Service businesses such as restaurants, bars, and salons often receive tips in addition to their payments for services rendered. Tips are usually given in appreciation for exceptional service or to ensure that the individual server or salesperson receives a portion of the profits. While business owners do not receive income from the tips, they are often required to match FICA taxes, which include Social Security and Medicare taxes, on these payments. Under a special tax credit called the FICA Tip Tax Credit, though, small business owners can claim a tax credit that reduces their share of the matching FICA taxes on tips.
Following the economic recession of 2008-10, the United States government took extraordinary measures to attempt to shore up the national economy. One of the major areas of concern was unemployment. Rising unemployment figures pushed the national unemployment rate up to 10 percent, placing a strain on federal unemployment funds.
Taxpayers who are subject to foreign income taxes may qualify to take a foreign tax credit against their U.S. tax liability. In most cases, these foreign income taxes are levied on individuals who have partial-year residency in a foreign country or who receive income from foreign-based business activities. The IRS has created the foreign tax credit to help taxpayers offset these additional charges.
Adjusted gross income (AGI) is one of the most important figures on Form 1040. This amount determines your applicable tax rate and, by extension, your actual tax liability for the year. However, many taxpayers are unfamiliar with how adjusted gross income is calculated, which means that they may not be aware of how their AGI amount fluctuates from year to year. Knowing how to calculate your AGI can help you prepare for your taxes based on the potential change in the amount of income tax you owe.
College students have been using work study as a way to earn additional income for school for many years. While work study provides a regular stream of income, it is not actually classified as a job because it is a form of financial aid provided for needy students. Despite this classification, though, receiving work study income can have an impact on your federal income tax liability at the end of the year. For this reason, it's important to know why work study is significant and how to include this school related tax on your tax form.
If you follow financial news, you may have the heard the phrase "tax-free bond" used quite often. Some news reports discuss that investors are purchasing tax-free bonds in droves to take advantage of rising interest rates. What is a tax-free bond? Why would it be beneficial for the interest rate on these bonds to rise? Are there any risks in purchasing tax-free bonds? Do I need assistance managing tax free bonds?
taxpayers are required to travel during the course of their employment. While the IRS allows individuals to write off business expenses related to travel, doing so can be a veritable minefield of tax issues, meaning you may need assistance from IRS Revenue Officers. For example, can you deduct the cost of gas if you're making a stop along the way to go sightseeing? What about engaging in pleasure while you're away on business? Is there any way to prevent being audited by the IRS for claiming travel expenses? To answer these and other questions, here's an introduction to help you learn how to write off business travel costs.
The IRS has instituted a special program called the Offshore Voluntary Disclosure Program (OVDP). Under the terms of this arrangement, taxpayers who have been hiding assets may be able to report these activities to the agency and avoid being criminally prosecuted by the IRS. However, there are several conditions for receiving amnesty under the OVDP and any taxpayer who is considering applying should do so only after investigating the entire program and its requirements.
If you operate a home-based business, you're probably familiar with the large number of home office expenses you can deduct. However, one of the most valuable deductions available to self-employed taxpayers may also pose the highest number of tax pitfalls: the home office deduction. Due to some IRS problems with tax audits in the past, some taxpayers who are legitimately entitled to claim this deduction refrain from doing so. To be clear, people who are qualified for the home office tax deduction should use it, but they must make sure that their records and use meet the IRS guidelines.
Tax day is a source of dread to many people, which is why so many taxpayers neglect to file their taxes until the very last minute. If you'd like to look at the lighter side of the tax code, here are five fun tax facts to take your mind off your potential tax bill.
