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Underreporting income tax

Underreporting income tax

Credit and debit cards are nearly as common as cash. Nearly everyone in the USA has at least one in their wallet, including business owners. Customers often swipe a card to pay for their purchases. This seemingly simple act could help attract unwanted attention from the IRS. If your business has low cash sales the IRS may send you a “Notification of Possible Income Underreporting.” The IRS has sent the letter to thousands of small business employers, asking them to review and confirm that they accurately reported their income on last year’s tax returns. So far, some 20,000 employers across the country have received the letter, according to The Washington Post. IRS Notice Underreporting Income The IRS Notice CP 2000 is referred to as the Notice of Proposed Adjustment for Underpayment and is the most common notice sent out by the IRS. The IRS reports that document mismatch inquiries were sent to more than 4.3 million taxpayers in the 2010 fiscal year; more than $7.2 billion in additional taxes...

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Real Estate Agent Tax Advice

Real Estate Agent Tax Advice

Real estate agent tax advice in 2014 will include a new complicated formula on high end home sales. The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts. In general, investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities and businesses that are passive activities to the taxpayer (within the meaning of section 469). To calculate your Net Investment Income, your investment income is reduced by certain expenses properly allocable to the income.  This 3.8% tax is on investment income for “high earners.” The tax which went into effect in 2013 will be dedicated to the Medicare Trust Fund. “High earners” are defined as individuals whose gross income is $200,000 or more, or married couples filing jointly with...

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Tax Deductions for Real Estate Agents

Tax Deductions for Real Estate Agents

Tax deductions for real estate agents can help you reinvest in your business. Most real estate agents don’t understand all the things they can write off to save them taxes. They often overlook the simplest items that are deductible in the course of their business activities. You do a lot more than just list and sell properties. You advertise for your clients, protect the home while it’s being viewed, show the seller how to give their home more curb appeal, and help buyers find that perfect home to create long-term memories of their family. All this can lead to bigger tax deductions. Even the smallest expense done several times of over several years can save you hundreds if not thousands of dollars. You can also plan your business to take advantage of every possible deduction. Some tax deductions for real estate agents to consider are: Auto Travel Your auto expense is based on the number of qualified business miles you drive. Expenses for travel between business locations or daily...

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Sales Tax Deduction

Sales Tax Deduction

Sales tax deduction can significantly increase your tax deductions. Even if you haven’t saved all your receipts you may still be able to claim the deduction. Who can take the deduction? If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. You can’t claim both. If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. Method 1: Actual sales tax expenses Keep all your receipts, and add up the total amount of sales tax you paid during the year. This method is requires a tremendous amount of record keeping, but could result in a higher deduction. The actual receipt calculation might be worthwhile if you made a lot of purchases last year. Scenarios involving costly and taxable expenditures include: You bought a lot of electronic equipment. You moved to your first or a new...

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Obamacare Taxes

Obamacare Taxes

Obamacare taxes (from Affordable Care Act) will probably affect your healthcare insurance cost decision.  If you do not have health insurance through your employer you need to get insurance or pay a penalty. Obamacare taxes could mean that you get a federal subsidy for your health insurance.  Plus, if you own a small business you will not be required to provide health insurance.  But, you could get tax credits to reduce the premium costs of any group plan you choose to offer to your employees. Obamacare taxes Individuals – Americans who can afford to must obtain minimum essential health coverage for 2014, get an exemption or pay a per moth fee. Employers – In 2015 large employers must insure full time employees or pay a per employee fee. Over half of American get their health insurance through work and the largest group of uninsured is currently the working poor. Advanced premium tax credits – low to middle income Americans are eligible for tax credits which reduce the upfront cost...

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