Items free of Sales Tax...read

In 2012, Texas shoppers get a break from state and local sales taxes on Aug. 17, 18 and 19 — the state's annual tax holiday. Lay-away plans can be used again this year to take advantage of the sales tax holiday. 

As in previous years, the law exempts most clothing, footwear, school supplies and backpacks priced under $100 from sales and use taxes, which could save shoppers about $8 on every $100 they spend.Backpacks under $100 and used by elementary and secondary students are exempt. A backpack is a pack with straps one wears on the back. The exemption during the sales tax holiday includes backpacks with wheels, provided they can also be worn on the back like a traditional backpack, and messenger bags. 

The exemption does not include items that are reasonably defined as luggage, briefcases, athletic/duffle/gym bags, computer bags, purses or framed backpacks. Ten or fewer backpacks can be purchased tax-free at one time without providing an exemption certificate to the seller.No exemption certificate is required - with one exception. 

If the purchaser is buying the supplies under a business account, the retailer must obtain an exemption certificate from the purchaser certifying that the items are purchased for use by an elementary or secondary school student. “Under a business account” means the purchaser is using a business credit card or business check rather than a personal credit card or personal check; being billed under a business account maintained at the retailer; or is using a business membership at a retailer that is membership based.

A word of caution: If you sell items that do not qualify for the exemption, you may not advertise or promise that you will pay your customers' sales tax. You are prohibited from advertising that you will not collect sales tax on items that do not qualify, but you may advertise that tax is included in the sales price of the taxable items that you sell.

Source: http://www.window.state.tx.us/taxinfo/taxpubs/tx98_490/tx98_490.html



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IRS revised rules is making more flexible terms to its Offer-in-Compromise Program so that  some financially distressed taxpayers can clear up their tax problems quicker.

What is an offer-in-compromise (OIC)?

An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the reasonable collection potential.

This initiative focuses on the financial analysis used to determine which taxpayers qualify for an OIC.

Here are some of the changes:

• Reducing the number of years in the calculation for a taxpayer’s future income. 
• Reducing the time it will take to paid in full the amount due. 
• Allowing taxpayers to repay their student loans Minimum payments on college student loans guaranteed by the federal government.
• Allowing taxpayers to pay state and local delinquent taxes. 
• Expanding the Allowable Living Expense allowance for basic necessities for citizens in similar geographic areas. 

More information on the “Fresh Start” initiative can be found at IRS.gov. or from your CPA professional of choice. 

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

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Comming up IRS tax Due Dates...

TAX DUE DATES- up to June 15, 2012

 

June 8, 2012- 

• Deposit payroll tax for payments on June 2-5 if the semiweekly deposit rule applies.

June 11, 2012-

• Employees are required to report to employers tips of $20 +earned durng May 2012.

June 13, 2012-

• Deposit payroll tax for payments on June 6-8 if the semiweekly deposit rule applies.

June 15, 2012-

• Employers must deposit payroll tax for May if the monthly deposit rule applies.
• Corporations are required to deposit the second installment of 2012 estimated tax.
• Deposit payroll tax for payments on June 9-12 if the semiweekly deposit rule applies.
• Individuals outside the U.S. must file 2011 Form 1040.
• Individuals pay the second installment of estimated tax for 2012.

 

Source: IRS.gov 

 

 

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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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