Filing a Federal Tax Return is Voluntary?

This is one of the many frivoulous tax arguments of non-filers.

Some taxpayers assert that they are not required to file federal tax returns because the filing of a tax return is voluntary. Proponents of this contention point to the fact that the IRS itself tells taxpayers in the Form 1040 instruction book that the tax system is voluntary. Additionally, these taxpayers frequently quote Flora v. United States, 362 U.S. 145, 176 (1960), for the proposition that "[o]ur system of taxation is based upon voluntary assessment and payment, not upon distraint."

The Law: The word “voluntary,” as used in Flora and in IRS publications, refers to our system of allowing taxpayers initially to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them from the outset.

Any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return. Failure to file a tax return could subject the non-complying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.

(Source http:///www.IRS.gov)


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Important Employer Tax Forms

FORM I-9

This IRS form is called "Employment Eligibility Verification" form and must be completed for each newly hired employee employee to demostrate the employer's compliance with the law and the employee's work authorization in the U.S.A.

Source: http://www.irs.gov/

Author Comments:

They are other compliance issues along with the completion of this form, so consult your Tax Accountant (CPA) for additional information.

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2012 Tax Planning begins now?

Tax Planning begins early in the year and not at year end.

Taxpayers that are organized and can plan ahead save time, money and headaches at year end and during the next filing season. This is what the IRS recomends you can do now to make next April 15 easier.

• Adjust your withholding- To review your withholding and make adjustments for next year, especially if you'd prefer more money in each paycheck this year. If you owed at tax time, perhaps you'd like next year's tax payment to be smaller.  
• Secure your return in a safe place-  Put your 2011 tax return and supporting documents somewhere secure so you'll know exactly where to find them if you receive an IRS notice and need to refer to your return.  
• Organize your current records-  Establish a central location where everyone in your household can put tax-related records all year long. 
•  Review your witholding- Look at your paycheck and make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions and other items. 
• Shop for a tax professional early- If you use a tax professional to help you strategize, plan and make financial decisions throughout the year, then search now. You'll have more time when you're not up against a deadline or anxious for your refund. Choose a tax professional wisely. You are ultimately responsible for the accuracy of your own return regardless of who prepares it.  
• Prepare to itemize deductions wisely- If your expenses typically fall just below the amount to make itemizing advantageous, a bit of planning to bundle deductions may pay off. An early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medical bills could equal some tax savings. 
• Strategize tuition payments- The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. It may be beneficial to take full advantage of this tax credit, up to $2,500, before it expires.  

The IRS emphasizes that each household's financial circumstances are different so it's important to fully consider your specific situation and goals before making large financial decisions

 

Special Edition Tax Tips from the IRS.  http://www.irs.gov/

 

 

 

 

 

 

 

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Tax Planning the need to keep up with tax law changes

Background

It is imperative that you keep up with the tax law changes that affect your finances and the best way to do that is to partner with your CPA or tax professional or your choice. Lets take for example the extended provisions that had been approved the last minute by congress and close to year end.  To mention a few these are:  the increased Alternative Minimum Tax (AMT) exemption amounts, the State/Local Sales Tax  deduction, the Mortgage Insurance Premiums deductions, School Teacher Expenses, and the Qualified Charitable Distributions from IRAs.  Lets discuss each one of them in detail here.

• The State/Local Sales Tax deduction is an election in lieu of deducting state income taxes.  It is mostly used by taxpayers residing in Washington, Texas, Nevada, Florida, and other states where there is no state income tax. You must itemize deductions to take advantage of this deduction.
• The Mortgage Insurance Premium deduction applied to homeowners who made down payment of less than 20% of their homes' value and were required to carry PMI.  These premiums were deductible similar to mortgage interest. 
• The School Teacher Expenses provision provided a $250 deduction for teachers, counselors, principals, and aids for books, supplies and other materials.
• Qualified Charitable Distributions provision was very popular among taxpayers.  It allows individuals who are age over 70 1/2 to make a direct charitable gift from their IRA in lieu of taking a required minimum deduction.

These provisions expired at the end of 2011. 

How can your CPA do for you?

Your CPA can be able to monitor regularly, at least quarterly, your financial situation to see if you are going to be affected by any tax-law changes.  He can also help cope with life-changing events such as marriage, divorce, parenthood or new business launch. 

BY taking the necessary steps as soon as the need arises, rather than delaying action until the end of the year, you can better protect your financial interest. 

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Employment taxes

TAX NEWS for Employers:

Today is the due date to deposit payroll tax payments on May 5-8 if the semiweekly deposit rule applies.

Source IRS.gov

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2013 Inflation Adjusted deductions

Cost-of-Living adjustments that will be in effect starting in 2013.

Health Savings accounts:

1. Annual contributions made to a health savings account for an individual with self-only coverage under a high deductible health plan is $3,250.
2. For an individual with family coverage under a high deductible health plan is $6,450.

SOurce IRS.gov.  (Sec 223)

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TAX NEWS for Employers:

Employers due date today:

Employers are required to report tips of $20 or more earned during April 2012.  

What filing is required?  May report these amounts on Form 941.

For what reporting period? ... We will like to hear from you.

(Source: IRS.gov)

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TAX Due Date May 9, 2012

Deposit payroll tax for payments on May 2-4 if the semiweekly deposit rule applies.
Source: IRS.gov


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Tax, Accounting, and Auditing: Tax due date

Tax, Accounting, and Auditing: Tax due date: On Penalties   Today's the last day to file your taxes and pay your tax liability.  The IRS have increased the number of electron...

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Tax due date

On Penalties

 

Today's the last day to file your taxes and pay your tax liability.  The IRS have increased the number of electronic filing and payment options for you, reducing your burden and improving the timeliness and accuracy of tax returns. The IRS can assess a penalty if you fail to file, fail to pay or both by the due date.

They are two different penalties you may face if you file or pay late.

• If you do not file by the deadline, you might face a; 
• Failure-to-file penalty- So if you cannot pay all the taxes you owe, you should still file your tax return on time and pay as much as you can. 
• 
  The failure-to-file penalty ($) is generally more than the failure-to-pay penalty.
• The penalty is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
• If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
• If you do not pay by the due date, you could face a failure-to-pay penalty.
• Generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes. 

• On a Valid Extension: 
• If you request an extension of time to file by the tax deadline and you paid at least 90 percent of your actual tax liability by the original due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date. 

• If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.  Interest are added to all penalties due.

• Can you avoid these penalties?
• You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

 Ask your tax consultant for more details and information.

 

Source: http://www.irs.gov/

 

 

 

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