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Tax Preparation Made Easy

(ARA) - April 15 may seem far away, but it’s not too early to start thinking about organizing your taxes, especially if you know you’ll have to do some digging to unearth the necessary receipts and other paperwork.

A little advance planning can make doing your taxes a lot less stressful, and can help avoid any unpleasant surprises. Getting an early start also gives you time to research the latest tax rules and regulations to make sure you’re taking advantage of all the deductions.

Before Taxes Are Due...

The first step in getting your taxes prepared is to set aside some time to collect the information you know you’ll need. Typical items include your return from last year, your W-2 forms from work, any tax related documents pertaining to your investments, mortgage and property tax statements, receipts for charitable deductions, etc.

Once you have gathered all the information, you can determine what IRS forms you’ll need to complete your taxes. Will you need any special tax forms? For example, if you’re self-employed, or if you have complex investment income, you’ll need to complete additional forms.

“Obviously, you want to maximize the amount of money you can deduct from your taxes, while obeying the law and paying your fair share of income tax,” says Maxine Sweet of Experian, a company that provides consumers with products and resources to help them understand, manage, and protect their personal credit profiles. “The more deductions you can claim, the smaller your total tax bill will be, so it pays to know if you qualify for any deductions.”

If you’ve had any major changes in your income this year, such as an inheritance, an investment windfall or the like, you may want to hire a tax professional to help you sort through all the legalities. For those who feel they need a little coaching to get through their tax forms, a good tax preparation computer program can be useful.

It may seem obvious, but any changes in your personal life may affect your taxes. Did you get married or divorced in the past year? Did you buy a house, have a baby, or send a child off to college? Any of these circumstances can affect your tax return. If you have questions, visit www.irs.gov for more information.

April 15

The sooner you calculate your income tax, the sooner you’ll know whether you owe Uncle Sam or he owes you (or in a perfect world, that it’s a draw). If you qualify for a tax refund, the sooner you file your return, the sooner you’ll see your check from the IRS. You can even file your return online for a faster turnaround, if you don’t mind paying a fee for the convenience and speed.

Another advantage of having your taxes finished early is that if you owe money to the government, you have some time to figure out how you’ll pay. You can pay in installments, pay by credit card, or if it looks like you won’t be able to come up with the funds on time, you can file for an extension. To use an installment plan or get an extension, you still need to file the correct forms by April 15. “Before using your credit card to pay, review your overall household finances to avoid any surprises, such as exceeding your credit limit,” Sweet advises. “That review should include bank statements, credit card billing and a copy of your credit report. You can get a copy of your credit report from Experian at www.experian.com.”

After You’re Done

Once you’ve finished your taxes for this year, take some time to think about what you could do differently for next year. If you spent a lot of time tracking down your tax documents this time, create a filing system that works for you and be prepared for next year. Start using a better system now to collect important information throughout the year, and stick to it.

If you owed money this year, or if you have a huge return coming, you may want to consider adjusting your withholding amount. The goal should be to break even. While getting a refund may seem like a good deal, you’ve basically been loaning the government money at zero interest. Increasing the allowances you claim so less is taken from each paycheck means more money in your pocket each month. If you owed this year, decrease your allowances so more money will be withheld from your paycheck and you won’t have the same unpleasant surprise next tax season.

Investing in tax deferred accounts such as a Roth IRA, or in pre-tax investment programs such as a 401(k) or a standard IRA can not only help you save for the future, but can also provide benefits at tax time. If you don’t currently use these investment tools, take some time to investigate how they might work for you.

Use your return wisely. While the temptation is to consider a tax refund “found” money, resist the urge to spend it on a trip or a new sofa. Instead, why not invest it or put it in the bank? If you are carrying credit card debt, apply the amount of your tax return to paying off what you owe.

While April 15 will probably never be anyone’s favorite day of the year, a little planning and forethought can make it easier to cope.

For more information on learning about your credit, visit www.experian.com.

Courtesy of ARA Content  

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Keep Your Personal Information Safe at Tax Time and All the Time

(ARA) – Ahh, tax time. The smell of freshly sharpened pencils, the clicking of the calculator keys, the satisfaction of figuring out the tax forms. What? That doesn’t sound familiar? Perhaps this is more your experience: the smell of sweat as you realize you can’t find key receipts, the silent scream you utter when the numbers don’t balance for the tenth time, the agony of trying to figure out which forms you need.

Whichever camp you belong to, the simple fact is that tax time can’t be avoided. So as long as you’ve got all your financial information out of the file box, why not make the most of the occasion and devote a few extra minutes to checking your credit report, as well as taking some easy steps to protect your private information?

Theft of financial information, like its cousin, identify theft, is on the rise. According to the latest Experian-Gallup Personal Credit Index survey at www.PersonalCreditIndex.com, one in five consumers report that they have had their financial information stolen, including a bank or credit card number. In addition, one in seven people say they have had their personal information stolen, such as a birth certificate, driver’s license or Social Security number.

“These numbers are alarming,” says Maxine Sweet, vice president of public education for Experian, a global information solutions company. “However, there are simple steps that consumers can take to help protect their financial and personal information.”

As you gather up the forms you need to complete your taxes, take a good look at the information they contain. From credit card receipts to property tax statements, mortgage interest statements, W-2 forms and more, the information on these forms is a goldmine for someone who wants to use your good credit to their advantage. And with the growth of online shopping and electronic record keeping, it’s not just a paper trail you have to worry about.

Once you start noticing all the places your information shows up, it can make you a little nervous. But there are simple steps you can take to protect that information.

* Start protecting your information by requesting a copy of your credit report at www.Experian.com and scanning your credit history and any recent changes to make sure the report is accurate. If you notice anything questionable, such as accounts you don’t recognize, it is possible that someone has used stolen information to open accounts in your name. Contact the creditor and the credit reporting companies to report this; they can help you take the necessary steps to correct your credit report and protect your accounts.

* Always shred sensitive information, including credit card statements, pay stubs and anything else with personal data on it. Personal shredders are available in office supply stores for under $20. “To some consumers, shredding personal documents may seem like overkill, but it only takes a second and it is a sure way to protect your personal information,” says Sweet.

* If you receive pre-approved mailings from credit card companies looking for your business, shred them as well if you do not wish to open an account. Do the same with any blank checks your credit card company sends you if you don’t plan to use them.

* Don’t give out personal or financial information to friends and family unless absolutely necessary. The Experian-Gallup Survey showed that 21 percent of those who had experienced personal or financial information theft said they knew the person who stole the information.

* Never provide personal or financial information to an unknown source.

* Invest in anti-hacking software to keep the information on your computer safe.

* Review your credit report periodically. To make it easier, you can subscribe to a credit monitoring product that will alert you to changes in your credit report including inquiries, new accounts, late payments and more.

For more information on protecting your credit, visit www.Experian.com.

Courtesy of ARA Content

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Tips for Storing and Destroying Sensitive Documents

(ARA) - Each year consumers spend many hours preparing taxes hoping they don’t owe the government money. But what many fail to realize is that the government isn’t the only one who may collect their hard earned cash -- so may identity thieves.

In a time where one man’s trash is another man’s treasure, it’s important to ensure that the multitude of documents used to prepare taxes are appropriately stored or destroyed. In 2005, consumers lost nearly $57 billion to criminals who stole their identities. Although this statistic is alarming, there are ways to protect yourself from the crime, especially during tax season.

While it may appear easier to file everything, paper trails are still an identity thief’s dream. Recent research conducted by Fellowes, Inc., the leading shredder manufacturer; shows nearly 40 percent of Americans believe identity theft is most likely to occur through online exchanges. In reality, Internet fraud represents only nine percent of the crime. The majority of identity theft crimes occur through paper documents and stolen information, making it crucial to properly store or destroy the sensitive documents used during tax season.

“Tax season can leave consumers with mountains of paperwork, which makes them more vulnerable to identity theft," says Kristen Gehrig, director, global marketing for Fellowes, Inc. “Shredding is one of the easiest ways to ensure your information doesn’t end up in the wrong hands, but you also need to be conscious about what documents are important to keep.”

Simply knowing what needs to be filed or shredded will quickly alleviate potential problems.

For documents you need to keep, consider storing them in a safe and accessible place, such as a fireproof box that is well hidden in your home. When destroying records, it’s best to use a shredder that can slice credit cards and CDs and has confetti-cut capabilities, such as the Fellowes PS-77Cs. Confetti-cut shredders ensure that private information is reduced to small, unidentifiable pieces, making it nearly impossible for a would-be identity thief to piece the information back together.

As shredders become a necessary household product, it’s important to choose a shredder that not only protects your family’s identity, but also its safety. The Fellowes PS-77Cs alleviates shredder safety concerns with its SafeSense technology, which shuts down the shredder when it senses that hands are too close to the paper opening.

Additionally, a few more protective measures against identity theft should be taken during tax season. If you’re filing your tax returns over the Internet, make sure your computer has updated anti-virus, anti-spyware and firewall software. It is also imperative to shred all paperwork used to calculate taxes such as receipts, bank records and various forms. Finally, pay particular attention to W-2 or 1099 forms because they contain your Social Security number, which is a would-be thief’s dream. A missing form may leave you vulnerable to the crime.

For additional identity theft prevention tips and information on how long to keep financial records, visit www.IDconfidence.org or check with your tax professional.

Courtesy of ARA Content

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A New Year and New Tax Incentives… Save Energy and Write-off Energy-saving Window and Door Improvements

(ARA) - It’s true. The U.S. federal government is so in favor of reducing energy consumption, they’ve created incentives to encourage Americans to replace leaky old windows and doors with more energy-efficient options.

Why all the concern? The more ways we can conserve energy, the better for us all. Government reports indicate that over the past decade, America’s energy consumption has grown about 40 times faster than our energy production.

Pella Windows & Doors encourages consumers to stretch their dollars by utilizing energy saving tax incentives for the home. Legislation passed in 2005 offers tax deductions for homeowners adding energy-efficient improvements to their existing home in 2006 or 2007. Tax credits are also available for builders constructing highly energy-efficient new homes in the same time frame.

For existing homes, eligible homeowners may claim tax credits of up to $500 total for energy-saving improvements implemented in 2006 and 2007. Installing replacement windows and doors designed to help conserve energy, adding insulation, or enhancing a metal roof with coatings designed to reduce heat gain are among the qualifying improvements.

Homeowners that replace windows in their primary residence may qualify for a 10 percent tax credit, up to $200 maximum. Replacement energy efficient doors may qualify for the 10 percent tax credit, up to $500. Windows, doors and insulation must meet the requirements of the International Energy Conservation Code (IECC), a model energy code for buildings. For ease in understanding which windows qualify for the tax credits, look for the ENERGY STAR, recognizing the most energy-efficient products.

Storm doors may qualify for tax credits, too, on eligible purchases from Jan. 1, 2006, to Dec. 31, 2007. Ten percent of the storm door purchase price may be a tax credit, up to a $500 maximum.

Customers purchasing qualifying Pella windows or doors should save their purchase receipt, obtain Pella’s Manufacturer's Certification Statement, available at www.pella.com, and claim the deduction at tax time. If you have any questions or concerns, consult your tax professional.

As Benjamin Franklin lamented, “In this world nothing is certain but death and taxes.” Make the most of the tax savings inspired by the federal government. And as temperatures drop and energy consumption heats up, consider the benefits of new high performance windows.*

Seasonal savings -- Low-E coatings, gas-fills, and insulating spacers and frames can significantly reduce winter heat loss and summer heat gain.

Improved daylight and view -- New glazings with low-solar-gain low-E coatings can reduce solar heat gain significantly with a minimal loss of visible light (compared to older tints and films).

Improved comfort -- In summer and winter homeowner comfort is increased; window temperatures are more moderate and there are fewer cold drafts. Discomfort from strong summer sunlight is reduced.

Reduced condensation -- Frame and glazing materials that resist heat conduction do not become as cold and results in less condensation.

Reduced fading -- Coatings on glass can significantly reduce the ultraviolet (UV) and other solar radiation which causes fading of fabrics and furnishings.

Lower mechanical equipment costs -- Using windows that significantly reduce solar heat gain means cooling equipment costs may be reduced. The National Fenestration Rating Council (NFRC) label appears on window and door products which are part of the ENERGY STAR program.

Your home remains a great investment. This year, invest in windows and doors that provide a short-term return on that investment with a tax credit, and long-term savings in reduced energy bills, thanks to high-performing Pella windows and doors.

For more information on improving energy efficiency with windows and doors, contact a local Pella Window & Door store expert by calling (888) 84-PELLA or logging on to www.pella.com.

*Source: Efficient Windows Collaborative

Courtesy of ARA Content

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Shape-up Your Office with a Sweat-Free Plan

(ARA) - Here’s a statistic that will startle you into action. According to a recent Office Depot survey, the average business professional loses 90 hours a year -- or more than one full workweek --due to disorganization.

Thankfully, there’s a solution to help you deal with the overflowing piles and outdated files. It is an easy-to-accomplish five-day office makeover plan that has been developed by organizing expert Stephanie Winston and Office Depot. Best of all, it’s sweat-free, and doesn’t require any heavy lifting.

"All it takes is a few clear-cut systems and a dose of consistency to trim your in-box and perform a ‘nip and tuck’ on the ever-bulging files in your office,” says Winston. By following her advice and the simple solutions in the Office Depot Five-Day Office Makeover Plan, anyone can maintain an orderly workspace. Highlights include:

These and other suggestions are available free of charge at www.officedepot.com/getorganized.

Courtesy of ARA Content

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S Corp - What is it?

For many small businesses, the “S” corporation is the business entity of choice. The “S” in S corporation refers to a tax designation. All corporations are created the same way under state law. A small business must then chose a tax status, to wit, “C”, “S” or non-profit. Important issues concerning S corporations are covered in this article.

C Corporation v. S Corporation

Federal tax laws automatically consider every corporation to be a “C” designation. A small business, however, may elect to be designated as an “S” corporation by filing IRS form 2553. The election must be made prior to the tax year in which it is going to be effective. All shareholders must sign the election.

A C corporation stands alone for tax purposes. It must file tax returns and pay taxes on profits. Profits and losses are reported on the corporate tax return and do not pass through to shareholders. C corporations can elect any calendar month as the end of their fiscal year.

An S corporation is a pass through entity for tax purposes. It does not file a tax return for the purpose of paying taxes, but does file information returns. All profits and losses are passed through to the shareholders. In turn, each shareholder reports the profit or loss on his or her individual tax returns in proportion to their ownership interest. For instance, if you own 30% of the total issued shares, 30% of the profits or losses must be reported on your personal tax returns. S corporations must have a fiscal year-end of December 31. If you intend to eventually take your business public, you cannot use an S corporation.

Although S corporations are a tax choice, there are limitations on what corporate entities can make the election. The biggest hurdles are:

1. There can be no more than 75 shareholders;

2. Each shareholder must be a person, not a business entity; and

3. There can be only one class of stock.

Benefits

While S corporations provide relief from the tax filings of a C corporation, there are negative aspects to using them. Simply put, a C corporation can write off more expenses. S corporations may not be able to deduct certain types of insurance and costs of doing business. The list is fairly complicated, so you should speak with a tax professional prior to deciding which designation works for your business.

S Corporation vs. Limited Liability Company

S corporations have a definite tax advantage over limited liability companies [“LLC”]. Distributions from LLCs to shareholders are subject to self-employment tax [15.2 percent] in their entirety. Distributions from S corporations, however, can be broken down into two categories, salaries and dividends. The dividend distributions are not subject to the self-employment tax. Avoiding self-employment tax can make a substantial difference in the amount of money you take home.

In Closing

I always laugh when someone emphatically says that every business should be formed as a particular entity. Such statements are simply wrong. The “best” business entity depends entirely on the nature of your business. In many instances, S corporations are ideal.

Richard Chapo, Esq., is a business lawyer with http://www.sandiegobusinesslawfirm.com - offering legal advice to San Diego businesses. This article is for general education purposes and does not address every facet of the subject matter. Nothing in this article creates an attorney-client relationship.

Article Source: http://EzineArticles.com/

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Small Business Tax Issues for Self-Employed Individuals

The United States is a nation of entrepreneurs. There are literally tens of millions of self-employed individuals that enjoy pursuing their dream business. Of course, few of you enjoy the paperwork and confusing tax issues that arise from owning your own business.

Many self-employed individuals are considered "sole proprietors" or "independent contractors" for legal and tax purposes. This is true regardless of whether you are turning a hobby into a business, selling an indispensable widget or providing services to others. As a self-employed person, you report business revenue results on your personal income tax return. Following are a few guidelines and issues you should keep in mind if you are pursuing your entrepreneurial spirit.

Schedule C - Form 1040.

As a self-employed person, you are required to report your business profits or losses on Schedule C of Form 1040. The income earned through your business is taxable to you as an individual. This is true even if you do not withdraw any money from the business. While you are required to report your gross revenues, you are also allowed to deduct business expenses incurred in generating that revenue. If your business efforts result in a loss, the loss will generally be deductible against your total income from all sources, subject to special rules relating to whether your business is considered a hobby and whether you have anything "at risk."

Home-Based Business

Many self-employed individuals work out of their home and are entitled to deduct a percentage of certain home costs that are applicable to the portion of the home that is used as your office. This can include payments for utilities, telephone services, etc. You may also be eligible to claim these deductions if you perform administrative tasks from your home or store inventory there. If you work out of your home and have an additional office at another location, you also may be able to convert your commuting expenses between the two locations into deductible transportation expenses. Since most self-employed individuals find themselves working more than the traditional 40-hour week, there are a significant number of advantageous deductions that can be claimed. Unfortunately, we find that most self-employed individuals miss these deductions because they are unaware of them.

Self-Employment Taxes - The Bad News

A negative aspect to being self-employed is the self-employment tax. All salaried individuals are subject to automatic deductions from their paycheck including FICA, etc. In that many self-employed individuals often do not run a formal payroll for themselves, the government must recapture these taxes through the self-employment tax. Simply put, you are required to pay self-employment taxes at a rate of 15.3% on your net earnings up to $87,900 for 2004. For net income in excess of $87,900, you will pay further taxes at a rate of 2.9% on the excess.

In an interesting twist that reveals the confusing nature of the tax code, you are allowed a partial deduction for the self-employment tax. Simply put, you are allowed to deduct one-half of your self-employment taxes from your gross income. For example, if you pay $10,000 in self-employment taxes, you are allowed a deduction on your 1040 return of $5,000. Many self-employed individuals miss this deduction and pay more money to taxes than needed.

Health Insurance Deduction

This used to be a very messy area for self-employed individuals, to wit, you received little tax relief when it came to your health insurance bill. This was a particular burden for small business owners when considering the astronomical cost of health insurance. All of this has changed and you now may deduct 100% of your health insurance costs as a business expense.

No Withholding Tax

Unlike a salaried employee sitting in a cubicle, you are not subject to withholding tax on your paycheck. While this sounds great, you are required to make quarterly estimated tax payments. If you fail to make the payments, you are subject to a penalty, but the penalty is not the biggest concern.

A potential and dangerous pitfall of being self-employed is failing to pay quarterly estimated taxes and then getting caught at the end of the year without sufficient funds to pay your taxes. The IRS is not going to be happy if you fail to pay your taxes and you will suffer the consequences in the form of penalties and interest. Making sure you pay quarterly estimated taxes helps avoid this situation and it is highly recommended that you follow this course of action.

Record Keeping

You must maintain complete records of all business income and expenses. Simply put, document everything. Create a filing system for each month and file every receipt, etc. All business travel expenses must be documented, including auto mileage you incur when performing business tasks. Office supply stores sell business mileage books that you can keep in your car and use whenever you travel. If you have any doubt about documenting something, just do it!

In Closing

As a self-employed individual, your focus and time is spent on making your business successful. Your focus is not on the complexities of the tax code and how to limit the amount of taxes you owe. If any of the information in this article is new to you, then it is highly likely you have paid far more in taxes than required.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

Article Source: http://EzineArticles.com/

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10 Tax Tips to Reduce Costs and Increase Income

No one likes paying tax. Everyone understands that tax is a necessary evil and that without it our government would not be able to afford our roads, health services, education, welfare system etc. However you are not obliged to pay more tax than that for which you are legally liable.

Here are some tips to keep your tax down:

1. Reduce all stock to levels and cut costs.
   Never carry excess stock because that is money that is sitting on the shelves and not in your bank.
2. Clear out stock that is slow.
   Clear stocks and turn them into cash. If necessary reduce your prices and turn stock into cash rather than have it sitting on the shelves or in the warehouse. Best to cut your losses and use the cash to buy in stock that does sell.
3. Reduce rental costs.
   Cut your rental cost by letting out or letting go space that are excess to your requirements. Talk to your landlord about what you can do. It may be that you can obtain approval to rent out areas that you don’t need.
4. Pay your bills on time but not before the due date.
   Do not pay your bills too early because having the money sitting in your bank will reduce your bank fees and interest costs. Make use of any early payment discounts offered and, where necessary, if the funds are short talk to your suppliers and see if they would allow you extra time to pay.
5. Make sure you are making a profit on your sales.
   The correct profit margin you put on to your products is critical and will determine whether you will be profitable or not.
6. Use your credit card.
   Credit cards often have an interest-free period so make use of it. Advantage can be taken of this fact by using your card to pay some expenses and then paying the credit card on the due date. The result is that you effectively obtain an interest-free period through the use of this facility.
7. Dump and no longer stock products that are not profitable.
   Check your product range and discontinue all slow moving stock that is not generating profit. It is far wiser turning poor products into ready cash and using that cash for those products which provide a profit contribution.
8. Look after your customers.
   No customers mean no business. Your customers are critical to your success, so look after them. Satisfied customers will keep coming back to buy. Unhappy ones will never be seen again. When they stop coming back, sales will be lost and your business will suffer.
9. Reduce credit to customers.
   Don’t sell on credit unless you have to. Provide credit to customers who are regulars and who support the business all the time. Give credit to those who pay their bills on time. Late payers should be dropped as the costs of servicing them will drain your profits.
10. Keep all papers.
    Remember papers are "worth more than money". Keep a record of all claims you make and all receipts to justify those claims. It is very important for you to write/record in your working papers the basis or reasoning or viewpoint relating to every claim you make. If your basis is sound but wrong then you will have a better chance to resist any claim for tax avoidance or evasion directed at you. If you have no basis at all and no thought given to how you arrived at the claim made, and your claim is rejected, you could be up for the "high jump" and be charged with the intention to evade tax.

Copyright 2005 StartRunGrow
http://www.startrungrow.com

StartRunGrow (http://www.startrungrow.com) is a global online information organization that specializes in creating, developing and marketing business help information specifically with the aim of "making business easier" for entrepreneurs around the world. The StartRunGrow objective is to become a dominant player in the business help arena providing end to end solutions for the millions of small and medium businesses worldwide who continue to struggle daily with the difficulties of starting, running and growing a successful business.

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