Nothing leads to more gnashing of teeth than the thought of preparing your own taxes. Fortunately, there are people out there that do it for a living.

Here Are My Receipts

If the thought of preparing your own taxes makes you queasy, don’t worry. Preparing your taxes is a job that can be shipped out to others. These individuals, known loosely as tax preparers, prepare tax returns year around. Here’s a breakdown of the different types of preparers.

Basic preparers are the least trained, but the cheapest to hire. They tend to be part time workers who are individually employed our work at large out fits like the one with the letters H and R in its name. If you have a simple tax situation, like basic W2 wages and no homeownership, this can be a good choice.

Enrolled agents are a step up from basic preparers. These individuals are licensed by the IRS and must take continuing education courses to maintain their license. That being said, they are not formally educated in the field of finance or tax. Enrolled agents are typically more competent than basic preparers, but much less so than a CPA. If you have a tax situation requiring a basic 1040 filing with one or two schedules, a good enrolled agent should be able to take care of it. If you are looking for more sophisticated tax planning to cut your tax bill, a CPA is probably your best choice.

A CPA [Certified Public Accountant] is a highly trained and licensed individual. Passing the boards to become a CPA is extremely difficult. Once a person becomes a CPA, they also are required to pursue up to 40 hours of continuing education. The downside of using a CPA, of course, is the higher competency translates to higher costs. Still, you get what you pay for, so a CPA may be the answer if you are doing well financially and are looking for guidance on tax planning.

Tax attorneys are a beast unto themselves. If you’re bringing in the big bucks, tax attorneys can save you a bundle with sophisticated plans. Tax attorneys are also the people to see if the IRS decides to have a go at you. While CPAs can handle the tax issues raised by the IRS, CPAs tend to know next to nothing about evidentiary law. A good tax attorney will be able to throttle the IRS on legal issues.

So, who should you use to prepare your taxes? It really depends on what you are looking for and your finances. Generally, the more complex your finances, the more competency you should look for. If you have the money, go with a CPA. A good one should be able to save you far more than their fee.

Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.

Capital is a unique term when it comes to taxes. If it gains value, you pay a tax. If it loses it, you can write at least some of the loss off.

Capital Assets - Gains and Losses for Taxes

Practically everything you own is a capital asset. This is true whether you use it for business purposes or personal use. The internet revenue service is very interested in your capital assets. Why? The IRS likes to tax the full gains while only giving you a small break on any lost value. Specifically, you have to report and pay taxes on gains in value of your capital assets when you sell them. Unfortunately, you only get to claim a loss on capital assets if it is an investment property such as stocks. Doesn’t seem fair, but that is how the cookie crumbles these days!

Here are some tax issue highlights on capital assets:

1. Generally, you report gains and losses on capital assets by subtracting the price you purchased it for from the price you sold it for. This calculation is reported to the IRS on Schedule D, which should be attached to your 1040 tax return. Lucky you!

2. Capital gains and losses are classified as long-term or short-term. The classification breaks down on�tad a, how long you’ve owned the capital asset in question before selling it to someone else. If it has been less than a year, it is a short-term gain or loss. Hold on to it for more than a year and you are looking at a long-term gain or loss when reporting taxes. Each classification requires different tax calculations and you will ultimately pay different amounts of tax.

3. In a bit of good news, you are generally going to pay less tax on a capital asset gain. For the 2005 tax year, the tax rates range from a miserly five percent to a more painfull 28 percent.

4. While the IRS is happy to tax all of your capital gains, it has different views towards losses. You can deduct losses, but only up to $3,000 each year.

We all have capital assets, even if we don’t realize it. Unfortunately, the IRS is aware of this, so make sure to report your gains and losses.

Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.

If you work in a service where you get tips, guess what? The IRS expects you to report them and pay taxes on them.

Your Tip Earnings and Taxes

The internal revenue service takes a very simple approach to tips. It views all tips you make in your job as taxable income that must be reported and for which taxes must be paid. Put another way, the IRS has a simple but brutal view towards taxes

Now tips come in different forms. Some are received directly from customers while others are automatically added to the customer’s bill. The IRS takes the position you must report and pay taxes on both amounts. This also includes taxes you earn through any group splitting where all tips are collected together and then split amongst the employees. On top of this, the IRS also takes the view that any non-cash tips such as tickets to something are also income that should be reported and taxes paid on. Put another way, the internal revenue services gets you coming and going.

To make things a little more brutal, the internal revenue service requires you to take some steps in reporting tips. If your tips total $20 or more in any calendar month from a single job, you are supposed to report the total to the employer by the 10th day of the next month. The employer is then supposed to withhold federal income tax, social security and Medicare taxes from your paycheck. Keep in mind that the failure to do so can lead to the placement of a 50 percent penalty on your taxes. Obviously, the IRS is fairly serious about getting its money.

Tips paid to waitresses, bartenders, barbacks and so on are a hot spot with the IRS and always have. Since tips tend to be given in cash form, the potential for forgetting to report them is particularly high. The IRS seems to think so and has shown a generally aggressive attitude on the subject. If you indicate you are a waitress or bartender on your tax return, but fail to report any tip income, it could be audit time.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.

With education costs soaring to all time highs, making tuition payments for grandchildren and others can save lots of money in gift and estate taxes down the road - even if the donor is not alive when the tuition money is actually used.

By way of some background, the tax laws exempt tuition payments by grandparents or others from any gift taxes, provided certain requirements are met. First, the only educational costs that are gift-tax free are tuition costs. The cost of room and board, books, and other educational expenses are not exempt.

Second, the tuition costs must be paid directly to an educational organization that “normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” Notice that there is no requirement that the tuition costs be paid to a college or university. In fact, tuition payments for nursery school, private elementary school, and private high school may also qualify. It’s possible, too, that tuition payments for part-time courses, such as dance, theater, music, cullinary arts, and the like will also qualify for the gift tax exemption.

So, how is this such a good deal? In the first place, these tuition payments are not treated as taxable gifts, so you don’t have to worry about having them come under the annual gift tax exclusion. In fact, you can make tuition payments for your grandchildren or others and still give each of them the annual exclusion amount ($12,000 for 2006) as a birthday gift or whatever.

Second, if your estate is large enough to be concerned about federal estate taxes (currently in excess of $2 million, $4 million for a couple), then the amount of the tuition payments will be excluded from your estate upon your death. In other words, your tuition payments will not be subject to a gift tax when the payments are made, nor will they be subject to an estate tax upon your death. In addition, they will not be subject to any generation-skipping taxes (GST) upon your death

That’s pretty good deal by itself, but here’s an added bonus. On July 9, 1999, the Internal Revenue Service issued Technical Advice Memorandum 199941013 stating that prepayment of tuition costs was also exempt from gift taxes under IRC Section 2503(3)(2). In that particular case, a set of grandparents had made payments to a private school to cover tuitiion costs for their two grandchildren from pre-school through grade 12. There was an agreement between the school and the grandparents indicating that the tuition payments would not be refundable even if the grandchildren failed to attend the school each of those years. The total payments made by the grandparents amounted to over $181,000 over a two-year period.

Recently, the Internal Revenue Service issued a private letter ruling that supports the Technical Advice Memorandum cited above. In that case, the IRS told a taxpayer that prepayments of many years of tuition costs for his grandchildren would not be considered a gift.

While Technical Advice Memorandums and private letter rulings only apply to the taxpayer’s who request them, they are a good indication of the IRS’ position on specific tax matters. Here, it appears fairly clear that prepayment of multiple years of tuition costs will not be treated as a taxable gift by the IRS.

Now, let’s sort of put all this into perspective. In the TAM discussed above, the grandparents pre-paid roughly $181,000 of tuition costs over a two-year period. The payments were not treated as taxable gifts and, since the money was removed from their estate, it was not subject to estate taxes upon their death. If the grandparents kept the money until they died and then gave it to their grandchildren under their will, it would have gone through probate first, then would have been subject to a federal estate tax and then, possibly, a generation-skipping tax - all before it could be used by the grandchildren.

If the grandparents had a fairly large estate, say larger than $4 million, then the estate taxes paid on that $181,000 would be roughly $83,260 (based upon a marginal tax rate of 46%). In that case, prepaying the tuition costs resulted in an estate tax savings of roughly $83,260. Plus, the grandparents didn’t have to use up their annual gift-tax exclusion to get the estate tax savings.

Still, there are some drawbacks that you should be aware of. First, you have to have a large enough estate to be concerned about estate taxes. Second, you probably should be concerned about dying before your grandchildren complete their education. Otherwise, you could just pay the tuition costs as they become due.

Finally, when you prepay your grandchildren’s tuition costs, you won’t be able to get the money back if your grandchildren drop out of school or decide to attend a different school. Some schools may allow the money to transfer to another school, but that would have to be agreed upon beforehand. Even so, there is no guarantee the IRS will go along with those types of arrangements.

One final point, tuition payments excluded from gift taxes under IRC Section 2503(e)(2) are not the same as payments under a 529 plan. First, gifts to 529 plans come under the annual gift-tax exclusion. Prepaid tuition gifts are in addition to the annual exclusion gifts.

Second, gifts to a 529 plan are excluded from the donor’s estate only if the donor survives during each year for which the pre-payment was made. Prepaid tuition gifts are excluded from the donor’s estate as soon as the prepayment is made.

Third, 529 plans apply only to higher education (college and beyond) whereas prepaid tuition gifts apply to all levels of education, including nursery schools, elementary and high school.

Fourth, 529 plans apply to all education costs, including room and board, books and supplies, as well as tuition. Prepaid tuition gifts apply only to tuition costs.

That is not to say, however, that prepaid tuition gifts cannot be used in tandum with 529 plans.

For wealthy grandparents who are inclined to help with their grandchildren’s education costs, a prepaid tuition gift under IRC Section 2503(3)(2) certainly should be considered.

Attorney Michael P. Pancheri is the founder and CEO of the Living Trust Network. You may contact him by email at info@livingtrustnetwork.com. You may also contact him at the Living Trust Network’s web site. Its URL is http://www.livingtrustnetwork.com.

Copyright 2005. LivingTrustNetwork, LLC.

A taxpayer who is covered by a high-deductible health insurance policy may establish and contribute to a health savings account (HSA). The contributions the taxpayer makes are deductible in calculating adjusted gross income, so a taxpayer does not have to itemize deductions on Schedule A of Form 1040 to receive the deduction. Contributions made by an employer are not taxable to the employee.

For 2006, for individual coverage, a high-deductible policy must have an annual deductible of at least $1,050. For 2006, for family coverage a high-deductible policy must have an annual deductible of at least $2,100. A plan may have a lower deductible for preventive care. The annual out-of-pocket expenses are limited to $5,250 for an individual or $10,500 for a family.

The maximum monthly contributions an individual may make to an HSA in 2006 are the lesser of 1/12 of the deductible or $2,700. The maximum monthly contributions allowed to an HSA for a family plan in 2006 are the lesser of 1/12 of the annual deductible or $5,450. Individuals who are age 55 or older may contribute up to an additional $700 in 2006, $800 in 2007, $900 in 2008, and $1,000 in 2009 and later years.

Distributions from the HSA used to pay medical expenses, other than most health insurance, are not taxable. The medical expenses may be those of the taxpayer, the taxpayer’s spoouse, the taxpayer’s dependents, and certain individual who would be dependents except that they failed certain of the requirements for being a dependent.

If the taxpayer receives a distribution from the HSA and it is not for medical expenses, the distribution is taxable. If the taxpayer receives a distribution from an HSA for other than medical expenses, the distribution is taxable and the taxpayer must pay a 10-percent penalty unless the taxpayer is age 65 or older, disabled, or dead.

Medical expenses include optical, dental, and certain non-prescription drugs as well as expenses for physicians, hospitals, prescription drugs, and other traditional medical expenses. A taxpayer may not pay for a medical expense from an HSA and also deduct the same amount as a medical expenses on Schedule A of Form 1040.

Special rules apply to married taxpayers where each has health insurance. If only one spouse has family health insurance, both spouses are deemed to have family coverage. if both spouses have family health insurance under separate plans, the law treats each spoouse as having a family policy with the lower deductible.

Taxpayers who are interested in the tax benefits of an HSA should consult a competent tax professional and a knowledgeable insurance agent.

Alan D. Campbell is a CPA in Arkansas and Florida and is self-employed primarily as an author of tax publications. He earned a Ph.D. in accounting with an emphasis in taxation from the University of North Texas. He is also admitted to practice before the United States Tax Court. He has published numerous articles on tax topics in professional journals. He is the co-author of the book Tax Strategies for the Self-Employed and the revision editor of CCH Financial and Estate Planning Guide, 15th edition. For more tax savings strategies, please see his blog: http://taxsavingsstrategies.blogspot.com

Preparing and filing your taxes is a less than exciting task. Much like visiting the dentist it something that must simply be done. There are ways to make it a little less painful.

Get a Jump Start on Your Taxes

As with many things, procrastinating on the preparation of your taxes is a bad move. Tax preparation procrastination leads to one thing - frustration. If you try to sit down, organize your records, fill out forms, recheck your math, discover a stack of missing receipts, redo your taxes, recheck your math, discover another set of receipts�well, you get the idea. Doing it all at once is a recipe for disaster and mayhem. Don’t do this if at all possible. Instead, spread out the tasks. While you are waiting for clothes to dry, grab your receipts and organize them. A few days later, get all of your 1099s together. A few days later, add the receipts you’ve subsequently found to the first stack you created. Taking little steps is not much more fun than slamming it out at one time, but it is a heck of a lot less frustrating and stressful.

If you anticipate getting a refund from the government, go ahead and prepare your taxes as early as possible. While many people are ecstatic to receive a refund, they fail to realize they are giving the government an interest free loan. If you’re refund is sizeable, you should take a look at adjusting the number of deductions or size of your quarterly estimated tax payments to forgo having the government hold your money for months on end. Doing so will also help your cash flow from month to month.

Once you begin preparing your tax returns, it is time to start thinking about math. The biggest error made by taxpayers on returns is math. Double-check your addition and subtraction figures. Many times you’ll find you made a small mistake, which actually results in the payment of excessive tax. The IRS, of course, isn’t going to let you know such a mistake was made, so you have to do it yourself.

Finally, the best advice I can give you is not to panic. Contrary to popular opinion, taxes are not the end of the world. If you don’t have money to pay them, the IRS will not throw you in jail. Instead, they will put you on a payment plan until you do have enough money to pay them. That’s as bad as it gets, so don’t let the tax man get you down.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.

With the every expanding global economy, many people receive earnings from foreign entities. Unfortunately, the federal government wants you to pay taxes on it.

Taxes on Your Earnings From Abroad

The federal government has a very simple attitude towards taxes and earnings. If you have earnings, the feds want some of it. A number of countries, however, take the attitude that if you earn money in another country, they will not tax that money. In theory, this is because you are already paying taxes in the foreign country. This makes sense from a logical perspective, which means the federal government does something else.

Regardless of what you do, how you do it or where you do it, the federal government demands that all U.S. citizens pay taxes on their worldwide income. Your income includes everything from wages, tips, interest payments, dividends, capital gains, pensions, royalties, rents and revenues. Put another way, there are no loophole exceptions regarding what qualifies as income.

It is important to understand that you do not get to avoid reporting and paying taxes on foreign income or revenues just because you aren’t issued a 1099 or W-2 form. You still have to report it and pay.

Now, more than a few people will be tempted to�forget�they receive foreign funds during the year. There are a few problems with these memory lapses. First, the IRS could take a look at your bank account and realize there is a difference between what you reported and deposited. Second, rivals and ex-spouses have a bad habit of reporting such memory losses to the IRS. If the IRS ultimately finds out you’ve failed to report foreign income, you could be facing tax evasion charges. Tax evasion is a criminal charge carrying prison terms and massive penalties.

There is one key exception to the above scenario. If you live outside of the United States and earn income, you may be able to take up to an $80,000 deduction. Put another way, you will not be taxed on your first $80,000 of earnings if you are living in Japan and working for Sony. You have to meet a number of strict and somewhat complex requirements to take advantage of this deduction. Boiled down to the basic elements, you essentially have to remain outside of the United States for the taxable year.

It can be tempting to forget to report your foreign earnings and revenues. The IRS is aware of this, so taking some memory improvement supplements is highly recommended.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.

Property taxes are decided collectively by school boards, town boards, legislators, and councils. The tax rate is set by collating the amount of funds an area needs. This is then divided that by the “total taxable” assessed value of the area. The tax an individual pays is computed by multiplying the tax rate by the assessed value of your property and then deducting any applicable exceptions. Property taxes are at an all time high. Studies indicate that they have increased more than 35% in five years.

Property is assessed by determining property costs in any given area. Property is valued by studying: the current sale price of properties in the area, costs to be incurred to replace the property, potential realization of property if it is rented, sold, or gifted, and the historical value of a property.

There are a few ways in which you could save on taxes:

1. Check if the state you reside in is offering any rebates. For example, a money back rebate, energy rebate, capping of taxes, or home owners rebate where under certain conditions you may be eligible to claim a rebate.

2. Ensure that the property is assessed right. This will ensure that you do not have to pay excess taxes. Assert your right to check you assessment report ensure that there are no miscalculations, mistakes, or assumptions. If in any doubt, do put in an appeal. According to statistics almost 50% of the cases win some relief.

3. Check all exemptions allowed according to the law.

4. Buy property jointly with a partner or family member. This way both owners become eligible for tax rebates.

5. Check if your assessment is in according to other properties in your neighborhood. Check with the assessment office or with your neighbors themselves. It helps to know applicable laws. Use the help of a real estate professional to put together a file of properties similar to yours that have a lower assessment. Or, use the bank’s appraisal to support your case. Be sure that the case you gather together is water tight.

6. Use a property consultant to help you save taxes. Some charge a flat fee while others just a percentage of what you save. A professional will check how assessment is done and also if there are any loop holes you can use.

7. There is strength in numbers. Get together with other owners who are also checking or fighting assessments. Check on the National Taxpayers Union Web site http://www.ntu.org for your rights.

8. Ask you home loan provider whether you are eligible for refund of property taxes paid. Some agreements have a provision for this. Many mortgages have automatic escrow of taxes.

9. Even before you buy a home find out what the property taxes are in the area and what have been the increases in tax rates.

10. Be sure to read through assessment and tax manuals published by your local authorities. These will give a clear idea of what are the parameters used and what you must do to reduce or pay the correct property taxes.

In order to be money smart you need to get the help of an efficient and dedicated accountant, plan your tax liabilities well, known thoroughly all aspects of Property Tax. If you are prudent, you can benefit by using ways and means to cut your tax burden and liabilities.

Paul Wilson is a freelance writer for http://www.1888PressRelease.com/Home-and-Family-Taxes-1-81.html, the premier website to Submit Free Press Release for any announcements including launching of new product or services, new website, announcing new hires, sponsoring a special event or seminar and more. His article profile can be found at the premier Legal Article Submission Directory http://www.1888Articles.com/legal-articles-3.html

Many believe that if you open a bank account offshore at any of the popular jurisdictions such as Panama or Belize, then that bank account would be out of the reach of home tax authorities and you can pretty much do as you please with it. Further it is thought by some that any earnings from said account need not be reported.

This line of thought is further bolstered by offshore hucksters who claim the above is true.

Fact is that opening a bank account offshore is not illegal but lying on your tax form is.

Remember those direct questions about offshore bank accounts and trusts on your income tax form? They are there for a reason. The government wants to know where your assets are so that they can tax them or seize them as they feel is appropriate.

On shore banks do not know the meaning of customer privacy and now function as agents of the government by reporting everything you do according to a bizarre set of reporting rules forced upon them.

Ferreting lawyers want to know how big and where your assets are too and this is easy for them to ascertain in the US or Canada.

It is well documented in the US that opportunistic lawyers actually prey on wealthy folks by crafting and instigating law suits knowing that many targets will settle out of court just to be rid of the trumped up problem.

Opening a bank account in Panama is fine but how are you going to get any sizeable amount of money into your shiny new account without sending up red flags all over the desk of your friendly tax official?

Your local bank is a snitch!

Governments under cover of excuses referring to terrorist threats and their possible money laundering activities now keep close watch on farmers in Saskatchewan and vintners in California in case they are doing something that is a national threat!

Privacy has never more threatened than it is today and as a direct result has never been more important. However privacy is now only for those who insist upon it, create it and defend it.

Forget about opening an offshore bank account as that alone will accomplish nothing.

Consider the proper creation of a competent offshore structure that is lawful, powerful and very, very private.

A good offshore structure will still do today what it has done for generations and that is to provide privacy and asset protection for assets which if left unprotected onshore may soon no longer be yours to protect.

And yes. Depending on the situation there may be some tax efficiencies as well!

The author has been involved in the financial arena for most of his adult life, latterly as the CEO of a successful financial services company which he sold a decade ago to devote his time to advising a select group of clients in prudent and cautious uses of offshore structuring. He has traveled extensively among many offshore jurisdictions over a span of 25 years and acquired hands on experience together with high quality contacts and resources in the better jurisdictions. He provides consulting services and can be reached at http://www.offshoreandprivate.com.

A taxpayer who conducts an active trade or business can save income tax with the Section 179 deduction. Section 179 of the Internal Revenue Code allows a business to deduct immediately the cost of tangible, personal property that the business purchased and placed in service in a trade or business. Therefore, a taxpayer may claim the Section 179 deduction on business equipment, office furniture, and machinery used in the business. In addition, off-the-shelf computer software qualifies through 2007. However, if the taxpayer uses such assets in connection with rental real estate, they do not qualify for the Section 179 deduction.

A taxpayer must use the asset for more than 50-percent business use to claim any Section 179 deduction. If the usage is greater than 50 percent but less than 100 percent, the taxpayer may claim the Section 179 deduction on the percentage of the cost of the asset that is used for business. A taxpayer claims the Section 179 deduction by making the election on Form 4562.

This deduction reduces taxable income and therefore saves income tax. If the taxpayer is a self-employed individual, the Section 179 deduction also reduces self-employment income and therefore saves self-employment tax.

Vehicles purchased and placed in service in a business are eligible for the Section 179 deduction. However, the total deduction for depreciation and the Section 179 deduction on most vehicles is severely limited. Therefore, claiming the Section 179 deduction on car used in a business is usually not the best use of the Section 179 deduction.

However, if the taxpayer purchases and places in service a sport utility vehicle (SUV) that has a gross vehicle weight of more than 6,000 pounds, the taxpayer may claim a Section 179 deduction up to $25,000. In addition, the taxpayer may claim a depreciation deduction on the remaining cost. If a taxpayer purchases and places in service a pickup truck with a gross vehicle weight of more than 6,000 pounds, the taxpayer may claim all of the cost of the pickup as a Section 179 deduction, subject only to the annual limit and the taxable income limit as explained below.

The Section 179 deduction reduces the adjusted basis of the property. However, if the taxpayer has any cost remaining after subtracting the Section 179 deduction, the taxpayer may take depreciation deductions on the remaining cost, including in the year of purchase.

The maximum Section 179 deduction allowed in 2006 is $108,000 (Rev. Proc. 2005-70). This limit is the aggregate limit on the cost of all eligible property and not the limit on each item of eligible property. If a taxpayer purchases more than $430,000 of eligible property during 2006 (Rev. Proc 2005-70), the maximum Section 179 deduction is reduced by $1 for each $1 of the cost of eligible property over the $430,000 limit.

In addition, the Section 179 deduction is limited to the taxable income derived for any business before considering the Section 179 deduction. For this purpose, wages and salaries count as income from a business. Therefore, someone who is employed may start a part-time business and claim the Section 179 deduction even if the business makes little money or suffers a loss in the first year or two. The taxpayer may carry forward to the next tax year any Section 179 deduction that exceeds the taxable income limit. There are also special rules for certain kinds of property called listed property.

If a taxpayer disposes of property on which the taxpayer has claimed the Section 179 deduction, the Section 179 deduction is subject to recapture in the same manner as depreciation. A taxpayer reports the sale of such property on Form 4797. The recapture of depreciation and the recapture of the Section 179 deduction on a sale of the property are not subject to the self-employment tax (Section 1402(a)(3)(C)).

If the taxpayer converts the asset to 50-percent or less business use before the end of its depreciable life, however, the taxpayer must recapture part of the Section 179 deduction for income tax purposes and self-employment tax purposes. A taxpayer reports such recapture on the same form on which the taxpayer claimed the deduction. For a self-employed individual the form would be Schedule C of Form 1040 because the Section 179 deduction claimed on Form 4562 flows to Schedule C.

The Section 179 deduction is one of the best deductions allowed to a taxpayer who operates a business. Claiming the Section 179 deduction accelerates the deduction for depreciation that the taxpayer would have to claim over several years. Money does have a time value. In addition, a self-employed individual usually saves self-employment tax with the Section 179 deduction, but the recapture of the Section 179 deduction increases only income tax, not self-employment tax.

While claiming the Section 179 deduction is usually a good decision, in some cases it may not be wise. Therefore, a business owner would be wise to consult a competent tax professional before claiming the Section 179 deduction.

Alan D. Campbell is a CPA in Arkansas and Florida and is self-employed primarily as an author of tax publications. He earned a Ph.D. in accounting with an emphasis in taxation from the University of North Texas. He is also admitted to practice before the United States Tax Court. He has published numerous articles on tax topics in professional journals. He is the co-author of the book Tax Strategies for the Self-Employed and the revision editor of CCH Financial and Estate Planning Guide, 15th edition. For more tax savings strategies, please see his blog: http://taxsavingsstrategies.blogspot.com

When it comes to preparing our taxes, many of us could use some help. The following websites offer guidance and information that may assist you in learning about how to get the most out of filing your returns.

Fairmark.com
www.fairmark.com

Recommended by Forbes.com, Fairmark.com sia tax site dedicated to helping investors file their taxes correctly, offering a Tax Help Center and guidance when dealing with Roth IRAs, capital gains, and financing for college.

IRS.com
www.irs.com

Although not affiliated with IRS.gov, this site suggests online taxx programs you can use for filing your return; info about extensions, deductions, and refunds; and Hot Topics, such as Tax Scams.

MSN Money
moneycentral.msn.com/tax/home.asp

MSN Money’s Tax Estimator hepls you prepare to file this year’s taxes with information about tax law changes. A tax terms glossary helps you decide what forms you need to file, and tax attorney Jeff Schnepper answers questions you post in the Tax Corner message board.

TaxSites.com
www.taxsites.com

A directory of tax and accounting websites, TaxSites.com provides links for state tax agencies, legal information, organizations, and governmment sites for each state.

United States Tax Court
www.ustaxcourt.gov

The U.S. Tax Court lets you dispute tax-related offenses. This site describes the process the court uses, presents FAQs about what’s involved when a case goes to tax court, and gives contact information for court offices and judges.

Yahoo! Taxes
taxes.yahoo.com

The giant search engine’s Taxes page includes Tax Tips, a Tax Guide For Investors, Tax Education, and resources that can help users find an accountant or talk with others on the Yahoo! message board.

Cal Golden is the webmaster of Tax Help Super Tips. Visit the site for up to date tax preparation tips and techniques to maximize the effectiveness of your return. Find out what Uncle Sam does not want you to know.

QUESTION: I’m a part-time “hobby” seller of used books on Amazon and eBay. Do I need to pay income tax on the sales I had last year?

ANSWER: Yes, you are required to pay federal income tax and self-employment tax on your net income from selling used books online, whether you sold them on Amazon, eBay, Half.com, ABE, Alibris, or any other venue.

Since you don’t have an employer reporting your bookselling income and withholding a portion for taxes, you must inform the IRS about it yourself. It makes no difference that you consider your bookselling a “hobby.” If you’re making a profit, the IRS considers it a business, and wants its cut.

I’m assuming you won’t be incorporating your business, so you’ll need to report your bookselling income as a “sole proprietorship” on the long tax form, IRS Form 1040, Schedule C, “Profit or Loss From Business.”

You can report your self-employed income using the personal editions of TurboTax or TaxCut software. These programs can save you lots of time, since they give instructions in plain English instead of the bewildering jargon of IRS instruction manuals.

If you made a profit during 2005 from bookselling, you’ll also owe some state income tax for that, so I’d also recommend you also use the state version of TurboTax or TaxCut to figure your state tax obligation.

To complete your tax return, you’ll need to account for every transaction involving your book business. If you’re not already doing so, keep all your receipts and records, and put your expenses into categories such as “postage,” “shipping supplies,” “books,” and so on. This is the information that will go on your Schedule C.

Next year, don’t wait this long to get your affairs in order. With self-employed income, you’re supposed to estimate your tax obligation during the year, and make quarterly payments on your profits, submitted with Form 1040-ES, by April 15, June 15, September 15, and January 15 of the following calendar year. Since you didn’t do this during 2005, you may owe a penalty for late tax payments. If you were expecting a tax refund this year, it may be smaller than you thought.

For next year, I’d recommend you have a separate checking account to track expenses and income from your bookselling. If your bank enables you to download your transactions into Quicken or another personal-finance program, you can automatically categorize expenses such as “postage,” etc., in Quicken. And next year you can transfer this same data into your tax-prep software. This will greatly lessen your bookeeping chores next year, and also give you a handy tool for examining the performance of your book business.

See a real-time list of the most highly sought after used and collectible books.

Read more free articles on selling used books profitably online: http://www.weberbooks.com/selling/selling.htm

Steve Weber is author of “The Home-Based Bookstore: Start Your Own Business Selling Used Books on Amazon, eBay or Your Own Web Site” (ISBN 0977240606). Got a question for Steve? Send to: steve_weber@yahoo.com

Don’t let your accountant organize your receipts for taxes.
You and only you are responsible to the IRS if your receipts
are not categorized correctly. Take your time, lay out your
reciepts, and place them in the category you think they
belong in. Attach each category to a sheet, list the
category at the top of the sheet, list each item on each
sheet and why it is deductible.

1. Make two categories–Business and Home

You should have two sheets, one with Business written the
top and one with Home written at the top. Place your
business file in front of your home file and your personal
file in front of your personal file. List all of the
categories you can think of and you see on the list of a
typical schedule

2. Sub Caterorize your Business and Home Titles

Place several sheets on top of the Business sheet and
several on top of the personal sheet. Write down each
category that applies to Business and each that applies to
Home on each sheet. Take each sheet from your Business
category and one from your Home category and place
sub-category on them.

3. Your Groups of Receipts

Remove your receipts from your accordian file you have
stored all year. Attach the receipts that belong to each
Business sheet sub-category, you should have several sheets
with Business at the top and the sub-category. Do the same
with your Personal deductions.

5. Research Your Deductions

Research and read up at the IRS website to find out any and
all possibilities you have for tax deductions. Copy and
paste that sheet to sub-category. You can also find
potential tax deducations on the actual tax forms provided
to you by the IRS, find those on the IRS website at irs.gov.

6. You and your accountant

Make sure your accountant understands what you have done and you understand what he or she has done. Discuss your tax
deductions with your accountant. You are ultimatley
responsible for everything that goes on your tax forms.

7. The Importance of Honest Tax Preparation

It still amazes me how many business professionals do not
understand the importance of honesty in tax preparation. It
is very easy to get caught submitting dishonest tax
information, and you may not be caught for years to come.

www.msfinancialsavvy.com

Lois Center-Shabazz is the author of, Let’s Get Financial
Savvy! and the editor of the personal finance website,
http://www.MsfinancialSavvy.com, Get a free ecourse at,
http://www.msfinancialsavvy.com/register/ecourse7.php.

Are you accustomed to seeing large numbers in the “property taxes due” column of tax statements? Property owners in Texas, a state with notoriously high property taxes, may be forced to budget a “big chunk” of their operating budgets each year for property taxes. You should always be looking for a way to increase the return on your investment, and reducing property tax expenses can have a significant impact on your bottom line.

Market Value vs. Assessed Value

Many investors have asked why Texas property taxes keep increasing even though their revenue has declined and operating expenses have increased. Since appraisal districts value so many properties, they are often not aware of “softness” in a submarket. In addition, some appraisal districts have been slow to recognize the huge increases in insurance expenses. Since property taxes are such a material expense, investors have realized they need to review assessments annually. Most Texas real estate investors appeal their property tax assessment annually.

Why Property Taxes are Important

Property taxes are one of the largest line item expenses incurred by property owners. When attempting to cut excess property taxes, even sophisticated property owners may not know all their rights. For instance, the current Texas Property Tax Code allows property owners to seek an equity adjustment based on comparable properties that are appropriately adjusted.

Does Unequal Appraisal Apply at Informal Hearings?

The legislature also introduced a provision in 1997 attempting to allow property owners to appeal on unequal appraisal during the administrative hearing process (informal and appraisal review board hearings). Unfortunately, the wording of the statute was not clear. Some appraisal districts have chosen not to consider appeals based on unequal appraisal at the administrative hearings. It’s a shame that many appraisal districts rebuff administrative appeals based on unequal assessment. Property owners become very angry when they feel they have been taxed unfairly. Fortunately, most cases of inequitable assessment can be resolved through a judicial appeal.

Why Aren’t Properties Assessed Equally?

You may be wondering why properties aren’t assessed equitably. Reasons include data errors, focusing on recent sales and inconsistencies in the informal and appraisal review board hearings due to the personal element. Since an appraisal district may track over a million real property accounts, it is unrealistic to expect all of the data to be accurate (the large number of properties also affects their ability to accurately estimate your property’s value). Overstating the quality of one property while understating the quality of another property could lead to an inequitable assessment. At times, some appraisal districts have focused on recent sales without reassessing all the properties in the surrounding area.

Once the preliminary research is completed, the owner should determine the market value of the property and whether it is in line with the total assessed value. There are three approaches that are employed in concluding market value: cost, income and market. The property’s occupancy rate, rental rate, operating expenses, net operating income and other factors, as well as sales prices of comparable properties, are valuable sources of information in determining market value. If the property owner determines that the assessed value is higher than the market value of his property, he should file a protest with the local appraisal district. This can be done either by the property owner or his designated agent. Property tax protests must be filed by May 31 in Texas; deadlines vary by state.

Preparing for Your Hearing

Once a protest has been filed, a protest hearing will be scheduled. Four types of data should be compiled for the hearing: pictures of the subject property, an income analysis, comparable sales data and assessment comparables. Pictures of the subject property should indicate the quality and condition of the improvements on the property. If there is deferred maintenance, document it with pictures and bids. An income analysis should include a profit and loss statement for the previous year and a rent roll for a date near January 1 of the current tax year (most states use January 1 as the effective date for assessment.) The analysis should also detail market rent, market vacancy and market expenses (including reserve for replacement) to derive net operating income for the property (neither depreciation nor debt service should be deducted when calculating net operating income).

If your property has above-market occupancy or rental rates or below-market operating expenses, you should make adjustments when calculating net operating income. If you operate your own property, your income analysis should include an allowance for labor and management fees (if they are not in the profit and loss statement). Revenue not directly related to real estate rental (box sales, truck rentals, etc.) should be excluded. Related expenses should also be excluded. The net operating income is then capitalized to derive an indication of value for the property.

An appraisal may be appropriate to support the value conclusion. Comparable sales are given strong consideration at the hearing because they are an indication of market value. Data from sales of comparable properties for the past year or two should be collected and reviewed. Assessment comparables are given strong consideration at some appraisal districts but not considered at others. Pictures of competing properties that are assessed for less than your property can be an effective tool for cutting your property taxes. Prepare a table summarizing your property and the assessment comparables.

Attending Your Hearing(s) (Informal and Appraisal Review Board)

Once all the pertinent data has been collected and analyzed, the protest hearing process begins. The initial protest hearing is called an “informal” hearing. The informal hearing involves a meeting between the owner, or his designated representative, and an appraiser from the appraisal district. If the owner is not satisfied with the offer made by the appraiser, he may proceed to the next level of the protest process, an appraisal review board hearing (in some states this is referred to as the board of equalization). The appraisal review board hearing, also referred to as the “formal” hearing, involves a meeting with members of the appraisal review board, an appraiser from the county appraisal district (who may be different from the appraiser at the informal hearing) and the owner or his designated representative. The Appraisal Review Board panel may set a value which is equal to, lower than or higher than the level proposed by the staff appraiser at the informal hearing; therefore, the offer made at the informal hearing deserves careful consideration.

The majority of protests are resolved during the informal and formal hearings. However, in a small portion of protests the property owner believes the assessed value can be cut further by filing a judicial appeal. Although few owners pursue the final opportunity to reduce their taxes, owners have the option to file a lawsuit to contest the assessed value. It is probably financially feasible to file suit if the judicial appeal will reduce the assessed value by at least $200,000 to $300,000. This rule of thumb is for Texas; it may be higher or lower in other areas. In Harris County (Texas), for example, about 500 to 800 property owners annually determine there is still enough discrepancy after completing the informal and formal hearings to further pursue an adjustment in the assessed value by filing suit. Litigation in Texas must be filed within 45 days of receiving written notification of the value set at the formal hearing. This process can result in additional reductions in the assessed value; however, it typically takes 12 to 24 months and requires services from both an attorney and an appraiser. Although relatively few owners under-stand how to pursue judicial appeals, they can be a very effective tool in lowering property taxes.

With property taxes making up such a large percentage of operating expense, a commercial property owner I know was recently pleased when his consultant informed him that the company saved over $123,000 in property taxes. Some owners will realize less savings than those, but every little bit helps your bottom line.

To view this article and similar articles, please visit property tax.

Patrick O’Connor, MAI is president of O’Connor & Associates. The firm, in business since 1974, specializes in nationwide real estate appraisals, research, and state and federal tax reduction services. O’Connor is frequently acknowledged by national publications as a respected source of information on real estate trends.

Nowadays, every department in the governmental or private sector boast a digital nervous system - as Bill Gates put it in his best seller Business at the Speed of Thought - through which it interfaces with the public, listen to the grievances and carries out or facilitates various services. Our current topic of discussion, is electronic tax filing, it makes use of the digital nervous system of the tax department, and in simple terms, it is the World Wide Web’s way of filing your tax returns.

In a way, Internet has revolutionized the way people have access to information. It virtually eliminated the unending delay that used to associate with the process of getting services done from governmental bodies in a big way. In the present context, long gone are the days of unending queues and taxing paper works. The electronic filing has made the submission of tax returns a customer friendly exercise. Let us have a look from close quarters the advantages of electronic filing as opposed to the conventional way of filing returns and study what sizeable change it had made in the whole process.

� The first and foremost reform electronic filing had brought about is that it virtually eliminated the need for going through the exhaustive steps of filling the forms and rushing to the nearest post office to get it posted before the due date.

� Not only the paper work, electronic filing in fact has eliminated all sorts of physical movement required in completing the filing of returns. No more office hopping is required. The only thing you needs is a PC and a reliable Internet connection.

� In electronic filing, any mistake that has invariably crept in is corrected in less time. As every bit of data of the tax payer is available online, there is no wastage of time searching dossiers.

� Electronic filing has also reduced the time lag before receiving your tax refunds. Also, with the online submission, it is possible to take a printout of the filed return at the time of submission to keep it as record. No more requests or visiting offices for the same.

� Electronic filing facilitates payment by credit card.

Also, with electronic filing, the back office processing time has reduced by days. For example, even if the customer had waited till the last day before filing his/her returns, still it is possible to get the filing processed within hours of submission as opposed to the 10 odd day’s delay that used to occur during the days of paper returns. As a result, as mentioned earlier, it has become possible to complete the refunds within a couple of weeks since filing.

Here is the process of filing returns by electronic means: The customer first should prepare his tax returns (by oneself or through a tax professional). Once the tax returns are in place, then the filing can be done through an IRS e-file provider. Filing can be done online as well, but if you are not sure about the technicalities, it is better to seek professional help. Generally most tax professionals will be licensed IRS e-file providers. Sign all relevant documents and get a customer copy as a record or for future reference. The IRS e-file provider will then file the returns electronically. Within 48 hours of filing the returns, the IRS will send the customer/IRS e-file provider an acknowledgement specifying the current status (acceptance or rejection as it may apply). If it is a rejection, remedial steps should be taken immediately.

As of now, if filing the returns online by oneself, the service as such is free. But if getting the job done through an IRS e-file provider, he/she may charge you a fee for offering you his/her expertise. As there is no solid rule of law in place governing the charging of fees for electronic filing of returns, the fees charged by different IRS e-file providers may vary and hence, from a customer point of view, it would be better to shop around and find out the cheapest deal possible before hiring one for your service.

Keisha Seaton is the owner of http://my-articles.com. To read more Tax Articles please visit http://www.my-articles.com/Category/Taxes/96.

Well, most of us are through with our taxes for this year. And now is the perfect time to say what we will do differently next year.

Take the time to sit down and assess what worked and didn’t work for you. What cost you the most time? What did you dread doing the most? Take the time to reorganize your taxes for next year.

Start with looking at the basics. How do you organize your tax receipts? This is the part that most of us hate the most, adding up all those little receipts. There are many ways to cut down on this problem.

You could start by using a computer to track your expenses. There are several programs that help you balance your checkbook, track your expenses and make reports as to where your money is going. They make it so very easy to see exactly what you are spending on. I love them. When it is tax time, all you have to do is print out the record (make sure that you’ve stuck the receipts in a box, the IRS doesn’t take computer printouts as fact).

There are people out there that like the tangible ledgers and shoeboxes. My husband is like that, so we keep our records in ledgers and files. You can keep this simple. For example, we own a ranch. We keep an accordion file with a ledger in the front. When a receipt comes in, we right it down in the ledger and file it in the appropriate section, for example “feed.” At any time, we can pick up our books and know exactly what we have out in every section. This is important not only in taxes, but in business planning and viability.

Keep a tax file for the year. Stick every receipt that is deductible in this file. This includes medical expenses and the such. I write the receipt down on the outside of the file before I stick it in. Then I don’t have to sort through receipts when adding, just go down the list.

If you own your home, keep a home file. You will need the receipts from improvements to offset any profits when you sell the home. Stick every major improvement receipt in the file and you’ll know where they are when you need them.

Tax time can be as simple as grabbing a couple of accordion file folders and heading out the door. If you have few deductions, you may only need one simple folder. The key is keeping things together and organized. What takes you only a few seconds now will save you hours of searching when tax time is starting to wind down.

If you do your own taxes, being organized will help you get a jump start on working on filing next year. It is more motivational to sit down with organized papers than piles and piles of receipts in boxes.

If you have your taxes prepared by a professional, don’t leave it until last minute. If you are organized, you should be able to walk out the door at a minute’s notice. Start early in the year, so that you know what receipts you should be saving and what you don’t need to keep. In a few weeks, go talk with a professional and identify what you need to do for next year.

Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today

You just got done paying taxes or filing an extension and are grumpy. If you are smart, you will use this miserable event to save some cash for next year.

Using This Years Taxes to Save On Next Years Taxes

For most people, preparing and filing taxes is the equivalent of sticking a pin in a body part. It simply is not fun. Heck, it is not even amusing. One of the reasons is you inevitably find some part of the process where you wonder how you could possible not have more deductions or credits. You fully realize you should tweak your finances to maximize certain expense areas and, by God, you are definitely going to do it for next year. This admirable goal, much like a New Years Resolution, fades into antiquity after about a month. You should not let this happen!

There is no better time than now to proactively plan for savings on next year’s taxes. Having just completed your taxes, you inherently know where you got hurt. Even if you do not, you inevitably felt like you paid more than your fair share. To avoid this, you need to do some tax planning.

Stop groaning. Tax planning may sound boring, but it actually very exciting if you think about it the right way. If I told you a trip to Vegas would definitely result in $2,000 in your pocket, would you be excited to go? Of course you would. Well, tax planning has the same the result. You need to focus on the amount of money you will save.

The best way to go about tax planning is with a proactive accountant. Yes, they cost money, but they will save you far more than you spend and you can write off their fees. A win-win if ever there was one.

When selecting a CPA, you want a proactive one. You want them to look at your tax return and tell you where money can be saved. Then you want to know exactly how much you would have saved last year if you had taken the recommended steps. Yes, it will be painful, but it will also motivate you to get on board with their plan and stick with it.

Paying taxes this year was undoubtedly a painful experience. Analyze the specific areas that caused you pain, and next year will be blissful.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes. Visit us to read more articles about tax deductions and our new tax help page.

Tax time! Aaaahhhhhh! Sound familiar? Tax time is the one time of the year that everyone gets nervous and anxious because we all know that we are going to be putting out a big chunk of change. It sucks, we hate it but it is one of those things that we have to deal with, unless of course we want to go to jail. Taxes don’t have to be so scary though, and they don’t even have to cost you too much money. You would be surprised to learn just how much you can save by simply learning about tax deductions.

Everyone can find something to deduct from his or her taxes, they just need to know how to do it. Tax deductions are simple. You see, we all get taxes on the part of our income that is taxable. If we can get some of our income designated as non-taxable then we will not have to pay taxes on that portion. By making use of the many different deductions that we are eligible for we can cut down the amount of taxable income that we have each year.

There is more to tax deductions than just the deductions themselves however. For example, the deductions that you can claim will depend on the way you are choosing to file your taxes. There are several different ways that you can go about filing and the one you choose will depend on your own personal circumstances but it should also depend on which way will save you the most money in the end.

When you are filing for tax deductions you will have a choice between either standardized deductions or itemized deductions. This amount is always different from year to year because of inflation and such but you don’t have to worry about getting confused because every year this amount is stated right there on the tax forms. Each form has the deductions on them so you will not have to worry.

Standardized tax deductions are generally the simpler of the two methods and that is why most people choose this kind. If however, you can save more with the itemized version then you really should use that one.

If you have been keeping good records throughout the year then you will find it much easier to do your taxes and find the tax deductions that are right for you and your situation. Just make sure that you don’t get carried away with your deductions, if you claim too many the IRS will get suspicious and they will check things out. That is never a good thing, it is far better to fly under their radar!

http://tax.hampsonbiz.com Tax Deductions

This article is shareware. Give this article away for free on your site, or include it as part of any paid package as long as the entire article is left intact including a live link. Copyright � 2006 Mitchell Hampson

The Internal Revenue Service wants you to pay taxes on time. That being said, it understands this is not always possible and has created a program for such situations.

The Internal Revenue Service is very upfront about its goal in dealing with taxpayers. While it obviously wants to collect all taxes due, it is also focused on keeping you in the system. This attitude is a relatively recent change undertaken in the 1990s. The IRS essentially determined it made better financial sense to have you in the system versus spending hundreds of man hours hunting you down. In practical terms, this means you need not have a panic attack if you do not have sufficient funds to meet your tax obligation. If you panicked this past tax deadline, there was no need.

The IRS will put you on a payment plan if you cannot pay your taxes on time. The plan calls for monthly payments like a car loan, to wit, they are an equal amount each month so you know what you are obligated to pay.

You are only eligible for a payment plan if you file a tax return. Once you file, you want to use form 9465 to request the payment plan. It costs $43 to file the application. The IRS will then get back to you on what it is willing to do. The payment plan process is not an audit. Millions of people apply each year and the IRS considers it standard operating procedure. No red flags are raised when you file the application. To the contrary, the IRS tends to view you as an honest tax payer since you are acknowledging the full amount due and trying to find a way to pay.

Importantly, the payment plan should be viewed as a means to buy time. Making the monthly payments will eventually pay off the debt, but it will take years. Interest on the amount you owe will also continue to accrue. The best strategy for using the plan is to make the monthly payments while saving up money to make a lump sum payment to satisfy the debt.

If you cannot pay the taxes you owe, do not panic. The payment plan option will keep you out of trouble with Uncle Sam.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.

If you live and work outside of the United States, I may have some very good news for you. Although Americans are taxes on their worldwide income, you may be able to claim a huge deduction.

Dealing With Taxes If You Live and Work Outside The United States

As the global economy continues to integrate companies and workers, you may find yourself living and working full time in another country. From a tax point of view, this can be a bit problematic since the Internal Revenue Service demands you pay taxes on all of your income regardless of where it is earned. If you are paying taxes in the country you are working in, the double whammy can wipe you out. Alas, there is a solution to this problem.

If you meet certain requirements, the IRS allows you to exclude up to $80,000 of your income from being taxed. You may also be able to deduct certain amounts you paid for your housing.

To qualify for these exclusions and deductions, you must have earned the income abroad and be living abroad. You must also claim residency in a foreign country for the entire tax year or be present in that country for 330 days out of 12 consecutive months. If you meet these fairly simple requirements, you will save a bundle on taxes. Please keep in mind that you must file a tax return with the IRS even if you do not owe any money because of the exclusion.

In certain situations, you may also be able to claim the exclusion and deduction if United States and country have a tax treaty covering the issue. To promote trade, many countries enter into tax treaties to address double taxation issues that would otherwise make most trade financially impossible. Many such treaties exist between the United States and other countries, so make sure to review any for your location.

Living and working abroad is much more common than it use to be. Make sure you understand the above requirements so you can avoid unfortunate tax consequences.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.

If you’ll recall back in 2001 the new IRS electronic filing was getting to be very popular and it was touted in being able to help the government collect more money. It got off to a rather rocky start, but it is alive and well today and each year more and more Americans are filing their taxes this way and it is saving our government money in administrative costs and making it easier for Americans to file the taxes.

Below is an excerpt of an article I wrote back in 2001 to give you an idea of how far the IRS e-filing project has come up until now.

“IRS becoming more efficient with e-file option: Electronic filing to increase by 100% this year. Also getting help from Jackson Hewitt and H and R Block. Also thanks to the software that has the option right on the screen. When less money used in collection of our taxes that means that there is more money realized and therefore more money for services to citizenry. Unfortunately Congress did not pass a $10.00 discount for those using the e-file system; Maybe next year. Historically the IRS has had to spend up to 40% of every dollar in the collection of those dollars. With this system in place we may see that go to only 5-8% and this is where everyone wins. Your taxes will not ever be less, we will just get more in services and more money for a stronger military and better health care for our grandparents, veterans and challenged. This is good and it saves trees to, even though you should keep a hard copy in a file, some day you can keep it all on a disk or post it note by 3M. The future is getting fun.

For more information go check it out at: http://www.irs.gov and http://www.usps.gov And you know things are changing when we see this type of cooperation with our government and quasi government agencies. The USPS is also making headway with their computer and Internet tracking.”

Today, the number of Americans the United States of America who were using electronic IRS tax filing is steadily increasing and this means a more efficient government and less tax dollars wasted in collecting taxes. Many people say that the government is not very good many things, but all people agree that they’re very good at spending our money! Well, I have another one to add to the list; they’re getting pretty good collecting to. Consider this in 2006.

Lance Winslow

Property taxes are a substantial expense for Texas homeowners, averaging about $3,600 annually. To reduce this expense, property owners should annually review and consider appealing property taxes. While there is no guarantee that an appeal will be successful, a recent survey conducted by O’Connor & Associates indicates that 70% of property tax appeals are successful.

Since the mortgage company typically disperses payments, property taxes tend to be a stealth tax. Although the homeowner writes a check, including taxes and insurance monthly, the property tax component is not evident. The property tax component can become quite evident when the homeowner is asked to fund a deficit in the escrow account.

Although 70% of property tax appeals are successful, only 7% of homeowners appeal each year. Research indicates five primary reasons homeowners do not appeal:

1. The process seems overwhelming and they do not know how to appeal,
2. They do not think an appeal is likely to be successful,
3. They think their home’s assessed value is below market value and there is no basis for appealing,
4. They do not understand they can appeal on unequal appraisal,
5. They are busy and do not want to set aside time, given the presumption that “you can’t fight city hall”.
Why appeal?

Consider an appeal for a $150,000 house where the property taxes are reduced by 5%. This would reduce the assessed value by $7,500 and the property taxes by $225, based on a 3% tax rate. Since the typical appeal hearing takes less than an hour, these are meaningful savings for the time involved. Regularly appealing your property taxes will minimize the value, so you are assessed for less than most of your neighbors. Most of the property tax appeals are resolved at the informal hearing, which is the first step in the process.

How to appeal

The first step to appealing annually is to send a written notice to the appraisal review board (ARB) for the county in which your home is located. Even if you have not received a notice of assessed value from the appraisal district, file a notice of appeal by May 31st for the following reasons:

1. The notice of assessed value can get lost in the mail,
2. A notice of assessed value is not necessary unless your assessed value increases by $1,000, and
3. You should appeal annually

You can file a notice of appeal by utilizing the Comptroller’s form available at www.cutmytaxes.com or by sending a letter to the ARB. The letter to the ARB simply needs to identify the property being appealed and the basis for your appeal. You should always appeal on both market value and unequal appraisal. Since the appraisal district staff is extremely busy during late May and early June, sending any data on the value of your property tax is probably a waste of time. At the same time you send your notice of appeal to the ARB, send a “House Bill 201″ request to the chief appraiser at the appraisal district. The House Bill 201 request will provide you a volume of information at a modest price.

Reasons for obtaining House Bill 201 information

Since most homeowners are not familiar with House Bill 201, you may be wondering what it is and when it became available. House Bill 201 is the term used by property tax consultants to describe provision 41.461 of the Texas Property Tax Code. This section reads as follows:
“at least 14 days before hearing on a protest, the chief appraiser shall: � inform the property owner that the owner or the agent of the owner may inspect and may obtain a copy of the data, schedules, formulas, and all other information the chief appraiser plans to introduce at the hearing to establish any matter at issue.”

The property tax code further provides the chief appraiser the right to charge up to $15 for each residence, and up to $25 for each commercial property owner for this information. However, there are limits on the cost per page an appraisal district can charge. Practically speaking, the maximum charge is $1 to $2 for a residence. In Harris County, most homeowners can print this information from the appraisal district’s web site once an appeal has been filed using the “I file” system.

This section of the tax code was added in 1991, but many appraisal districts have attempted to ignore this section of the property tax code for years and some still do. After discussing this section of the Texas Property Tax Code on a radio show in 2005, several listeners called back a week or two later to report certain appraisal districts were claiming to be unaware of this section. When O’Connor & Associates sent House Bill 201 requests to appraisal districts in 2005, some called us and said “what do you mean you want our information, we plan to use your information at the hearing to prove our value.” While these examples seem quaint and cute, it is surprising that 15 years after taxpayer friendly legislation has been passed, that appraisal districts are still ignoring property owners and tax consultants who ask for this information.

There are at least seven reasons to utilize House Bill 201 to obtain the information the appraisal district will use at the hearing:

1. It is an effective way to obtain information regarding both market value and unequal appraisal for your property tax appeal,
2. You will receive the appraisal district’s information regarding the size, condition and other qualitative and quantitative data for your house,
3. The information can be obtained for a nominal cost,
4. It is helpful to know what information your adversary will be able to use at the hearing,
5. Making the request limits what information the appraisal district can present at the hearing. If you do not request their information prior to the hearing, they can use any information available to them at the hearing. However, if you request the appraisal district information using a House Bill 201 request, they may only use information previously provided to you,
6. If they do not provide you information on market value or unequal appraisal in the House Bill 201 request, you win by default at the ARB hearing, and
7. In many cases, the appraisal district House Bill 201 information clearly supports a lower value.
Preparing for the hearing

When you receive the appraisal district House Bill 201 information, start by reviewing the appraisal district’s description of your home and ask yourself these questions:

1. Is the year built accurate?
2. Are the qualities and amenities accurate?

If the appraisal district overstates either the quantity or quality of improvements to your property, this is an excellent means to reduce your property taxes both for the current year and subsequent years.

Filing a 2525c Appeal

If the appraisal district has overstated the size of your house by more than 5% to 10%, even if you did not file a property tax appeal in prior years, you should consider filing a 2525c appeal. This will allow you to reduce the assessed value of your property for the current year and for prior years.

Patrick O’Connor, a designated member of the Appraisal Institute, is president of O’Connor & Associates. The firm, in business since 1974, specializes in real estate appraisals, research, and state and federal tax reduction services nationwide. With offices in Houston, Dallas, Los Angeles and Newport Beach, the firm employs more than 130 people. Patrick O’Connor is frequently acknowledged by national publications as a respected source of information on real estate. Visit http://www.cutmytaxes.com.

The Mortgage Interest that you paid to acquire your first and second home can be deducted in your income tax. As you read on, you will learn how to deduct and calculate Mortgage Interest for your income tax return. Plus, you will learn how Mortgage Interest works.

How it works

The Lender sends you form 1098. The form 1098 shows how much mortgage interest was paid. Using the values from form 1098, you transfer the values to Schedule A Form 1040 of your income tax form.

Requirements for Tax Deductions

There are three conditions to meet to be able to deduct mortgage interest. First, you must fill out the Schedule A Form 1040. Second, you must be liable for the loan. Basically, the homeowner pays the mortgage payment. And, he owns the home. Lastly, the home must be a secured debt of a qualified home.

Mortgage, Deed of Trust, or Land Contract instrument secures a debt. The instrument provides a way to satisfy debt in case of default, makes the owner liable to pay debt, and records under the local state of law.

Qualified Home means house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. And, the home is first and second home of the homeowner.

Qualified Mortgages

The three categories are Grandfathered Debt, Home Acquisition Debt, and Home Equity Debt. Grandfathered Debt is acquired mortgage prior October 13, 1987. If the Homeowner refinanced the mortgage, the mortgage remains as Grandfathered Debt. Home Acquisition Debt is acquired mortgage after October 13, 1987 to buy, build, or improve a home. The total mortgage must not exceed $1 million. Home Equity Debt is acquired mortgage after October 13, 1987 not to buy, build, or improve a home. The mortgage must not exceed $100,000 of the fair market value.

IRS yearly update

This article may or not contain the most current tax regulations, and laws. You may want to consider checking with your trusted Tax Advisor or IRS.

Dennis Estrada is a webmaster of mortgage calculators website which calculate the monthly payment, bi-weekly payment, affordability, refinance, annual percentage rate, discount points, and more.

Many Americans working overseas may experience higher tax bills under the new law signed by President Bush. In some cases, overseas taxpayers could face tens of thousands of more dollars in taxes.

Those most affected will likely be those living in high cost areas, such as Hong Kong and Singapore. Those whose companies don’t help cover the additional tax burdens of living abroad may suffer the highest increases. For companies with special relief packages for taxes, the additional costs could mean that fewer workers will be working abroad.

Under the old law, Americans working overseas could exclude up to $80,000 of foreign-earned income for 2006. Under the new law, the figure rises to $82,400. But the rate after that level is now higher than before. The new law also reduces the amount of housing costs that can be excluded or deducted.

The provision is expected to raise an estimated $2.1 billion in revenue over the next 10 years.

It is unclear how companies will react to the new law. The additional tax burden is expected to “significantly affect the cost” of overseas assignment, according to an Ernest & Young report.

In some areas of the world, American workers can expect to have as much as $20,000 in additional taxes for this year.

Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

Organizing your taxes can get quite nerve-racking. This is the main reason why many people would find some assistance in preparing their taxes.

When you file your taxes, you can find someone who can do the job for you. Look for a person who is knowledgeable, an experienced expert with tax specialization. There are actually various available types of assistance from people such as:

1. Tax Preparer

They have good knowledge when it comes to filing taxes. Tax preparers are persons that are highly trained and educated in preparing your tax returns and preparations.

2. Enrolled Agents

Compared to tax preparers, an enrolled agent can show you your taxes with an assessment. They are the “advanced” tax preparers, however the superiority or work and skills differs from agent to agent.

3. Certified Public Accountants

You cannot only use your CPA to prepare taxes for you; they can also help you to keep yourself from paying too much taxes. Their services are very expensive. You have to pay them in an hourly basis ranging from 200 to 300 dollars. However, they are worth the charges because a lot of them are very good. CPA’s can give you the ins and outs about taxes. They can provide you ways on how to save on your taxes legally.

In choosing among the three, consider first your finances. If you have reasonably small earnings every year, you do not have to hire someone whose service charge is bigger than your income. Hire someone who is within your budget.

If not, there are many other ways you can fix your taxes, a lot of websites offer free information on how to prepare your taxes.

Article written by Hector Milla, editor of http://www.bigmoneyteam.info, a website pointing ways to make money online , you may read their make money articles at http://www.bigmoneyteam.info/legalty-ways-to/, thanks for publish this article in your website or ezine keeping a live link.

There is an adage that claims that the only things certain in life are taxes and deaths. One could presume that tax laws are as easily determined and understood as one identifies death. When a person stops breathing and his brain stops functioning, he’s dead. However, this is not the case with taxes. There is nothing easily understood, clear, and simple when it comes to tax laws. Thus, more tax troubles ensue not because of disregard for the tax laws but because of misinterpretation and misunderstanding of the laws. Tax collectors, indeed, have very taxing jobs. Aside from collecting taxes from people who do not want to part with their hard-earned money, they also have to ensure that these people pay their fair share. Fortunately, Texas taxes, Texas tax laws, and policies are one of the lowest and manageable among the states. There is no magic in this; Texas simply does not charge income tax for state purpose. As a result, Texas taxes are not managed by the CPA of the state but the IRS.

This instance does not mean that Texas tax laws are lax and lenient. There are still several key events that tax collectors and auditors regularly deal with regarding Texas taxes. For one, there is the matter of tax evasion. Though used interchangeably with tax avoidance, there is an essential difference between the two that makes evasion a crime. Tax avoidance simply merits finding loopholes in Texas taxes, Texas tax laws, and policies, and using these to lower tax burdens by legal means. This ensures that the individual pays the least amount of tax as legally possible. Though this may cause tension between the collector and the taxpayer, this is something that can be easily settled with an audit. If the audit confirms that all tax deductions are valid, the taxpayer can get away with his minimum tax. However, if the audit proves otherwise, and the taxpayer was found out to have employed unlawful means to evade paying taxes such as under-declaring income, he could be charged with tax evasion. The legality of the methods used to lower taxes is the difference between the two.

Even if they lack state tax, Texas taxes, Texas tax laws, and policies require that the IRS conduct regular audits. These audits ensure that the taxpayers honestly meet their obligations. These are done in three ways, and the most employed is randomization. In this method, the IRS randomly selects income tax files from the submitted returns. Since there is a probability and a chance that they would be evaluated, taxpayers are driven to be honest with their tax information, thereby, limiting tax evasion cases. The second method employs a computer program used to spot evasion patterns which are prevalent among tax evaders. Evasion patterns such as unusually large allowances for entertainment are red-flagged. Individuals who are repeatedly tagged for the same pattern are investigated.

Thus, even if Texas does not have state income taxes, stringent Texas taxes, Texas tax laws, and policies, ensure efficient tax collection. Texans do not suffer from burdensome state taxes since the tax collection system employed in the state more than suffice for needs of Texas. Texas proves that added taxes are not guarantees for increasing state income.

For more valuable information on texas taxes please visit http://www.taxtexas.com

1. Estimated Tax Payments: If you are a sole proprietor, a partnership, or a shareholder in a Sub-chapter S corporation, you are considered self-employed. Since you don’t have an employer deducting taxes from your pay throughout the year, you are responsible for making advance payments of your estimated federal income tax. Estimated tax payments are due quarterly - on April 15, June 15, September 15, and January 15 - and are filed on a Form 1040-ES. At the end of the tax year, you will file a final Form 1040 with a Schedule C, which itemizes your business expenses for the whole year.

To avoid underpayment penalties - which are substantial - individuals whose adjusted gross incomes were under $150,000 need to have paid at least 100 percent of their prior year’s tax bill. People whose incomes were over $150,000 need to have paid 110 percent of the amount they owed in the prior year.

It’s in your interest to make your estimated tax payments during the year. This system also keeps you from owing a large sum of money all at once, which can be overwhelming. If your state of residence has income taxes, as most do, you will have to make estimated tax payments throughout the year for state taxes as well.

2. Self-Employment Tax: Your estimated tax payments will also include the federal self-employment tax - Social Security and Medicare. If you were employed by someone else, your employer would pay half of your Social Security and Medicare and the other half would come out of your paycheck. Self-employed people must pay the full amount themselves; however, 50 percent of the self employment tax is deductible on the 1040 form.

What if you are a salaried employee and you operate a home-based business as a sideline? In this case, you’ll be filing both the usual Form 1040 and a Schedule C for your home business deductions; you may also have to pay additional self-employment tax. No matter how little your sideline income is, you should be aware that it is subject to tax - although by taking advantage of the home-office deduction, you may find you owe little or no taxes.

3. Employment Taxes: Home-based workers who employ others must comply with many additional tax requirements. IRS Circular E, Employer’s Tax Guide, covers the federal regulations, and your state tax agency can inform you of state requirements for employers with regard to income, state unemployment, and workers’ compensation taxes.

If you employ your children or grandchildren, their earnings are deductible. Family businesses do not need to pay Social Security or unemployment taxes on minor children, and the children pay no income taxes on the first $3,000 of earned income. To substantiate this claim, keep time records of their work (the records will be more believable to the IRS if a non-relative keeps them), note the work done, and pay family at the rate you would pay a non-family member for the same work.

4. State and Local Taxes: Depending on where you live, you will face a variety of state and local tax requirements. All but nine states (Alaska, Wyoming, Nevada, Florida, Tennessee, South Dakota, New Hampshire, Texas, and Washington) have state personal-income taxes. But even those may have taxes on business. For example, Florida levies an income tax on corporations. Some cities, like Kansas City, have earnings taxes apart from the state income tax; others have unusual taxes on business. New York, for example, taxes unincorporated businesses.

Jeff Casmer is an award winning entrepreneur, keynote speaker, and internet marketing consultant with career sales over $25,000,000. His “Top Ranked” Earn Money at Home Directory gives you all the information you need to start, maintain, and prosper with your very own Internet Home Based Business in the 21st century.

Property taxes are one of the largest line item costs incurred by apartment owners. However, many owners do not appeal effectively. Even though owners realize that property taxes can be managed and reduced through an appeal, some view taxes as an arbitrary estimate provided by the government which can’t effectively be appealed. It tends to boil down to the old adage, “You can’t fight city hall”.

Fortunately, the property tax appeal process in Texas provides owners multiple opportunities to appeal. Handled either directly by the owner or by a property tax consultant, this process should involve an intense effort to annually appeal and minimize property taxes. Reducing the largest line item expense has a significant effect in reducing the owner’s overall operating expenses. While it is not possible to entirely escape the burden of paying property taxes, it is possible to reduce taxes sharply, often by 25% to 50%.

Why some owners don’t appeal

Some property owners don’t appeal because they either don’t understand the process, or don’t understand that there is a good probability of achieving meaningful reductions in property taxes. Some owners believe that since the market value of their property exceeds the assessed value, then it is not possible to appeal and reduce the property taxes. Although appeals on unequal appraisal are relatively new, there is a clear-cut way to appeal property taxes at the administrative hearing level based on unequal appraisal. Unequal appraisal occurs when property is assessed inconsistently with neighboring properties or comparable properties. Also, some owners are reluctant to hire a property tax consultant, even though many consultants will work on a contingent fee basis, in which there is no cost to the owner unless property taxes for the current year are reduced.

Overview of appeal process

The following are the primary steps in the annual process for appealing property taxes:

� Request notice of accessed value
� File an appeal
� Prepare for hearing
. Review records
. Review market value appeal
. Review unequal appraisal appeal
� Set negotiating perimeters
� Administrative hearings
� Decide whether binding arbitration or judicial appeals are warranted
� Pay taxes timely

Requesting a notice of assessed value

Property owners have the option of requesting a notice of assessed value for their property annually. Section 25.19g of the Texas Property Tax Code provides the owner the option to request a written notice of the assessed value from the chief appraiser. Owners benefit from requesting and receiving a written notice of assessed value for each property because it ensures they have an opportunity to review the assessed value. This notice should be sent on an annual basis. The appraisal district does not have to send a notice of assessed value if the value increases by less than $1,000. However, if an owner was not satisfied with a prior year’s value and the value remained the same, the appraisal district probably will not send a notice of the assessed value for the current year. In this situation, the owner might forget to protest since a notice of assessed value for the property was not received.

How to file and appeal

On or before May 31st of each year, the property owner should file an appeal for each property. However, while many owners are comfortable with an assessed value, in many cases there is a basis for appealing. Two options for appealing include:

1. unequal appraisal, and
2. market value based on data the appraisal district provides to the owner before the hearing.

You can appeal by completing the protest form provided by the appraisal district and indicating both excessive value (market value) and unequal appraisal as the basis for appeal. In addition, the property owner can simply send a notice that identifies the property, and indicates dissatisfaction with some determination of the appraisal office. The notice does not need to be on an official form, although the comptroller does provide a form for the convenience of property owners. (You can access the protest form at www.cutmytaxes.com .)

House Bill 201 - helpful information

House Bill 201 is the industry jargon for a property owner’s option to request information the appraisal district will use at the hearing, and to receive a copy 14 days before the hearing. The name House Bill 201 is derived from the bill used to enact the law. The details for House Bill 201 are located in sections 41.461 and 41.67d of the Texas Property Tax Code. When filing a protest, the property owner should additionally request in writing that the appraisal district provide a copy of any information the appraisal district plans to introduce at the hearing. The appraisal district will typically require the property owner to come to the appraisal district office to pick up the information and charge a nominal fee, typically $0.10 per page. While the cost for House Bill 201 requests are quite low (typically $0.50 to $2.00 per property for residential and commercial) the information is invaluable in preparing for the hearing. In addition, filing a House Bill 201 request is important because it limits the information the appraisal district can present at the hearing to what was provided to the property owner two weeks before the hearing.

Preparing for the Hearing

Start by reviewing the appraisal district’s information for your property for accuracy. If the appraisal district overstates either the quality or quantity of improvements, this will justify a deduction. The next step is to review the information on market value and unequal appraisal provided by the appraisal district in the House Bill 201 package. If the subject property is an income property, review the appraisal district’s income analysis versus your actual income and expense statements. Consider the following areas as opportunities to rebut the appraisal district’s analysis:

� Gross potential income
� Vacancy rate
� Total effective gross income, including other income
� Operating expenses
� Amount of replacement reserves
� Net operating income
� Capitalization rate
� Final market value

Many property owners and consultants start with the actual income and expense data, and use one or two of the assumptions provided by the appraisal district. However, they primarily utilize information from the actual income and expenses in preparing their own income analysis and estimate of market value for the subject property.

When comparable sales are the primary issue in determining market value, start by reviewing the comparable sales data provided by the appraisal district versus the assessed value for your property. Convert the sales prices from the appraisal district to either a per square foot or per unit basis. Then compare the sales to the per square foot or per unit assessment for your property. Sales can be helpful during the hearing.

The cost approach is not typically used in the property tax hearings except for brand new or relatively new properties. If your property is new, the appraisal district will probably want to review the cost information and you probably won’t want to show it to them. In many cases, the actual cost of a property is higher than the estimate provided by the appraisal district. If this is the case, you will likely want to appeal on unequal appraisal instead of on market value. No matter how good your argument or how passionately it is expressed, the appraisal district staff and Appraisal Review Board (ARB) members tend to believe that cost equals value for new properties.

Deferred Maintenance and Functional Obsolescence

Another issue that is important for the market value appeal, and to some extent for a unequal appraisal appeal, is information on deferred maintenance and functional obsolescence. Deferred maintenance could include items such as:

� rotten wood
� peeling paint
� roof replacement
� substantial repair
� landscaping updating and other similar items

Most appraisal districts give minimal consideration to requests for adjustments based on deferred maintenance, unless the property owner provides repair costs from independent contractors. There are some exceptions where a cooperative informal appraiser or sympathetic ARB will take an owner’s estimate of deferred maintenance and make adjustments based on those costs. Most appraisers and ARB members are much more inclined to make adjustments if third-party cost estimates are provided. In addition, the appraisers and many ARB members are inclined to only deduct a portion of the total cost using the argument, “we’ve been giving a replacement reserve allowance for this item for the past years and it’d be double-dipping to deduct the whole value off it in the current year.” While this is an incorrect appraisal argument, it does tend to be the practice at many appraisal districts. The reality is, the cost of curing deferred maintenance is deducted from the offer by a prospective buyer.

Examples of functional obsolescence would be a three-bedroom apartment unit that only has one bathroom, or a two-bedroom apartment that does not have washer/dryer connections in an area where those connections are common. Another example would be an apartment that has a window air conditioner in an area where central HVAC is typical and expected.

Unequal appraisal analysis

The Texas Property Tax Code, section 41.43(b)(3), provides for appraising or appealing on unequal appraisal including ratio studies and “a reasonable number of comparable properties appropriately adjusted.” Virtually all unequal appraisal appeals involve a reasonable number of comparables that are appropriately adjusted. Comparables are similar properties.

This is primarily because of the difficulty and cost of performing a ratio study. Historically, the position of many appraisal districts was that the property owner needed to get a fee appraisal for each comparable property and compare the market value estimated by the appraiser to the assessed value. The cost of getting multiple appraisals made this process financially impractical. Compiling a reasonable number of comparables appropriately adjusted is simple and straightforward. The first step is to choose a reasonable number of comparables. Usually four to five comparables is the typical number used at a property tax hearing, but in some cases, property owners choose ten to thirty. In some cases, there may only be one to four comparable properties that merit consideration. Most unequal appraisal presentations include three to ten comparables. The number of reasonable comparables depends on the location, type, size and age of the property. For example, there would be fewer five-year-old bowling alleys in the northern part of Harris County compared to recently built apartment complexes.

After choosing a reasonable number of comparables, array them in a table format, including fields of data such as account number, net rentable area, year built, street address, assessed value and assessed value per square foot.

The next step is to determine whether or not to make appropriate adjustments. For the administrative hearing, if you have truly comparable properties, most boards (appraisal review board or ARB) won’t be concerned with you not making adjustments. If you make adjustments, those would typically be based on factors such as differences in size and age compared to the subject property.

You should also review the information in the appraisal district’s House Bill 201 packet on an unequal appraisal. In many cases, the appraisal districts unequal appraisal analysis will document a reduction in your assessed value! If the appraisal districts unequal appraisal analysis documents a reduction, either the informal appraiser or the ARB should make the adjustment in assessed value for you. Having the opportunity to get an assessed value reduced automatically based on the appraisal districts unequal appraisal analysis is one of the reasons to appeal every property every year.

Completing Hearing Preparation

After reviewing the appraisal district’s information on your property, the House Bill 201 package, and your market value and unequal appraisal analyses, determine the strengths and weaknesses of each approach and decide which basis of appeal provides the best opportunity for a meaningful reduction. Although appeals on unequal appraisal have clearly been the law of the land since 2003, some appraisal districts and review boards have chosen to disregard the option for unequal appraisal put forth by the Texas Legislature. Although there is litigation underway which should resolve this issue within the next year, it would be prudent to visit someone who is knowledgeable in local property tax appeals to determine whether the county appraisal district and ARB in your area are considering appeals on unequal appraisal.

Set Negotiating Perimeters

After reviewing the information, it is important to set the highest level of assessed value you will accept at the informal hearing because after you accept an assessed value, the appeal process will be complete for the year and you will not be able to appeal further.

Administrative Hearing Process

The two steps to the administrative hearing process are the informal hearing and the appraisal review board hearing.
The Informal Hearing
The following procedure and rules are typical at the informal hearing:

� Meet with an appraiser representing the appraisal district. You should be polite and prepared at this meeting. While many property owners are frustrated and angry at the high level of real estate taxes, the appraisal district appraiser does not control the tax rate set by various entities nor the policy regarding property taxes in the area or the state. The appraisal district appraiser is trying to execute his job in a professional manner and appreciates it when property owners work with him on that basis.
� Provide the appraiser information on your property and he will review that information and information he has available.
� The appraiser will likely make an offer to settle the assessed value of your property fairly quickly. You can either accept the value or negotiate further. Either way, you should know within ten to twenty minutes whether the appraiser will offer an acceptable value. If the value is acceptable, conclude the negotiation by agreeing to the value for the current year. If the value offered is not acceptable, ask to go forward with an ARB hearing.

Appraisal Review Board Hearing (ARB)

The ARB hearing panel consists of three impartial citizens selected and paid by the appraisal district. The age of most ARB members ranges from fifty to eighty. There is an unfortunate bias in the system since the ARB members are selected and paid by the appraisal district, but most ARB members are reasonable people who want to make appropriate decisions.

Like the appraisal district appraiser, the ARB does not set tax rates or tax policy. The members are also not responsible for the effectiveness of local government. It is unlikely to help your case if you complain to the ARB members about either the high level of property taxes or the poor quality of some aspect of local government.

The ARB will expect you to make your presentation in about three to ten minutes. They will typically wait patiently while you make your presentation and may have questions after you conclude. An appraiser from the appraisal district, who may or may not be the same person who attended the informal hearing, will represent the appraisal district at the ARB hearing. The appraiser will comment on the evidence you presented and will often present other information the appraisal district has available. If you requested a House Bill 201 package for your property, it substantially limits the evidence the appraisal district appraiser can offer at the hearing. The ARB members may have questions after the appraisers presentation. Then the property owner will be given a final opportunity to rebut evidence presented by the appraisal district appraiser and quickly summarize the evidence. The ARB members strongly prefer you not repeat your entire presentation at this point.

After hearing the evidence, the ARB members will confer and make a decision. This decision is not subject to negotiation and they will not revise the decision if further evidence is presented. When this decision is announced, the hearing is effectively over. The ARB will send a letter two to four weeks later summarizing their decision and notifying the owner of a 45 day limitation from the date receipt of the ARB decision to either request binding arbitration or file a judicial appeal.

Binding Arbitration or Judicial Appeal

Beginning September 2005, owners of properties with an assessed value of $1 million or less may file a request for binding arbitration. The owner must file with the appraisal district no more than 45 days after receipt of the notice of the ARB’s decision. The binding arbitration option is interesting because it includes a loser pays provision. The appraisal district pays for the arbitrator’s fee if the final value is closer to the owner’s opinion of value, and the owner pays for the binding arbitration if the final decision is closer to the appraisal district’s opinion of value. Binding arbitration was passed to provide an alternative to judicial appeals, which can be expensive to prosecute.

Many owners pursue judicial appeals to further reduce property taxes. In 2005, O’Connor & Associates filed over 1,200 judicial appeals on behalf of property owners in the state of Texas. The judicial appeals can be expensive if the property owner and attorney don’t understand the process and have a plan in place to minimize the cost of legal and expert witness fees. Judicial appeals are typically successful. However, success requires cooperation from the property owner, such as providing responses to questions, documents and a deposition if requested. The judicial appeal is meaningful as an option to minimize property taxes since it reduces the base value. This is important because the appraisal district and ARB consider the base value in the subsequent year when setting the administrative hearing value.

Conclusion

Property owners can generate substantial reductions in property taxes by appealing annually. Consider appeals on both market value and unequal appraisal and obtain the House Bill 201 information when preparing for the appeal hearing. Property owners should consider all three levels of appeal: informal hearing, ARB hearing and judicial appeal/binding arbitration. While the ARB hearing and judicial appeal/binding arbitration can be an intimidating process, each is straightforward once you understand the mechanics.

Pat O’Connor, MAI is president of O’Connor & Associates, 130-person firm in business since 1974. O’Connor & Associates is the largest tax consultant in Texas, handled more than 43,000 administrative appeals in 100 counties in 2005 and is currently coordinating over 2,000 judicial appeals. O’Connor & Associates also provides real estate appraisal, cost segregation and market research services.

http://www.poconnor.com
http://www.cutmytaxes.com

If you are reading this I was successful in getting your attention. The financial strategy known as ESOP (employee stock ownership plan) has saved business owners one trillion dollars in income tax, that’s twelve zeros. $1,000,000,000,000.

The infamous October 1987 stock market crash actually resulted in a very positive outcome. Yes, the market quickly bounced back but the lesson to business owners was clear. I began to hear questions like “How will I monetize my equity out of the business?” “Will I get my price?” and “What will my tax consequences be?”

For over half a century the ESOP has been used by over 12,000 business owners as a solution to these issues and to provide many other advantages. Business owners can either cash out or phase out of their business and get tax free cash. All that is required is to then invest the proceeds in stock of a U.S. Company during the following twelve months.

As an example, if you sold the business for two million dollars you could invest in blue chip dividend paying stocks and look to an annual income of approximately $200,000. The two million received from the sale of your company stock can escape capital gains tax and ultimately be passed on to your children or to whomever you choose.

Putting “golden hand cuffs” on key employees is another advantage of the ESOP. In other words, who works harder, owners or employees? Several studies done by business schools including Stanford and the University of Michigan have shown that ESOP companies are more profitable than non-ESOP companies when communication is given due attention. In other words, when employees are made aware that they are important to the bottom line, which they are a part of, they begin to care like owners.

Who is an ESOP candidate? Existing ESOP’s range from businesses with a couple of employees to the largest ESOPs in the world, Proctor and Gamble and Publix Supermarkets each with well over 100,000 employees. Actually, companies with 20-100 employees represent the majority of ESOP sponsors.

Many business owners labor under the misconception that an ESOP means they give up control. This is far from reality as the business owner can retain total control until he/she chooses to pass the gavel. Cash flow can be much improved in a number of ways. Essentially, if income and capital gains taxes can be eliminated the bottom line advantage is clear. Loans conducted through an ESOP are about 40% less costly because both principal and interest are tax deductible. An article which I wrote for the RMA Banker’s newsletter spreads the word to all bankers that ESOP’s are superb loan prospects.

I have worked with several Arizona banks on over one hundred ESOP’s and these bankers are eager to participate with ESOP companies. As a means to create capital for corporate growth, ESOP is a superb financial strategy. As an acquisition tool, a well designed ESOP company can buy other companies with before tax dollars rather after tax dollars. Sellers also realize a dramatic advantage as they can eliminate all capital gains tax. Again, a win win for all concerned. Mr. business owner, taxes are voluntary.

Article by Frank Amato, President of Arizona ESOP Group, LLC and Employee Stock Ownership Plan (ESOP) consultant specializing in planning, implementing and administrating ESOP plans that offer business owners rich cash and tax advantages. For more information about ESOP plans, visit
http://www.ArizonaESOPGroup.com or call 480-222 0199.

If you own a franchise business, then there are a few taxes that you are need to pay to make sure that your business runs smoothly and you don’t have to face any legal / tax complications in the future.

All the corporations that are supposed to file the Annual Franchise Taxes. The new franchise tax and fee law introduced in the year 2004 requires all the franchise businesses to pay a State Authority franchise tax and another franchise fee to the Secretary of the State every year before April 15.

The franchise taxes are of two kinds: the organization taxes and the doing business taxes. The organization taxes are the taxes that have to be paid by franchises to exist as a corporation. On the other hand, the doing business taxes are ones that have to be paid by the corporations for having the privilege of doing business within the limits of the taxing authorities.

The franchise taxes and the fees were paid to the Secretary of States, in the past, at the time of filing the annual report. With the new franchise tax law, the taxes are to be filed with the Department of Revenue after filling up the tax form K-150, and the franchise fee is to be paid to the Secretary of States along with the annual report.

There are a few things that you are supposed to keep in mind, even if your corporation is not a franchise, you are still supposed to follow the franchise tax. In this case, the franchise tax will be considered a business tax based upon the corporation’s assets. All corporations are supposed to file the franchise tax. In case no tax is due, the corporation has to give its information to the respective department.

The franchise taxes have to be paid by the corporations including the domestic as well as foreign. They also include partnerships, some owners, and even Limited Liability Companies (LLC). “Corporation” also includes the trusts, joint stock companies, and other associations and organizations that operate for profits, have a capital stock, or shares, and special privileges.

The franchise taxes are supposed to be filed a year in advance depending upon the assets of the enterprise as of the first day of the taxable period. Let us take an example: If a new business enterprise incorporates in April 20, 2004, with its accounting period ending on December 31, 2004, then, it is supposed to file its first franchise tax return on the 15th day of the 4th month from the time the taxable period begins.

In this way, the date that will be due for the initial franchise tax return for that entity will be August 15, 2004, depending upon the qualification date and the assets it had at the time of its incorporation.

The business entities that have a net worth of $100,000 or more in a state should pay a franchise tax of 0.125% of their total net worth to the State Department of Revenue along with their taxpayer’s balance sheet. Various credit balances are deducted from the franchise tax to calculate the amount owed. If the calculated amount of tax is found to be less than $100, then, your corporation is not required to pay the franchise tax for that period. Yet, filing is still important.

(Remember talk to your legal and accounting advisor)

Learn more about owning a franchise today : http://www.hjventures.com/franchise/franchise-glossary.html

About The Author
Howard Schwartz is a partner in several business strategy groups, including HJ Ventures International, Inc. Howard has worked with hundreds of entrepreneurs worldwide with a focus on writing Business Plans for companies interested in raising capital from Venture Funds and Angel Investors. Howard’s business plans have secured several million dollars in funding. For more information: http://www.hjventures.com.