They say paying your federal taxes is the hard part. Actually, theÂ U.S. Department of Treasury has made it pretty easy by providingÂ taxpayers a free service called Electronic Federal Tax Payment System so that you can pay your tax bill 24 hours a day, seven days a week by phone or by Internet. For more information on how the process works, read this C.P.A. Insight.
It is no secret that the IRS has increased the number of audits they perform. If you receive an envelope from the IRS, there is no need to run screaming for the hills. The IRS generates thousands of letter, many of them a benign correspondence to clarify information you have sent them. For more information on IRS correspondence, read this C.P.A. Insight.
As if calculating your taxes were not difficult enough, many middle-income families now have to recalculate their taxes to determine if they must pay the alternative minimum tax. For a brief overview of what deductions may have to be included in income according to AMT rules, and some of the deductions that may put you in the AMT bracket, read this C.P.A. Insight.
In a sneaky attempt to avoid FICA, Social Security and Medicare payroll taxes, some S corporation owners and officers pay themselves artificially low salaries. The IRS is catching on and is paying very close attention to the salaries and corporate distributions S corporations pay out. For more information on how the IRS categorizes officers of S corps, read this C.P.A. Insight.
The IRS accepts multiple forms of payment–check, money order, direct debit and credit cards–to pay due taxes. Most tax preparation software or tax professional offer electronic payment options. For detailed information on the features and benefits of the available electronic payment options, read this C.P.A. Insight.
Tax brackets refers to the range of income where an individual stays at any particular tax rate. While most people like to know their tax bracket, few understand how to use that information. For more information on how to calculate your tax bracket and the common misconceptions about them, read this C.P.A. Insight.
This 40% refundable credit makes college more affordable for low and moderate-income students.
If you are self-employed, you may be able to hire your spouse or children as employees and take advantage of several tax deductions. The rules the IRS has for employing family members are very reasonable and simple to follow. For more detailed information on what tax benefits come with employing family members, read this C.P.A. Insight
The Pension Protection Act of 2006 created a hybrid retirement plan called the Defined Benefit 401(k), which combines a defined benefit plan, based on final average pay with a safe-harbor 401(k). This plan becomes available January 1, 2010. For more information on the specifics of this plan, read this C.P.A. Insight
Tax planning is not strictly for the April deadline. Taxpayers have opportunities year-round to minimize their overall tax bill. These include bunching deductions, tax loss selling and income deferral. For more information on how these methods can help reduce your tax liability, read this C.P.A. Insight.