Understand Topic of Internet Marketing and Tax Deductions
Posted by admin on Nov 5, 2008
Tax Information and Deductions About Adsense and Other Online Businesses
These Tax Deductions are aimed at U.S. internet marketers. Keep in mind, these go hand in hand with your personal tax situation. Consult a tax attorney or other tax professional in your area. I never realized this until I started preparing taxes, but being aware of your tax situation all year is a must. Just by paying a little attention and learning the basic tax code, you can save thousands in taxes. It is your hard earned money, this money should be in your pocket, or in a interest bearing account.
Google Adsense and Similar Programs
Google Adsense is required to collect tax information from those who participate in the program. If you’re a business, you’ll need to put your EIN number on your application. If you’re an individual, all you’ll need is your social security number. If you don’t have that information when you initially sign up, you can still apply for the Google Adsense program.
While Google does not withhold taxes or provide any tax advice, they will send you a 1099 once your earnings reach a certain amount. Of course, if you are a Non-US business and have no activity in the United States, you will not need to provide this information. For more tax information regarding the Google Adsense program, visit the Google Adsense Support site. For other tax-related questions or concerns, you can log onto irs.gov. Google will also send a copy of the 1099 to the IRS, so you must report this income and pay taxes on it.
Software, Computers and Other Hardware
If you use your computer for 100% business, you can deduct the full of the cost of your internet service, phone, computer, printer, fax machine and copier, even your computer desk and other equipment. Say the PSU went out on your business computer. The entire cost to repair the PSU is deductible. Bought memory? Yep, tax deductible. You can take the section 179 deduction or depreciate the equipment. Software you buy for your business, your web hosting fees, domain registration fees, and the cost of ads you place across the Internet are also tax deductible.
I stress though, only the business costs can be deducted, nothing for personal use. For example, if you use your computer for 75% business and 25% personal use, you can deduct 75% of your yearly internet bill. If you have an online business, it is vital to keep accurate records. I would suggest keeping a log of hours you spend on business and personal use, like pizza delivery people do for driving, or should do.
Membership Site Fees
If you promote your business through traffic exchanges or safelists and you pay for upgrades or buy credits, these are also tax deductible. Membership fees for sites related to your business are also deductible. For example, say you sell PLR or Resell Rights products as your business, and you pay a membership site $29.97 a month for your products, you can deduct those fees. If you buy website templates and graphics for your business site, those are also deductible. Fees for payment processors are also deductible.
Home Offices
For a room to be considered a home office, it must be used 100% for business purposes only. No tv’s, radios, or hanging clothes in the closet, no sleeping in the room, nothing but business, or it will not be allowed. The IRS has really cracked down on this in the past couple of years, and a preparer who uses due diligence will not allow the deduction. I know I won’t. If you also deduct your mortgage interest, it is even more important. If you do this properly, you will receive a great tax benefit.
Put Money Off to the Side
If you make most of your money online, I would suggest putting away at least 20% of your earnings for taxes, more if you start making high 5 figures or higher. Of course, this depends on your personal tax situation, like state or city income taxes, filing status and dependents. Myself, I’m single, live in Florida, so my returns are pretty easy, and for now, I only need to put 10% away. One last thing, and I cannot stress this enough: the vast majority of the time it is better to file Married Filing Jointly instead of Married Filing Separately. This is true even if only one spouse has earned income.
Keep Your Records
Always keep detailed records, and keep them organized, which is very easy to do. Make the records on your computer, print them, and also burn the files to a CD or DVD, and label them properly. I suggest keeping the records for at least 3 years, but 5 is better. If you make 6 or 7 figures online, I would keep the records even longer. When tax time comes around, you will be very well prepared, and you will get the best tax benefit possible. And if the IRS does an audit, you will have the records to prove your deductions are legit.
More tips about Internet Marketing and how to increase your profits with the help of capture video on screen strategies.
Donating Your Car To Charity
Posted by admin on Sep 28, 2008
Donating A Car To CharityDonating a car to charity is not that difficult. However, you need to be aware of the new tax regulations before you donate your car to a non-profit organization. The IRS provides some general rules of thumb on car donations:Starting in 2005, if the claimed value of your donated car exceeds $500 and the item is sold by the charitable organization, your tax deduction is limited to the amount of money the charitable organization actually receives from selling the vehicle.
The charitable organization must provide you (the donor) with a written acknowledgement within thirty days of the sale, specifically stating the net amount they received for selling your donated car. As an example, let’s say you make a car donation to a non-profit charity, and the fair market value of that car is $5,000. The charity then sells the car without “significant use” or “material improvement”, for a total sale price of $2,500. Your deduction is limited to $2,500, not the $5,000 fair market value.
This is substantially different than earlier years when you could deduct the entire estimated fair market value instead of the amount that the car donation actually raised for the charity.Another caveat is that many non-profit organizations use a third-party administrative service to handle the pick-up and auction sale or your car donation. The resulting administrative fees are often 20% or more of what the car sells for at auction. Your tax deduction is correspondingly lowered by the amount of third-party fees because the net amount the charity receives has been reduced. In the example above, your car donation deduction would be reduced from $2,500 to $2,000.There are a few exceptions to these car donation tax deduction rules of thumb that are recognized by the IRS.
Car Donations: “Significant Use” & “Material Improvements”If the charity significantly uses or materially improves the vehicle, they must certify that in the form of an acknowledgement to the donor (within 30 days of the contribution). In the case of significant use or material improvement, the donor may usually deduct the vehicle’s market value ($4,000 in the example above).To be considered “significant use”, an organization must use the vehicle to substantially further its regularly conducted activities.
The recipient organization’s use of the vehicle:1 - Must not be insignificant2 - Must not be intended at the time of the donationSignificance also depends on the frequency and duration of use by the non-profit organization.”Material improvement” includes major repairs or other improvements that significantly increase the vehicle’s value. Cleaning the vehicle, minor repairs, and routine maintenance are not material improvements.Make sure you don’t get misled by a car donation sales pitch saying you can claim higher tax deductions than the IRS allows.
For more information, see IRS Publication 561, Determining the Value of Donated Property ( PDF 101K) at www.irs.gov
Greg Reynolds writes about fundraisers and fundraising events for schools, churches, and nonprofit organizations. Signup for the free monthly newsletter at www.fundraiserhelp.com
Alternative Minimum Tax - Online Tool
Posted by admin on Sep 27, 2008
Hell hath no fury like a person who just found out the alternative minimum tax applies to them. The IRS has set up an online tool to figure out if you do.
Alternative Minimum Tax
The alternative minimum tax is a procedure that was set up to keep the richest of Americans from avoiding tax paying responsibilities. As is typical of the federal government, the failed to include any language adjusting for income growth and so on. As a result, the alternative minimum tax creams many taxpayers even though it was never intended to cover them.
So, why don’t our beloved leaders just amend the relevant codes? Politicians giving up money they can spend on wars and favorite, but unnecessary, projects in their districts to keep voters happy? Surely, you aren’t that naïve anymore. Oh, they will talk about repealing or modifying it, but it just never seems to happen. Hmmmm…
To determine if the alternative minimum tax applied to your situation, you have to take a very simple step. Fill out your taxes using both the regular 1040 forms and the alternative minimum tax forms. What a complete waste of time. Fortunately, the IRS seems to agree.
Much like those handy online mortgage calculators, the IRS has taken the alternative minimum tax into the digital world. It has created a new online tool where you can enter the relevant information and find out if you are subject to the alternative minimum tax. One simply goes to the IRS web site, does a search for “AMT Assistant” and starts entering information. The process takes between five and 10 minutes if you have your financial number handy. If you don’t, add however much time it takes you to get your records together.
Now, you might be a little nervous about entering financial information on the IRS site. What if they are tracking you? Don’t worry. It is anonymous. The information can’t be tracked back to you unless the IRS wanted to hunt IP numbers through hosting companies and computer systems. Given it takes 30 minutes just to get an IRS representative on the phone, it is highly unlikely this will occur.
When you’ve got your courage up to full tilt, give it a try. Maybe, just maybe, you’ll find you aren’t subject to the alternative minimum tax.
Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits
Fraudulent Tax Shelters - KMPG Goes Down Hard
Posted by admin on Sep 25, 2008
In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars. KMPG has agreed to pay a fine of $456 million dollars, but nine of its executives still are under indictment.
Son of Boss Tax Shelters
From 1996 to 2003, KMPG promoted a tax strategy known as the Son of Boss. This shelter was used to create phony tax losses that could be claimed by wealth individuals looking to write off tens of millions of dollars. KMPG promoted the structure despite the fact it’s own internal tax attorneys warned the structure was fraudulent and could result in criminal charges. So far, wealthy individuals participating in the scheme have paid over $3.7 billion dollars to the IRS.
There should be no mistaking the impact of the plea agreement in this case. KMPG may have enjoyed the huge fees earned from the scam, but it is paying an incredible price for pursuing this practice. The price paid includes:
1. 456 Million Dollar Fine,
2. Permanently barred from providing tax services to wealthy individuals,
3. Permanently barred from involvement in any pre-packaged tax strategies,
4. Permanently barred from charging a contingency fee for work,
5. All actions monitored by government appointee for three years,
6. Full cooperation with government in indictments of individual KMPG employees.
Remaining Indictments
While KMPG pled guilty, it left its employees out to dry. An interesting maneuver since one can assume KMPG enjoyed the millions of dollars produced from the fraudulent tax shelters. Those under indictment, who are all now former employees, are:
1. Jeffrey Stein, former Deputy Chairman of KPMG, former Vice Chairman of KPMG in charge of Tax and former KPMG tax partner;
2. John Lanning, former Vice Chairman of KPMG in charge of Tax and former KPMG tax partner;
3. Richard Smith, former Vice Chairman of KPMG in charge of Tax, a former leader of KPMG’s Washington National Tax and former KPMG tax partner;
4. Jeffrey Eischeid, former head of KPMG’s Innovative Strategies group and its Personal Financial Planning Group and former KPMG tax partner;
5. Philip Wiesner, former Partner-In-Charge of KPMG’s Washington National Tax office and former KPMG tax partner;
6. John Larson, a former KPMG senior tax manager;
7. Robert Pfaff, a former KPMG tax partner;
8. Mark Watson, a former KPMG tax partner in its Washington National Tax office.
In Closing
In the end, KMPG led clients down a very dangerous path for the apparent purpose of generating revenue. While even bad publicity is supposed to be good publicity, this situation seems to suggest the opposite.
Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits
Capital Assets – Gains and Losses for Taxes
Posted by admin on Sep 24, 2008
Capital is a unique term when it comes to taxes. If it gains value, you pay a tax. If it loses it, you can write at least some of the loss off.
Capital Assets – Gains and Losses for Taxes
Practically everything you own is a capital asset. This is true whether you use it for business purposes or personal use. The internet revenue service is very interested in your capital assets. Why? The IRS likes to tax the full gains while only giving you a small break on any lost value. Specifically, you have to report and pay taxes on gains in value of your capital assets when you sell them. Unfortunately, you only get to claim a loss on capital assets if it is an investment property such as stocks. Doesn’t seem fair, but that is how the cookie crumbles these days!
Here are some tax issue highlights on capital assets:
1. Generally, you report gains and losses on capital assets by subtracting the price you purchased it for from the price you sold it for. This calculation is reported to the IRS on Schedule D, which should be attached to your 1040 tax return. Lucky you!
2. Capital gains and losses are classified as long-term or short-term. The classification breaks down on…tad a, how long you’ve owned the capital asset in question before selling it to someone else. If it has been less than a year, it is a short-term gain or loss. Hold on to it for more than a year and you are looking at a long-term gain or loss when reporting taxes. Each classification requires different tax calculations and you will ultimately pay different amounts of tax.
3. In a bit of good news, you are generally going to pay less tax on a capital asset gain. For the 2005 tax year, the tax rates range from a miserly five percent to a more painfull 28 percent.
4. While the IRS is happy to tax all of your capital gains, it has different views towards losses. You can deduct losses, but only up to $3,000 each year.
We all have capital assets, even if we don’t realize it. Unfortunately, the IRS is aware of this, so make sure to report your gains and losses.
Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits
Corporations Failing To Claim AMT Exemption Overpay Taxes By $11,000
Posted by admin on Sep 23, 2008
Does your incorporated business pay alternative minimum tax [AMT]? If so, there is a 93 percent chance you have been overpaying your taxes by an average of $11,000 a year according to the Treasury Inspector General.
The Office of the Treasury Inspector General for Tax Administration was created in 1999 to oversee the IRS. One of the duties of the Treasury Inspector General is to study and report the efficiency of the tax payment system, particularly the accuracy of tax collection efforts. Many of the studies conducted by the office reveal starting results, particularly when it comes to businesses overpaying their taxes.
As part of this oversight, the Treasury Inspector General is reporting that many small business corporations are incorrectly paying AMT. The AMT was enacted in the late 1990s, but proved to be a huge burden on small businesses. The tax was confusing and the paperwork was incredibly complex. An amendment was subsequently added to give small business corporations relief from the AMT. Section 55(e) of the Internal Revenue Code now contains language exempting small business corporations from paying the AMT.
Small business corporations can claim an exemption from the AMT if gross revenues average $5 million or less for the initial three years of business. Thereafter, the business can continue to claim the exemption as long as revenues average $7.5 million or less of each subsequent three year period.
According to the Inspector General, companies that fail to claim an exemption to the AMT are overpaying taxes by an average of $11,638 each year. 93 percent of small business corporations qualify for the exemption. Since the IRS has no duty to notify taxpayers of overpayments, many small business corporations have no idea they are overpaying taxes and are due refunds.
All taxpayers have the right to file amended tax returns for the past three calendar years. If you failed to claim the AMT exemption, you may be due a refund totaling over $33,000.
Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits
Unbiased Tips About Accounting and Taxes
Posted by admin on Sep 22, 2008
The following is a comparison of the two primary accounting methods (Cash method and Accrual method) used to calculate taxable income for U.S. Federal income taxes. According to the Internal Revenue Tax Code, a taxpayer may compute taxable income using any of the following methods of accounting:
The cash receipts and disbursements method;
An accrual method;
Any other method permitted by the chapter; or
Any combination of the foregoing methods permitted under regulations prescribed by the Secretary.
A taxpayer must compute taxable income using the same accounting method he uses to compute income in keeping his books; also, the taxpayer must maintain a consistent method of accounting from year to year. Should he or she change from the cash method to the accrual method (or vice versa), they must notify and secure the consent of the Secretary.
Cash method
Cash method taxpayers include income when it is received, and claim deductions when expenses are paid. A cash method taxpayer can look to the doctrine of constructive receipt and the doctrine of cash equivalence to help determine when income is received. Most individuals start as cash method taxpayers. There are three types of taxpayers that cannot use the cash method: (1) C corporations; (2) partnerships with at least one C corporation partner; and (3) tax shelters.
Accrual method
Accrual method taxpayers include items when they are earned and claim deductions when expenses are owed. An accrual method taxpayer looks to the all-events test and earlier-of test to determine when income is earned. Under the all-events test, an accrual method taxpayer generally must include income “for the taxable year when all the events have occurred that fix the right to receive income and the amount of the income can be determined with reasonable accuracy.
Under the “earlier-of test,” an accrual method taxpayer receives income when (1) the required performance occurs, (2) payment therefore is due, or (3) payment therefore is made, whichever happens earliest. Under the “earlier-of test” outlined in Revenue Ruling 74-607, an accrual method taxpayer may be treated as a cash method taxpayer when payment is received before the required performance and before the payment is actually due. An accrual method taxpayer generally can claim a deduction in the taxable year in which all the events have occurred that establish the fact of the liability, the amount of the liability can be determined with reasonable accuracy, and economic performance has occurred with respect to the liability.
The History
Originally, federal law required all taxpayers to use the cash method of accounting. However, many businesses used the accrual method, as most generally accepted accounting principles (”GAAP”) were based thereon, and objected to the new law. Less than a year after the 1913 Revenue Act, the IRS allowed use of the accrual method for deductions, then for income, and in 1916, Congress formally adopted the accrual method into U.S. tax law.
Read more about what is FASB and other accounting information.
Help With Ex-Spouse Tax Problems
Posted by admin on Sep 21, 2008
Historically, tax issues arising from bad marriages fell into the category of “better or worse” in the marriage vows. The IRS historically considered spouses one person for tax purposes, but has changed its views.
Tax Problems
When a marriage has problems, finances are almost always one of the elements that contribute to the strife. This can be particularly true where spouses file a joint tax return, which the both sign as tax payers. If the information provided on the tax return is false or inaccurate, the IRS has historically viewed both spouses as liable for the resulting assessments. If the relevant taxes were not paid, the IRS would also look to both spouses to pay the delinquent amount. In worse case scenarios, this can include criminal charges for tax evasion.
Fortunately, the IRS has modified its view of the liability of joint filers. The IRS now recognizes that innocent spouses can’t control their deadbeat former spouses. It allows such innocent spouses to claim three types of tax relief:
1. Innocent Spouse Relief
2. Relief by Separation of Liability
3. Equitable Relief
If the IRS comes after you for the tax liability of a former spouse, you can seek tax relief under these three theories if you meet all the following requirements. First, you filed a joint return with inaccurate information. Second, you didn’t know of the inaccuracies and didn’t have any reason to. Finally, taking into consideration the situation, holding you liable for the tax would be unfair.
The IRS will evaluate your application and render a ruling on your application. The IRS may agree to simply waive any tax claim against you and go after the deadbeat spouse as the sole debtor. Alternatively, the IRS may split the tax into a his and her account, only requiring you to pay one half of the amount due. While this may not sound great, it will immediately cut your tax bill in half.
In rare cases, you can seek equitable relief from the IRS. Equitable relief simply is another way of saying making you pay the tax would be manifestly unfair. You must show you and the spouse did not transfer assets as part of an fraudulent scheme, didn’t transfer assets with the intention of evading taxes, didn’t intend to commit fraud, didn’t pay the taxes due and you didn’t know what your spouse was up to. Equitable relief claims need to be handled very carefully as the IRS views them with a very cynical eye. Nonetheless, they are a last step that can be taken when all else has failed.
It is highly recommended that you use a professional when you find yourself stuck with the tax problems of an ex-spouse, as the IRS can be very cynical in evaluating such claims.
Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits
Rental Property Tax Deductions
Posted by admin on Sep 20, 2008
Own residential rental properties? This article discusses how income from those properties impacts your taxes.
What Constitutes Revenue?
Generally, rental income is defined as any revenue you receive from the occupancy or use of residential property. Rent, obviously, is included in that revenue. Many owners are surprised to learn revenue also includes rent advancements, expenses paid by a tenant and any security deposits not returned to the tenant. In fact, revenue can also include amounts paid to cancel a lease, even if you had to sue the defendant to get it.
Yeah, Yeah, But What Can I Deduct?
Tax deductions associated with rental properties are strikingly similar to those found in any business. Technically, you can deduct any expense reasonably necessary to “manage, conserve or maintain” the property. Obvious deductions include mortgage payments, cleaning expenses, insurance premiums, service payments such as landscape maintenance, repairs, maintenance, etc. Overlooked rental property deductions include:
1. Expenses incurred in finding tenants,
2. Commissions paid to third parties that arrange for tenants,
3. Paying your accountant and/or lawyer,
4. Mileage for driving to and from the property [I said, “No more parties!”]
5. Depreciation of the property,
6. Depreciation of items in the property such as washing machines, furniture, etc.
Imaginary Rent Deduction
A few creative property owners have suggested that they should be able to deduct their customary and standard monthly rent if the property is empty. The argument goes, “If the property is empty, I am not making revenue and should be able to deduct the $1,500 that I am missing out on.” At first glance, this almost makes sense. Sadly, it doesn’t fly from the perspective of the IRS. Since you are not receiving revenues, your total revenues for the year will be reduced by the loss rent. You can’t double dip by deducting the $1,500 from the already reduced yearly revenues. The only things you can deduct are the expenses you incur during this period, and only for so long as you are actively trying to rent the place.
Rental properties are a great investment. Even more so if you stay on top of your taxes.
Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits
Cash Advance Georgia , Low Cost Payday Loans
Posted by admin on Sep 19, 2008
cash advance lenders
If you are looking for an instant cash advance company, you can find it by browsing online. By just typing for keyword phrases like “cash advance 1 hour” you will surely be prompted with websites that are sorted according to authority which bear the information that you are looking for. Searching online also enables you to understand better about cash advances or payday loans. This information allows you also to weigh the advantages over the disadvantages of cash advance loan.
instant cash online payday advance
If you want to find a company which enables you to avail for fast cash advance program, the Internet also is a very powerful medium to do this. And if do not know a specific site then you can do your search using search engines. Just input keywords like “fast cash advance ”. For sure, you will find lots of companies who offer this kind of program. As incredible as it sounds, 30 second approval payday loan is available for qualified people with immediate financial needs. If you are looking for a very urgent loan to settle your immediate problems, try the 30 second approval payday loan. As the name speaks, it is possible to get approved super fast. Most financial situations usually demand immediate financial solution, thus 30 second approval payday loan can help greatly.
free payday loan
There are important things to consider before grabbing any offer from these companies. You need to understand that not all are giving an offer that provide a just deal. You need to accept only from those who are proven to be reputable– Those company that provide a low cost or interest rate. Try to search for this topic– “low fee payday loans ”. Try also if there are free-rate cash advance loan using this key phrases “free cash advances ”
It is important to realize that cash advances should be taken as a last option. That just means, if you think that there are better alternatives then do not go for it. It should be used in times of real financial difficulty. Else, you might end up in great regret when you find that your salary comes with a great slash.