Financial questions

As tax time approaches, many home-based business owners begin completing their forms or paying their accountants with trepidation. This nervousness comes from two sources: a fear of being audited and a fear of having to pay a lot. For the most part, both of these fears are unfounded. For one, audits are rare. In fact, only 0.5% of taxpayers are subjected to audits every year. And if you do beat the odds, keeping good records and maintaining receipts will help you weather the IRS storm. Obviously you have not control over whether or not your return is chosen for an audit, but you can control how much you are going to owe the government this year....

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An early distribution from an Individual Retirement Arrangement (IRA) or a qualified retirement plan need not be a "taxing" experience. Fortunately, there are exceptions to early distributions. Any payment that you receive from your IRA or qualified retirement plan before you reach age 59Ѕ is normally called an "early" or "premature" distribution. As such, these funds are subject to an additional 10 percent tax. But there are a number of exceptions to the age 59Ѕ rule that you should investigate if you make such a withdrawal....

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If you are environmentally conscious and purchase a 2005 Ford Escape Hybrid vehicle that combines a gasoline-powered engine with alternative power methods, you are in line for a nice tax deduction. Ostensibly, the government uses clean power tax deductions as a method to promote the use of vehicles that are less harmful to the environment. The clean-fuel tax deduction is based on the incremental cost of using a vehicle model that combines traditional gasoline-powered engines with electric motors....

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Running a home based business reaps many wonderful tax deductions that other businesses some times may not claim. Unfortunately to many small business owners end up paying the government taxes every year because they are unaware or several small business deductions that are available. Most of the time any expenses that are related to your business can be added as a deduction on your taxes. If you do not pay taxes through out the year, deductions can help you from paying a large amount of taxes each year and can also adjust earned income....

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"Settle for Pennies on the Dollar! IRS debts settled for $20Wipe out the Penalties with an Offer"-such is the language of Offer-in-Compromise promoters. What they fail to tell you is that one has to qualify for an Offer and few taxpayers will be able to meet the tough standards for an OIC. The Offer-in-Compromise (OIC) has been around for a long time, but it wasn't until 1992 that IRS started really using the program in good faith. After the Revenue Reform Act of 1998, IRS became even more liberal with the OIC....

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Reservists called to active duty and enlistees in the armed forces may qualify for a deferral of taxes owed if they can show that their ability to pay taxes was affected by their military service. The deferral covers active duty members of the military services - Army, Navy, Air Force, Marine Corps and Coast Guard - and commissioned officers of the uniformed services - Public Health Service and the National Oceanic and Atmospheric Administration. Reservists must be placed on active duty to qualify....

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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....

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You've been feeling uneasy (perhaps even guilty) becauseyou've failed to report your under the table business income. Perhaps you've never filed a tax return, even though you know you owe money. Finally, you contact anaccountant to resolve the situation. Although it is commendable that you are trying to correctmatters, hiring an accountant to do these delinquent returns could be a big mistake. The reason why is because tax evasion is a criminal offence or felony. You might also be subject to civil action....

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As your business grows, you are going to need help. This help comes in the form of employees and independent contractors. What you can write-off is dependent upon how your helper is classified - as an employee or independent contractor. Independent Contractor Whenever possible, you want to use independent contractors to assist you. Payments to independent contractors are completely deductible. You simply claim the deduction on your return. If you pay them more than $600 during the tax year, you also must issue a 1099-MISC in January of the following year....

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Misconceptions, misinterpretations and just plain "untruths" are floating about income taxes. Believing them could be costing thousands of tax dollars! Myth: A Professional Tax Preparer knows all there is to know about taxes so you don't have to know anything them. Truth: Tax Preparer's/CPA's/Accountants are not uniformly informed about ALL tax laws. Most are able to file a personal income tax and know all the laws and how to apply them to personal income tax. There are thousands of excellent, hard-working accountants doing a great job....

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As a small business owner, it's wise to familiarize yourself with some key deductions that may reduce your tax bill for 2004. Employee Benefit Plans - You may deduct contributions to employee benefit plans (such as health insurance plans and retirement plans). Depending on your circumstances the maximum contribution that you may deduct per employee in a qualified retirement plan can go up to: $100,000 or more With a Defined Benefit Plan $ 44,000 With a 401(k) plan $ 41,000 With a SEP-IRA or Keogh Automobile Expenses - You can elect to deduct the actual expenses incurred (including gas, oil, tires, repairs, insurance, depreciation, and rent or lease payments) for the business-related portion of your car or truck expenses, or simply take the 2004 standard mileage rate of 37....

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As everyone in the U. S. knows, we have just passed one of our most "favorite" times of the year: income tax season. If you are going to create and sustain wealth, it is inevitable that you will have to address your personal tax situation. By "address," what I really mean is take control. This is true whether you live in the U. S. or just about any other country. Agree or disagree with the "fairness" of taxes, this is a subject that you must obtain some basic understanding if you want to significantly increase your wealth....

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