IRS

Capital Gains Home Sale with Home Office Depreciation

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If you have a small business, the taxes can be pretty tough to swallow. That’s why you need to be sure that you take all the tax write offs you possibly can to lower your small business tax bill. These small business tax deductions are particularly important for solo entrepreneurs and other self-employed business owners who get stuck with additional self-employment tax. For many business owners, one important tax deduction is the home office tax deduction. This deduction allows home owners who use part of their home for business purposes to write off expenses including deducting property taxes, a portion of utilities and other costs of owning and maintaining a home. How Home Office Affects Capital Gains on Home Sale When you sell property, like your home, you typically have to pay taxes on any increase in the value of the asset. These taxes are called capital gains taxes. Fortunately, these taxes are often taxed at a lower tax rate than your standard tax bracket rate. Unfortunately, on the sale of a large asset, like your home, these capital gains can still be substantial. Luckily, there is a special home sale exclusion for capital gains on the sale of your …

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Coming to FinanceGourmet – Personal Finance Blog

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This coming week, we have some interesting new articles for Finance Gourmet to help with frequently asked about and requested personal financial health topics. First up, as May draws to a close, June marks both the end of the second quarter, and the midpoint of the year. What kinds of things should you be aware of at this point for optimal financial health? We’ll discuss quarterly tax payments, how the markets are looking at the half way point, what things you might want to be thinking of for minimizing your taxes, and more. Next, we tackle signing up for a 529 plan, step by step. Not long ago, I wrote about how a financial planner can help keep you from getting stuck on your financial planning actions such as setting up a 529 plan. But, when you can find them, a detailed step-by-step guide to setting up financial accounts such as a 529 plan can be just as valuable. We’ll give you a detailed guide on how to open a Colorado 529 plan, including how to fill out all the Colorado 529 plan forms to set up an account. Then, we’ll look at some of the new IRS numbers that …

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What Happens If I Don’t Pay My Taxes

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Doing income taxes can be a trying time for many taxpayers. There are numerous forms to fill out, cumbersome calculations to perform, not to mention, the rules change every year. When you finally finish, you might end up owing a lot of taxes to the government. The IRS isn’t know for being forgiving, but that doesn’t stop people from wondering, what happens if I don’t pay my taxes? Failure to File Taxes First, it is important to distinguish between not filing your income taxes, failure to file, from not paying your income taxes. There are significant additional penalties for not filing your income taxes on time. If you can pay your taxes, but can’t get them done on time, then consider filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax. Filing this form grants taxpayers an automatic extension of time to file. This form must be filed by the April 15th filing deadline just like a regular tax return would be. Once filed, the new deadline for filing your taxes moves to the beginning of October. Beware, even if you file for an extension, you do NOT get any additional time to pay …

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Detecting IRS Phone Scam

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The latest phone scam goes something like this: Someone calls and claims to be from the IRS. They say that you owe taxes and you need to make a payment right away. Otherwise, the scammer says, you may be deported, lose your business license, or even be arrested. This is in addition to the ongoing problems with tax fraud identity theft. How To Tell If It’s the IRS Phone Scam There are a couple of tip offs that can help you detect whether it really is the IRS on the phone. First, off, the IRS does most of this stuff by mail. Mail gives a verifiable paper trail for future legal proceedings if necessary. Also, having a computer spit out 10,000 letters is way faster, cheaper, and more efficient than calling 10,000 people. If you haven’t gotten a single letter from the IRS before you get a phone call, be very suspicious. Sometimes, the scammer gets lucky and maybe you have gotten some letters from the IRS. Maybe you didn’t understand them completely. Now, it’s time to understand how the IRS threatens people. The IRS cannot do ANYTHING at all without telling you IN WRITING that they are going to …

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What Happens If You Don’t File Your Taxes On Time

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What happens on April 15?  For those of you from non-US countries, that probably doesn’t mean much.  To us Americans, April 15th is Tax Day, the deadline to file tax returns. Yup, and entire day taken over and corrupted by government. Well, I guess those interstates won’t pave themselves for free. If you’re working at the last minute then you might be looking for last minute tax tips.  Of course, what many people really want to know is what happens if you don’t file your taxes by the deadline and is there anything I can do if I can’t get my taxes done? The answer, actually, is surprisingly benign.  Filing late is a no-no and can result in all kinds of problems, not the least of which are penalties.  But, there is a ray of hope.  Instead of filing your tax return, file for an extension.  One extension is granted automatcially, so all you have to do is send in the form.  If you can’t get your taxes done by April 15, then make sure you file your request for extension in its place to avoid penalties, fees, and interest. If you file for an extension when are your taxes due?  …

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Will IRS Really Settle Tax Debt for Pennies on the Dollar?

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The latest radio commercials claim that if you owe the IRS $10,000 or more in back taxes or delinquent tax, that there are government programs that will help you settle that tax debt for pennies on the dollar. They go on to say that, with this company’s help, of course, you can make you tax debts go away, including fees and penalties. Sound too good to be true? It probably is. How IRS Settles Delinquent Tax Debts In many ways, the IRS is just like any other creditor. If someone owes them money, then they want to get paid that money. However, in many other ways, the IRS is unlike any other creditor out there. For most companies, collecting on a delinquent debt is a cost-reward calculation. The amount of possible debt recovery is compared to the cost of getting that money. For a very large debt from someone with the means to pay it, it is worth it to engage lawyers and go to court to seize assets and garnish wages. For smaller debts, or for debtors with no assets, the cost of collecting the debt isn’t worth it. There comes a point where trying to collect the debt …

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IRS Mileage Rate 2014

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Note: The latest standard mileage rate deduction amount from the IRS can be found at the updated, current article. Here come the end of year numbers from the IRS for 2014. Recently, the Internal Revenue Service released the official 2014 standard mileage rates. Keep in mind that these are the number for miles driven during 2014. You’ll be using the 2014 numbers in early 2015 when you are filing your 2014 taxes. If you need the mileage rates for 2013 those are the one you use for the income taxes you are filing in early 2014. 2014 Mileage Rate Deduction Standard As always, the IRS allows two ways to deduct expenses associated with tax deductible use of a motor vehicle. The taxpayer may claim either the actual expenses for vehicle, or claim a standard amount per mile instead. To claim the actual expenses for driving an automobile for deductible reasons, the taxpayer must keep complete records of all expenses occurred during the year. Considering how complicated filing income taxes is in the first place, why add another layer of complexity by keeping even more records, and making even more calculations. The 2014 Mileage Rates are: 56 cents per mile for …

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IRS Identity Theft Issue

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The IRS holds a special place in the American psyche. The concept of taxes and the taxman are widely despised by many Americans, even though the efficient collection of taxes is a key component of running a modern democracy. Even though the IRS is often cast as the bad guy, it is never cast as an inept one. In fact, far from it, the IRS is often portrayed as a powerful, all knowing, governmental entity that must never be cheated. If that is so, then why is Congress investigating widespread identity theft and tax fraud allowed by the IRS. IRS Tax Fraud via Identity Theft The legend goes a little something like this. An average American taxpayer files his income taxes. When he does so, he submits some documentation, but most of what goes on the typical tax form requires no documents actually be sent to the IRS. Rather, the taxpayer must keep those documents as proof, just in case the IRS comes asking via the dreaded tax audit. Each year, the IRS audits something around one percent of all tax returns. Of that amount, a certain number are just randomly selected for review by a computer. Others, we are …

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Review IRA Beneficiaries

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When I was a financial planner, there were a lot of little things that came up over the years that I realized went unnoticed by the vast majority of people, no matter how well educated they were in finance and investing. Understanding, setting and updating the beneficiaries on accounts like IRAs was one of those things that slips through the cracks for many people. Of course, IRA plans aren’t the only accounts with beneficiaries on them. Be sure to check your life insurance accounts, annuities, 401k accounts, and other retirement plans to keep them up to date. Without this important part of estate planning, all your other efforts might be for nothing. Will Versus Beneficiaries One of the most important things to understand about accounts with beneficiaries, is that that accounts only become a part of your estate after your die, IF AND ONLY IF, there are no living beneficiaries assigned to the account. What that comes down to is that updating your will and changing who you are leaving what, does NOTHING to affect how your insurance or IRA account balances are distributed upon your death. Even if you specifically disinherit someone in your will, they will still get …

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Tax Season Bumped Back by IRS

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The IRS announced that it was moving back the beginning of tax filing season due to the government shutdown. Apparently, workers finalizing tax forms and systems for the end of the 2013 tax year and getting them ready for the 2014 filing season were not part of the essential government workers that kept working during the recent government shutdown. As a result, the IRS is about two weeks behind on getting ready for the tax filing season. The original date when taxpayers were first allowed to file tax returns was supposed to be January 21, 2014. However, after having basically making no progress during the 16-day shutdown, that date is being moved back. Although no official date has been set for when the IRS will begin accepting 2014 returns, the agency announced a “one- to two-week delay.” That means that the earliest date would be January 28, 2014 and the latest start date would be February 4, 2014. The delay is not due to big changes to paper forms, but rather to ensuring that the electronic systems for filing, as well as the electronic tax preparer data provided to firms like TurboTax, are up to date. In addition, the IRS …

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