Tax return transcripts are free – actual copies of the return cost $$

There are two easy and convenient options for obtaining free copies of your federal tax return information – tax return transcripts and tax account transcripts – by phone or by mail. A tax return transcript shows most line items from the tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any…

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Financially Distressed Taxpayer Help

With many people facing additional financial difficulties, the IRS is taking several additional steps to help people who owe back taxes. They claim to ensure that they balance their responsibility to enforce the law with the economic real ities facing many American citizens today. They claim to want to go the extra mile to help…

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Reporting Hobby Income and Expenses

Since a hobby is something done for personal pleasure it is not a trade or business, should income be generated from a hobby the gross income is reported on Line 21, Form 1040. The cost of the materials used to make the item sold directly reduces the amount she reports on Line 21. The definition…

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Form 4361, Application for Exemption From Self-Employment Tax for Use by Minister, Members of Religious Orders and Christian Science Practitioners.

Filing IRS Form 4361 will not prevent collecting Social Security on the amounts earned prior to becoming an ordained minister or any additional non-ministerial self-employment income or wages. Form 4361 applies only to services as an ordained minister. The form contains a statement that the taxpayer is conscientiously opposed, for moral or religious principles, to…

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Payment to religious schools ruled non deductible

The Ninth Circuit affirmed the Tax Court (125 T.C. 281 (2005)) in holding that a couple’s tuition and fee payments to their children’s Jewish day schools do not qualify for the charitable deduction because they received a substantial benefit from their payments and lacked charitable intent. Sklar v. Commissioner, No. 06-72961 (9th Cir. Dec. 12,…

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SUV’s and Depreciation

In Revenue Procedure 2003-75, the IRS announced a separate set of luxury car depreciation limitations for trucks or vans that do not have a gross vehicle weight in excess of 6,000 pounds. In that revenue procedure, the IRS stated that the term “trucks and vans” referred to passenger automobiles that are built on a truck…

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Hardship distributions from retirement plans not taxable

If your money is locked away in an ever-decreasing 401(k) or IRA account and you need it to stay afloat, relief may be on the way. Heavy penalties, including regular income tax as well as a 10% additional penalty usually apply to early distributions from these plans. However, there are special loan provisions and hardship…

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Kiddie Tax

If your child has unearned income (interest, trust payments, or just about anything other than earnings at a job), your child will have to pay the so-called “kiddie tax” at your highest marginal tax rate. The threshold amount for the kiddie tax has been increased to $1800 in 2008 and $1900 in 2009.

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Paying the babysitter

If you have a nanny or a cleaning service, the annual threshold amount for having to report and pay employment taxes is $1,600 for 2008 and $1,700 for 2009. If your yearly payments to any one domestic employee exceed these amounts, you have to report withheld income and social security taxes on your individual tax…

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