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, November 29, 2007

2008 Standard Mileage Rates

WASHINGTON — The Internal Revenue Service today issued the 2008 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

* 50.5 cents per mile for business miles driven;
* 19 cents per mile driven for medical or moving purposes; and
* 14 cents per mile driven in service of charitable organizations.

The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.



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Monday, November 26, 2007

Plan Now to Get Full Benefit of Saver’s Credit

IR-2007-187, Nov. 9, 2007

WASHINGTON — Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2007 and the years ahead, according to the Internal Revenue Service.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Formally known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

“We want low- and moderate-income workers to know about this valuable credit so they can effectively plan ahead and take full advantage of it,” said Richard J. Morgante, commissioner of the Wage and Investment Division of the IRS. “Now that a growing number of employers are automatically enrolling their employees in 401(k) plans, the saver’s credit offers many workers who save for retirement an added bonus.”

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2007 tax return. People have until April 15, 2008, to set up a new individual retirement arrangement or add money to an existing IRA and still get credit for 2007. However, elective deferrals must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees. Employees who are unable to set aside money for this year may want to schedule their 2008 contributions soon so their employer can begin withholding them in January.

The saver’s credit can be claimed by:

*
Married couples filing jointly with incomes up to $52,000 in 2007 or $53,000 in 2008;

*
Heads of Household with incomes up to $39,000 in 2007 or $39,750 in 2008; and

*
Married individuals filing separately and singles with incomes up to $26,000 in 2007 or $26,500 in 2008.

Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

Read The Rest

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Sunday, November 25, 2007

Waiting for the new IRS tax code

Hey everyone,

Hope y'all had a great Thanksgiving!

I'm waiting for the release of the 2007 tax code from the IRS so I can read it and try to decipher it for you while giving you the correct knowledge. In the meantime, feel free to read a few posts. Leave a comment and let me know what you want to learn.

Thanks,

Tim

Tuesday, November 20, 2007

Honda Hybrid Begins Phase-Out on January 1

The Internal Revenue Service announced today that American Honda Motor Company, Inc, has submitted quarterly reports indicating that its cumulative sales of qualified vehicles to retail dealers reached the 60,000-vehicle limit during the calendar quarter ending Sept. 30, 2007.

Under the current tax law, the credit for buying a hybrid vehicle begins to phase out in the second calendar quarter after the quarter in which the manufacturer sells its 60,000th hybrid or lean burn technology vehicle.

The credit for all new qualified hybrid passenger automobiles or light trucks manufactured by Honda will begin to phase out on Jan. 1, 2008.

Vehicles purchased before Jan. 1, 2008 qualify for the full credit. For Honda hybrid vehicles bought on or after Jan. 1, 2008, and on or before June 30, 2007, the credit is 50 percent of the otherwise allowable credit amount. Taxpayers buying vehicles on or after July 1, 2008, and on or before Dec. 31, 2008, can only get 25 percent of the credit.

Here are the credit amounts for Jan. 1, 2008, through June 30, 2008:

* Honda Accord Hybrid AT, Model Year 2007 — $650
* Honda Accord Hybrid Navi AT, Model Year 2007 — $650
* Honda Civic Hybrid CVT, Model Year 2007 —$1,050
* Honda Civic Hybrid CVT, Model Year 2008 — $1,050


Here are the credit amounts for July 1, 2008 – Dec. 31, 2008:

* Honda Accord Hybrid AT, Model Year 2007 — $325
* Honda Accord Hybrid Navi AT, Model Year 2007 — $325
* Honda Civic Hybrid CVT, Model Year 2007 —$525
* Honda Civic Hybrid CVT, Model Year 2008 — $525

Beginning Jan 1, 2009, taxpayers who buy a Honda hybrid cannot claim the related tax credit.

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Monday, November 19, 2007

IRS is attempting to return $10.5 million to nearly 9,000 New Yorkers

The IRS wants to give thousands of New Yorkers money - but can't find them.

The federal tax agency is holding on to $10.5 million in refund checks that couldn't be delivered by the postman to 8,722 New Yorkers.

IRS spokesman Kevin McKeon said it's easy to find out if your refund is in limbo, by picking up the phone or logging on to the computer.

The Daily News tracked down several of the New Yorkers on the list and made them all a little bit richer.

Alerted by The News, Mark Lingley, a 52-year-old custom shirt-maker, called the IRS toll-free - and quickly found out how to get his cash.

"It's $30," he said with a laugh. "It's not great - but it's something. I'm going to take myself out to dinner."

Read The Rest

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Sunday, November 18, 2007

Bush: 'Alternative minimum tax' must be fixed

WASHINGTON (AP) -- President Bush demanded Saturday that Congress send him legislation that keeps middle-class Americans from being hit at tax time next year by the dreaded alternative minimum tax.

That's not likely to happen anytime soon. Congress has adjourned for the Thanksgiving holiday.

The legislation is muddled in the House and Senate. And Bush has threatened to veto any bill that raises taxes as a way of fixing the tax, known in shorthand as AMT.

"I will veto any bill that raises taxes as a condition of fixing the AMT," Bush said in his weekly radio address. "Members of Congress must put political theater behind them, fix the AMT and protect America's middle class from an unfair tax hike."

The AMT was created in 1969 to ensure that a small number of wealthy people could not use tax breaks or deductions to avoid paying any taxes.

It was never indexed for inflation, and every year the AMT net falls on more middle-income taxpayers. This year some 4 million people were subject to the tax.

If Congress and the White House do not reach a compromise by the end of the year, anywhere from 21 million to 25 million middle-income taxpayers will be subject to it, costing them as much as $2,000 in extra taxes.

Read The Rest

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Saturday, November 17, 2007

Tax panel wants a cut from Web

TALLAHASSEE - Florida is losing more than $2-billion a year in revenue from untaxed Internet sales, and a panel of state leaders said Friday it's time the state joined 22 other states and went after that money.

Citing explosive growth in e-commerce, members of the Taxation and Budget Reform Commission endorsed taxing remote sales as a way to tax all sales the same and to expand the tax base at a time when Florida faces serious revenue shortfalls.

"This is not a new tax or changing an exemption," said Julia Johnson, a member of the commission's Finance and Taxation Committee. "This is about collections."

The unanimous vote by eight of the 11 members of the committee was its first foray in the highly controversial arena of changing Florida's tax system. The vote was no more than a consensus to seek the full 25-member commission's support, but it was a start.

Read The Rest

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Tuesday, November 13, 2007

2008 Nissan Altima Certified as Qualified Hybrid Vehicle

WASHINGTON — The Internal Revenue Service has acknowledged the certification by Nissan North America, Inc., that its 2008 Nissan Altima Hybrid vehicle meets the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle.

The credit amount for the hybrid vehicle certification of the 2008 Nissan Altima Hybrid is $2,350.

The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Nissan sold 2,627 qualifying vehicles to retail dealers in the quarter ending Sept. 30, 2007. This brings the total number of qualified hybrid vehicles sold to 7,849.

Original owners may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

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Minimizing Tax Liability On Death

Minimizing Tax Liability On Death

The only way to keep up with the latest about law is to constantly stay on the lookout for new information. If you read everything you find about law, it won't take long for you to become an influential authority.

When we die, most of us leave behind a fairly substantial and intricate web of assets and liabilities, including money, our home and our other possessions. In most jurisdictions, there arises a liability to tax on death that must be borne from the totality of the estate, and this can lead to a significant reduction of inheritance for our loved ones. Having said that, there are numerous of ways in which tax liability after a death can be vastly reduced. In this article, we will look at some of the best ways in which one can seek to minimize the estate's liability to tax on death, and ways in which careful planning can help increase the legacies we leave behind.

Tax liability on death usually arises through bad inheritance planning, and a lack of legal consideration. Of course to a certain extent it is unavoidable, but with some care and consideration it is possible to lessen liability overall. There's absolutely no point in making legacies in a will which won't be fulfilled until after death and which haven't been properly considered in the relevant legal provisions. If you haven't done so in, it is extremely advisable to consult a tax attorney on minimizing tax liability upon death, and on resultant estate planning to avoid these potential problems and to ensure your family are left with more in their pockets.

If you intend to leave money or property to family members of a specific quantity or nature, it may be wise to do so at least a decade before you die, which will ultimately divert any potential legal challenges upon death which would give rise to tax liability. Obviously there is seldom any way to tell precisely when you are going to die, but making a will at least a decade beforehand avoids any liability that might be attached on death. In effect, donating during your lifetime well before you die means you can still provide for your family without having to pay the corresponding tax bill.


You may not consider everything you just read to be crucial information about law. But don't be surprised if you find yourself recalling and using this very information in the next few days.


Another good way to minimize tax liability is to get rid of assets during your lifetime by way of gifts to friends and family. One of the most effective ways to do this is to transfer your house to your children during your lifetime, or to move the house into a confidence for which you are a beneficiary. This assures you remain functionally the host, but legally, the asset doesn't feature in your estate on death and therefore doesn't allure tax liability. Again, it is of great importance to ensure that the transfer is made well before death to avoid potential challenges and potential inclusion in the estate which would lead to inheritance tax liability.

Death is a particularly important phase in our lives, particularly in legal terms. The change between owning our own property and distributing ownerless property provides a range of challenges, and the tax implications can originate serious problems. Without careful planning and an expert hand, it can be easy to amass a significant tax bill for your loved ones to bear. However, with the right direction, it can be slight to use the relevant mechanisms to minimize the potential liability to tax on your estate upon death.


This article's coverage of the information is as complete as it can be today. But you should always leave open the possibility that future research could uncover new facts.

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

Friday, November 9, 2007

Tax Break Helps Low- and Moderate-Income Workers Save for Retirement

Plan Now to Get Full Benefit of Saver’s Credit; Tax Break Helps Low- and Moderate-Income Workers Save for Retirement

WASHINGTON — Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2007 and the years ahead, according to the Internal Revenue Service.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Formally known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

“We want low- and moderate-income workers to know about this valuable credit so they can effectively plan ahead and take full advantage of it,” said Richard J. Morgante, commissioner of the Wage and Investment Division of the IRS. “Now that a growing number of employers are automatically enrolling their employees in 401(k) plans, the saver’s credit offers many workers who save for retirement an added bonus.”

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2007 tax return. People have until April 15, 2008, to set up a new individual retirement arrangement or add money to an existing IRA and still get credit for 2007. However, elective deferrals must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees. Employees who are unable to set aside money for this year may want to schedule their 2008 contributions soon so their employer can begin withholding them in January.

The saver’s credit can be claimed by:

* Married couples filing jointly with incomes up to $52,000 in 2007 or $53,000 in 2008;
* Heads of Household with incomes up to $39,000 in 2007 or $39,750 in 2008; and
* Married individuals filing separately and singles with incomes up to $26,000 in 2007 or $26,500 in 2008.

Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.

In 2005, the most recent year for which complete figures are available, saver’s credits totaling more than $900 million were claimed on nearly 5.3 million individual income tax returns. Saver’s credits claimed on these returns averaged $216 for joint filers, $149 for heads of household and $140 for single filers.

The saver’s credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

Other special rules that apply to the saver’s credit include the following:

* Eligible taxpayers must be at least 18 years of age.
* Anyone claimed as a dependent on someone else’s return cannot take the credit.
* A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
* Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2007, this rule applies to distributions received after 2004 and before the due date (including extensions) of the 2007 return. Form 8880 and its instructions have details on making this computation.

Begun in 2002 as a temporary provision, the saver’s credit was made a permanent part of the tax code in legislation enacted last year. To help preserve the value of the credit, income limits are now adjusted annually to keep pace with inflation. More information about the credit is on this Web site.

Related Item: Publication 590, Individual Retirement Arrangements (IRAs)

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Thursday, November 8, 2007

2008 Hybrids Certified As Tax Credit

WASHINGTON — The Internal Revenue Service acknowledged the certification by Toyota Motor Sales U.S.A., Inc., that several of its Model Year 2008 vehicles qualify for the hybrid vehicle tax credit. Only vehicles purchased prior to Oct. 1, 2007, qualify for a credit.

For purchases made April 1, 2007, through Sept. 30, 2007, the hybrid vehicle certifications recently acknowledged by the IRS and their credit amounts are:

* 2008 Toyota Prius Hybrid — $787.50
* 2008 Toyota Camry Hybrid — $650
* 2008 Toyota Highlander Hybrid 4WD — $650
* 2008 Lexus LS 600h L Hybrid — $450
* 2008 Lexus RX 400h 2WD and 4WD — $550

No credit is allowed for purchase of these vehicles after September 30, 2007.

The credit amounts reflect a decrease in the credit beginning on Oct. 1, 2006, as a result of the manufacturer’s having sold 60,000 qualified hybrid motor vehicles.

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Snipes: Ocala too racist for tax trial

November 08, 2007
Snipes: Ocala too racist for tax trial

OCALA -- Actor Wesley Snipes calls Ocala a "hotbed of Klan activity" in federal court documents, arguing that the city is too racist to seat a fair jury at his tax evasion trial.

The motion filed this week in federal court calls for the charges to be dismissed or the venue changed. It also includes results from a telephone survey, commissioned by Snipes' attorneys, that says 63 percent of people in Ocala think the Confederate flag is a sign of pride rather than prejudice.

In the Southern District of New York, where Snipes wants his trial moved, a similar survey found about 33 percent of people expressed similar views.

"The government ... deliberately chose the most racially discriminatory venue available to the government, with the best possibility of an all-white southern jury," Robert G. Bernhoft, Snipes' attorney, writes in the motion.

Snipes' ethnic background is African-American and Native American, and he has strong ties to the Latino community, Bernhoft says.

"While many Ocala jurors may be fair, substantial pockets of prejudice persist," Bernhoft writes. "Just one or two prejudiced jurors can prevent Snipes a unanimous verdict of impartial jurors, and such a risk is uniquely present here in compared to Manhattan. It is the real reason for the government's exceptional venue manipulation: a jury as partial and prejudiced as possible against Snipes."

The U.S. Attorney's Office declined today to comment on the motion.

"Our response will come through the court," said U.S. Attorney's Office spokesman Steve Cole.


Read The Rest Here

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Wednesday, November 7, 2007

Another Record-Breaking Number of Taxpayers Choose to Electronically File in 2007

Another Record-Breaking Number of Taxpayers Choose to Electronically File in 2007

WASHINGTON — The Internal Revenue Service this year received nearly 80 million tax returns through e-file, breaking the record set last year.

The 2007 level is up about 9 percent from the 73 million returns filed for the same period last year. Of the 139.3 million returns filed in 2007, 79.98 million or about 57.4 percent were filed electronically.

“It was another record-breaking year for e-file,” said IRS Acting Commissioner Linda E. Stiff. “Paper returns continue to drop year after year. E-file is the safe, accurate way for more and more taxpayers to quickly complete their taxes and get a refund faster.”

Since 2001, the number of e-filed returns has almost doubled and over the past decade the number of e-filers has increased four-fold.

Year Returns Total E-file Percent E-file

1997 121.5 million 19.2 million 15.8%

1998 123.8 million 24.6 million 19.9%

1999 125.9 million 29.3 million 23.3%

2000 128.4 million 35.4 million 27.6%

2001 131.0 million 40.2 million 30.7%

2002 131.7 million 46.9 million 35.6%

2003 131.6 million 52.9 million 40.2%

2004 132.2 million 61.5 million 46.5%

2005 134.0 million 68.5 million 51.1%

2006 136.1 million 73.3 million 53.8%

More than 22.6 million returns have been e-filed by taxpayers doing their own returns, up from 20.3 million from the same period last year. More than 57.4 million returns were e-filed by tax professionals, up from nearly 52.9 million last year.


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Taxation Law For Small Business

Taxation Law For Small Business

Current info about taxes is not always the easiest thing to locate. Fortunately, this report includes the latest taxes info available. The following article includes pertinent information that may cause you to reconsider what you thought you understood. The most important thing is to study with an open mind and be willing to revise your understanding if necessary.

Taxation law is a complex and in - depth area of concern for the small business owner. With potential financial and criminal consequences, it is of paramount importance to ensure as a business owner, you are familiar with the tax consequences in your state, and the ways in which you can minimize your liability. While one of the most legally important things to understand as a small business owner, taxation law also provides an excellent opportunity for saving money and increasing profitability within a small business environment. In this article, we will look at some of the main and most common tax implications of running a small business, and some of the most effective ways of ensuring you pay less tax through your small business operation.

Tax laws vary from state to state, and the implications of running a small business also vary, both in terms of the legal and financial requirements. Having said that, there are a number of common elements that transcend regulation and appear in numerous guises across various systems that can be of use to the small business owner. One of the first things to consider as a small business owner is to base a limited liability company. The primary reason for this is that limited liability companies usually provide a more relaxed tax atmosphere. A sole proprietor operating with the parameters of a corporate entity is liable to account for profits as income, which can lead to a greater tax liability and potential individual state contributions. As a corporate entity, you, as the owner can pay yourself via share dividends, which carry a lesser tax liability and thus minimizing your overall tax liability. This is significantly more desirable than paying yourself a wage, which bears the tax liability from both ends. The company is liable to taxation as are you.

Knowledge can give you a real advantage. The more authentic information about taxes you know, the more likely people are to consider you a tax expert. Read on for even more taxes facts that you can share.

Another essential for the small business owner is what is known as depreciation. By point of depreciation, business owners can offset the acquisition cost of assets on a graduated scale in accordance with the specific principles of the items in question. This is in effect a deductible expense, which ultimately minimizes yearly tax liability. There is a particular benefit in that many regimes allow an accelerated cooperation for business assets. This can be exploited to an extent by acquiring assets through the employment, for example a car, which can also be used for fixed purposes. Rather than buying a car from personal income, buying it through your company allows you to offset the amount of the expense quickly against your business profits, which ultimately reduce your liability to tax.

Before embarking on any tax reducing strategies, it is strongly suggested that you become acquainted with the specific laws to avoid potential criminal liability as a consequence of ignorance. By familiarizing yourself with the tax laws in your state, you can avoid the potential pitfalls and create a tax format strategy that provides the most cost effective solution for you and your small business.

It never hurts to be well-informed with the latest on law. Compare what you've learned here to future articles so that you can stay alert to changes in the area of law. Now might be a good time to write down the main points covered above. The act of putting it down on paper will help you remember what's important about taxes. Tax law is very complicated, and you should consider hiring a tax attorney to help with your small business taxes.


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

Tuesday, November 6, 2007

Frivolous Tax Arguments

The federal income tax was established by the 16th Amendment to the Constitution, which reads: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

The amendment was proposed by Congress in July, 1909, and declared law in February, 1913, after 36 of the then-48 states ratified it. Opponents of the tax, however, contend that the 16th amendment was improperly ratified by some of the states, and thus is invalid.

The Internal Revenue Service, which has long faced challenges to the income tax on legal grounds, has a 54-page bulletin on its website aimed at responding point by point to common arguments against the income tax.

The bulletin "The Truth About Frivolous Tax Arguments," was originally published at the main IRS Web site. Click Here For The PDF

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Monday, November 5, 2007

IRS Announces New Chinese, Korean, Russian and Vietnamese Tax Glossaries to Assist Taxpayers

IR-2007-182, Nov. 2, 2007

WASHINGTON — The Internal Revenue Service today announced the availability of five new publications to help foreign-language communities understand federal tax forms and publications that are written in English. These new glossaries of tax terminology will help meet increased demand for tax-related resources in languages other than English.

The five new publications are new versions of Publication 850 for Chinese (simplified), Chinese (traditional), Korean, Russian and Vietnamese. A Spanish version was previously available.

Read The Rest

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Friday, November 2, 2007

Lotto winner facing prison on tax charge

TAMPA — A former Florida Lotto jackpot winner pleaded guilty today to filing a false tax return, according to federal court documents.

Rhoda Toth faces up to three years in prison.

The Internal Revenue Service says Toth owes more than $1.1-million and her husband, Alex, owes more than $1.4-million in back taxes. The agency said the Toths lied about their income in 2000, 2001 and 2003.

Read The Rest

I live in Florida, and this comes from my local paper. Folks, do not try to cheat on your taxes, the IRS will catch up to you. In addition to the taxes you would normally have to pay, add in the penalties and interest and then you are really paying through the nose.

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IRS Warns of E-mail Scam Soliciting Donations to California Wildfire Victims

WASHINGTON — The Internal Revenue Service today warned taxpayers to be on the lookout for a new e-mail scam that appears to be a solicitation from the IRS and the U.S. government for charitable contributions to victims of the recent Southern California wildfires.

In an effort to appear legitimate, the bogus e-mails include text from an actual speech about the wildfires by a member of the California Assembly.

The scam e-mail urges recipients to click on a link, which then opens what appears to be the IRS Web site but which is, in fact, a fake. An item on the phony Web site urges donations and includes a link that opens a donation form which requests the recipient’s personal and financial information.

“People should exercise caution when they receive unsolicited e-mail or e-mail from senders they don’t know,” said Richard Spires, IRS Deputy Commissioner for Operations Support. “They should avoid opening any attachments or clicking on any links until they can verify the e-mail’s legitimacy.”

The bogus e-mails appear to be a “phishing” scheme, in which recipients are tricked into providing personal and financial information that can be used to gain access to and steal the e-mail recipient’s assets.

The IRS also believes that clicking on the link downloads malware, or malicious software, onto the recipient’s computer. The malware will steal passwords and other account information it finds on the victim's computer system and send them to the scamster.

Generally, scamsters use the data they fraudulently obtain to empty the recipient’s bank accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name or even file fraudulent tax returns to obtain refunds rightfully belonging to the victim.

The IRS does not send e-mails soliciting charitable donations. As a rule, the IRS does not send unsolicited e-mails or ask for personal and financial information via e-mail. The IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

Recipients of the scam e-mail who clicked on any of the links should have their computers checked for malicious software and should monitor their financial accounts for suspicious activity, taking measures to prevent unauthorized access as necessary. Any unauthorized activity should be reported to law enforcement authorities and to the three major credit companies. More information on how to handle actual or potential identity theft may be found in IRS Publication 4535, Identity Theft Protection and Victim Assistance, available on the IRS Web site. Information is also available on the Federal Trade Commission’s identity theft Web site.

Recipients of the scam e-mail can help the IRS shut down this scheme by forwarding the e-mail to an electronic mail box, phishing@irs.gov, using instructions found in “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes” on this site. This mail box was established to receive copies of possibly fraudulent e-mails involving misuse of the IRS name, logo or Web site for investigation.

The IRS and the Treasury Inspector General for Tax Administration (TIGTA) work with the U.S. Computer Emergency Readiness Team (US-CERT) and various Internet service providers and international CERT teams to have the phishing sites taken offline as soon as they are reported.

Since the establishment of the mail box last year, the IRS has received more than 30,000 e-mails from taxpayers reporting almost 600 separate phishing incidents. To date, investigations by TIGTA have identified almost 900 host sites in at least 55 different countries, as well as in the United States.

Recipients of questionable e-mails claiming to come from the IRS may also call TIGTA’s toll-free hotline at 1-800-366-4484.

The IRS has come across numerous schemes in which e-mails claim to come from the IRS. More information on these schemes may be found on the genuine IRS Web site, IRS.gov, by entering the term phishing in the search box.

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Rules Regarding The Kiddie Tax

The Small Business and Work Opportunity Tax Act of 2007 does offer some juicy tax breaks to entrepreneurs. But it also includes a potential headache: an expansion of the kiddie tax, which limits the amount of investment wealth that parents can shift to a child to take advantage of the youngster's lower tax rate. In tax year 2007 your child can report only about $1,700 of passive investment income before triggering your tax rate (the amount rises annually with inflation). Congress is also tinkering with the age limits. In 2006 the cutoff age for kiddie tax purposes was increased from 14 to 18; the latest change, which takes effect in tax year 2008, raises the age to 19 - and up to 24 for full-time students.

You Qualify For the Tax Break If:

1. In tax year 2007, your child reports under $1,700 in passive investment income (amounts over that trigger your tax rate).

2. In 2006 your child was 18 or younger. In tax year 2008 the age rises to 19 years (up to 24 for full-time students).

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Thursday, November 1, 2007

Planning For Your Taxes

Tax planning is very important if you want to make sure that your income tax return is filed quickly, effectively, accurately, and painlessly. Through careful tax planning, you can have everything you need to file your income tax return at your fingertips whenever you are ready to file. Tax planning is also helpful in the case that your income tax return is brought up for audit by the Internal Revenue Service.

Tax planning is essentially tracking your income tax deductible items as they come up, and keeping records organized and handy in case they are needed. The most important tool for tax planning is a small filing cabinet. You can use this filing cabinet to file your tax planning documents and receipts, as well as keep track of previous tax returns filed and other important documents such as birth certificates and social security cards. The file cabinet you get to use for your tax planning should be fire proof and have a lock. That way your tax planning documents are safe in almost any disaster, and other people cannot easily gain access to your tax planning and other important documents.

Part of tax planning is making sure that you are aware of what expenses are tax deductible. You cannot engage in tax planning and track tax deductible expenses if you don't know what you should be tracking! The Internal Revenue Service offers many publications on this subject. However, if you have any questions about income tax deductible items you should contact a qualified, certified, and licensed tax professional or tax attorney.

Once you know what tax deductible expenses you will need to track for the coming tax year, you need to set up tax planning record keeping system. This can be a simple receipt book, expanding file, index cards, envelopes, or any other method that makes sense to you. Keep in mind, however, as you engage in tax planning, that your tax planning record keeping system should not only make sense to you, but also make sense to your income tax preparer and the Internal Revenue Service if necessary.

At the end of each month, you can add up the totals for the different types of income tax deductible expenses you recorded in your tax planning records for that month. This way, all you have to do to discover your tax deductible amount is add up the totals for each month. The other records you collect and track through your tax planning are simply for proof that you can claim these income tax deductions, and are not really needed for preparing your income tax return if you have all of your totals in order.

On the surface, income tax planning may seem complicated and difficult. But with proper organization, tax planning is really quite easy. Not only that, but when you engage in income tax planning, you better your chances for that larger income tax refund that you need and deserve. If you have any questions about tax planning, you should contact a tax planning professional or tax attorney.

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