Help With Your Federal Income Tax, Articles and stories related to the IRS, taxes, tax credits, EITC and tax deductions and updated tax news

Thursday, August 30, 2007

Court To Reconsider Whistleblower Tax Case

Court To Reconsider Whistleblower Tax Case, by Glen Shapiro, LawAndTax-News.com, Washington 28 August 2007

Last week attorneys for whistleblower Marrita Murphy asked a US court to reconsider its decision that her award for emotional distress should be taxable, itself a reversal of an earlier decision in her favour.

Ms Murphy's attorneys David Colapinto and Stephen Kohn have asked the full US Court of Appeals for the District of Columbia Circuit to reconsider a July decision by a three-judge panel that held that the IRS can tax damage awards based solely on compensating victims who suffer personal injuries, claiming that Congress intended to amend the tax code “by implication” to tax personal injury damages under its authority to create an excise tax on people who use the courts to vindicate their rights. But a year earlier, the same panel in the same case held that such taxes were unconstitutional, as compensation for a documented "loss" was not "income" subject to the tax code.

Marrita Murphy had received $70,000 compensation after having filed a complaint with the Labor Department against her former employer. She paid taxes on the award but later filed an amended return asking for a refund, which the IRS rejected.

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US Senators Investigate ID Theft And Tax Fraud

US Senators Investigate ID Theft And Tax Fraud, by Leroy Baker, Tax-News.com, New York 30 August 2007

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Republican Member Chuck Grassley (R-Iowa) are asking the Government Accountability Office (GAO) to investigate the growing problem of tax fraud related to identity theft, and how it contributes to the tax gap.

The Senators’ letter to David M. Walker, Comptroller General of the GAO, is aimed at identifying what procedures the IRS currently follows to curb identity theft and subsequent tax fraud, and how these measures can be improved.

Portions of the tax gap strategy crafted by the Treasury at Baucus’s request include efforts to fight tax fraud. The Senators said on Tuesday that tackling identity theft must be an integral part of the Department’s effort to stop legally owed taxes from going unpaid.

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Friday, August 24, 2007

Tax Deductible Employee Business Expenses

Today we are going to look at tax deductions you can take related to employee business expenses.

As an employee, you may incur some expenses related to your job. If these expenses are ordinary and necessary business expenses, these expenses may be tax deductible. Once again, make sure you keep accurate records. Any expenses that are reimbursed by your employer are not tax deductible. All expenses are are subject to the 2% Adjusted Gross Income(AGI)limitation. Generally, you must fill out form 2106 Employee Business Expenses And Schedule A Itemized Deductions

You can deduct these expenses you have while traveling away from home for business as long these expenses are both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business, profession or trade. A necessary expense is one that is helpful and appropriate for your business.

Here are some common expenses you might have and can deduct when traveling away from home.

Travel by airplane, train, bus or car between your home and business destination. If you were provided a ticket or otherwise travel for free, your cost is zero. Fares for taxi, commuter bus and airport limousine are also deductible. If you operate your car for business travel, you can deduct either standard mileage or actual expenses, along with business related tolls and parking. If you rent a car, you can only deduct those expenses related to business use.

If you send baggage and sample or display material between your regular and temporary work locations, these expenses are tax deductible.

Lodging and meals are tax deductible if your business trip is overnight or long enough that you need to stop for sleep and rest to properly your job duties. Refer to Publication 463 for more detailed information.

Dry cleaning and laundry are tax deductible. Business calls while on your business trip are also deductible. This includes communication by fax machine or any other device. Tips you pay for any of the expenses listed here are also tax deductible.


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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.

Wednesday, August 22, 2007

US Appeal Court Asked To Reverse Whistleblower Tax Ruling

by Leroy Baker, Tax-News.com, New York 22 August 2007

The full US Court of Appeals for the District of Columbia Circuit has been asked to reconsider last month’s decision by a three-judge panel that reversed itself on a key civil rights tax case.

On July 3, 2007, the panel held that the IRS can tax damage awards based solely on compensating victims who suffer personal injuries. However, on August 22, 2006, the same panel in the same case held that such taxes were unconstitutional, as compensation for a documented "loss" was not "income" subject to the tax code.

In a major reversal, the three-judge panel, (Chief Judge Douglas H. Ginsburg, and Judges Judith W. Rogers and Janice Rogers Brown), held that 'make whole' compensation to restore personal injuries losses are taxable.

The case arose as a result of the Department of Labor ruling in the whistleblower case of Marrita Murphy. In that case, the Labor Department held that Ms. Murphy suffered substantial damages to her health and reputation, and awarded her $70,000 in compensatory damages strictly related to her losses.

The IRS taxed Ms. Murphy's damages and she asked for a refund of the tax on the grounds that her damages were not income.

In an August 22, 2006 decision, Judge Ginsburg, writing for the 3-judge panel, agreed with Ms. Murphy, and found that compensation for actual documented personal injury losses were not subject to an income tax. The IRS argued that the decision was wrong, and the panel agreed to vacate its original decision and rehear the case to consider issues that were never timely raised on appeal by the IRS.

Rather than overrule its prior decision (Murphy v. IRS, Aug. 22, 2006) holding that taxing Murphy’s damages was unconstitutional, the panel simply held that Congress intended to amend the tax code “by implication” to tax personal injury damages under its authority to create an excise tax on people who use the courts to vindicate their rights. No court in the history of the United States has ever upheld such an implied tax.

In a remarkable ruling, the Court held that compensation for damages for emotional distress suffered by a whistleblower were not paid to make the employee “whole,” but were instead paid as part of a “forced sale” which Congress could tax under its excise tax authority.

Read the rest Here

Tuesday, August 21, 2007

Georgia Tax Attorneys

How a Georgia Tax Attorney Can Help You

Taxes are based on laws. Since laws are made by human beings, they are imperfect. A good Georgia tax attorney can help you because of this innate imperfection of laws. How?

First of all, let us consider the factor of time: no man can predict what will happen in the future. New technologies and industries are developed on a regular basis. Because of this, no law can truly cover every event happening every day. A good Georgia tax attorney can help you by making use of the time factor to find loopholes in different tax laws. He or she should be creative in order to pull this off. This involves a lot of research and familiarization of history of tax laws and different factors affecting those laws. By finding certain laws that could serve you and not burden you, a good Georgia tax attorney would be able to help you solve your problems.

There is also the matter of interpretation. All of tax law can be interpreted in different ways. A good Georgia tax attorney would be able to spot any ambiguity or erroneous interpretation in tax laws to help you with your case. A good Georgia tax attorney will be able to show you a number of different ways to interpret tax law in the light of various statutes, the internal revenue code, IRS rulings and a number of other legal standards. This means that you will have a number of different solutions in your hand.

There is always the question of what is effective and what is creative. You might be able to find a Georgia tax attorney who could tell you how to solve a problem the conventional legal way. This is the "effective" Georgia tax attorney. However, there are a few who are able to "think outside the box." These Georgia tax attorneys can look at a problem from a very unique perspective. A Georgia tax attorney who is creative can solve a problem and save you a lot of time and money in the process.

The general view of people today is that we live in a world of compromise. And they might be right. In this world today, there are no absolutes, not even taxes. A good Georgia tax attorney will be able to form a compromise between you and the IRS. Yes, you can actually settle with the IRS. Why?

Well, the IRS itself knows how complicated tax laws can be. They also know that they are capable of error. Because of this, they are willing to negotiate with any person who realizes that the tax laws are not perfect. A good Georgia tax attorney can help you by coming into agreement with the IRS and giving you a break. This of course, is only possible if you actually can prove that some sort of error has been made.

A good Georgia tax attorney will be able to help you if he or she has extensive experience in dealing with the IRS. This is because he or she would know what goes on in the minds running the agency. Through extensive experience dealing with the IRS, a Georgia tax attorney would be able to "get into their heads" and settle with them in a way that would be most beneficial for you. This is how a Georgia tax attorney can help you.
Georgia tax attorney who is creative can solve a problem and save you a lot of time and money in


Georgia Tax Attorneys


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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.

Thursday, August 16, 2007

Tax Deductible Moving Expenses

In my last post we went over the rules to be eligible for moving expenses, today I will go over what can and cannot be deducted. You can deduct the reasonable expenses of moving your household goods and personal property and traveling expenses. And sorry, meals are not deductible.

The traveling from your former home to your new home should use the shortest and most direct route available. For example, say I move to Ocala, I should use Interstate 75 North as my route, because it is the most direct. Any expenses including side trips, sightseeing, stop overs, or anything not related to the move are not deductible.

If you use your car to move, you can choose either actual expenses or the standard mileage rate, whichever gives you the best benefit. Actual expenses include gas and oil, and you must keep records of these expenses. The standard rate was 18 cents a mile in 2006 and will be 20 cents a mile for 2007. No matter which one you choose, you also deduct parking fees and tolls related to your move. You cannot deduct general repairs, insurance, depreciation, or anything else along those lines. If you deducted moving expenses in the last 3 years, take a look at your returns, and make sure you got the best benefit.

Deductible Moving Expenses: Here are the various moving expenses you can deduct. Make sure to keep accurate records, not only to ensure you get the maximum benefit, but also if the IRS wants proof.

The cost of packing, crating, and transporting your household goods and personal effects are deductible.

The cost of storing and insuring your household goods and personal effects are within any period of 30 consecutive days after things are moved from your home but before being delivered to your new home.

The costs associated with connecting or disconnecting utilities are deductible.

You can deduct the cost of shipping your car or pets to your new home. You can also deduct the cost for items you move from a place that is not your former home, but the cost cannot exceed that of shipping the items from your former home.

Also deductible are lodging and transportation expenses for you and members of your household while traveling from your former home to your new home.

Remember if your employer reimburses you for any of these expenses, then they are not deductible on your tax return.

Nondeductible Moving Expenses: This list is pretty self explanatory as to what does not qualify as an moving expense.

Any part of the purchase price of the new home

Car tags

Drivers license

Expenses buying or selling a home

Expenses breaking or getting a lease

Home improvements to help sell your home

Meals

Losses on the sale of your home

Temporary living expenses

Pre-move house hunting expenses

Real estate taxes

Security deposits

Storage charges that are not incurred during transit

Losses on the sale of your home.

Some of the above can be tax deductible elsewhere on your return, all depending on your specific tax situation. Consult a preparer or tax attorney to find out what is best for you.

Now you have a better understanding of moving expenses and what can and cannot be deducted.


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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.

Rules For Deducting Moving Expenses on Your Tax Return

Sorry about the lack of posts, I have a hard time writing about taxes in the middle of summer.

Here are the rules for deducting moving expenses. This can be a complicated subject, and this post will aim to simplify the IRS tax code.

You can deduct your moving expenses provided all of the following apply:
Your move is closely related to the start of work at a new location
You must meet the Distance Test
You must meet the Time Test

If you are a member of the Armed Forces, different rules apply to you, which I will cover later.

The Distance Test: Your move meets the Distance Test if your new main job location is at least 50 miles away from your former home than your old main job location was from your former home. For example, if your old main job location was 5 miles from your former home, your new main job location must be at least 55 miles from your former home.

The distance between your job location and your home is the shortest of the most commonly traveled routes. Also, only the location of your former home and new job location are considered, and does not take into account the location of your new home.

Your main job location is usually the place where you do most of your work. If there is no one place where you spend most of your working time, such as you work in construction and go to different job sites, then your main job location is where your work is based, usually your company's office. If you work for several employers on a short term basis and you get work under a union hall system, then the main job location is the union hall.

Time Test: There are 2 Time Tests, one for employees and one for self-employed people.

If you are an employee, you must work full time for at least 39 weeks during the first 12 months after arriving in the area of your new work location. You count only the work you do as an employee, not the work you do as self-employed. You do not have to work for the same employer all 39 weeks, nor do you have to work 39 weeks in a row. You must work full time within the same commuting area for the entire 39 weeks.

You are considered to work full time if are temporarily absent from work for reasons like illness, natural disasters, strikes, layoffs, or lockouts. Time spent on vacation from your job is also included.

For people who are self-employed must work 39 weeks in the first 12 month period and for at least 78 weeks during the first 24 months after you arrive at your new job location. You count any full time work done as an employee or as self-employed. You do not have to work for the same employer all 78 weeks, nor do you have to work 39 weeks in a row. You must work full time within the same commuting area for the entire 78 weeks. You are not considered self-employed if you are semi-retired, a part-time student, or if you only work a few hours each week.

If you are married and file a joint return and both you and your spouse work full time, either of you can meet the full time work requirement. However, you cannot combine your weeks to meet the 39 week rule.

If you move this year, you can deduct your expenses on your 2007 return even if you have not met the Time Test by the time your return is due. You can only do this if you expect to meet the 39 week rule.

The Armed Forces: If you are in the service, you do not have to meet the Time Test because of a permanent change of station. If you are on active duty and move because of a permanent change of station, you do not have to meet the Time or Distance Test, and you can deduct your unreimbursed moving expenses.


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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.

Friday, August 3, 2007

Computer security problems found at IRS

IRS employees ignored security rules and turned over sensitive computer information to a caller posing as a technical support person, according to a government study.

Sixty-one of the 102 people who got the test calls, including managers and a contractor, complied with a request that the employee provide his or her user name and temporarily change his or her password to one the caller suggested, according to the Treasury Inspector General for Tax Administration, an office that does oversight of Internal Revenue Service.

The caller asked for assistance to correct a computer problem.

The report said that by failing to question the identity of the caller the employees were putting the IRS at risk of providing unauthorized people access to taxpayer data that could be used for identity theft and other fraudulent schemes.

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