Finance Tips

The Mighty 1040X, 941X and 1120X

If a client has improperly filed his or her 1040, 1040A, or 1040EZ tax return and the error is serious enough, the IRS will require that the client file a 1040X with the correction. If the client has made multiple errors over several years, the client will need to file a 1040X return for each year in question. The same applies to clients who make serious errors on their Form 941 payroll tax forms or their Form1120 corporate tax forms. In those situations, the taxpayer will need to file a 941X or 1120X to correct the error or errors.

The basic format of these amended returns is essentially the same. The taxpayer is required to place the original return income, deduction and credit figures in the first column and the amended figures in another column. The taxpayer will also need to provide an explanation regarding the figures that have been amended.

However, not all errors are created equal. Some taxpayer errors do not require the filing of an amended return, while others do. So let’s discuss a couple of categories of errors that taxpayers might make and what they may have to do to correct them. Continue reading ‘How to Amend a Tax Return’ »

The Elderly or Disabled Credit

One specific credit available to struggling senior taxpayers is the Elderly or Disabled Credit. The exact amount of the credit will vary depending on your unique financial situation and is somewhat difficult to calculate. Basically, you will need to start with what the IRS calls your “initial amount” which will be between $3,700 and $7,500. Next subtract any non-taxable pensions or social security income, then reduce it by a percentage of your excess adjusted gross income. Finally, take that total and multiply it by 15% to find out the credit you quality for. As you can tell, calculating your credit is a tricky process and I highly recommend getting help from a qualified professional. However, if you do want to calculate it yourself then checkout IRS Publication 524.

Qualifying for the Credit

Essentially in order to claim the Elderly or Disabled Credit, you need to be either elderly or disabled. According to the IRS, you either need to be over the age of 65 at the end of the tax year you want to claim the deduction, or meet specific qualifications to be considered disabled. If you are on permanent and total disability, or had taxable disability income during the year then you may be eligible to qualify. Continue reading ‘Taxes and the Elderly’ »

Businesses often use the financial leverage found in credit as the primary source of capital to fund their growth. The state of the credit markets most often move in tandem with the general economy, so when the economy softens the availability of credit typically tightens. Thus, companies need to be continually aware of the dynamics of the credit markets to manage risks that arise from the uncertainty of credit availability during downturns in the credit cycle.

Whilst a cash conservation strategy is one many businesses attempt to employ, it can be very difficult to execute, especially each January as business owners are faced with their annual property tax assessment. Fortunately, the easy availability of commercial property tax loans is welcome news to many Texas property owners. They are seen as an excellent solution for a number of reasons:

• Loan qualifications are relatively easy. Most lenders do not require credit checks.
• Flexible repayment options prevent annual tax bill from depleting cash reserves.
• Loan pays off all delinquent taxes, interest, penalties, and fees.
• Interest rates are far below annual penalties charged by tax assessor.
• Loan processing times are typically short, generally less than one week. Continue reading ‘Commercial Property Tax Loans in Texas’ »

If you need to settle taxes with the IRS you may want to think long and hard about paying in full. When you do this you do not have to deal with the IRS for very long. Once they get the money you owe they will leave you alone – and that is a good thing. You don’t want to put the IRS off for too long. If you do this you will find it difficult to settle taxes in a way that benefits you.

It is very easy to settle taxes by paying the IRS in full. What this means is that you are sending one check for your total liability. For instance, if you owe $5k you will send this amount to the IRS and that will be the end of the line. You do not have to send monthly payments, or worry about any other confusing correspondence.

Why doesn’t everybody in debt to the IRS pay in full? The reason for this is that it can be expensive. Not everybody has enough money to pay in full. This means they have to opt for something such as a payment plan. While there is nothing wrong with settling your taxes in another way, you need to realize that this often times leads to penalties, interest, and a long process. This is why those with enough money quickly realize that it is best to settle taxes by paying the IRS in full. Continue reading ‘Settle Taxes by Paying the IRS in Full’ »

With the country facing its worst economic conditions in 75 years, the consent among economists was to leave the solution to the Federal Reserve because previous economic situations had been resolved to everyone’s satisfaction in that manner. The concern was that if congress was to get involved, the resulting legislation would arrive too late and/or be ineffective.

President Obama’s stimulus package is a mix of tax cuts and government spending; both methods had their proponents and detractors. One type of tax cut would come in the form of tax credits for first time homebuyers. It was hoped that if the housing market improved it would provide a stimulus for the housing industry and create jobs.

However, during uncertain times, consumers will cut back on their spending and are more likely to save the tax cut windfall as opposed to spending it. This saving increase will allow for sustained economic growth later but in the near term, it will not help the economy grow.

The other part of President Obama Stimulus Package is government spending. Detractors claim that this will add to the national debt that future generations will have to deal with. The response to this concern is to spend the money on projects that will benefit those future generations. Our roads and bridges have been neglected and investing in alternative energy industry now will pay back those future generations with technology that will be ready for them when they will need it. Helping state and local government agencies will give the local officials the spending money to finish or start much needed projects. Continue reading ‘Stimulating Stimulus Package by President Obama’ »

Who is a Non-Resident?

You are considered a foreign non-resident if you are an individual exercising any profession or vocation in Singapore for less than 183 days in a year under a contract for service.

Non-Resident Tax Exemptions

1. However, this rule does not apply if you are a director, public entertainer or exercising a profession in Singapore.
2. They are unable to claim for personal relief.
3. For director’s fees and income other than employment, they will be taxed at a flat rate of 20% from Year of Assessment 2005.

They are also exempted from tax on remittances made to Singapore. Continue reading ‘Singapore Non-Resident Taxation and Exemptions’ »