New Tax Laws and Same Sex Marriage Ruling

Posted on July 22, 2013 by Kursti Nakagawa

New Tax Law After Same Sex Ruling

The Supreme Court recently declared the Defense of Marriage Act unconstitutional. This means that, in some states, same-sex couples who are legally married can now receive the same Social Security, retirement and health care benefits that have long been available to heterosexual couples. The ruling could even lead to a check from Uncle Sam for some! This article discusses the financial and tax implications of this new ruling for same-sex couples.

Gift Taxes and Estate Planning

Gift and estate taxes have been a core issue for many same-sex couples. Since there was previously no federal recognition of same- sex couples, members of these unions were not able to pass their assets on to their spouses upon their death without being taxed. Now some same sex couples will be able to share the same spousal estate benefits that straight couples have enjoyed. The new ruling also makes it possible for married same-sex couples to share assets without having to pay gift taxes. This has been a problem in the past when a same sex-couple shared a house and split mortgage payments. Same-sex couples may want to consult with their tax professionals to make sure their estates and trusts are updated to take advantage of any new estate or tax benefits provided by the new laws.

Health Care Benefits

One of the greatest benefits of the new legislation is that a member of a same-sex union can now be recognized on their partner’s health insurance plan without the large fees that were added in previous years. In addition, same-sex couples can now elect a variety of more affordable and flexible health care plans with better rates. Even if a couple is happy with their current health insurance arrangement and chooses not to change plans, they may be eligible to file amended tax returns to collect taxes that have been paid on benefits in prior years.

Income Taxes

Until recently, same-sex couples were not able to file joint tax returns and thus had larger tax bills than heterosexual couples. One couple said they paid an additional $5,000 in taxes because they could not legally marry. As a rule of thumb, married couples pay less in taxes than individuals filing separately. This is especially true when one person in a couple earns significantly more than the other. In addition, married couples filing joint tax returns realize other tax benefits in areas such as capital gains taxes, child care credits and a larger exclusion for the sale of a home. These tax benefits will now be available to some same-sex couples. Although the new Supreme Court ruling potentially offers many tax benefits, same-sex couples may want to consult with a tax professional to see how it affects their specific set of circumstances.

If you have tax questions or tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

Top Tax Deduction Benefits for Small Business Owners

Posted on June 27, 2013 by Kursti Nakagawa

Top Tax Deductions for Small Business Owners

One of the benefits of being a small business owner is the tax deductions that are available. The more tax deductions that you have at the end of the year, the less you owe in taxes…..plus you could even walk away with a few extra benefits. It seems that many small business owners are not aware of important tax deductions that could greatly benefit them. Have you ever wanted to take a holiday, part business and part vacation? Believe it or not, it can be a tax deduction. The same goes for that nice car you may have been wanting. Here is a list of 7 Tax Deductions for Small Businesses.

Automobile Expenses – Your business can own its own automobile or, if you use your car for business, you can deduct some of the costs associated with driving. Basically, you have two choices:
The Actual Expense Method would require you to keep a log and track all business related expenses.
The other option is the Standard Mileage Rate Method. Each year a standard mileage rate is given. In 2013, the rate is 56.5 cents per business mile (up from 55.5 cents per mile in 2012). Just calculate how often you use the car for business purposes. Many people do not deduct their auto expenses even though it is a great way to save money!
Technology and Office Supplies – Small business owners are frequently buying new computers, scanners, phone systems, and countless other items that are part of running a productive shop. Although many people are not aware of it, most of these items can be fully expensed. Just keep an account of all purchases and discuss with your CPA or tax advisor any items that might be used for personal use as well.
Mobile Phones – Just a few weeks back I upgraded phones and got a wonderful new phone on our business account. Nowadays, cell phones are used all of the time to do business all over the world. Plus, the IRS issued a new ruling stating that business owners can write off 100% of their cell phone costs as long as they have an established home phone line.
Business/Leisure Travel Trips – This happens to be one of the most underused deductions for business owners. This is strange because travel expenses are 100% deductible, while other items like the usual entertainment expenses and meals are only 50% deductible. Yes, this includes hotel, airfare, train costs, rental cars, taxis…….
Meals and Entertainment – This is another deduction that is that is not used as often as it could be! Any meal or coffee taken for business purposes can be written off. What if you do not have the receipt? Relax, if it is under $75 you usually do not need a receipt. Plus, it is easy to keep track of records from bank accounts and credit cards bills for write offs as well.
Charitable Contributions – If your business is an LLC, a Partnership, or an S Corporation, you can make charitable contribution to the charity of your choice and simply pass it on to yourself to be claimed on your individual tax return.
Advertising and Marketing Costs – Ordinary advertising and promotion of your business is deductible as a current expense. Think business cards, yellow page ads, or sponsoring that little league game.

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services, visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation

The Argument Against Tax Deductions

Posted on June 17, 2013 by Kursti Nakagawa

Tax Day

A current survey after the 2012 United States tax season showed that a majority of taxpayers were in favor of a tax system where everyone pays the same percentage of their income in taxes. Think about it: After another stressful tax season, in which, decent and fair Americans rush to get all of their information together and out of the door by mid-April, it seems that these taxpayers would like to trade their system in for a more efficient and easy system. How would this work?

The United States tax law is currently 72,000 pages. It is a complicated and always evolving system. One of main factors of the confusion for the taxpayers is all of the deductions and exemptions and tax codes. For this reason alone, our country has 1.2 million tax preparers to assist the people with their taxes.

Let’s look at Schedule A itemized deductions, many experts believe that these items appear as though they are created to aid the wealthier people in society. For example, in 2010 the IRS reported that itemized deductions totaled $1.2 trillion dollars. A staggering number to imagine, in comparison to the total nationwide adjusted gross incomes of $8.1 trillion! If one breaks the itemized deductions down here is the order: Taxes (state, local, and real estate) at $445 billion, interest totaling $414 billion, and then charitable deductions at $170 billion.

When one looks at these numbers they wonder the logic behind these deductions. Would people still contribute to charities if these itemized deductions were not allowed? Is this donating “saving the world?” Where are these donations going exactly? Many analysts have researched that only 10 percent of charities are out there that actually assist people who are actually in need of help. It seems that only another 10 percent went to actually went to education and health combined. Where are the donations going?

It seems as though the wealthy donate less of money to basic needs charities and more of it to the arts and universities. It also seems as though this systems favors the richer individuals. Another investigation showed that most of the people who get the large write offs from their charitable donations are not spending their money on donations that would actually benefit most people. In fact it seems their donations only benefit a specialized few, such as certain schools, colleges, and universities. It seems Colombia University received the second biggest single donation. Two other big donations included the Metropolitan Museum of Art and the Central Park Conservancy.

As implied it seems that those citizens of Manhattan seem to largely benefit from the tax deduction. In fact, New York itself had 40 percent of the 50 million dollar plus donations of 2012. However, if you live in rural North America you may be out of luck!

The schedule A deductions is just one example of how the wealthy can benefit and tweak the tax system. Some experts have the opinion that the tax codes, deductions, and exemptions needs to be simplified not only to make tax day easier, but to make it more fair.

For more information about our tax debt resolution services, visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation

How To Endure An Audit

Posted on May 6, 2013 by Kursti Nakagawa

Tax season has come to an end and now audit season is about to commence. People always fear that they will be audited, but in reality the chance of being audited is fairly low. About 1 out of 100 people are actually audited. Read below on how to endure an audit.

However, if you do happen to be one of the unlucky people, here are a few easy steps to take to make the process go smoothly:

Don’t Ignore Mail From the IRS – Although it may be frightening, it is always best to open mail from the IRS. It is best to face the problem head on and resolve the issue. You are usually given about 30 days to respond to the letter. Keep in mind that if you ignore such information, the IRS will simply keep adding penalties to the amount owed.

Contact a Tax Professional – You will want to a hire a tax professional to represent you and to communicate directly with the IRS on your behalf. Tax law is very complicated so, in the case of an audit, it is important to hire a licensed CPA or other tax professional that specializes in IRS audit defense representation. It is important to keep your tax preparer up to date on everything as well.

Get All Records and Documentation in Order- Find out what part of your tax return is in question and gather all of the necessary paperwork. All tax documents should be kept for three years but, if you are missing a file, you can always get a copy. If you have lost a receipt, you can usually get a duplicate copy depending on the type of business that issued it. For example, doctor’s offices and charity services usually keep good records and will be able to supply you with a copy of your receipt.

Remain Calm – One of the best pieces of advice for handling an audit is to be polite and respectful to your assigned IRS agent. It is never helpful to begin an audit by being rude and difficult. The process will be much smoother if you approach it with the assumption that the IRS agent is simply doing their job. Also, no matter what you do, do not hide or cover anything up. It also will serve you well to be upfront and honest.

Tax returns are selected for audit in a variety of different ways including random sampling. If your return is selected for an audit, it is important not to panic and to realize that many IRS audits can result in the acceptance of a return without change or perhaps even a refund when they are handled properly. When faced with an IRS audit, selecting a qualified Certified Public Accountant to provide IRS audit defense is well worth the investment.

For more information about our tax debt resolution services, visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation

Tax Day Freebies!

Posted on April 15, 2013 by Kursti Nakagawa

Tax Day Freebies!

April 15, 2013 is here and upon us! If you have already filed your taxes you can breathe a deep breath and take advantage of the following offers. If you still are in the process of filing your taxes, you only have a few more hours to go. Or you can always file for an extension………Here are today’s Tax Day Freebies!

Here are a few Tax Day Deals for today:

15% off of food at PF Changs
Two free cupcake bites at Cinnabon
Buy one drink and get one drink free at Jamba Juice
Get a free taco at El Pollo Loco
Kids eat free at participating IHOP.
Arbys’s is having its 3^rd annual free curly fry day!
Panda Express-Get a free Samurai Surf & Turf on April 17 when you bring in their Facebook coupon to participating stores.

If you have tax any questions or tax debt you are unable to pay our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years, in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services, visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.