eBay sellers, do you write off all your business expenses come tax time?
Expenses such as eBay fees, office supplies, home office expenses, and even gasoline can qualify as a deduction for your eBay business. Accurate bookkeeping will track all your business expenses and make your tax professional's life a lot easier come tax time. Cola Tax & Solutions provides bookkeeping service and tax preparation/consulting.
If you have any questions, please feel free to ask as you have nothing to lose but $$$ to gain!
Thursday, September 25, 2008
Do you hate bookkeeping?
If you're like most business owners the answer is yes.
Let us at Cola Tax & Solutions handle your bookkeeping! Our rates are low and usually range from $50-300/month. Included are monthly financial reports.
Saturday, April 19, 2008
Friday, April 18, 2008
Importance of a Credit Report
Analyzing your credit report is a great way to make sure you are on tip top shape before applying for loans. The most important reason is the interest rate in which you are able to obtain. A higher risk = a higher interest rate. A great way to analyze your risk is by looking at a few key points in your credit report. First obtain a copy of your credit report – Get Your Equifax Credit Report Now! Next, look to see if you have any unpaid debt. Any unpaid debt might disqualify you for a loan so make sure to pay them before applying. After that, check to see how many revolving credit accounts, credit cards, you have open. You want to have around three open at one given time. If you are looking to close an account choose ones that are consumer cards and/or younger accounts. Older accounts with a good payment history are exactly what creditors want to see! The last step would be to make sure you have a balance less than 25% on all of the accounts, and the monthly payments should not be more than 7% of your monthly income. It would be best to not carry any balance on your revolving debt and have monthly payments on a mortgage, car or student loan. Hopefully these tips will help you get the best rate on your next loan!
By Cola Tax & Solutions
By Cola Tax & Solutions
Forex? What is it, anyway
The marketThe currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover. (click here to read full market background by Easy-Forex™).Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's all.How does one profit in Forex?Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general, Easy-Forex™ offers trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.How do I start?Register (Easy-Forex™ offers the simplest and quickest registration process, no obligation); deposit your first trading "margin" amount (credit cards are welcome, only by Easy-Forex™); start trading.It can't be simpler or easier than that. Need help? We'll provide you with 1-on-1 training and service, as much as necessary (Easy-Forex™ offers real people service, live, in your own language).How do I trade Forex?You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).Before you finally activate the deal, you can still "freeze" it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The "freeze" feature is a unique service by Easy-Forex™.When your Forex deal is running (you hold an "open position"), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, Easy-Forex™ lets you determine a "take-profit" rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.Want to know more? Want to get on-line training? Register here (simple, quick, no obligation), we'll be glad to guide you, every step of the way.Good luck!Forex trading involves substantial risk of loss, and may not be suitable for everyone
Wednesday, April 16, 2008
Definitions - Key Income Tax Words
Cola Tax & Solutions
Total Income – The sum of income from all sources such as wages, interest, dividends, alimony, IRA distributions, see the Income column on the 1040 for more info.
Adjusted Gross Income (AGI) – Your total income minus above the line deductions such as moving expenses, early withdrawal penalties, IRA contributions, student loan interest, see the AGI column on the 1040 for more info.
Standard Deduction – the basic deduction the IRS gives you from being single, head of household, or married.
Itemized Deduction – Schedule A, Instead of taking the standard deduction you can itemize your deductions such as your medical expense, taxes you paid, interest you paid (mortgage and mortgage insurance premium), charity donations, job expenses, for more information view the schedule A
Taxable Income – The amount you owe tax on after you subtract your standard or itemized deduction and exemptions from your AGI.
Tax - The net tax you owe off your taxable income. You can either use the tax schedule or the tax table to configure your tax. It is best to do both and use the lowest, this might save you as much as $8.
Total Tax – The tax subtracted from your total credits is your total tax. After you have your total tax subtract all payments and EIC, if any, that will give you your refund or payment amount.
Self Employment Tax – Any one with self employed income of more than $400 has to file self employment tax, SE tax is your Social Security and Medicaid tax. At a job you usually pay half and your employer pays another half for you when you are self employed you are responsible for the whole bit. For more information view the SE form
Education Credits – If you are a student or a parent of a full-time student you can claim either the HOPE or Lifetime credit if your AGI is less than 57,000 for single and 114,000 for married. These credits are taken off the tax you owe dollar for dollar.
Earned Income Tax Credit (EIC) – to qualify you must make less than 39,800 in 2007, and either be over the age of 25 or have a qualifying child. To see how much you can get check out EIC page 44-50.
Tuition and Fees Deduction – Much like the education credits except it lowers your AGI instead of dollar for dollar against the tax bill, on the other hand it has a higher income limit of 80,000 for single and 160,000 for married. (Only one of the three can be claimed for the same child in the same tax year)
Cola Tax & Solutions
Total Income – The sum of income from all sources such as wages, interest, dividends, alimony, IRA distributions, see the Income column on the 1040 for more info.
Adjusted Gross Income (AGI) – Your total income minus above the line deductions such as moving expenses, early withdrawal penalties, IRA contributions, student loan interest, see the AGI column on the 1040 for more info.
Standard Deduction – the basic deduction the IRS gives you from being single, head of household, or married.
Itemized Deduction – Schedule A, Instead of taking the standard deduction you can itemize your deductions such as your medical expense, taxes you paid, interest you paid (mortgage and mortgage insurance premium), charity donations, job expenses, for more information view the schedule A
Taxable Income – The amount you owe tax on after you subtract your standard or itemized deduction and exemptions from your AGI.
Tax - The net tax you owe off your taxable income. You can either use the tax schedule or the tax table to configure your tax. It is best to do both and use the lowest, this might save you as much as $8.
Total Tax – The tax subtracted from your total credits is your total tax. After you have your total tax subtract all payments and EIC, if any, that will give you your refund or payment amount.
Self Employment Tax – Any one with self employed income of more than $400 has to file self employment tax, SE tax is your Social Security and Medicaid tax. At a job you usually pay half and your employer pays another half for you when you are self employed you are responsible for the whole bit. For more information view the SE form
Education Credits – If you are a student or a parent of a full-time student you can claim either the HOPE or Lifetime credit if your AGI is less than 57,000 for single and 114,000 for married. These credits are taken off the tax you owe dollar for dollar.
Earned Income Tax Credit (EIC) – to qualify you must make less than 39,800 in 2007, and either be over the age of 25 or have a qualifying child. To see how much you can get check out EIC page 44-50.
Tuition and Fees Deduction – Much like the education credits except it lowers your AGI instead of dollar for dollar against the tax bill, on the other hand it has a higher income limit of 80,000 for single and 160,000 for married. (Only one of the three can be claimed for the same child in the same tax year)
Cola Tax & Solutions
Maximize your Refund!
Cola Tax & Solutions
The additional child tax credit is a tricky tax credit that is meant for the low-medium income families, and it is fully refundable which means it could put dollar for dollar in the taxpayer’s bank account! In order for a taxpayer to qualify for the additional tax credit they must claim the child tax credit. The child tax credit is a credit up to $1,000 that the taxpayer receives per dependent child under the age of 13. For example, the taxpayer has one child and his tax is $600 dollars. The taxpayer’s child tax credit will be $600. That will leave the tax payer with a tax bill of nothing. If the taxpayer made more than $11,000 dollars and less than the limit for the credit, then the taxpayer can claim the additional child tax credit. The scenario can change; the taxpayer has three kids and a tax liability of $500. If the taxpayer qualifies for the additional child tax credit they can be looking at a credit up to $2,500. However, these cases are very rare and easily looked over by a tax preparer. A good tax preparer will prepare the tax return according to the taxpayer’s documents. Then, the tax preparer will look at the return and see what could be claimed or increased if the return is filed differently. Small things could make a huge difference. Example: A taxpayer, with one child, claims $500 dollars in student loan interest paid. By claiming that deduction he will make his taxable income zero and make him owe zero in taxes. Sounds like the write thing to do right? Wrong. If the taxpayer did not claim that $500 deduction his taxable income might have been up to $500. Tax on that is around $50. He would then apply the child tax credit for $50. If he qualifies for the additional child tax credit the taxpayer will then have just increased his return by $950. Yes, the return, as in the bottom line. Scenarios as simple as that happen a lot more than you think. Especially by people using tax software as it does not check for that. Since the student loan interest is above the child tax credit naturally the system would say the taxpayer is not eligible for the child tax credit or the additional credit. Taxpayers are not required to claim student loan interest paid and by all means it is legal to not claim it. So, keep that in mind and make sure to ask your tax preparer what they are doing to maximize your refund!
Cola Tax & Solutions
The additional child tax credit is a tricky tax credit that is meant for the low-medium income families, and it is fully refundable which means it could put dollar for dollar in the taxpayer’s bank account! In order for a taxpayer to qualify for the additional tax credit they must claim the child tax credit. The child tax credit is a credit up to $1,000 that the taxpayer receives per dependent child under the age of 13. For example, the taxpayer has one child and his tax is $600 dollars. The taxpayer’s child tax credit will be $600. That will leave the tax payer with a tax bill of nothing. If the taxpayer made more than $11,000 dollars and less than the limit for the credit, then the taxpayer can claim the additional child tax credit. The scenario can change; the taxpayer has three kids and a tax liability of $500. If the taxpayer qualifies for the additional child tax credit they can be looking at a credit up to $2,500. However, these cases are very rare and easily looked over by a tax preparer. A good tax preparer will prepare the tax return according to the taxpayer’s documents. Then, the tax preparer will look at the return and see what could be claimed or increased if the return is filed differently. Small things could make a huge difference. Example: A taxpayer, with one child, claims $500 dollars in student loan interest paid. By claiming that deduction he will make his taxable income zero and make him owe zero in taxes. Sounds like the write thing to do right? Wrong. If the taxpayer did not claim that $500 deduction his taxable income might have been up to $500. Tax on that is around $50. He would then apply the child tax credit for $50. If he qualifies for the additional child tax credit the taxpayer will then have just increased his return by $950. Yes, the return, as in the bottom line. Scenarios as simple as that happen a lot more than you think. Especially by people using tax software as it does not check for that. Since the student loan interest is above the child tax credit naturally the system would say the taxpayer is not eligible for the child tax credit or the additional credit. Taxpayers are not required to claim student loan interest paid and by all means it is legal to not claim it. So, keep that in mind and make sure to ask your tax preparer what they are doing to maximize your refund!
Cola Tax & Solutions
Monday, March 24, 2008
A mortgage is a smart investment!
Cola Tax & Solutions
This article highlights the benefits of a mortgage. Now is a great time to buy a home, the housing market is at a low which means the value will be higher in time. Owning a home is not only a great investment, but is the best income tax deduction for individuals. Mortgage interest paid is deducted right off the AGI. The IRS cuts even more slack to those without a 20% down payment, by allowing private mortgage insurance premiums to be a tax deduction. The benefits of owning a home do not stop with income tax breaks. Monthly payments toward a mortgage slowing gain equity, so in a way a small percentage of the mortgage payment is refunded back at the time the house sells. On top of the equity, the market value may increase as well. The average during a stable market is 4% per year. Some markets today are stable and still growing, while others are declining. Between the two, selling your home could make you a big profit and if done carefully, can avoid capital gains tax all together. To avoid capital gains tax the owner must have lived in the property, as a primary residence, for more than 2 years in the past 5 years. Without a down payment of 20% most people become discouraged. This should not be the case, a credit score greater than 620 allows for PMI, Private Mortgage Insurance, again tax deductible. Another option is a FHA, Federal Housing Authority, loan which is allowing many people right now to obtain a mortgage, and to buy there first piece of real estate. FHA loans are becoming ever more popular. The best thing to do is pick up a phone and call a mortgage lender and see what type of loans they have available. The next step in becoming a homeowner, after choosing a loan type, is to contact a realtor. Also check BankRate.com regularly while looking for a home. A low mortgage rate could save you hundreds a year and thousands through out the life of the loan. For more information visit Cola Tax & Solutions
This article highlights the benefits of a mortgage. Now is a great time to buy a home, the housing market is at a low which means the value will be higher in time. Owning a home is not only a great investment, but is the best income tax deduction for individuals. Mortgage interest paid is deducted right off the AGI. The IRS cuts even more slack to those without a 20% down payment, by allowing private mortgage insurance premiums to be a tax deduction. The benefits of owning a home do not stop with income tax breaks. Monthly payments toward a mortgage slowing gain equity, so in a way a small percentage of the mortgage payment is refunded back at the time the house sells. On top of the equity, the market value may increase as well. The average during a stable market is 4% per year. Some markets today are stable and still growing, while others are declining. Between the two, selling your home could make you a big profit and if done carefully, can avoid capital gains tax all together. To avoid capital gains tax the owner must have lived in the property, as a primary residence, for more than 2 years in the past 5 years. Without a down payment of 20% most people become discouraged. This should not be the case, a credit score greater than 620 allows for PMI, Private Mortgage Insurance, again tax deductible. Another option is a FHA, Federal Housing Authority, loan which is allowing many people right now to obtain a mortgage, and to buy there first piece of real estate. FHA loans are becoming ever more popular. The best thing to do is pick up a phone and call a mortgage lender and see what type of loans they have available. The next step in becoming a homeowner, after choosing a loan type, is to contact a realtor. Also check BankRate.com regularly while looking for a home. A low mortgage rate could save you hundreds a year and thousands through out the life of the loan. For more information visit Cola Tax & Solutions
Reminder to file your income tax returns!!
In order to receive the economic tax relief package, that was proposed by president Bush, you must file a income tax return with the IRS. Just file your tax return and the IRS will take care of the rest and send you the check. So if you made more than $3,000 dollars in 2007 and weren't planning to file a tax return its time to rethink that and go ahead and file. Don't the let the government keep YOUR money!
Stimulus Tax Rebate Top 6 FAQ
Trying to help addressing all questions about the stimulus tax rebate.
1. It is officially signed into law so there are no more questions about that.
2. The rebate is based on your net tax. If you are wondering what that is and where to find it, well you came to the right place, since I am about to explain it all. To come to your net tax you must first subtract all your deductions and exemptions from your total income. This will leave you with your taxable income. Then figure your tax using either the tax table or through the formula provided by the IRS. That number plus any alternative minimum tax you have will equal your net tax. Your net tax is before any credits are applied such as the child tax credit or education credits. Those credits can reduce your net tax by thousands. Your net tax can be found on the 1040 line 46, 1040A line 28, or 1040EZ line 10.
3. So now you have your net tax figure. If you are single, and your net tax is less than $300 and your income is more than $3,000 in 2007 then you will get the minimum from the rebate which is $300. If your net tax is higher than $600 than you will get the maximum rebate of $600. If your net tax is higher than $300 but less than $600, then your rebate becomes the size of your net tax. Same general rules apply for couples. Couples with a net tax of less than $300, and making more than $3,000 in the year will get the minimum back for couple in the amount of $600. If the couple’s net tax is more than $1,200 then they will get the max rebate of $1,200. Any net tax amount between $600 and $1,200 will become the amount of the rebate.
4. Individuals and couples with dependents under the age of 17 are entitled to an extra $300 per qualifying child. This will excludes any dependent that is not a qualifying child of the tax payer and those qualifying children that are over the age of 17. So, anyone with dependent parents are out of luck on this bonus. Also anyone that can be claimed as a dependent on there 2007 tax return is not included in the rebate regardless if they made more than $3,000 or not.
5. The IRS has to process all 2007 tax returns before they can issue checks for this rebate. After the tax season ending on April 15th, the IRS plans to start cutting check by mid May time.
6. This money is a free bonus with nothing hidden. You will not have to pay income tax on it, and it will not be repaid with your 2008 return. It is truly free money for taxpayers.
1. It is officially signed into law so there are no more questions about that.
2. The rebate is based on your net tax. If you are wondering what that is and where to find it, well you came to the right place, since I am about to explain it all. To come to your net tax you must first subtract all your deductions and exemptions from your total income. This will leave you with your taxable income. Then figure your tax using either the tax table or through the formula provided by the IRS. That number plus any alternative minimum tax you have will equal your net tax. Your net tax is before any credits are applied such as the child tax credit or education credits. Those credits can reduce your net tax by thousands. Your net tax can be found on the 1040 line 46, 1040A line 28, or 1040EZ line 10.
3. So now you have your net tax figure. If you are single, and your net tax is less than $300 and your income is more than $3,000 in 2007 then you will get the minimum from the rebate which is $300. If your net tax is higher than $600 than you will get the maximum rebate of $600. If your net tax is higher than $300 but less than $600, then your rebate becomes the size of your net tax. Same general rules apply for couples. Couples with a net tax of less than $300, and making more than $3,000 in the year will get the minimum back for couple in the amount of $600. If the couple’s net tax is more than $1,200 then they will get the max rebate of $1,200. Any net tax amount between $600 and $1,200 will become the amount of the rebate.
4. Individuals and couples with dependents under the age of 17 are entitled to an extra $300 per qualifying child. This will excludes any dependent that is not a qualifying child of the tax payer and those qualifying children that are over the age of 17. So, anyone with dependent parents are out of luck on this bonus. Also anyone that can be claimed as a dependent on there 2007 tax return is not included in the rebate regardless if they made more than $3,000 or not.
5. The IRS has to process all 2007 tax returns before they can issue checks for this rebate. After the tax season ending on April 15th, the IRS plans to start cutting check by mid May time.
6. This money is a free bonus with nothing hidden. You will not have to pay income tax on it, and it will not be repaid with your 2008 return. It is truly free money for taxpayers.
IRA contributions will get you a bigger refund!
Individuals have until April 15th 2008 to make contributions to an IRA account and be able to deduct it from their 2007 tax return. The IRA contributions deduction has a limit of $4,000, for the 2007 tax year, for filers under the age of 50 (given your earned income was over $4,000). The limit increases to $5,000 for individuals over the age of 50. These contributions will reduce your taxable income and there for reduce your tax bill. In some cases they might actually make you fall into a lower tax bracket and save you even more.
If you haven’t started contributing to an IRA consider doing so. The short term tax relief is only one small benefit. The real benefit comes when you retire. It is a known fact that most American’s do not have enough funds in their retirement accounts. Please do not fall victim to that statistic and invest today.
For more finance related blogs please visit Cola Tax & Solutions
If you haven’t started contributing to an IRA consider doing so. The short term tax relief is only one small benefit. The real benefit comes when you retire. It is a known fact that most American’s do not have enough funds in their retirement accounts. Please do not fall victim to that statistic and invest today.
For more finance related blogs please visit Cola Tax & Solutions
Thursday, February 7, 2008
Don't be Cheated by Online Free E-file Sites!!
I have personally seen tax software be wrong. Some tax software is off $1-6 dollars. How this happens you might be asking yourself, well it's simple really and I will explain it. The IRS gives you two ways to compute your tax. Either use the tax table or figure it using a basic formula. The table has many levels of taxable income listed. Every $50 dollars more of taxable income the table's level increases to the next level Example 1000-1050 is one level. The tax table figures one tax for the whole level. What the tax table does is take the tax of the middle of the level, 1025, and then computes the tax, $103, and applies it for the whole level of 1000-1050. If your taxable income was 1005 you would be paying the same tax as someone that had 1045. Where as if you compute your tax using the tax formula 1005 would be $101 and 1045 would be 105. That makes a $4 difference.
You have the choice to use either method. If your taxable income was 1049 it is clearly better to use the table and pay tax of 103, instead of 105 if you used the formula, which saves you $2.
The problem arises when tax software uses only the table to compute tax. If your taxable income is 1005 they simply use the tax table and you will pay a tax of $103. If you computed it using the formula your tax would only be $101, results in you losing $2. The same $1-3 your neighbor, relative, and half of America lost. It really adds up fast.
You might be asking were the other $1-3 might come from? Well it's simple; those individuals that are eligible for Additional Child Tax Credit get robbed another $1-3. Since the IRS bases the Child Tax Credit on your tax. It is easy to understand why the Additional Child Tax Credit would be wrong. For example you have one child and by the table’s standard your taxable income of 5450 computes 548 in tax. Your child tax credit will then be only 548. That makes your Additional Child Tax Credit 452. Now if you use the formula your tax on 5450 would be 545. That makes your Additional Child Tax Credit 455. Which I want to add for those who do not know the Additional Child Tax Credit is refundable which means money in your pocket. It basically gives you what is left from the Child Tax Credit (1000/child) IF you qualify.
To sum it up tax software that only uses the tax table will cheat about 49% of filers $1-3 and of those filers the ones that qualify for the Additional Child Tax Credit are shorted another $1-3. You might be thinking it's not a lot and it's not everyone. But why let the government keep all of that money?
You have the choice to use either method. If your taxable income was 1049 it is clearly better to use the table and pay tax of 103, instead of 105 if you used the formula, which saves you $2.
The problem arises when tax software uses only the table to compute tax. If your taxable income is 1005 they simply use the tax table and you will pay a tax of $103. If you computed it using the formula your tax would only be $101, results in you losing $2. The same $1-3 your neighbor, relative, and half of America lost. It really adds up fast.
You might be asking were the other $1-3 might come from? Well it's simple; those individuals that are eligible for Additional Child Tax Credit get robbed another $1-3. Since the IRS bases the Child Tax Credit on your tax. It is easy to understand why the Additional Child Tax Credit would be wrong. For example you have one child and by the table’s standard your taxable income of 5450 computes 548 in tax. Your child tax credit will then be only 548. That makes your Additional Child Tax Credit 452. Now if you use the formula your tax on 5450 would be 545. That makes your Additional Child Tax Credit 455. Which I want to add for those who do not know the Additional Child Tax Credit is refundable which means money in your pocket. It basically gives you what is left from the Child Tax Credit (1000/child) IF you qualify.
To sum it up tax software that only uses the tax table will cheat about 49% of filers $1-3 and of those filers the ones that qualify for the Additional Child Tax Credit are shorted another $1-3. You might be thinking it's not a lot and it's not everyone. But why let the government keep all of that money?
Monday, February 4, 2008
Importance of records when it comes to taxes.
Bookkeeping and record keeping is important for both individuals and business. In today’s world this is a very simple task and can save you hours in the long run. Whether you decide to use QuickBooks, Microsoft Excel, or on paper they will all get the same job done.
For businesses bookkeeping is the foundation for accounting as a whole. Bookkeeping shows you where every dollar came from and where every dollar was spent. This is a necessity when it comes to taxes. With good bookkeeping you will be able to find every dollar you spend on deductible expense for your business.
Record keeping isn't just for businesses it is just as important for individuals. Especially those that itemize their deductions saving receipts with sales tax are a must. Just have a central place to keep them all. I use a plastic filing cabinet; other options could include old shoe boxes or a drawer. To save you some time during tax season I would recommend every other month or so count all the sales tax up and write it down on a piece of paper and then paper clip the receipts you counted up. I use a Microsoft Excel spreadsheet to keep a running told of how much sales tax I paid. This is also a great way to see were you are stand with your deductions. If you need more itemized deductions consider donating some of your kid’s old toys or some old clothing around the house. Just remember to get a written statement from the charity showing the fair market value. You could even buy some deductible cookies for your family. Did I say deductible cookies what I meant to say is Girl Scout cookies. These are just a few of the many things that can help increase your deduction and lower your taxable income.
This article was written to make people aware of the importance of record keeping and to give them ideas on how to make it work for them. Enjoy.
For businesses bookkeeping is the foundation for accounting as a whole. Bookkeeping shows you where every dollar came from and where every dollar was spent. This is a necessity when it comes to taxes. With good bookkeeping you will be able to find every dollar you spend on deductible expense for your business.
Record keeping isn't just for businesses it is just as important for individuals. Especially those that itemize their deductions saving receipts with sales tax are a must. Just have a central place to keep them all. I use a plastic filing cabinet; other options could include old shoe boxes or a drawer. To save you some time during tax season I would recommend every other month or so count all the sales tax up and write it down on a piece of paper and then paper clip the receipts you counted up. I use a Microsoft Excel spreadsheet to keep a running told of how much sales tax I paid. This is also a great way to see were you are stand with your deductions. If you need more itemized deductions consider donating some of your kid’s old toys or some old clothing around the house. Just remember to get a written statement from the charity showing the fair market value. You could even buy some deductible cookies for your family. Did I say deductible cookies what I meant to say is Girl Scout cookies. These are just a few of the many things that can help increase your deduction and lower your taxable income.
This article was written to make people aware of the importance of record keeping and to give them ideas on how to make it work for them. Enjoy.
Saturday, February 2, 2008
2008 Stimulus Rebates
In early January, President Bush proposed a tax rebate in effort to stimulate the economy and prevent a recession. When the bill arrived in Congress a few changes were made which resulted in over 20 million more people being included. Although it reduced the amount Bush projected I believe the package would be more effective.
As of now it stands if you made under 75,000 for singles and 150,000 for couples and paid income tax you are subject to the full rebate which is up to $600 per person leaving the couple with $1200. In addition to that they will get $300 per child they have. The changes congress made included those that did not pay any income tax they would be receiving rebates of $300 if their income was more than 3,000. Congress included the retired into the package as well and they will be subject to the same guidelines.
A few examples are couple with one kid that made 45,000 and paid in 850 dollars in taxes their rebate will be 1150. Were as a single mother of two making 25,000 with no taxable income will receive $900.
The rebates from the stimulus package are expected to arrive between May and August of 2008. The IRS will be the ones sending out the checks and they already have all the information they need. Please be careful if anyone calls you asking for personal information regarding your tax rebate. Plenty of people have already got scammed. If you get a phone call please contact your local authorities.
Please enjoy your rebates as they are meant to stimulate our economy. This can not be done if they are put in a savings account. Go out and buy a new car, upgrade something in your house, or use it toward closing cost on a new home, since mortgage rates are at an all time low which is a whole other story in it's self.
As of now it stands if you made under 75,000 for singles and 150,000 for couples and paid income tax you are subject to the full rebate which is up to $600 per person leaving the couple with $1200. In addition to that they will get $300 per child they have. The changes congress made included those that did not pay any income tax they would be receiving rebates of $300 if their income was more than 3,000. Congress included the retired into the package as well and they will be subject to the same guidelines.
A few examples are couple with one kid that made 45,000 and paid in 850 dollars in taxes their rebate will be 1150. Were as a single mother of two making 25,000 with no taxable income will receive $900.
The rebates from the stimulus package are expected to arrive between May and August of 2008. The IRS will be the ones sending out the checks and they already have all the information they need. Please be careful if anyone calls you asking for personal information regarding your tax rebate. Plenty of people have already got scammed. If you get a phone call please contact your local authorities.
Please enjoy your rebates as they are meant to stimulate our economy. This can not be done if they are put in a savings account. Go out and buy a new car, upgrade something in your house, or use it toward closing cost on a new home, since mortgage rates are at an all time low which is a whole other story in it's self.
Friday, February 1, 2008
Individual Income Tax Planning
Many people ask "How can I reduce my tax liability?". It is simple. Just like anything else planning is essential to success. A well planned year could save you hundreds or even thousands of dollars when it comes time for income taxes. The single best thing you could do for yourself is buy a house. I can't stress the importance of owning a home. The interest on the mortgage is tax deductible, you build equity in the home, your housing expense is fixed for 30 years, the list could go on and on about how owning out weighs renting. Right now could not be a better time to go out and buy. With sub prime rates, FHA and other government housing, it would be foolish for anyone not to TRY to qualify for a mortgage. Mortgage interest and now MI premiums are tax deductible which often are the first things that make a person itemize.
If you know you are going to itemize your deductions you better be saving all your receipts! Sales tax can quickly overcome state and local tax payments. If you own your own business or simply sell crafts saving receipts on materials bought could help reduce your taxable income.
The next deduction that comes to mind is contributing to an IRA. The IRS is allowing you to deduct payments into an IRA. This is a no brainer. The number one thing people lack the most is retirement funds. Whether your 30 or 20 there is no better time to start and IRA fund. Time flies by as we already know! You never want to face retirement on social security alone.
Hopefully this has been helpful. I wish you all good luck in life and hope you are successful. May this article save you thousands on your income tax next year or even this year.
If you know you are going to itemize your deductions you better be saving all your receipts! Sales tax can quickly overcome state and local tax payments. If you own your own business or simply sell crafts saving receipts on materials bought could help reduce your taxable income.
The next deduction that comes to mind is contributing to an IRA. The IRS is allowing you to deduct payments into an IRA. This is a no brainer. The number one thing people lack the most is retirement funds. Whether your 30 or 20 there is no better time to start and IRA fund. Time flies by as we already know! You never want to face retirement on social security alone.
Hopefully this has been helpful. I wish you all good luck in life and hope you are successful. May this article save you thousands on your income tax next year or even this year.
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