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Those goody bags Oscar presenters receive aren’t tax free gifts anymore.

“The gift basket industry has exploded, and it’s important that the groups running these events keep in mind the tax consequences,” said IRS Commissioner Mark W. Everson in announcing the tax agency and film industry has reached an agreement on Oscar goody bags.

Oscar presenters walk off with over $35,000 worth of goodies in their gift bags, including a $25,000 four night stay at Honolulu’s Halekulani Resort. But tucked deep in that bag will be a nice letter from the IRS.

In fact, the Academy of Motion Picture Arts and Sciences first contacted the IRS voluntarily due to the high value of the goody bags this year. The Academy was concerned with any potential tax issues for this year and previous years.

The Academy and the IRS have settled the tax obligations for all gifts through 2005, though no details were given as to how. Recipients of this year’s gift basket will be issued informational tax forms by the Academy and will be responsible for their own income tax obligations.

It doesn’t seem as if the “gift” should be taxed. After all, the goddies are given by the hotels, designers and manufacturers as a homage.

But the IRS says that at this level of cost, the gift bags have public relations value. This is business, according to the agency. The only option the stars have, according to an IRS spokesman, is to donate the gifts to a qualified charitable organization. If they do, they may be able to take a tax deduction, subject to the usual applicable limitiations and requirements.

This will affect many more people than just the Oscar stars. Celebrity fundraiser goody bags, celebrity golf, charitable organization and other entertainment Read more…

Don?t be in the dark about your taxes. If you are not very good with numbers but would like to get a clear estimate of how much you have to fork over to the government, then use a tax and tax refund estimator. This easy-to-use software will not only make managing your taxes a lot easier, but possibly also save you a lot of money.

Tax refund estimators can help forecast your tax situation for the upcoming year, and notify you of refunds if you are qualified. They are usually very intuitive and easy-to-use, so that you can print a comprehensive tax report within minutes. Choose the software that has tools and tips to help you minimize taxes and maximize your refund!

Most of this software requires you to connect to an online portal. You need to create an account and log in to use web-based peripherals, such as accessing your bank account or estimating the values of your property. It is therefore important that you only buy from trusted software brands, because while poorly developed software is cheaper, it is also more likely to compromise the security of your data.

Tax refund estimator software programs are just estimation tools, so your actual tax and tax refund will vary slightly from what Read more…

Many states have their own estate tax laws that you need to worry about. With the current law phasing out the estate tax over the next few years, the state’s are beginning to feel the pinch of having less federal estate-tax revenue coming in.

Several states, especially those with budget issues, are levying some forms of estate and inheritance tax on their own.

Twenty-four states and Washington, D.C. now have an estate or inheritance tax. Some of these laws are new, some are not.

Although the current federal law exempts the first $2 million of an estate’s worth, the threshold in some states is much lower. With a home, a retirement account and other investments, many estates easily become taxed by the state.

For example, in New Jersey, estates worth over $675,000 are subject to some form of state inheritance or estate tax.

The threshold is $1 million in D.C., Kansas, Main, Maryland, Massachusetts, Minnesota, Nebraska, New York, Oklahoma and Oregon.

The maximum rate varies, but is usually around 16%. Federally, you can recieve a deduction on your federal estate-tax liability based on the amount of estate tax paid to the Read more…

An organization has a large number of employees who receive a salary for the work they do. Some employees may be paid a stable salary while others are paid on the basis of productivity or the number of hours worked. All organizations having employees are in charge of paying payroll taxes. Payroll taxes are all the different forms of employment taxes paid by the organization and covers Federal and state income tax, social security and Medicare taxes and federal unemployment tax. Payroll taxes are deducted from the employees pay. Filing pay roll taxes becomes an important task in order to maintain proper record and pay taxes regularly.

There are a number of forms and documents that need to be filed with the IRS. Payroll taxes involve large number of deductions and exemptions that are to be taken into account during the filing process. First, pay roll taxes need to be calculated accurately and each of the employees is required to fill out a form know Form W-4. The form helps to calculate payroll taxes. The form is used to calculate federal and state income tax to be deducted from the salaries of the employees. Social security and Medicare deductions are also considered and the amount to be paid is calculated. Both the employer and the Read more…

Business tax is paid by large organizations and individuals running small businesses. The process of tax planning and submission is a very tedious one and requires meticulous planning from the taxpayers. Tax laws are very difficult for many people to understand and require a detailed study of all the intricacies contained therein.

Business tax lawyers are legal professionals with expertise in specifically dealing with issues related to business tax law. They guide individuals and organizations through the intricacies of meticulous tax planning, provide advice on leveraging tax benefits legally and negotiate issues concerning taxation claims by government agencies. The services of business tax lawyers help clients minimize tax liabilities thereby increasing their profits and maximizing the growth of their business. Tax lawyers also safeguard their clients from tax avoidance investigation by government agencies. In case of tax related litigation, they make expert counsel available to their clients and represent them in courts, if necessary.

The tax system in the United States is extremely complicated with various kinds of tax laws applicable to people such as sales tax, employment tax, property tax and many other local and federal tax laws. It?s advisable for new business organizations and individual entrepreneurs to appoint full time tax attorneys who can guide them through the various methods of structuring their businesses Read more…

The Energy Act of 2005 created major tax credit incentives for people purchasing hybrid vehicles. The IRS has recently concluded the quarterly review of manufacturers and issued tax credit status.

IRS Updates Hybrid Tax Credits Following Industry Audit

As part of the Energy Act of 2005, the federal government took a major step towards promoting the use of hybrid vehicles. In simple terms, it converted the tax deduction for purchasing a hybrid vehicle into a tax credit. This change was remarkable because a tax credit is very valuable because it is a reduction from the actual amount of tax you owe, not your gross income. Given the fact the tax credit could be over $3,000 for some models, this was a major boon for hybrid car sales!

Alas, the hybrid tax credits were not set in concrete in the tax code. Instead, they are known as phase out credits. In this case, the amount of the tax credit is first set by the IRS after a review of the car model in question. Each quarter, the IRS then totals all of the hybrid sales by manufacturer. Once the total sales reach certain milestones, the tax credit amount is reduced by a percentage. Eventually, the credits are completely phased out and the relevant automobile executives openly weep.

The magic sales threshold for hybrid manufacturers is 60,000 cars sold. Once a manufacturer hits this level, the credits phase out in a labored manner as is typical with taxes. Once the 60,001 car is Read more…

While the IRS will auction off just about anything to satisfy a tax bill, seized real estate gets people excited. Here are the basics of IRS real estate auctions you need to know.

Understand IRS Real Estate Auctions

Does the IRS really seize homes and then auction them off? Yes. The seizures occur from wayward taxpayers who never pay their taxes and seizures of crime-inspired purchases such as those from drug dealers and such. Before you run off to bid on these seized homes, however, you want to keep some things in mind.

The first thing to keep in mind is the property is offered as-is. The IRS makes absolutely no guarantees regarding the soundness of the structure, the quality of title and so on. If you win, the IRS simply issues you a quit claim deed to the property and moves on.

The second thing to remember is you have to pay cash for the property. Yes, cash. Okay, you can pay with certified checks, but no financing, personal checks or credit cards are allowed. None! Make sure to read the notice of auction closely to understand what is required of you.

With real estate tax auctions, there is another issue you need to understand. Although you may win the auction, the delinquent taxpayer has the right to buy the property back from you for a period of 180 days. If the taxpayer exercised their option during Read more…

Buy a home, car, helicopter, NFL team or whatever for one measly dollar. Ah, we must be talking about IRS property auction hype.

The Basics of IRS Property Auctions

You may have seen commercials or advertisements on the web about the steals you can get at IRS property auctions. Whether you can actually get such deals is questionable, but there is no doubt the IRS does hold auctions. The purpose of the auctions is to sell off property of a taxpayer that owes the IRS money. Here are the basics of the auction process.

Perhaps the most interesting thing about IRS auctions is there is no set procedure. With some auctions, you must appear in person to bid. With others, you can mail in a bid. Still others require you to submit a sealed bid. So, how do you know which is which? You need to get a copy of the official notice of the auction. It lays out all the specifics and is binding on the property sale.

The second basic thing to know about IRS property auctions is the payment method. Ironically, the IRS is really into cash. If you intend to bid on a piece of property, you must be prepared to pay in cash, with a cashier?s check or certified bank check. You cannot finance the transaction, pay by personal check or even use a credit card. Again, make sure to review the official notice of Read more…

If you are writing a college tuition check, there may be a hidden tax break that will allow you to deduct a part of your college tuition payment. In order to do this, you must utilize a ‘Section 529′ College Savings Plan in one of the 26 states that provide a tax deduction or credit when you deposit the money.

People currently using Section 529 plans are well aware of these popular tax breaks. However, there are still plenty of others that currently pay state tuition but don’t participate in the Section 529 plan. By first depositing the funds into a Section 529 plan and then withdrawing for the state tuition payment, you may qualify for deducting your state tuition. The deduction is allowed (in most cases) without regard to your income status.

A ‘Section 529′ College Savings Plan is best known for its Federal Benefits. The earnings on the plan are tax free if you use them for higher education expenses. The current Federal law is set to expire in 2010 unless an extension is passed. Most states conform to the Federal law in allowing tax free earnings on the Section 529 plan. However, they also award a state tax break for residents’ contributions to the state’s own 529 plan. Kansas and Maine, starting next year, will give deductions for deposits into any state’s plan.

Since the state deduction to the plan is immediate, you can deposit the funds into the ‘529′ account then withdraw from the account within a short period. The worth of the deductions depends on your state’s tax rate and whether your annual tax break is limited for making a 529 deposit.

To take advantage of the 529 Savings Plan, visit savingforcollege.com, click on “529 Plans”, then click on “529 Plan Details.” Click on the state in which you reside for details on its savings plan. Then browse through the state’s homepage to read up on how to open an account and to withdraw money later.

Many state officials do not like their plans to be used as tax breaks, but few actually try to prevent it. So if you plan on keeping money there for only a short time, you should choose the most conservative investment option. New Mexico is one of the states where the account must be open for a year before money can be withdrawn from it. The state of Michigan has limits as well.

States prefer that residents start saving early, to benefit from compounding and in order to get tax breaks for 20 to 25 years instead of just four. It is a good idea to try out this plan with your tuition money though, as four years of deductions is better than none.

Maximum Annual Deductions Here are the maximum annual deductions or credits available. If your state isn’t here, it either doesn’t have income taxes or doesn’t offer a tax break for “529″ deposits.

State/District Annual Cap on the Tax Break Colorado Unlimited deductions up to the amount of your taxable income* Connecticut $5,000 deduction; $10,000 for married couple filing jointly District of Columbia $3,000 deduction; $6,000 for married couple filing jointly; a couple with one child must have two accounts to get the full $6,000 Georgia $2,000 deduction per beneficiary; declines above $50,000 in income or $100,000 for married couple filing jointly Idaho $4,000 deduction; $8,000 for married couple filing jointly Illinois $10,000 deduction; $20,000 for married couple filing jointly Indiana $1,000 tax credit (20% of deposit up to $5,000) starting in 2007 Iowa $2,500 deduction per beneficiary; $5,000 for married couple filing jointly Kansas $3,000 deduction for each beneficiary; $6,000 for married couple filing jointly Louisiana $2,400 deduction per beneficiary per year; $4,800 for married couples filing jointly; state matches deposits on up to 14% of deposit depending on income Maine $250 deduction per beneficiary starting in 2007 if income is below $100,000 (or $200,000 for married couple filing jointly) Maryland $2,500 per account holder per beneficiary (or $10,000 if each parent maxes out the deduction in both of the state’s 529 plans) Michigan $5,000 deduction; $10,000 for married couple filing jointly Mississippi $10,000 deduction; $20,000 for married couple filing jointly Read more…

The Congressional Budget Office has lowered the estimated size of the US federal deficit for fiscal year 2006. The decrease in the expected deficit is largely a result of high tax revenues.

The Congressional Budget Office is a non-partisan arm of the US Congress. The office projects a $260 billion deficit for fiscal year 2006, a decrease of $111 billion from the March projection.

The deficit would be 2.0% of the gross domestic product — coming in as the smallest recorded deficit in the past three years.

Currently, the federal government is running a deficit of around $239 billion, according to the CBO estimates. That estimates puts the government $64 billion behind last year’s deficit at 10 months.

Spening in June was slightly lower than expected. The Treasury recorded a surplus of $20 billion in June, $1 billion lower than the CBO estimated for the month.

Total reciepts for the first 10 months of the fiscal year are around $223 billion higher, a gain of 12.8%. Individual income tax receipts grew by 14.5% and accounted for $110 billion of the increase. Social insurance tax receipts grew by $42 billion.

Corporate income tax receipts showed an increase of 27%, accounting for $56 billion of the gain. The growth rate of corporate receipts has slowed in recent months, indicating a slowdown in profit growths. However, corporate tax receipts have increased steadily for three consecutive years. The CBO predicts that in 2006, corporate tax receipts will be two Read more…