Tax-Efficient Investing: A Wise Choice

By: David Chazin
In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect

Taxes can take a chunk out of your investment returns; yet, many investors don’t give much thought to taxes when they make investment decisions. While investment decisions shouldn’t be based entirely on tax considerations, tax-efficient investing may make a significant difference in your net gain. Employing some of the following strategies could help you retain more of your potential investment earnings and lessen your tax obligation.
Invest in Stocks for the Long Term
Following a buy-and-hold strategy for your stock investments may save on taxes in the long run, as well as potentially increasing your net worth. If you trade your stock holdings frequently ? even if it’s only once a year ? you may end up owing estimated taxes and a significant capital gains tax on your profits. Capital gains are taxed at 15% on investments you hold longer than one year (5% for gains that would otherwise be taxed in the 10% or 15% marginal federal income tax bracket). Gains on investments you’ve owned one year or less are taxed at your regular federal income-tax rate, which may be as high as 35% for 2005. So, even if you reinvest your sales profits, taxes will reduce the amount you’re reinvesting, effectively diminishing the size of your portfolio and its overall potential return.
Tax-Exempt Investments
Tax-exempt investments, such as municipal bonds, produce income that is generally exempt from federal ? and often state and local ? income tax. If you’re seeking income rather than growth, municipal bonds may be a good choice. This is especially true for investors in higher tax brackets. Income from municipal bonds may be subject to the alternative minimum tax. To determine whether you would be better off buying a taxable or a tax-exempt investment, you need to calculate what a taxable investment would yield on an after-tax basis and compare that with the return on a tax-exempt investment. To do this, subtract your marginal tax rate from 100% and multiply this percentage by the rate of return the taxable investment is earning. That will give you your after-tax yield. Compare this with the yield on the tax-exempt investment to find out which is higher. For example, if you are in the 30% marginal tax bracket, a taxable investment return of 6% equates to an after-tax return of 4.2% (100% – 30% = 70%; 70% Ч 6% = 4.2%). Thus, a tax-exempt investment yielding higher than 4.2% will give you a better yield after taxes are considered.
Sell a Loser To Offset a Capital Gain
Capital losses offset capital gains dollar for dollar and up to $3,000 of ordinary income a year. If you will have capital gains to report on your income-tax return, consider selling a losing investment and applying the loss to offset an equivalent capital gain.
Mutual Funds with Low Turnover Rates
A mutual fund’s turnover rate measures the extent to which the fund sells securities and replaces them with new ones: the higher the turnover rate, the more frequently the fund’s managers are trading the fund’s holdings. Turnover rate is important to you as an investor because, when the fund sells securities, a capital gain or loss generally occurs for tax purposes. A portion of any capital gains realized by the fund is taxable to you, even if no distribution occurs or if your distribution is reinvested in additional fund shares. A low turnover rate indicates that capital gains generated by sales of appreciated securities should be kept to a minimum, allowing you to wait until you sell fund shares to take potential profits.
Tax-Deferred Retirement Plan
Don’t neglect your retirement plan as a vehicle for tax-deferred investing. Participating in an employer’s 401(k) or 403(b) plan (or a Keogh plan, if you’re self-employed) reduces your tax obligation, since taxes on your contributions and earnings generally are deferred until you withdraw funds from the plan, typically at retirement. Distributions may be subject to income taxes and if made prior to the age of 59 Ѕ, are subject to an additional federal 10% penalty. Individual Retirement Accounts (IRAs) are another option to consider if you are eligible. Your contributions to a regular IRA may be tax deductible. And, although contributions to a Roth IRA are not deductible, account earnings are tax deferred and can ultimately be withdrawn from the Roth IRA income tax free, provided certain conditions are met. Hanging onto as much of your hard-earned money as possible is the goal of tax-advantaged investing. Your financial advisor can help you invest with this goal in mind.
David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.
Mutual funds are offered by sprospectus. An investor should carefully consider the investment objectives, risks, charges and expenses of an investment company before investing. To obtain a prospectus that contains this and other information call or ask your financial representative for a free prospectus. Read it carefully before you invest or send money. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares, when redeemed may be worth more or less than the original amount invested.
David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.
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Use The Same Techniques The Rich And Famous To Avoid Taxes!

By: Lee H
"You've probably read in the newspapers of various celebrities and successful business who manage to avoid or at least substantially reduce their UK taxes – whilst a significant proportion of the general public are paying close to 50% of their income in tax. Well, there's nothing to prevent you using some of these techniques to slash your UK taxes as well, depending on your circumstances.
Here's some of the techniques that the Rich & famous use:
Make the most of your offshore status
People like Mohammad al Fayed make tremendous use of their non UK domiciled status. If you're an overseas national and were born overseas (typically your father will also have been a non UK domiciliary at the date of your birth) you can avoid paying any tax on your overseas income and capital gains.
The main condition to this is that you need to keep the income or proceeds outside of the UK. As you'd expect though there are ways around this to enable some of the proceeds and income to be brought into the UK free of taxes
Make the most of your spouses offshore status
If you're lucky enough to have a husband or wife that is either non UK resident or non UK domiciled you can use their offshore status to your advantage. This is what Philip Green did (the billionaire owner of BHS). His wife is a resident of Monaco and he ensured that she extracted dividends from his UK companies free of UK (and overseas) tax.
This saved him paying UK tax of around Ј200Million that he would have otherwise had to pay if he'd extracted the dividends.
Using a tax efficient holding company.
Famous bands such as U2 and the Rolling stones make use of some of the best offshore companies to avoid paying tax on much of their income. U2 for example used to fall within the Irish tax regime which had a longstanding tax exemption for artists. When this loophole was tightened up, they moved their holding company to the Netherlands to take advantage of tax free royalties.
There are lots of other countries that can also offer tax efficient holding companies such as Spain, Denmark and Cyprus. Using tax efficient trading companies.Multinationals such as Coca Cola make good use of a string of offshore companies to ensure that they can redistribute profits within the group to reduce the overall 'effective' rate of corporation tax. (It is reducing this effective rate that is the main focus of many in house tax lawyers lives!)
Actually move overseas Celebrities such as James Blunt, Michael Schumacher and Boris Becker have all moved offshore to ensure they have only limited UK tax obligations. They've based themselves in Switzerland and are local residents. The beauty of Switzerland is the 'fiscal deal' which allows the tax liability to be fixed at an artificially low amount. So there you have it – some ideas to get you thinking about how you could use the offshore tax planning techniques of the rich and famous.
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Inheritance Tax in the UK

By: David Sprake
Inheritance tax in the UK is payable when a large valued estate is handed over to a person, persons or business entity. Inheritance tax is usually due, or will potentially be due, when a person dies.
There are also other occasions when it could be due, such as – when assets are transferred to a company or discretionary trust. Even if you are not due Inheritance tax, because the amount is too small, you will still have to fill out a grant of representation. There are certain instances where this is not required, but for the most part you will have to.Inheritance tax acts as a major burden on larger estates than it does on smaller ones.
With larger rises in property rises, it can impact sums of money by a very significant percentage. The tax becomes larger as a percentage as the amount increases.
For example, on the top tier of a 300,000 pounds inheritance you could expect to pay 40%. Inheritance tax also applies for marriages and is due when the amount passes a certain threshold in terms of gifts the married couple receives from family and friends. As a parent you are allowed to give a gift for up to 5000 pounds and anything over will be taxed accordingly. Like wise, you will be due tax on any money you receive from grandparents over 2,500 pounds and 1,000 from friends who are not related to you.

When Do You Pay Inheritance Tax and what is the Threshold?
If the value of a gift is below the threshold then you do not have to pay inheritance tax, however that varies and is not fixed. Certain types of estate do not require tax to be deducted so that must become a factor in your calculation. The items that do not require tax deduction include shares in companies which are not quoted on the stock-market (private limited companies, sole proprietorships and partnerships) and the amount which it costs for the funeral in the case that you have inherited estate from someone who has died.

What are the Late Payment Charges?
Late payment is charged on any payment which is not paid by the due date. No matter what reason is to blame, such as not being able to get the money, shares or property on time. In the instance where you do have to make late payments they are usually fairly reasonable, around 5%. This is around the same value which you would accrue in a bank account; therefore the government is getting the money they would otherwise get from a bank if it was placed there. If you are inheriting the money from a bank account and get paid late, you will likely have accrued a similar amount of money there.

Who Has to Pay Inheritance Tax?
The person or persons who are getting the money have to pay the inheritance tax; therefore if you are listed in the will then you are responsible. You are due to pay inheritance tax based on the percentage of the taxable estate which you are set to gain.
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Tax Return Online is an efficient and modern system to pay tax

By: Michelle Barkley
Federal tax return is a procedure that every organization has to pay. This process has to be done after the end of every financial year. This is a rule and every firm has to follow no matters whether small or big or even it is a private firm to has to file tax return.
Even a government organization has to do tax return as the rule is liable for everyone. Tax return online has made the procedure of tax return very simple and less hectic. You do not have to stand in long queue and waste much of your time for paying the tax to the government. Globalization has made everything possible and we are connected to each other without any problem. Advent of latest and high technology has made all this possible and that is the reason we are in contact with our friends and relatives no matters where they are staying.
We happen to know each other generally through world wide web. Internet has become a requirement of our life and we feel something missing if we are not in touch with this. Paying tax to the government has become very easier with the use of internet. Now you can do tax return online without any worry and effort.
It is a modern way to file the tax in a modern world. Everything is influence by technology and this is the reason we come across various new changes in our life. The traditional method of filling the tax is over where you used pencil and pen.
This method is swapped by the new method of tax return online. You just have to sit before computer and fill the fax on the site. This all has been done for the convenience of many tax payers who are facing difficulty in filing the tax return. It is for the betterment of the general public who are regular tax payers.Tax return online is the easiest and fastest method to prepare and file your tax return. It just takes few hours to file your tax and in the matter of hours you have filed your tax for the financial year.
You do not have to depend on accounts professional who will fill the tax on your behalf. It is upto your way from where you want to file the tax. You can do it from the comfort of your home or from the office. You can tell your accounts persons to prepare the data that is required to file the tax.
If the data is already prepared then you can easily file the tax. You can also choose for the trial version of income tax return as it will make you aware with all the facts that can help you to do a proper tax filing. Look into the tax filing website and you can get some information for your tax return online.
You can take help from it and can refer into your tax calculation if needed.Tax return online has saved much of our time and made our work more easier and flexible. This online procedure has really helped in shedding the tension and worry of many of tax payers and firms. Once you have completed filing the tax return online then all your information gets stored in the database of the government system. Then there is no need of human verification and every information is correctly handled by the computer system.
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Tax for beginners

By: Dylan
Tax. Most people only need hear the word and they develop a sudden urge to find the nearest departing space shuttle and immigrate to Mars. Why is it such a sore subject to most people who are affected by the potential hazards of poor management of their personal taxes?
People generally are not accountants, so the blizzards of paperwork that one must brave in order to not face tax penalties can be rightfully feared. The IRS has attempted to make life easier in that they have tried to simplify the process for the average taxpayer.
Generally, the Internal Revenue Service, or IRS, requires each individual who qualifies for tax to hand in a full blown tax return on a certain date early every year. It is good to be prepared for this by having all ones deductions grouped in the appropriate manner to avoid getting penalized simply because of laziness and negligence.
One must first of all identify oneself correctly. Are you single, married filing together, married but filing separately, are you the head of the establishment or a widowed wife with dependents? The head of household qualifies for lower tax rates.
There is a list of form one might have to fill out additionally to the basic tax form, depending on how you classify in the above list and what type of income bracket you fall into. One has to report their yearly earnings and a form must by provided by their employer at the beginning of every year for this purpose.
Interest and other additional incomes must also be reported and local banks and investment organizations can provide a form for this. Some areas that are destined to have errors, which are bad since the IRS may give penalties, are travel and entertainment deduction, or perhaps home or office capital gains or losses.
If any tiny or massive mishaps are detected, one can make corrections with another form.When providing a tax return one should take measures to assure punctual and precise attention. Make sure that it is neat and organized.
Round off to the closest unit of currency, this makes calculating much easier and more guaranteed. Refer to previous year forms to ensure you do not miss important factors. Hand in returns in the required time regardless of whether there is money to be paid. If there is outstanding payment then write out a check for the amount. Keep reproductions of all of your documents on record.
If you are not sure about any aspect of the process then it may be advisable to visit a tax preparation organization or tax attorney and discuss the angles. Categorize all documents into folders for future efficiency of storage to make the following years easier to organize. Hold on to your receipts and documents for at least three years after the submission deadline.
Whether you are a individual or a small business, there will always be the agonizing task at hand of trying to keep up with the dreaded IRS and yearly audits and such, so make sure that all the above guidelines are thrown aggressively into full swing, and you may just find yourself on top of your financial life, the benefits of course being infinite, as the more work you incur on yourself the harder life is to enjoy!
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Is My Tax Refund on the Way?

By: Rich Chappo.. ,
Tax season can make you manic-depressive. Nothing is more depressing than preparing your taxes. Nothing is more manic than planning how to spend your tax refund.
Ah, but when is it going to show up is the biggest question most have.Before we go much further, it is important to understand something about tax refunds. If you receive a sizeable refund each year, you need to think through your tax payments.
A large refund each and every year is a sign that you are making a mistake in paying taxes.How could a large refund each year be a bad thing?
Well, you need to consider that the money you are getting back was originally your money. The IRS is not paying you interest on it, so you are effectively giving the government a free loan each year.Okay, enough about that.
You are due a tax refund and want to know when it is going to show up. Do you have to call the IRS? Nope. Despite its reputation for having technology from the stone age, the IRS has a great website you can use for this purpose.The first step to finding out about your refund is to visit the site for the IRS. You can find it by doing a search for IRS in any search engine.
Displayed prominently on the home page you will see a link for finding out about your refund. Click it.Once on the refund information page, you need to get some information together. You need to know your social security number, filing status and exact amount you claimed as a refund.Fill out the form and the program should kick out a status report for your refund.
It will tell you a proposed date of issuance, if it had a problem delivering the refund or if there is a problem with your tax return. P
ray this last one does not come up.Obviously, this final answer may cause most people to faint at their computer. Don’t. It is not necessarily an indication of impending doom, to wit, and audit. You may just have forgotten to fill in a necessary box or the computer may have had a problem with the form.In a worse case scenario, notification of a problem with your tax return could mean an audit. Even then, the world may not end.
Most audits now consist of letters being sent to you proposing a change to your return. You can usually clear it up by sending a letter.There are more than a few funny quotes about the joy of tax refunds. While funny, they are misguided. I personally prefer not to give the government a free loan in the first place. If you get big refunds each year, make sure to adjust what you are paying in.
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Audit Letters From the IRS

By: Rich Chappo..
A letter from the IRS used to send each of us into fits of anxiety. Now we get them all the time, since the IRS likes to send us forms every other day. That being said, there is still one particular letter you do not want to receive from the agency.Thick letters from the IRS are pretty much the norm. This is particularly true if you own a business.
The thick letters are full of forms. Ah, but what about a thin letter from the agency? This is typically nothing but bad news.An IRS notice. It sounds fairly bland, but this is the stuff of heart attacks. Why?
The innocuous sounding IRS notice is issued for one purpose. It is notifying you the agency thinks there is something dubious about your taxes. You might want to put 911 on speed dial.Importantly, this one page letter is not always the precursor to doom. In very rare circumstances, it can contain good news.
I once received one. After recovering from an anxiety attack, I actually read the letter and learned I was due just under twenty bucks.Audit. It is a word that can make a grown man or women weep like a small child. Well, most of these letters are notices of audits.
Sorry.
Ah, but the audit will rarely be the type of horrific experience you have heard of from someone who knew someone.The IRS is understaffed. As a result, it does not have the ability to do a massive number of audits.
Instead, it does many of them by mail, known as correspondence audits. This means you get to skip a meeting with an agent and try to resolve things through the post.With this type of inspection, the IRS tells you point blank what it is having a problem with in regard to your taxes. The agency will usually suggest a way it can be resolved and any impact on what you owe. There is no person to person interaction.Once you receive the letter, the burden is on you.
You are usually allowed to do nothing if you agree with the proposal of the agency.
If you want to fight it, you have 30 days to send a letter saying as much and why.Most of the proposed changes from the agency are deemed acceptable by taxpayers and the just accept them. If you fall into this category, you can end the audit by doing with the agency asks. I
f you don’t, you can fight the IRS with all that entails.If you receive the dreaded thin letter from the Internal Revenue Service, don’t panic until you actually read it from beginning to end. It may be easy to resolve. If it looks ugly, get professional help or risk the IRS rolling over you like a bug.
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How Tax Deductions Work

By: rateempire
Many people know that the interest paid on a mortgage is deductible on their income taxes. But they don't understand how it really works.When you understand the way a tax deduction works, you should be able to estimate the amount of tax relief you would receive from owning your own home and paying a mortgage.First, you need to know what is deductible. In many cases, homeowners are allowed to deduct the amount of mortgage interest paid from their income.
They are also able to deduct the amount of real estate property taxes paid on the property.For example, we have a homeowner and a renter who both make the same annual income of $60,000.The renter pays $1,000 a month in rent and receives no tax benefits for renting a home.
The homeowner holds a $140,000 fixed rate mortgage with a 7% interest rate. His total mortgage payment is $1,100 a month. He pays $1,500 in real estate property taxes. His total mortgage interest paid for this tax year was $9,755.Here's where the taxes make a difference. The owner is able to deduct $11,255 from his income before he calculates his tax liability.
The renter has no deduction from his income and is taxed on $11,255 more than the owner.Let's keep it simple and assume that both are in a 25% tax bracket.
The renter will owe the IRS $15,000 in taxes on his income of $60,000. The owner's taxable income has been reduced to $48,745 after his deductions. He only owes $12,186 in income taxes. The owner saves $2,814 in taxes each year. That's a savings of $234 each month.Basically, the homeowner's after-tax monthly payment is actually $866. The renter is still paying $1,000.
The homeowner gets to keep his house in the end.There are many variables that can affect the amount of mortgage interest you pay in any given year. But, you could often say that you can take 20% off of your mortgage payment to get a rough idea of the tax benefits of owning.Ask your lender.
A good loan officer should be able to give you a reasonable estimate of your mortgage interest and tax payments over a given period of time. Many lenders will give you a schedule when you close on your home.When it comes to determining your tax bracket and deductions, ask your CPA or tax attorney for advice.
Your loan officer can't really help you with tax details.The bottom line is that owning your own home has many financial advantages. If you are tired of spending your paycheck on rent, but getting nowher, home ownership may prove to be a more affordable solution for you.
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Tax Planning - Pay Only What Is Due To Uncle Sam

By: Cornie Herring
"In this world, nothing is certain but death and taxes", wrote Benjamin Fanklin in 1789. If we taking care of our health and be safety conscious, we may be able to outwit death until we are very old. But for taxes, you can't escape from paying tax since you start your first job, unless you are very poor. Hence, as a taxpayer, you need to have a good tax planning so that you can legally minimize your tax consequences and pay only what is due to Uncle Sam, not more! Understanding Your Tax Bracket The more money you make, the more you pay in taxes.
Your tax brackets increase as your income increase. In additional, you loss some of you tax advantages, such as exemptions of dependents, that are phased out as your income increase. Beside the federal government tax which is unable to be escaped for all taxpayers, if you live in state that also taxes you income, you need to pay for state government tax if applicable. There are seven tax-free states in United States: Alaska, Florida, Nevada, South Dakota, Washington and Wyoming. Hence, you should aware and plan in the additional tax rate if you are living at taxable state.
For example if you are in the 25% tax bracket for federal taxes and you live in state that has a 5% income tax, you total tax rate should be 30%. Thus, for every $1,000 you earn, Uncle Sam has his share of $300 living you $700 to spend. The dollar amount at which tax brackets occur change every year because of factoring in the inflation which vary from year to year.
Hence, you should get the most current tax schedule and use it in your tax planning.
How To Legally Pay Less Tax?

There are many tax exemption and deductions benefits offer to taxpayers.
You need to know the benefits that apply to you so that you can get some "discount" from Uncle Sam and pay less legally. The deductions and exemptions if you are eligible will help you to reduce your taxable income. Hence, you should get a good tax planning guide which will help you to understand what are the tax's benefits apply to you.
While a tax deduction is something you subtract from your gross income to reduce your taxable income, tax credit is another tax benefits that you can utilize to minimize you payable tax. Tax credits are actually worth more to you than a deduction. It reduces the amount of taxes you owe, dollar for dollar. Thus, you better get to know the tax credits that can apply to you.

Among the tax credits for you to calculate in, if applicable are:
1. Dependent & Childcare Credit
The dependent and childcare credit is available if you work outside your home or are full-time student. The expenses must be for dependents under age 13 or any person who is mentally incapable of care for themselves and they must be qualified as your dependent.
2. Child Tax Credit
If you enjoy this benefit if you have children being supported by if they are under age 17.
3. Education Credits
There are two types of education credits, the Hope Scholarship credit and Lifetime Learning credit. The Hope Scholarship credit is available for the first two years of college of you kids. The Lifetime Learning credit is not just for kids, you can utilize this benefit if you need to take courses to improve your job skills.
4. Adoption Credit
The adoption credit is based on the cost of adoption a child. These costs include reasonable adoption fees, court costs, attorney fees, and legal fees.
5. Earned-Income Credit
The earned-income credit is the only credit given as a payment. The credit is applicable for low-income families, usually with children. In Summary You can not escape from paying tax; this is the price of living in a civilized nation.
But you can learn more in tax planning so that you can pay less, legally. Uncle Sam will let you living in peace if you just pay what is due to him and you no need to pay more to make him happy.
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Last Minute Tax Filing Tips

By: Rich Chappo
As we move into April, tax deadlines are on the horizon. Since getting taxes prepared is pretty low on most people’s list of things to do, you might need some last minute tips.First and foremost, you have a couple extra days to file this year. The usual April 15th deadline falls on a Saturday this year.
As a result, the tax filing deadline is now the following Monday, April 17th.Preparing tax returns is a complex matter. If you don’t believe me, just try reading one set of instructions kicked out by the IRS.
Instead of doing a sloppy preparation, you might want to get more time. 4868 is the form you need to file.To the surprise of many, the IRS has a pretty lax attitude towards April 15th. It gives extensions without a problem.
In fact, just filing form 4868 will get you an automatic extension until October to get your return in.Taxpayers often misunderstand tax filing extensions. The extension only applies to the actual filing of the tax return. Unfortunately, it does not require to the payment of money. The IRS wants its cash now, so you need to pay something if you think you will owe.Nothing is worse then preparing your return and then realizing you don’t have enough money to pay the amount due.
This leads to quandary and massive headache. Is there any potential relief?The steps taken by most people is, well, to take no steps at all. They simply don’t file in hopes that they can do so later when they have the cash to pay. This is not the best of ideas.Not filing a tax return sends up red flags at the IRS. To avoid this, you should file regardless of whether you can cover the amount due. Send in your return as well as the amount you can pay. The IRS will then set you up on a payment plan.You are probably wondering what the difference is between the approaches.
Ultimately, the second approach saves you money. Why? Well, the interest and penalties you pay will be based on a smaller outstanding debt because you sent at least some money in.If you are ready to pay your tax liability, there are a couple of ways.
You can pay by check as has always been the case. You can also pay by credit card by going to officialpayment[dot]com.
You will pay a service fee for using the online system.Many people are happy to learn they are actually due a refund on their taxes. If you fall into this group, you might want to know when the heavenly money will be coming. Visit the site for the IRS and follow the link on the home page.I proudly admit to being a procrastinator. If you are like me, D-Day is here. Perhaps we should call it T-Day.
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How To Save Money On Your TaxesBy

By: Andrew Jamaz
The very thought of getting the paperwork for taxes sends shivers up my spine, and the pain get all the more acute as the deadline of April 15th approaches. Mixed with the financial burden it entails, the month of April has always been a challenging one for me ( and for everyone else ,I suppose).And in my confused state of mind I tend to forget that I can considerably reduce this tax burden if I keep some things in mind.
On the way, I have learnt a few tricks about saving taxes. The most important is the personal money I spend on my business. Due to many reasons, I often meet certain business expenses by paying through my credit card. In the end when I prepare my tax papers, these cards are often taken as revenue.
I don't have to tell you, that we have to pay taxes on what we earn. Therefore I end up paying for something, which I have not really earned.Step one is to calculate all the money you have put into the business and carefully avoid making it a part of gross revenue. If you are running a small business, it is worth your while looking at a Pension Plan.
Now, this has a two-fold benefit. One, your employees love it and two it saves tax. If you spend on a Pension Plan for your employees you are entitled for a tax credit of $500. This is quite a lot, when you consider that, the scheme provides for credit on your tax liability and not a deduction from your gross revenues. In effect, you pay $500 less tax.
This is what I call eating your cake and having it too!Each year the government comes out with some welfare scheme or other such program, for contribution to charitable institutions. If you are a regular contributor to any of these, you can claim some tax relief, this will be deductible from your gross income. Have you purchased a SUV during the past financial year? If it is over 6000 pounds you can avail yourself of a $25000 deduction, while on the balance amount you can claim depreciation. If it is non-SUV truck, you are not restricted to $25000 deduction.
I am sure you have worked out the savings by now.There are a host of other tax savings by way of deductions, exemptions and most importantly credit. Some states do not levy income tax, in which case you should try and save through the sales tax route.
Costs on discrimination lawsuits can be taken advantage of by those involved in such cases.It is sometimes tedious to work out all the deductions tempting us give up and pay up. But let me assure you that there are so many ways to save your money when you file your taxes, with so much money to save that it is worth your time. Especially when you consider that almost the same laws are applicable year after year. The first time may be the only time you spend your time, rest of the years you will know when and where to save.
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Tax Help Is Available For Those Who Honestly Seek It

By: Bernard Pruett ,
The New Year often brings with it the images of tax season. For some, this means a nice tax return and imagining how it might be spent. For others, this means a large tax debt and wondering how it will be paid off.
When dealing with tax debt in this type of situation, it is often helpful to seek tax help.Many people have found accountants to be the best source of tax help, since tax laws and the Internal Revenue Service (IRS) forms are their specialties. The fees associated with hiring an accountant may prevent some people from seeking tax help.
However, accountants spend years studying various tax-related laws and are up-to-date on the latest developments in accounting, which could save the client money in the long run.Tax debt most commonly results when taxpayers do not withhold enough taxes from their paychecks. Doing this gives the taxpayer bigger paychecks throughout the year, but may cause taxes to be owed at the end of the year.
It is always a better idea to withhold more taxes during the year with the hope of receiving a tax refund, than to end up owing a lot of taxes on April 15th.People who are self employed often find themselves in need of tax help.
They are not required to withhold taxes from their own paychecks, thus many times they do not. If this happens throughout the year, the amount of taxes they owe could be very high. In situations like this, it may be a good idea to make quarterly interest payments to the government to help keep track of what is owed.Sometimes, people require tax help due to late payment of tax debt or because they didn't file on time.
Federal tax forms are due by April 15 of every calendar year. Filing tax forms after this date means there will be a late fee. There is a 4.5 percent fee for filing late and an additional point 5 percent fee for not paying the tax debt on time. This amounts to a total possible fee of 5 percent, which can continue to accrue until the tax debt is completely paid. The late filing penalty will continue until it reaches a cap of 25 percent of the net amount initially owed. After five months, the delinquency fee continues accruing at the rate of point 5 percent.
Thus, the penalty amounts could potentially be quite expensive.In the event that a person's tax debt exceeds their financial capabilities, tax help is available from the United States Government in a few different ways.The most sought after form of tax help is the Offer In Compromise.
This deal is very attractive to those who cannot pay their complete tax debt since it reduces the amount they owe. It is important to note that most people will not qualify for this program, as it is very selective and usually applied to those who are in desperate need of assistance.Other forms of tax help come by way of tax relief.
The government will work with taxpayers who are unable to pay their entire tax bill by the deadline. Taxpayers can do everything from filing an extension to setting up monthly payments. The IRS wants its money, so it is very willing to offer tax help to those who need and ask for it.When incurring tax debt, the one thing that should never be done is to not make a payment at all. The penalties for nonpayment can be quite steep and could result in liens or levies being placed on the taxpayer's personal assets.
Also, any late payment or nonpayment of a debt can negatively affect one's credit report. Once a person's credit is determined to be "bad", it is extremely hard to repair. Having poor credit can prevent a person from receiving new loans in the future, which can make buying a home or new car very difficult.It is not uncommon to need tax help these days.
Tax laws can be hard to understand, especially since they change frequently. Fortunately, tax help is available to all taxpayers either from online sources, through the IRS, or through tax accountants. For those who need additional tax help, the government offers tax relief programs and even tax-debt settlement in some cases. Tax debt is never a pleasant thing to deal with, but having help, could make it a little more agreeable.
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