Finances

The IRS has obtained civil injunctions against more than 100 promoters of illegal tax avoidance schemes and fraudulent return preparers in an ongoing crackdown that began in 2001. Many of the injunctions, obtained in cooperation with the Department of Justice, also order the promoters to turn over client lists and to cease preparing federal income tax returns for others.

Signaling a renewed fight against tax fraud, the federal government stepped up the use of civil power four years ago. Civil injunctions have subsequently been used to stop:

1. Abusive trusts that shift assets out of a taxpayer’s name but retain that taxpayer’s control over the assets.

2. The misuse of "Corporation sole" laws to establish phony religious organizations.

3. Frivolous "Section 861" arguments used to evade employment taxes.

4. Claims of personal housing and living expenses as business deductions.

5. “Zero income" tax returns.

6. Abuse of the Disabled Access Credit.

7. The claim that only foreign-source income is taxable.

The IRS identifies abusive tax promoters through a variety of means, including ongoing examinations, Internet and media research or referrals from external sources such as tax professionals. If the findings of an investigation support a civil injunction, the IRS refers the case to the Department of Justice.

The Internal Revenue Service has certified the 2006 Toyota Highlander Hybrid as being eligible for the clean-burning fuel deduction. This certification means that taxpayers who purchase one of these hybrid vehicles new during calendar year 2005 may claim a tax deduction of up to $2000 on Form 1040.

Under Working Families Relief Act of 2004, which was signed into law in October of 2004, the clean-burning fuel deduction is limited to up to $2,000 for certified vehicles first put into service in 2005 and $500 for vehicles placed in service in 2006. No deduction will be allowed after 2006.

Federal Law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.

This one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner. Individuals do not have to itemize deductions on their tax return to claim this deduction. This benefit can be taken as an adjustment to income on the Form 1040.

In elementary school, kids come up with creative excuses why they did not bring in their homework. “My dog ate it” or “It was stolen by invisible space aliens” might be given as a reason why something was not turned in on time. Don’t try those excuses with the IRS! Don’t blame divorce, business failures, or family troubles either, because except under extreme circumstances, they won’t register with the taxman.

If you have unfiled tax returns, you need to file at least the last 6-7 years. Although under law IRS could make you go back and file that return from the late 1970’s when you were a disco diva or urban cowboy, the good news is that as a matter of policy they don’t! In most cases, filing the last 6-7 years will be OK and IRS will consider you in compliance. So don’t procrastinate any further, file the returns if you made over the standard deduction and personal exemption amounts during those years or were self-employed.

People delay filing returns for 3 main reasons:

1. They are afraid or embarrassed;

2. They have lost the records or don’t know where to go to get the returns done; or

Donating your used car to charity is a win-win situation; the charity gets your gift and you get tax deduction. Below are some simple steps to make a car donation.

1. Understand the rules. A good place to read the government rule on car donation is IRS Publication 4303, A Donor’s Guide to Car Donations (available on the IRS’s website at www.irs.gov). This guide outlines some important rules regarding car donation. For example, one important rule states that car donation must be made to qualified organizations in order to be tax deductible.

2. Determine the value of your used car. Although the blue book might help you determine the value of your car, you should read IRS Publication 561, Determining the Value of Donated Property (available on the IRS’s website), to see what your car really worth.

3. Find a charity to donate your vehicle. If you are associated with any charity or non-profit organizations, that organization might be your choice for donating your car. Otherwise, check the Yellow Book or search on the Internet to find an organization to which you feel like donating your car. After you have identified a candidate, you should review IRS Publication 78, which is a list of organizations eligible to receive tax-deductible charitable contributions. This document is also available on the IRS’s website and it’s searchable. Make sure the candidate charity is eligible. Otherwise, you might not get your tax deduction!

Estate taxes. It’s not enough to simply know they exist, and to know strategies to minimize them. When it comes down to it, you need to plan how you and your family will eventually pay them.

The Estate Tax Dilemma

Estate taxes are generally due nine months after the date of death. And they are due in cash. In addition to estate taxes, there may be final expenses, probate costs, administrative fees, and a variety of other costs. How can you be sure the money will be there when it’s needed?

Estate Tax Options

There are four main sources of funds to pay estate taxes. First, your current savings and investments. You or your survivors can use savings and investments to cover the costs of estate taxes, probate fees, and other expenses. This is often a sound alternative. However, sometimes savings and investments may not be sufficient. And if those savings were earmarked for other financial goals, you may need to rethink how you will achieve those goals.

Following is a reproduction of the IRS’s rules and requirements for 1031 tax deferred exchanges with regards to real property. If you have any questions regarding the sale of your real property or questions about what qualifies for a 1031 exchange or not, please consult your tax professional.

Sec. 1031. - Exchange of property held for productive use or investment

The electronic transaction ordinance defines the certificated copies in which are to be presented for adjudication. Where any law requires or permits the production of certified copies of any records, such requirement or permission shall extend to print outs or other forms of display of electronic documents where, in addition to fulfillment of the requirements as may be specified in such law relating to certification, it is verified in the manner laid down by the appropriate authority.

The code of civil procedure should be amended to oblige the court to accept the endorsement rule as enunciated in the rule 4 and 5 Order XI of the Code of Civil Procedure Act 1908 as defined in section 12 of Electronic Transaction Ordinance 2002.

The power to summon as defined in subsection (1) of section 94 of Cr.P.C (Act V of 1898) should be extended so as to add the power of police to summon all persons who has committed offence under electronic transaction ordinance 2002.

Why a Corporation Helps Save You Taxes

The Tax Rates (Notice anything unusual?):

The following tables provide a list of the tax rates for individuals and corporations:

Personal:
$0-$24,650 15%
$24,651-$59,750 28%
$59, 750-$124,650 31%
$124,651-$271,050 36%
$271,050+ 39.6%

Tax Secrets

Corporate:
0-$50,000 15%
$50,001-$75,000 25%
$75,001-100,000 34%
$100,001-$335,000 39%
$335-000-$10M 34%

If you examine them closely, you will see at least one glaring contrast. The individual making $49,000 per year is in the 28% percent bracket, while a corporation that earns $49,000 is only in the 15% bracket. That¡¦s a potential 13% difference in your tax rate if you organize your finances to take advantage of this one little item.

But, that¡¦s just part of the story. An individual who makes $49,000 in salary pays taxes on almost the entire $49,000. However, a business can first deduct its operating expenses, and only pay taxes on what¡¦s left. As Robert Kiyosaki says ?± the corporation acts as a filter that is used to reduce the corporation¡¦s taxable income by utilizing the tax deductions afforded by the tax code.

“Deducting Meals and Entertainment”

O.K. You’ve been working really hard on these lessons. Now its time for some fun. Are you with me? Imagine if you could spend time with friends, eating, drinking and seeing shows and your company could foot the bill? Wouldn’t that be GREAT! Fasten your seat belt, we’re going on a (tax-deductible) journey?

Tax Secrets of the Rich found here

Our first stop is meals. There are several great ways to deduct your meals. The first is to turn your social outings into business meetings. No Fun, you say. Watch this, I say. Many of my lunches are already spent with colleagues and associates. That’s the way it is when you’re in business for yourself. You start spending more and more time with business partners and associates. Asset Protection Techniques

Well, if I have lunch or dinner with a friend, that’s NOT tax deductible. But, if I discuss business with that same person, suddenly it becomes a deductible expense. And what does it take to officially discuss business? The IRS says that that the following conversation will suffice:

Your Associate: "How’s Business?"

Deducting Your Auto Expenses

Auto deductions are a very complex topic. So, to clarify, we are not going to attempt to cover all of the intricacies of the subject. Instead, we will cover some of the most-used provisions and provide you with a better understanding of some of the associated issues.

In keeping with one of our primary strategies, what we are interested in doing with our automobiles is to convert as much of their use as possible to legitimate business purposes.

That’s because personal auto use is not deductible. As a result, the object here is to maximize the amount of auto use you can attribute to business purposes and document that usage properly.

Strategy One: The Actual Method vs. the Standard Method

Tax Deductions

There are two methods that you can use to deduct your automobile usage. For the most part, you can choose the method that provides the greatest method to you. The first method is the "actual"(expense) method. The other is the "IRS" (standard) method.

The Actual Method.

This method requires that you keep track of your actual auto expenses and then compute the percentage of business use. So, you can deduct the business percentage of all operating expenses such as gasoline, insurance, licenses, maintenance, cleaning, etc.