New Business Depreciaton Rules For 2008

 

As we come to the close of 2008, this economy has caused a volatile year for many. Many Americans have had to scramble to make a living and adjust to changing times.

 

With higher gas prices and costs of living escalating to new levels, many businesses are on the brink of extinction. For the lucky few, that have had a profitable year, it is time to maximize the situation and plan to minimize the tax burden. The government has made some substantial changes in 2008 for investing in the U.S and we are going to look at the depreciation area for qualified acquisitions. The following is one of the incentives that is available for 2008:

2008 Changes for Eligible Depreciation ( Look at the example below)

Increased Section 179 limits. The maximum section 179 deduction you can elect for qualified section 179 property you placed in service in tax years that begin in 2008, has increased to $250,000 ($285,000 for qualified enterprise zone property and qualified renewal community property). This limit is reduced by the amount by which the cost of section 179 property placed in service in the tax year exceeds $800,000. For qualified section 179 Gulf Opportunity (GO) Zone property placed in service in certain counties and parishes of the GO Zone, the maximum deduction is higher than the deduction for most section 179 property.

Special depreciation allowance for certain property. You may be able to take an additional first year special depreciation allowance for certain qualified property (defined below). The allowance is an additional deduction of 50% of the property’s depreciable basis (after any section 179 deduction and before figuring your regular depreciation deduction).

Property that qualifies for this special depreciation allowance include the following.

Tangible property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less

Water utitiliy property

Off-the-shelf computer software

Qualified leasehold improvement property

Examples of Qualified property are the following and must also meet all of the following tests.

Dump trucks, garbage trucks, water trucks, boom trucks, vacuum trucks, semi trucks, excavators, backhoes, forestry equipment, farm equipment, office equipment, machinery and equipment, production equipment, computers etc

You must have acquired qualified property by purchase after December 31, 2007, and before January 1, 2009. If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. Additionally, the

Qualified property must be placed in service after December 31, 2007, and before January 1, 2009 (before January 1, 2010, for certain transportation property and certain property with a long production period).

The original use of the property must begin with you after December 31, 2007.

In a nutshell here is an example to illustrate the information above. Lets assume the following facts. You are a corporation, sole proprietorship etc and your net profit is $600,000 from January 1, thru October 31, 2008, November and December will be a breakeven therefore, we are at the $600,000 profit for the year based upon our estimate. We have some new signed contracts for the end of 2008 or beginning of 2009 and we need to buy some major equipment in the last month of the year and take delivery before the end of the year. We can get this equipment financed and the monies required down are minimal, maybe $10,000, and the total purchase price is $400,000…..If we execute this contract before the end of the year and take delivery, we are entitled to a $325,000 deprecation expense deduction for 2008. The way I came up with is deduction is by studying the information above. The first $250,000 of qualified acquisitions are dollar for dollar and the balance is $75,000 ($150,000 x 50% = $75,000) . The $150,000 is the remaining basis after deducting the special $250,000 from the original acquisition cost of $400,000. It is important to understand that the cash outlay of $10,000 has nothing to do with the depreciation deduction for 2008.

Obvious from this example, this could be a big bonanza to reduce taxes in 2008 without the major outlay of upfront money. It is important to obtain current interim 2008 financial statements from your CPA, bookkeeper, or in house books now to study your tax situation for 2008. This example above can be scaled back or up to a smaller or larger version and can have a tremendous impact on your company’s 2008 tax situation. These depreciation rules only apply to a profitable company and shouldn’t be considered for additional operating losses. Additionally, it is recommended that you consult with a qualified tax person because this tax law change is new and is higher upgraded from the allowable deductions for 2007.. For companies looking to acquire qualified assets for 2008 with substantial profit, there are limitations and phase out rules for acquistions over $800,000. Tax planning is important at this time of year whether you are Profitable or not and consulting with a qualified tax person is as equally as important . The dollars invested in this area, if done properly, will reward your company handsomely.

By: J.M Luna –Article Directory: http://www.articledashboard.com –J.M Luna has over thirty years in the financial field. This includes accounting and taxes, leasing, hard asset money and commercial loans. U.S Corporate Capital Leasing Group assists the startup and season businesses for financing in all different industries. www.cclgequipmentleasing.com/lease_construction.htmwww.cclgequipmentleasing.com/DiscussionBoard.htm

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Reasons Why You Should Hire A Tax Lawyer To Settle Owed Back Taxes

Highly Experienced - Tax lawyers have the education, training, and experience to help you solve your tax troubles. A competent tax lawyer will be knowledgeable about the IRS’ complicated tax code and therefore, better suited to help you resolve your tax debt.

IRS Defense - As you probably already know, the IRS can be very aggressive in their collection efforts. If you feel the IRS has treated you unfairly, then it is in your best interest to hire someone who has experience in dealing with the IRS and won’t be intimidated.   Privileged Communications - When you communicate with a tax lawyer or his or her staff, you can rest assure that what you tell them will remain confidential. Like all lawyers, tax attorneys are required to keep your communications confidential. They will only discuss with the IRS your financial information in order to resolve your tax debt.

 

Ethical Standards - Tax lawyers and attorneys are licensed and regulated by their respective state bars. They are required to complete a minimum amount of continuing legal education to remain up-to-date on their profession. They are also required to be honest in their communications. To do otherwise, would be to risk disciplinary sanctions by their state bar.

Skilled Negotiators - A tax lawyer’s negotiation skills and experience come in handy when negotiating with the IRS to resolve your debt. A tax lawyer can negotiate a manageable tax resolution since they have the experience and negotiation skills necessary to deal with the IRS.

 Not Intimidated - Most taxpayers are intimidated by the IRS and the IRS knows this. On the other hand, tax lawyers are not intimidated by the IRS because they know what the IRS can and cannot do. Competent tax attorneys will not back down in their negotiations with the IRS until they have done the best they can for their clients.

 

By: roni deutch - Article Directory: http://www.articledashboard.com – The Tax Lady Roni Deutch and her law firm Roni Lynn Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced IRS tax lawyer who will fight the IRS on your behalf.

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http://www.irstaxattorney.com/blog/2009/01/chairmans-amendment-in-nature-of.html
http://www.irstaxattorney.com/ 888.712.7690 x106 IRS Tax Attorney. Alvin Brown & Associates is a law firm specializing in IRS issues and problems in 50 states and abroad.

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Filing Back Taxes In Four Simple Steps

 

Filing any back taxes is very much so imperative. Non-filing taxpayers are treated much harsher if the Internal Revenue Service catches them before they intentionally. Taxpayers who think the IRS will not figure out they did not file, they are wrong.

Ignoring the IRS can even lead to the IRS completing the unfiled return for you, giving you no deductions and they will make sure you owe money even if you normally receive money back. Gather required tax return information needed to file back taxes. If the IRS finds you didn’t file a return or returns and decides not to prosecute or take legal actions they may file a tax return in your name. If the IRS does this, you can be assured they will not give you any benefit of the doubt and you will have a higher amount owed than if you were to intentionally file on your own. If the IRS has already done this then you need to gather old tax return information to change their return and you need to notify the tax expert you work with know that the IRS has submitted a tax return for you. The Internal Revenue Service Substitute Return tax return should be amended if you want to save money.

Prepare required documentation

If you cannot find required paper work, it is good to fill out form 4506-T (Request for Transcript of Tax Return) or your employer or former employer to try to obtain relevant tax information. To file or amend a filing you need tax documents such as a W2, 1099 as well as other documents supporting any deductions you claim. If you cannot obtain old W2’s, you can use the alternative form provided by the IRS which is form 4852.

Find a Reliable Back Tax Expert

Once you have obtained all the tax information you can get a hold of, contact a back tax expert. When selecting a tax firm it is best to work with a tax company that is able to file unfiled returns for you and will help settle taxes owed. You will get the best outcome if you have the same company filing and helping you handle any taxes owed that you cannot pay.

Work with Tax Professional To Prepare Unfiled Returns

You will only have to prepare tax returns for the last seven years. Your tax expert will contact the IRS to let them know you will be filing delinquent back taxes. Filing normal tax returns for each unfiled year will get you into "compliance" with the IRS. There will be charges from using a tax firm but after everything is considered these charges are well worth the money you will save. Once back taxes are filed, you will know how much you owe the IRS or how much the IRS owes you.

Realize your Options when it Comes to Paying your Back Taxes

 

Next if you cannot pay the tax amount owed then you can work with the tax firm you chose to find the best way for you to reduce and settle tax amounts owed to the IRS. Depending upon your money condition you can choose to pay the taxes owed over an extended period of time through an installment agreement or you may be able to settle your taxes for less than the total amount owed by applying for an offer in compromise, declaring financial hardship or setting up a partial payment plan.

By: Manuel Davis Jr – Article Directory: http://www.articledashboard.com   -Manuel Davis Jr. is a CPA and Tax Resolution Expert at BackTaxesHelp.com. If you need help Filing Back Taxes and/or Paying IRS Back Taxes please call or visit our site.

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Requesting Back Tax Help

When you owe back taxes it is in your best interest to seek the help of a professional. Tax professionals understand the IRS and can ensure you receive the best resolution possible.

 

If you are tired of getting phone calls and letters from the IRS regarding your overdue taxes, consider getting help with your back taxes and begin to relax again. Owing back taxes is stressful and dealing with the IRS can be complicated and most times you end up in a worse situation than you need to be in. You owe it to yourself to make a bad situation as good as you can and when you seek back tax help you will find those tax problems aren’t as bad as you thought they were and that there is a way out. Tax professionals know how to deal with IRS problems. The key is to get the ball rolling quickly.

Millions of Americans have back tax issues and have been helped immensely by getting help resolving their IRS taxes. The IRS will do everything in their power to collect back taxes, and let’s face it they have a lot of power. The IRS has the most aggressive and intimidating collection process there is.

They use the fact that their policies are so confusing and understand the public is not very aware of what their rights as taxpayer’s are to take advantage of the situation and get every penny they can. A lot of times they even take money they are not entitled to. This is why you need back tax help to minimize the damage the IRS can do.

Everyday people who work with tax specialists settle their liabilities for a fraction of what they originally owed. However, when they try to do it on their own, the IRS usually goes for the whole ball of wax and taxpayers end up in bad financial situations. You need to have someone who knows the system fight for you every step of the way.

 

Tax experts know how to handle the IRS and what they can and can’t get away with. The likelihood receiving a favorable outcome with the IRS increase dramatically when you use a tax professional.

Its well worth it to seek back tax help and you will find yourself much better off for it. There is no shame is asking for help with your tax problems. The IRS intimidates anyone and everyone. Being a government agency gives them a seemingly huge authority over the individual tax payer. Don’t give them that satisfaction because you do have rights as a tax payer. You deserve to get the best deal possible.

Back Tax Help
Need help resolving IRS or State Tax problems? We can help. Visit our site to request help.

By Manuel Davis Jr Published: 1/10/2009

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Owe Back Taxes? What To Understand And What To Do

 

When people owe back taxes, they can find themselves stressed and paralyzed as to how to deal with the situation. And, with good reason, owing back taxes to the IRS can be scary.

 

It’s an awful situation for anyone regardless of why the back taxes aren’t getting paid. You, like millions of Americans may have very legitimate reasons for not paying what is owed, however you must always keep in mind that one way or another, the IRS will get their money plus interest, fees and fines. It is important to minimize the damage as soon as possible. Being proactive can really save you a lot of time and money, not to mention stress. It may seem like the fact that you owe back taxes is dire and everything is gloom and doom. Well, that’s just not the case at all. You do have rights and options as a tax payer. The problem is that the IRS is not going to be very forthcoming on those rights and options as they best apply to you. They want their money and they want it now and they are not going to make it easy for you. However, if you consult a tax professional who knows how to deal with the IRS and have helped those who owe back taxes get out of many a jam, then you will find you could do a lot better than expected.

 Tax experts understand every situation where tax payers owe back taxes and how best to negotiate with the IRS to get the most favorable deal. Never negotiate a deal with the IRS alone. You better believe they will do everything they can to benefit them and not you. They will give you options, but not the ones best suited for you and your specific situation. A lot of times they won’t even waive fees and fines with the taxpayer. Tax professionals can often eliminate a lot of the fines levied on those who owe back taxes.

No matter what your situation or how much you owe back taxes can be resolved and most of time with better results than you may have imagined. But, you have to deal with it as soon as possible and show an effort in order to take advantage of your rights as a taxpayer. You need to have an expert guide you and show you the way to fix the situation.

 

 

By: Manuel Davis Jr - Article Directory: http://www.articledashboard.com

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Manuel Davis Jr is a CPA and Tax Resolution Expert for BackTaxesHelp.com.
Do you owe back taxes and need help? Please call us at 800-717-2797 or visit our site for more information on tax debt resolution.

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How To Audit-proof Charitable Donations For Income Tax Season

The IRS means business when it comes to properly documenting donations given to charity. Because of a change in the tax law you must now obtain written documentation for ALL cash donations.

 

Prior to the tax law change if your cash donation was less than $250, you weren’t required to have it substantiated with a receipt from the charity. But now you do. This means all tithes to your church too, that’s if of course, you’re going to claim it as an itemized deduction. Here’s a suggestion to ensure all of your t’s are crossed and your i’s are dotted in case of an audit. Always maintain good records and do it now instead of procrastinating till the tax deadline is staring you in the face. When you give to your local charity make sure you get a receipt. It must show the charity’s name, the date you contributed and the amount you donated.

Here’s something else you might not be aware of, if you use a credit card to make your charitable donation in 2008, you can claim a deduction even if you don’t pay it off until 2009. Sweet huh?

What if your donation is of the non-cash variety? Well, if you claim a deduction and it’s less than $250 you must get a receipt from the charity. Again, the receipt must show who, when and the amount you donated. If your contribution is over $250 but less than $500 don’t walk away without a contemporaneous written acknowledgment from the charity. In other words, GET A DETAILED RECEIPT!! For taxpayers who can give more than $500 but not more than $5000 you must follow the same rules, but you must file Form 8283, Noncash Charitable Contributions.

And for you blessed taxpayers who give more than $5000 the same rule applies but you must obtain a qualified appraisal. Contributions larger than $500,000 require you to attach a copy of an appraisal to your return.

If you’ll follow the practice of obtaining detailed receipts and keep good records every time you give to a charity, you’ll be able to calmly stand up to any inquiry by the Internal Revenue Service.

 

 

By: Frank Mayes  — Article Directory: http://www.articledashboard.com  — Frank Mayes is a 51 year old tax professional and growth oriented home business entrepreneur. He’s owned and operated an income tax service from home for over 25 years. His goal is to partner with entrepreneurs who have the desire to earn six figures from business online. Visit his website by clicking here now: www.youcanaffordthisbusiness.com

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Filing IRS Back Taxes - Do it Quickly and Painlessly

Scared of filing back taxes? Join the club. A club of millions of people who feel the same way you do.

It’s like ripping off a band aid though, so you have to do it quickly. Even if you can’t send a check in, still file as soon as possible can save you some grief later on.   Showing initiative instead of avoiding the inevitable will help your situation. It’s like you are striking first. Not letting the IRS get any more of an edge than they already have. Don’t be intimidated by the IRS, owing taxes or dealing with the IRS won’t be the end of the world. But, you should seek out help when you file late. Help from tax professionals who know how to handle the IRS.

 

Not filing back taxes can lead to some of the worst situations the IRS has to offer. They really frown on people who don’t file taxes more than anyone else. Avoiding this kind of scrutiny is the key to keeping your relationship with the IRS running smoothly. Taking the first step gives you some control, and having control is a good thing when it comes to dealing with the IRS. As intimidating and scary and big as the IRS may seem, you as a tax payer have rights and options and knowing what those are will help immensely when filing back taxes.

Having expert help when filing old taxes can really be the difference between paying dearly and setting yourself up in the best possible pay back situation for you, not the IRS. The IRS will take out every tool in its collection tool box to get money owed from you. But, you need to also have a tool to use against them and that is tax experts who know how to deal with the IRS on their level. You can minimize the negative effect of being late on taxes by knowing and exercising your rights.

Don’t fear filing back taxes. Take the initiative and show the IRS you mean business. Show them that you know your rights and are unwilling to give up more than you have to. Their intimidation tactics are formidable but your tax expert will know how to volley the next shot on your behalf. You will find your situation is not as grave as you thought it was. Filing back taxes doesn’t have to be stressful at all.

 

Filing Back Taxes
If you need help filing old taxes, please contact us and we can help.

By Manuel Davis Jr Published: 1/10/2009

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Everything You Need to Know about Filing Your Taxes

Everything you need to know to ensure a seamless tax filing process, including information on filing electronically, how to get help from the IRS, tips on receiving your refund sooner and options for paying if you owe.

 

There’s no shortage of information available about the complicated world of taxes. But you can also find plenty of information on how to make the filing process simple and easy and everything you need to know is buried within the IRS website. Here is a roadmap to the most essential information for taking the headache out of your annual federal tax filing.

1. How to File For Free and Electronically

There are many options for taxpayers looking to file their taxes online and the IRS maintains a list of e-file partners so taxpayers don’t fall victim to scammers. (http://www.irs.gov/efile/lists/0,,id=101223,00.html). If you are one of the 95 million taxpayers with an "adjusted gross income" of $52,000 or less, you can file your tax online and for free. Just visit the Free File Program webpage on the IRS website at http://www.irs.gov/efile/article/0,,id=118986,00.html for more information and a list of 19 participating e-file partners.

The site offers a "Guide Me to a Company" option that helps visitors decide which e-file partner to choose. From there, taxpayers will leave the IRS website and be directed to the private company site. If an e-file partner company notifies you that you are not eligible for free filing, go through the IRS website and select another company. While shopping around, keep in mind that some companies may charge a fee for filing state taxes.

 

For legitimate online filing options for businesses, charities, corporations and individual taxpayers visit http://www.irs.gov/efile/index.html.

2. How to Get Free Help from the IRS

We have to file our taxes year after year, so it’s a wonder we’re not all experts. Income, marital status, dependents and residence can remain unchanged for years, but new tax laws make us feel like we’re filing for the first time. Well, whether you are filing for the first time or the fiftieth, here are a few ways to get the help you need:

1040 Central Online Help

No matter what kind of tax help you need, 1040 Central is a good place to start. Visit this resource to browse various answers to questions about forms, your refund status, filing options, tax law changes, information on credits, tool and more. Visit http://www.irs.gov/individuals/article/0,,id=118506,00.html.

Call the IRS

Sometimes finding the answers you need could be as simple as calling the IRS, if you know the right numbers and have the right information. The IRS has several different numbers for different inquiries or services. Here are a few:

Individual taxpayers can call the IRS Toll Free Tax Help Line with questions about their returns at 1-800-829-1040.
To check the status of you tax refund, call the Refund Hotline at 1-800-829-1954.
To order forms and publications, anytime day or night, call 1-800-TAX-FORM (800-829-3676).
To hear recordings of other tax-related information, call the TeleTax line at 1-800-829-4477.
Hearing-impaired taxpayers with TTY/TDD equipment can call 1-800-829-4059.

The Tax Help Line, Refund Hotline, and the TTY/TDD line are available Monday through Friday, 7:00 a.m. to 10:00 p.m. local time, with Alaska and Hawaii observing Pacific Time. The Tax Form number is available 24 hours a day.

Get Free IRS Publications

If you’re looking for accurate information on virtually every tax topic under the sun, IRS publications are your answer.

Publication 17 is the most thorough tax guide for individual taxpayers. The 300-page publication is regularly updated with answers to taxpayers’ most frequently asked questions. It is also free. To get your copy, visit http://www.irs.gov/pub/irs-pdf/p17.pdf (Full Text), http://www.irs.gov/publications/p17/index.html (Table of Contents) or request one by calling 1-800-TAX-FORM (800-829-3676).

The IRS also has many other publications located on their website (http://www.irs.gov/formspubs/index.html) including Publication 910, "The Guide to Free Tax Services," which can be found at http://www.irs.gov/pub/irs-pdf/p910.pdf (full text).

These lengthy publications can be daunting, but detailed indexes and tables of content quickly direct you to the information you need.

Nationwide Tax Help Sites for Elderly, Military and Low Income Taxpayers

Taxpayers who are over 59 years old, military personnel and people earning less than $39,000 have access to free tax preparation help at over 12,000 tax preparation sites throughout the country. The Tax Counseling for the Elderly (TCE) Program, the Armed Forced Tax Council (AFTC) and the IRS Volunteer Income Tax Assistance (VITA) Program use trained community volunteers to provide assistance, answer questions and inform taxpayers about tax credits they can claim such as the Earned Income Tax Credit or the Credit for the Elderly. In addition to providing information, each site will have tax return preparation assistance and onsite electronic filing. For more detailed information on either program visit http://www.irs.gov/newsroom/article/0,,id=167463,00.html

Get Help Choosing Your Help- How to Decide on a Tax Return Preparer

No matter who prepares your tax return, you are ultimately responsible for what it says and may be held directly accountable for any mistakes. Getting professional help with your tax return can be beneficial, especially if you’re unsure about the process, but it is crucial to choose a legitimate and reputable professional. Here are some tips directly from the IRS on what to do before choosing your tax return preparer:

Do your research by checking with the Better Business Bureau and asking for references from their past or current clients.
Find out if they are members of any professional organizations which require continuing education or adherence to a code of ethics.
Make sure your preparer will be easy to contact after your return is filed.
Learn about fees before signing up.
Be wary of preparers that promise larger-than-expected returns.

If you encounter an abusive or fraudulent tax preparer, you can report the incident and the preparer to the IRS by filling out Form 3949-A.

3. Get Your Refund Faster

Now for the advice you really care about: how to get your tax refund faster!

Direct Deposit

If you expect a refund, the most surefire way to get it as quickly as possible is to request direct deposit. You can receive your money days, even weeks, sooner by having your refund deposited directly into your bank account.. You won’t have to wait for it to come in the mail — or worry about it getting lost in the mail — and you’ll save yourself a trip to the bank. The IRS now has the option to directly deposit your refund into more than one account with their new "split refund" option.

E-filing

According to the IRS, taxpayers who file online will get their refunds in half the time as taxpayers who file paper returns.

File Early

The sooner you file, the sooner you’ll see your return. Makes sense, right? Most people wait until just a few short days before the deadline (this year’s deadline is April 17th). Beat the rush and benefit by filing early.

No matter how or when you file, you can always check the status of your return online or over the phone. Go to the IRS homepage and click on "Where’s My Refund?" or call the Refund Hotline at 1-800-829-1954. You will need your social security number, filing status and the exact amount of your refund.

In the meantime, be wary of Refund Anticipation Loans, or RALs. These are very short-term loans from lenders in the amount of your anticipated refund. While these loans can be tempting, especially to low- and middle-income taxpayers, borrowers can get stuck with an expensive debt if the refund arrives late or is a less amount than anticipated. It’s best to simply avoid these loans.

4. If You Owe

If you owe, you have several options for paying your tax bill.

The Electronic Federal Tax Payment System

A free, 24-7 online and telephone tax payment option for individuals and businesses is the Electronic Federal Tax Payment System, or EFTPS, provided by the U.S. Department of Treasury. With EFTPS, you can pay all of your federal taxes. You can make the payment online or over the phone 24 hours a day, seven days a week. You can also schedule payments ahead of time by indicating on what day you want funds from your account to be transferred to the Treasury’s account.

Individuals and businesses must enroll to use EFTPS and must pay by 8:00 PM (EST) the day before the due date so that the payment is processed on time. Like the Free File program, taxpayers can gain secure access to the EFTPS website through the IRS site. To enroll, go to http://www.irs.gov/efile/article/0,,id=98005,00.html or call one of the following numbers:

Individuals: 1-800-316-6541
Businesses: 1-800-555-4477
TDD Hearing-Impaired: 1-800- 733-4829
Espaol: 1-800-244-4829
EFTPS Online: 1-800-555-8778

Filing taxes is almost as fun as paying taxes. However, being educated about taxes will help reduce your risk of making costly mistakes. Being a well-informed taxpayer will also help you to spend less time dealing with taxes and more time doing anything else.

Author: Maggie Beetz is a writer for FSI Financial Literacy based in Columbia, MD. FSI Financial Literacy aims to spread financial awareness to clients of FSI Tax Corp. (http://www.fsitax.com/), Debt Shield, Inc. (http://www.debtshield.com/) and the general public. For more information call 1-877-437-4669 or email mbeetz@fsiholding.com.

By Maggie Beetz Published: 3/11/2007

2008 Tax Law Changes
Economic stimulus payment: The economic stimulus payment is NOT taxable;; Standard deduction increase: For 2008 tax year, married couple filing jointly will get $200 more in standard deductions.

Should you do your own taxes? - MSN Money
A growing number of individuals are filing electronically — more than 90 million did so in 2008. Much of this growth has come from professionals filing their clients’ returns.

Tax Questions >> 2008 Tax Brackets | Free Legal Advice
For 2008, The value of each personal and dependency exemption, available to most taxpayers, is $3500, up 200 from 2007. The new standard deduction is 20900 for married couples.

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Making Tax Day Less Painful While Reducing Deficits

By Andrew L. Yarrow
Author of Forgive Us Our Debts

 

Marie Antoinette is said to have asked Louis XVI’s finance minister," What are you going to do about the deficit?" To which, the good minister-not unlike many an American politician today-purportedly answered: "Nothing Madame. It is too serious."

 

With a national debt of $9.3 trillion and rapidly growing, federal debt is serious, and failing to balance spending with revenues portends serious long-term pain for the American people, economy, and government if nothing is done. The elephant in the room is entitlement spending, but it is worth considering the role of our tax system, not tax rates, in exacerbating America’s debt. Liberals and conservatives can disagree about tax rates or types of taxes, but few disagree that how the United States collects taxes could not be much more dysfunctional.

Almost no one likes taxes, despite Oliver Wendell Holmes’ injunction that they are the price for a civilized society. Moreover, almost no taxpayer, expert, or politician likes the current U.S. tax system, which is insanely complex, grossly unfair, and horribly inefficient.

There are several basic problems: 1) filing taxes wastes stunning amounts of time and money; 2) huge amounts of owed taxes go uncollected because of rampant tax cheating; 3) too many Americans pay no taxes; and 4) many tax subsidies are corporate and special-interest welfare.

Income taxes, with 900 or so IRS forms, devour 3.4 billion hours of Americans’ lives every year, or 25 hours per taxpayer. They cost the average filer $200 in out-of-pocket expenses, the U.S. economy untold billions in lost productivity, and IRS compliance costs are one-tenth to one-seventh of the amount of taxes collected. Between the costs of preparing taxes and the lost income from time that could be spent productively, or more enjoyably, paying taxes costs our country between $240 billion and $600 billion in 2005, according to the Government Accountability Office - all to raise about $2 trillion.

Secondly, as Will Rogers once said, "The income tax has made more liars out of the American people than golf has." About $300 billion in taxes owed - more than recent deficits - go uncollected, as polls have found that at least one-fifth of Americans publicly say that it’s OK to cheat on your taxes. That’s only those who admit, in essence, to being liars.

In addition, one-third of Americans pay no income taxes, up from one-fifth in the mid-20th century. While many are low-income, there are good citizenship reasons for all Americans to pay taxes, even if this is not a big revenue-raiser.

The fourth arena - called "corporate welfare" by Ralph Nader liberals and Cato Institute conservatives - involves hundreds of billions of dollars in forfeited revenues from market-distorting tax breaks to business and special interests. Maya MacGuineas of the Committee for a Responsible Federal Budget says that these $800 billion a year in "tax expenditures are really spending programs designed to look like tax cuts." These range from farm subsidies to the $225 billion-a-year exclusion for employer-based health care, which exempts corporations and individuals from paying taxes on the value of health insurance.

These four issues are areas where bipartisan agreement would be relatively easy. While the devil may be in the details, tax simplification is a no-brainer. We could eliminate most forms for most taxpayers; go to return-free filing, putting the onus on the government, as Grover Norquist has suggested; and/or adopt a Simplified Income Tax proposed by the Urban Institute’s Leonard Burman, with a single family credit, a refundable work credit, a 15 percent mortgage credit, no state or local tax deduction, and a built-in 401(k).

To collect owed taxes, honesty could be encouraged and we could beef up enforcement, as the audit rate falling from 2.15 percent in 1978 to 0.58 percent in 2001. The employer health-care exclusion and many agricultural and corporate subsidies are often seen as prime candidates for elimination.

 

Reducing long-term debt requires many other reforms-notably of entitlement spending-but we could address much easier, tax-system reforms that could win broad support across the political spectrum.

- Andrew L. Yarrow, Washington director and vice president of Public Agenda, a nonpartisan think tank, is a professor of U.S. history at American University, and the author of Forgive Us Our Debts, a book about the causes, consequences, and cures for America’s national debt, published by Yale University Press this spring. Yarrow’s book Forgive us Our Debts is available from Yale University press

Wonk Room » IRS: Loopholes Let Corporations Pay 25% Tax Rate, Not 35%
Now, new IRS data shows typical American companies paid only 25.3 percent of their U.S. book income in federal corporate taxes in 2005, despite a statutory corporate tax rate of 35 percent.

Yahoo Auction - Tax Loopholes for eBay Sellers - Online Auctions
How much can you fit into your eBay tax loophole? Learn what the best tax-advantaged business structures are for your type of eBay business Get the free

IRS opens Internet tax return filing system - Reno Gazette Journal
IRS opens Internet tax return filing system. Reno Gazette Journal, NV - 8 hours ago "Nationally, Nevada is about in the middle of states when it comes to filing tax returns electronically.

By Buzzle Staff and Agencies Published: 4/14/2008

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