married and file a joint return. Their home was damaged by a tornado and they have contacted their investment company to resend them Forms 1099 so they can file their tax return. It does not appear that they will have this information by April 17, so they decide to ask for an extension by filing Form 4868. James and Sally estimate that their total tax liability for 2006 will be $1,843. Their Forms W-2 indicate that a total of $1,215 of federal income tax has been withheld. To avoid late payment penalty and interest, James and Sally must pay $628 with their Form 4868.

E-filing Extensions
The IRS offers e-filing of extension applications. The IRS will process Form 4868 through the original due date of your tax return. By filing an extension, you postpone the filing date of your return until October 15; however, any tax due on the return will be subject to interest and penalties if not paid by the due date.

Installment Agreement
If you are not in bankruptcy and have a balance due, but cannot pay your full tax liability by the due date, you should consider the IRS installment plan. To request an installment agreement, complete Form 9465, Installment Agreement Request, and attach it to the front of your tax return or include it with an e-filed return. You can also request an Installment Agreement after you file your tax return by filing Form 9465 by itself to the address shown in the form instructions or by e-filing Form 9465 by itself. If the IRS approves the request, you will be charged a fee and interest on any unpaid balance. The fee has been increased in 2007 to $52 for agreements to pay direct debit and to $105 for all others. Although you generally may have up to 60 months to pay, you should make the payments large enough so that the balance due will be paid off by the due date of your next return. Before requesting an Installment Agreement, you should consider less costly alternatives, such as a bank loan.

Record Keeping
It is a good idea to keep your previous tax returns, as well as other important documents that have affected your income and deductions, for at least three years. If you need a copy of a prior- year return, you can obtain it for a fee from the IRS by filing Form 4506, Request for Copy of Tax Return. This can take up to 60 calendar days.

Change of Address
Are you planning a move before the end of the year? The IRS has an official change-of- address form, Form 8822, Change of Address. If you complete and mail this form to the appropriate IRS Service Center, you should receive your tax booklet at your new address.

For more tax tips and information on tax preparation, please visit the Tax Resource Center at http://www.jacksonhewitt.com.

About the Author
R.L. Fielding has been a freelance writer for 10 years, offering her expertise and skills to a variety of major organizations in the education, pharmaceuticals and healthcare, financial services, and manufacturing industries. She lives in New Jersey with her dog and two cats and enjoys rock climbing and ornamental gardening.

Knowing income tax law is not enough. In order to offer value to taxpayers, tax law knowledge must be combined with effective tax planning strategies in order to yield maximum benefit. What would you do if you owned a landscaping business with the upcoming facts and circumstances? I will tell what I would do.

While having a quiet night out at a local restaurant, listening to music from a local band, I am approached by a friend that has just started a landscaping business. He is married and has one young daughter, age twelve. He will have gross receipts of $48,000 and will receive a 1099 for his efforts. His first question to me is how he should go about making quarterly estimated tax payments to cover both income tax expense and social security tax (SE tax). My response to him was; “hold on there young fellow. Let’s have a discussion of the facts and circumstances before we begin”.

As the band played beautiful music and a soft summer breeze cooled the restaurant patrons, I asked our young entrepreneur if he would need to buy a new truck for his business venture. His response was not only yes, but he informed me that he has already picked out the very one and knows the cost to be $35,000. In this case, he can deduct the entire cost of this new truck in year one under internal revenue code section 179. This allows for the write-off of new property placed in service of up to $125,000 in year one. Because this guy is financing the truck over four or five years, this becomes a great benefit to get such a large write-off without having to spend a bunch of cash. Projected income from all business activities are now reduced to $13,000.

During our ongoing discussion, my friend tells me of his desire to provide for his daughters college education. The 529 was mentioned but I had a better idea. What if we put your daughter on the payroll of your business for $5,000 (near the standard deduction for all individual taxpayers)? This will further reduce your exposure to income tax and self-employment tax. His daughter will not have to pay income tax because her standard deduction will reduce her tax exposure to zero. In addition, there will be no exposure to social security tax on his daughter’s wages because she is a minor and works for her dad’s unincorporated business. Projected net income is now reduced to $8,000. If our hero forms a partnership with his wife, she is a passive owner as she will not participate in the day to day operations of the business and his exposure to SE tax will be cut in half (assuming a 50/50 partnership interest). Roughly, the total tax exposure for 2007 will be $1,400 which includes the SE tax. This is before any other tax deductions the couple might have. Regardless, there will be no need for estimated income tax payments in year one.

For the future, year two offers hope that a retirement plan be formed to shelter some income as the truck deduction was used in the current year. There will also be the opportunity to claim a home office deduction as my friend takes over the entire operation and moves it into his home. Believe it or not, this conversation lasted about twenty minutes. My dessert had arrived and it was time to deal with the matters at hand. I was even invited to sing a couple of numbers with the band. I always do say, never trust an accountant that can’t sing and dance.

Ron Piner, CPA
Host of “Better Business”
Saturday mornings at 10ET
ON WBIS AM 1190
www.wbis1190.com
www.mwibonline.com
[email protected]

IRS liens and levies can wreak havoc on a person’s life, making it difficult to obtain financing on a home or a car and wiping out savings. Maybe you want access to your tax files to see where the problem began because you want to get it solved without ending up on the evening news. Fortunately, there is an answer for people who would like to see the type of information in their IRS files. Finding out how the IRS determines taxes, interest and penalties is possible without an extensive accounting background. The act that can help is called the Freedom of Information Act (FOIA).

The FOIA is for people seeking to obtain government records and allows individuals or any organization to acquire information on federal agencies. The FOIA basically says that government agencies must provide requested information if they have the information unless there are particular restrictions prohibiting public release of the information. The Freedom of Information Act makes government information accessible and applies to all 15 government departments and 73 federal agencies. The Internal Revenue Service (IRS) is one of these agencies.

Anyone can request IRS records. Here’s how:
- Describe the records being requested specifically. Try to give the name, subject matter, years, and location about the information in the documents.
- Cite the Privacy Act and FOIA to get the fullest disclosure possible.
- Say whether you want to inspect the records or have a copy of the records made without inspecting them.
- Include your address and phone number so the IRS can respond and contact you if necessary.
- Write “FOIA” on the envelope.
- Mail your response to the correct IRS office, which depends on the state where you live. View the list of addresses at http://www.irs.gov/foia/article/0,,id=120681,00.html

What the IRS Needs to Process the Request

Type of Requester

The request should state what type of requester you are so the IRS can determine any applicable fees. The categories are commercial use, media, educational institutions / non-commercial scientific institutional, and others (which include individual requesters).

Payment

The cost of a copy of a tax return as filed is $39. For all requesters, no fee is charged if the total charges are $10 or less. For individuals, there is no charge for the first 100 pages but $.20 per page after and no charge for the first 2 hours of searching but $17 per hour or fraction of an hour after. Your request must include an agreement to pay all fees generated from processing your request and can include an upper limit to the fees you are willing to pay.

Proof of Identity and Authority

If records you are requesting are confidential and not available to the general public, then you must submit proof of identity and proof of authority to access the information.

Signature

The request must be in writing and signed by the person requesting the information (stamped signatures not allowed).

Here is an example of an FOIA letter to send to the IRS:

Name
Address
Phone Number

Date

Internal Revenue Service
Your local IRS office address. See http://www.irs.gov/foia/article/0,,id=120681,00.html

This is a request under the Freedom of Information and Privacy Act.

I am requesting a copy of the following documents:
I do not want to inspect the documents first.

I am an Other Requester, requesting this information for personal use.

As proof of my identity, I have included a photocopy of my driver’s license.

I am willing to pay fees for this request up to the amount of $_
If fees will exceed this limit, please inform me.

Thanks for your consideration.

Sincerely,
Your Signature

How to Get Your Request Accepted

By following the above guidelines, it is possible to view your personal IRS records. Obtaining records of a deceased person or of a business is also possible as long as the proper documentation is submitted. For records of a deceased individual, proof of status as an administrator, executor, or trustee of estate or a copy of a will or birth certificate if a beneficiary, next of kin, or heir is needed. If requesting the records of a business, provide an official document that shows you as a corporate officer, partner, sole proprietor, or shareholder.

Response times range from 0 to 921 days, with the average response time 30 days. Requests denied by the IRS are for confidential tax information from individuals not authorized to receive it or for information about tax investigations, where disclosure may impair the investigation.

The accurate preparation of tax can actually prove to be a tedious as well as a time consuming task. Moreover, tax return preparation also requires a lot of expertise and domain knowledge as not just anybody and everybody can prepare accurate tax return details. Paying the accurate amount of tax and that also on time is something that everybody desires to do and so everybody wants to be prepared with their tax details before the tax return session comes in America. Precisely speaking there are two ways of going about it. Either you can get a CPA to do the work on your behalf or you can calculate the amount you have to pay as tax yourself. Preparing your tax return online is one of the best options that you can utilize for calculating your taxes. There are several sites on the web where you can calculate your tax return.

In fact, opting for Tax Return Online can prove to be of great advantage to you as not only it is time saving but also gives out accurate results. Filing tax return online makes the entire process much eased out for you and also hassle free. Shortage of time is something that everybody complains of these days and if you can actually prepare and file your tax returns online, you will get benefit from this, as you will get to save a lot of your precious time. In addition, going in for tax return online also gets the work done more promptly and the calculations are highly satisfactory as you are satisfied that the calculations have been done more accurately. Moreover, the best part with tax return online is that you will be the person who will be doing the calculation so you will need to be more accurate with your calculations.

Filing your tax return online saves you from the hassles of dealing with an accountant or a CPA. When the tax return session comes, everybody gets all baffled while preparing to pay off their tax on time so that they do not face any serious problems. In fact, the tax-calculating season witnesses a heavy influx in the offices of the accountants and CPAs. This results in the over burdening of accountant with work related to the tax calculations and preparation of tax returns. Therefore, if you opt for tax return online you are saved from queuing up outside the office of the accountants, and that is not all, you will not even have to pay the accountant for calculating your tax return. Tax return online can be filed in a much simple way and in fact, it can filed at a much faster rate than filing it manually. Once you start filing your tax return online, the amount is automatically calculated. Moreover, this is also convenient as you can file the tax online at any point of the day.

Tax return online is one of the most convenient and easiest ways of filing the tax returns on time and this also helps in the accurate filing of tax. Therefore, you can now give your accountant some rest and go ahead yourself with the filing of tax return online.

Captive Insurance Companies…
Big Tax Benefits for Smaller Businesses

Big business enjoys huge tax advantages by creating Captive Insurance Companies. Successful PCs can also use this powerful tool for wealth accumulation and risk management.

Keego Harbor, Michigan. May 11, 2007 – In 25 years of developing asset management plans for physicians and other entrepreneurs, Keith L. Mohn, CLU, CHFC, CAPP, CWPP has seen every financial planning technique. He helps PCs achieve their wealth accumulation and transfer goals with the “captive insurance company (CIC).”

“Captives aren’t for everyone,” emphasizes Mohn. “But for PCs fitting a certain profile, a CIC may be the ‘Holy Grail’ of planning.”

Ideal candidates -- successful owners/professionals with predictable annual profitability of $500,000+-- can deduct up to $1.2 million annually; convert current income into capital gains; create tax deductible war chests against business disasters; self-insure risks with pre-tax dollars, knowing funds are inaccessible to creditors of business or owners.

The CIC underwrites risks of companies owned by the same owner(s)--risks associated with the practice or medical facility that are not easily or cheaply covered by commercial insurance.

Risks that may be covered by a CIC:
• Administrative Actions
• Computers, Data Recovery
• Key Employees
• Employee /Executive/Professional Liability
• Business Income Loss
• Litigation Expense
• eCommerce Risk
• Directors/Officers
• Kidnapping/Ransom
• Sexual Harassment
• Income Tax Indemnity
• Deductibles/Gap Coverage

Policies can be labeled “litigation expense only”—creating a pre-tax war chest to fight lawsuits, while protecting assets against claims. “Premium dollars” are moved out -- away from creditors. Because premium payments are made “for value” it’s difficult for creditors to prove fraudulent transfer.

Advantages
• Better statutory protection for reserves due to requirements to pay claims. Creditors are less likely to force judgments.

• When no longer useful, captives can be terminated, assets distributed, capital gains declared, taxes paid -- providing optimum tax benefits.

• Captives formed under 831(b) have straightforward tax reporting -- like a simple “S” corporation. Smart entrepreneurs engage professionals experienced in this section of the code to ensure compliance.

The properly structured CIC is a powerful planning tool for the right business. Compared to traditional retirement plans, captives offer improved tax benefits, asset protection, wealth accumulation and wealth transfer,

Keith L. Mohn, CLU, CHFC, CAPP, CWPP -- financial consultant, lecturer, charter member of Wealth Preservation Institute, Wealth Protection Alliance, President Benefit Solutions Group. LLC, in Keego Harbor, a full service financial consulting and planning firm specializing in high net worth individuals, business owners and medical professionals since 1983. For information on planning strategies, email [email protected] or visit www.benefitsolutionsgroup.biz.

Paying tax to the government is indeed one of the most important and the most vital thing for anybody and everybody. As one financial year comes towards the end, everybody starts with his or her tax return preparation. The United States has made it mandatory for everyone to file his or her tax return preparation. Paying tax or filing tax return preparation is one of the foremost rules for every individual and corporate body in the United States. Filing tax return preparation on time can help an individual avoid all the inconvenient problems of filing a tax return late. In fact, if you want your business to flourish in the right way you should always plan a tax return preparation on time. Going in for a tax return preparation can help you and your business remain steady and help you to stay away from any problems concerned with tax returns. Tax return preparation must be undertaken before the tax return date resumes so that you can prepare in the manner that helps you and your business.

The initial ways of filing one’s tax returns were a genuine problem as it was not only tedious but also took a long time to get the work done appropriately. Filing a tax was a task that involved waiting in long queues. However, today thanks to the growing horizon of technology, filing tax is no longer a tedious process. Online filing of tax has replaced the traditional means of filing tax. Internet has become a necessity in the everyday life of everybody. Thinking of surviving in this fast-paced world without using the internet is impossible. Internet has made it much simpler and more relaxed. With the help of the internet, one can get all the work done from his home or his office and the best part is that the work is hassle free.

Filing your tax preparation can be easily done with the help of internet whereby you can avoid standing in long queues for hours. In addition, getting your tax return preparation done on the internet is much more effective and takes lesser time. Tax return is an issue that necessitates absolute concentration in the matter of tallying of the financial documents of your firm. You need to tally the profit and loss accounts, balance sheet, daily bills receivables, trial balance, financial statements, and payables and many things that constitute as a part of the financial documents of your business.

When the time comes for filing tax returns, the finance departments of all organizations have to face more workload and this work has to be done with a lot of accuracy and concentration. Every tax accountant is busy in arranging data to bring correct figure so that tax is paid without facing any problem as well as on time. The accountants are very busy and concentrate on tax return preparation so that the process is done without any error. Tax return preparation has become simpler by the introduction of the online procedure because now an accountant does not have to do many things manually and so there are less chances of inaccuracy. Now, you do not have to run to your accountant every time for even a small piece of work and others.