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

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Posted in Tax Guidance & Preparation, Tax Problems & Requests

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

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Posted in Hobby, Income

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

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Posted in Church Pastor Religion

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

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Posted in Charitable Contribution

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

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Posted in Business Expense, Depreciation

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

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Posted in Retirement

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

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Posted in Tax Guidance & Preparation

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

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Posted in Employment Tax

Exclusion of gain on your home

If only you could sell, you would be able to exclude from your income up to $250,000 if you are single or $500,000 if you are married of the capital gains on the sale of your home. You must use

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Posted in Capital Gain

Phase out of itemized deductions + personal exemptions

If you bump up against certain income thresholds, your itemized deductions and personal exemptions start disappearing. The reduction does not apply to deductions for medical expenses, investment interest, nonbusiness casualty and theft losses, and gambling losses. Luckily, these thresholds are

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Posted in Tax Guidance & Preparation
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