Sample Articles Related to Taxes
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
(These articles were first published on this site - http://www.expatcpatax.com/)
Three Ways to Get on Track with Your Taxes
Tax season is in and we don’t want to waste precious time and effort chasing after
deadlines. The best thing to do is to prepare early. You don’t have to go through all the
stresses of filling-up forms, calculating amounts, and finding relevant documents in a
short amount of time. Do these three simple steps as soon as possible to minimize a lot
of panics and make the tax filing process easier.
Organize Your Records and Documents
Consider your status as a taxpayer to find out which relevant documents or records are
important for your taxes. The IRS Tax Guide will help you identify the relevant resources
you need according to your employment or status. A business owner will need different
sets of records compared to a regular employee, or a student.
Whether these records may be in paper or electronic form, it is helpful for you to have
them all in one place ready to be retrieved during your filing process.
For paper documents, organize, label, and file them accordingly for easy retrieval once
you need them. For the electronic records, you may want to regularly check your email
for the W-2s that will surely begin to arrive in your inbox. Once you receive these
emails, be sure to keep them in a safe place. The worst thing to do is moving your W-2
and even your 1099s (if your self-employed) from your primary inbox into your junk mail
or even deleting them!
You also need to organize your emails so that you don’t have to deal with heaps of
emails and scrutinizing through each one just to look for that W-2 that was electronically
sent to you.
This kind of alertness is crucial for your safety. You should know that tax scams usually
come in the form of cheaters who would use your Social Security information to process
a tax return and your account is where the amount is charged. Vigilance is important
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WRITING PORTFOLIO ON TAX ARTICLES
during the tax filing season and keeping an eye on your mailboxes is one good step to
begin with.
Take Advantage of E-filing
Technology has opened up more comfortable ways to process things including the filing
of tax returns. You may start filing as soon as you can, and the most convenient,
secure, and rapid way to do it is through an E-file.
When your W-2 and other tax documents and records are ready, you may start
accomplishing your tax duties. You can also get rid of the stresses brought by going
with the majority of filing starting on January 23. Early processing of tax requirements
means you have the chance to get your refund in as early as 10 days when IRS begins
to process it. If you decide to get your tax refund directly through the bank, you can
have it in 21 days.
A recent change in the process which is worth to know is IRS will be holding the whole
amount of your tax refund until February 15, the very least. This is when you choose to
request the benefits of the Earned Income Tax Credit (EITC) or the Additional Child Tax
Credit (ACTC). Though your tax return is clean and no conflict is found, you should still
wait until February 27 or even later before your refund comes. More so if you opted to
receive your money through direct deposit. All taxpayers who will receive these benefits
will have to wait for this time frame whether you file it correctly or not and whether who
are you filing it with. IRS’s reason is actually to your advantage. You have to be patient
with it or endure the potential of being a victim of identity stealers or tax refund fraud.
Choose Direct Bank Deposit
When you avail of E-filing you also get to choose a better way to get your money fast
and secure. You can provide you bank details so that your refund goes directly into your
bank account. That means less hassle with having to wait for your check to arrive and
go through more waiting as you encash it. You also don’t need to spend more time and
effort having to go to the bank.
There are also some limitations related to direct deposits. First, you cannot direct
deposit your refund into a foreign account. IRS will also not allow more than three
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WRITING PORTFOLIO ON TAX ARTICLES
refunds into one bank account in one year. The fourth refund will be delivered to you as
a check. As its advantage, you may choose from 2 to 3 different bank accounts within
the country to deposit your tax refund.
Generally, the way to get on track with your tax responsibilities is to start and finish as
soon as possible. You can process your documents with less stress because the
deadline is far ahead.
You also give yourself as much protection from tax crooks. They will have difficulty
snatching your tax identity when you file early. However, when the worst happens and
someone illegally used your Social Security information, you would have to go through
months of proving yourself as the true owner before you can get your refund. You might
think it will not happen to you, but it’s better safe than sorry.
So, don’t linger before you start organizing your records and related documents
according to the Tax Guide, using E-filing for more convenience, and choosing to
receive your refund through a direct deposit. You can finish everything in one sitting if
you have the complete resources and the will to get it through.
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
Business Start-Up and Related Tax Procedures
Starting a business may bring about a certain degree of fear and anxiety. It does not
always portray a bed of roses, but you should understand that taxes related to your
business plan should not hinder you from starting that small business you dream of.
This fear of the unknown can be addressed with a little knowledge such as what this
article offers.
This does not mean starting and running your own small business will be a piece of
cake. If it were, there should have been more self-employed than employees. If you
understand how taxes work, you will gain more sources of income and the privilege to
be your own boss through your simple enterprise. Learn more to find out the real deal of
getting into the business world.
Understand the Requirements
Starting up your own business demands a certain level of administrative tasks on your
end. These, among others, include quarterly estimated taxes, keeping records, paying
taxes, and filing a tax return. The list does not seem so encouraging, but you’ll get used
to it once you’re in. There are also several other responsibilities which can help you land
the business arena with grace. You need to decide which business structure to operate
on, have an Employer Identification Number, and deduct some taxes.
Decide Which Business Structure to Adapt
It may sound too technical, but a business structure involves the way you determine
your responsibilities, the means to finance your business, the method how you earn and
the way to calculate your taxes. The following are the four basic classifications of
business structures: LLCs, corporations, partnerships, and sole proprietorships.
The LLCs have owners or members that are secured from liabilities similar to a limited
partnership structure or a corporation. IRS actually considers LLCs as similar to
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partnership, corporation, sole proprietorship and should be taxed as such. LLCs with a
single member will be considered as a sole proprietorship, while multiple-member LLCs
will be taxed as a partnership or a corporation. LLCs options vary from state to state.
When you want to consider this business structure, better to do some research and ask
pertinent advice.
Corporations come in two kinds: C corporations and S corporations. The owners of a
corporation are shareholders. Corporations enjoy the benefit of a limited liability. If a
business run by a corporation has a debt, the shareholders are not obliged to pay the
debt. Personal assets of shareholders are secured under the corporation structure.
The difference between the two types of a corporation is that an S corporation is
somewhat similar to a partnership, while a C corporation gets taxed twice – at the
corporate level and also at the shareholder levels. But are there many C corporations
out there? It is because an S-corporation is only limited to 100 shareholders and
requires it to be only US-based. There are other similarities, but such discussion goes
beyond this topic.
Two or more people running a business is usually under the partnership structure. Both
parties share in profits, losses, and contributions. It might be wise to consider that a
partnership is a kind of pass-through entity. Meaning, the income or loss of the
partnership have to “pass through” the business and no tax will be imposed until the tax
gets to the partner’s tax returns. The partnership is still accountable to file a business
return. Only, it is merely a means to acknowledge profit and loss. The actual taxes are
passed into the partner owners.
If you are the only owner of your small business, you may consider is as under a sole
proprietorship structure. You will be responsible for reporting your net income, or your
loss, by filing a Schedule C on your individual tax return. You will also have to pay a
self-employment tax but you can get half of its amount as a deduction on your 1040
return.
Whatever business structure you choose, the best thing to do is study and choose
wisely which structure fits your time, place, and capacities well.
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
Get an EIN
Once you’ve decided the best business structure ideal for your business plan, it’s now
time to get an EIN or Employer Identification Number. The fancy name simply refers to
the number that lets IRS identify you as a business taxpayer.
You can get your EIN for free and its procedure is easy to follow. You first need a valid
Taxpayer Identification Number (your SSN). You also need to provide your business
information and be sure to complete the EIN application in one sitting since you cannot
have it saved for completion at a later time. The process can be done online so you
don’t have to stress yourself a lot about it.
Know Your Tax Deductions
The beauty of owning a small enterprise is you get to deduct various expenses as being
a self-employed individual. You may deduct some federal, local, state, and foreign taxes
which are directly linked to your business. A full list can be derived from the IRS
website, but the list includes other taxes such as personal property taxes, real estate
taxes, and even half of your self-employment taxes.
Aside from these, you get to enjoy other credits and benefits available through the tax
guide.
Once you start stepping into the business world, brace yourself to face challenges that
may require you to overcome again and again. When it comes business-related taxes,
you don’t have to stress yourself out because there are plenty of resources and
assistance available to help you understand better and deal with your tax liabilities well.
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
Cut Down Your Tax Bill with These Employer-Sponsored Savings
Accounts
Now that tax season has started, you may want to be aware and take advantage of
these savings account that will help you save more, benefit more, and generally lower
your tax bill.
There are actually several plans and accounts that will help you stretch your money this
year but the three presented here are saving accounts ideal if you are an employed
individual. These are benefits that will cost you little or none at all. Your employer
generally sponsors these accounts and reading further will help you gain a better
understanding of what they offer and what they require from you.
HSA
First, the Health Savings Account or HSA. The HSA is available to employees who
have high-deductible medical plans. Both your employer and you as the employee
make the contribution. A dollar limit is also applied to both you and your employer’s
contributions.
The advantage of the HSA over other savings account is it does not operate under the
policy where you have to use it or else you will lose its benefit, like other savings
accounts. It can actually be carried over each year that you don’t take advantage of it
and it will continue to grow as a tax-deferred benefit. Another advantage is you can also
invest the amount under your HAS account and you can get earnings that are tax
exclusive. The only requirement is you use the money to cover your medical expenses
under its regulations.
When filing, you have to attach Form 8889 indicating the list of payments and expenses
you had within the year. Your payments will be considered as deductions on your tax
bill. The pre-tax payments that you had as your payroll deductions or those made your
employer will appear in box 12 on the W-2 form.
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WRITING PORTFOLIO ON TAX ARTICLES
Your HSA provider should also give you Form 1099-SA which contains all the
withdrawals you had for one year. If there are nonqualified medical expenses, those will
not be covered and you will have to pay tax for those amounts. There is also a 20%
penalty if your age is 65 or below. It is important to always keep medical expense
receipts as proof of your expenditures related to this account.
FSA
Another savings account to lower your tax bill is the Flexible Savings Accounts. Similar
to the Health Savings Account, it also allows you to set aside certain amounts from your
earnings as pre-tax deductions.
Some of the differences between the two are as follows:
FSAs come in two types: the dependent care and the healthcare. In contrast to the
HAS, you will lose your FSA if you don’t use it. If at the end of a year you still have
money left, those will not be carried over and you will lose those amounts. Although
contributions can still be made by both employee and employer, and the dollar limit
applies to both contributions, only the employer can give a carryover of a certain
amount up to $500. The employer can also avail of a grace period of up to two months
and a half to use the leftover funds. But employers are not obligated to offer these
options. Also, when they choose to have the employees enjoy these alternatives, they
can only choose one between carrying over or grace period.
The good thing about FSA is that it does not require any reporting documents to attach
to your tax return. You can also get money from your FSA if you need to pay medical
expenses within its qualifications even if you have not yet submitted the funds.
401(k)
This last savings account aimed at helping you cut down your tax bill is actually a
retirement savings plan. A 401(k) contribution is tax-deferred; meaning, you don’t have
to pay taxes on your 401(k) funds until you use the money during your retirement years.
The contributions you make through payroll deductions will all be pre-tax values. Box 12
of your Form W-2 will show you these contributions. There are situations when
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employers choose to make matching contributions for their employees up to a certain
amount.
Another good thing about the 401(k) retirement savings account is its Saver’s Credit.
You can find out if you are qualified for this particular credit which depends on your
adjusted gross income.
This retirement savings plan should be used when you reach more than 59 years old
and a half. If you withdraw it before that time, you get a 10% penalty. Aside from that,
there might be some income tax value related to your withdrawal.
Availing of these three savings account will not only provide greater benefits for your
health, retirement, and general savings, it will also help minimize the amount you owe
the IRS and you will have spare cash to spend on other important things in life.
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
Form 8938 – Requirements and Penalties for US Expats
Your US expat tax filing may undergo revisions and updates to cope up with the IRS
requirements. Enough and accurate information on the guidelines set by the Treasury
Department will be a great advantage for your tax compliance. In particular, foreign asset
reporting through Form 8938 needs certain attention and understanding on your part.
Who are Required to Submit Form 8938?
The Statement of Specified Foreign Financial Assets or Form 8938 is an important part
of your US expat taxes. There are certain thresholds which will determine if this is indeed
necessary on your part or not. Other factors that will determine eligibility are foreign
financial assets and filing status.
The following conditions will require you to submit form 8938:
a. A single taxpayer with foreign assets exceeding of $50,000.
b. Married couple who lives in the US and filing a joint tax return whose foreign assets
exceed $100,000 on the last day of the tax year or $150,000 at any time during
the year.
c. Dual citizens with foreign assets above $400,000 on the last day of the tax year or
$600,000 at any time during the year.
If you fall under any of the specified conditions above, it means you have to file Form
8938 and your FBAR. Form 8938 does not replace this tax form requirement. Not all who
file FBAR will have to file Form 8938.
What are Included in the Instructions for Form 8938?
Specific requirements for filing of Form 8938 are included in the Instructions. It also
identifies the type of assets considered as foreign financial assets and must be included
in the Form.
Other information included in the Instructions are:
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WRITING PORTFOLIO ON TAX ARTICLES
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Procedures on how to accomplish and submit the form
Time periods for reporting and filing
Excepted specified domestic entities
Determining the total value of your specified foreign financial assets
Interests in specified foreign financial assets
Specific instructions
Special rules and examples
What Penalties are Associated with Non-filing of Form 8938?
You may know already the strict policies IRS imposes when it comes to failure to file tax
forms and tax payments. Like any penalties, the severity of the penalties IRS may require
will depend on certain factors.
The basic fine when you fail to file Form 8938 is $10,000. Continuous failure to file this
form despite notifications from IRS raises the penalty up to $50,000. Aside from these
values, any understatement or non-disclosure of assets will result in a 40% penalty.
Even with this information, the real deal is the application. Even if you comply, mistakes
can be time-consuming and costly. What more can non-compliance of foreign asset
reporting result to? Remember that even if you completely, accurately, and promptly filed
Form 8938, you still have to accomplish FBAR Form or FinCEN 114.
Being knowledgeable and faithful in accomplishing and submitting these forms will
provide greater advantages.
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
How to Keep Track on Your Student Loan
Those student loans might keep you from concentrating well on your studies or from
enjoying life in general. Don’t let these thoughts trouble you and be ahead of yourself by
making sure you keep track on your student loan every now and then.
When holidays come and you want to spend extra money, you might realize your
thoughts on how to pay your debts bothering you. Before anything else, it is important to
accept your real financial situation. You can still manage to enjoy life while doing your
best with your student loan. These practical tips will let you be on track when it comes to
the money you owe.
Be Informed with Your Numbers
Scary as it may seem, you can’t get away from crunching those numbers you received
as your student loan. The idea that you have to pay these amounts may sound stressful
but everything will come to pass. Being informed as to how much you owe and making
personal plans and budgets from there should give you a better heads-up on things.
Whether you check online or through a bank, checking your loan balance is one way to
keep you on track of your student loan.
Be Responsible with Your Payments
Instead of spending what you don’t have, why not get into some money-earning
schemes to help you pay off your debt quickly? Here are easy steps to make sure you
gain extra cash to repay and enjoy more worry-free student days.
a. Pay the principal amount quickly to get lower interest charges.
b. Have a goal in place and stay committed to paying monthly according to your
budget.
c. Set up an account to be used only for paying your study debt. Cut back on
expenses so you something to put into this account.
d. Have a part-time job.
e. Avoid the usual money-spending traps.
CHARLENE SAMOY
WRITING PORTFOLIO ON TAX ARTICLES
For your advantage, paying the interest on your loan means you get an additional tax
deduction. Tax savings at the end of the year also help to lessen your tax due. Save as
much money as you can and set these aside to pay off your debt.
Be Flexible with Your Repayment Plan
Regularly checking your repayment plan is an ideal way to make sure you can pay
according to your means. Especially when you are falling behind your plan, you may
have to adjust your monthly payment and change your plan accordingly. Make sure you
are paying the amount you can fit into your general budget. When you set an unrealistic
goal and does not achieve it, you add more stress and frustrations to yourself.
Be Disciplined with Your Living Expenses
You don’t have to impoverish yourself and cut off utility services such as your water,
heat, food, and gas allowances until you pay the whole debt. These are important daily
expenses which are as important as your student loan.
What is required from you is, to be honest with how much you can spend for yourself.
You may need to cut down on some recreational and relaxation opportunities, or buying
stuffs you don’t really need. Still, give yourself an occasional reward for being on your
toes with your expenses and your studies.
Just like any other debts, you can deal with your student loan victoriously using good
and smart strategies.