The IRS places a tax lien on individuals or businesses with overdue taxes until they are paid. Liens can be resolved by paying the bill or entering into a repayment agreement. The IRS may offer subordination of the lien to facilitate property transactions. Premature or improperly issued liens can be revoked by law. A tax […]
Investors pay dividend reinvestment tax on mutual fund dividends even if they reinvest the money back into the fund. Governments often treat dividend reinvestment tax and dividend disbursement tax as the same. Tax-protected retirement accounts can help investors avoid dividend reinvestment tax. Investors who purchase additional shares with fund disbursements also face capital gains tax. […]
Year-end tax planning involves managing finances for the best annual tax benefit, including timing sales, purchases, and deductions. External factors like government tax changes can also impact planning. Actions like deferring income and managing deductions are common, and it’s important to consider both short and long-term effects. Optimizing available tax benefits is also crucial. Year-end […]
Governments may tax insurance premiums received by businesses, which can vary from 5 to 10 percent. Insurance companies face strict regulations, including the premium tax, which can limit the number of policies sold. Companies must disclose policies sold, and tax rates can differ based on policy type. Insurance companies must add procedures for collecting and […]
A withholding tax is a deduction from pay, made by employers or financial institutions, to pay taxes to the government. In the US, tax withholding is based on income and exemptions, and can be adjusted to reduce or increase the amount withheld. Self-employed individuals are responsible for paying their own taxes. It’s important to seek […]
The Making Work Pay Tax Credit was a temporary measure introduced in 2009 to help reduce the financial burden caused by the 2008 economic crisis. It was only available for the years 2009 and 2010 and had strict limits on who could apply. Those eligible could claim up to $400 USD ($800 USD for married […]
A new car tax credit allows taxpayers to receive a credit or deduction for purchasing a new car in the previous tax year. Governments may initiate it to stimulate the economy and reduce oil dependence. The credit may have qualifying factors, income caps, and upper limits. It can be a tax credit or deduction, and […]
Death taxes are any taxes on assets of a decedent that are redistributed to beneficiaries. In the US, it refers to the inheritance tax, which varies by state. Opponents see it as a burden on beneficiaries, while defenders argue it benefits society. Death taxes are any type of taxation on the assets of a decedent […]
A property tax deferral allows temporary relief from paying property taxes, but must be repaid in the future with interest. Eligibility criteria may include age, health, or income level, and the program may be operated at the state level. It is not the same as property tax forgiveness. A property tax deferral is an opportunity […]
A tax roll is a list of all taxable properties within a jurisdiction, used for accurate record-keeping and assessing property taxes. It includes the owner’s name, property address, legal description, and current taxable value, with an assessment or schedule number for internal use. Updating occurs before the new tax year begins to notify homeowners of […]
The Tobin tax is a transaction-based tax designed to limit currency speculation and stabilize currencies. It is levied on spot currency conversions and structured to limit exchanges while allowing non-speculators to exchange currency. The tax aims to impose a small fee on individual transactions, penalizing speculators who engage in large numbers of small spot trades. […]
Tax swaps involve selling a declining stock and buying a similar but higher priced stock to generate a loss for tax purposes. While legal, there is a risk involved if the original stock rises or the new stock declines too much. Tax swaps are strategies that involve the sale and acquisition of two different but […]
Tax professionals perform various tasks depending on their job description, including preparing tax returns, record keeping, communicating with tax agencies, and legal representation. They can also provide advice on optimal handling of finances and represent clients in audits or as a lawyer. The tasks a tax professional performs depend on their specific job description. For […]
Tax cuts reduce or eliminate a tax category, resulting in a reduction in government revenue. They are often controversial and can lead to debates about balancing the burden of taxation. Governments may cut taxes to promote economic recovery or support certain groups or initiatives. Tax cuts can become political, with representatives held accountable by their […]
Many people are unaware of what expenses can be used as tax deductions, especially those who run a home business. Tax-deductible expenses must meet three requirements and can be determined through government agency guidelines or by consulting with professionals. It’s important to properly classify expenses to avoid delays in accepting annual tax returns. Many people […]
Scarlett O’Hara faced financial trouble in Gone with the Wind when taxes on her home were raised to an unaffordable amount. Today, non-payment of taxes can lead to tax sales, including tax lien sales and tax deed sales. Buying a lien can lead to steps such as garnishing wages, while buying a tax deed can […]
The California Franchise Tax Board collects personal and business taxes, helps other government agencies collect debts, and offers assistance programs to Californians. It was established in 1950 to administer the Bank and Corporation Tax and Franchise Tax Act. The Franchise Tax Board is a California state government agency that is responsible for collecting individual income […]
US citizens and resident aliens must pay taxes on worldwide income, including income earned while living abroad. The IRS offers two overseas tax exemptions, including the foreign earned income exclusion and the foreign housing exclusion. To claim these exemptions, taxpayers must complete IRS Form 2555 and meet certain requirements. The foreign earned income exclusion allows […]
Closing tax loopholes can be done through enforcing existing rules or enacting new legislation. It can involve eliminating tax breaks and preventing methods of avoiding tax on investment income. Closing loopholes could bring the US government an additional $1 trillion in revenue annually. Massachusetts raised revenue by closing tax loopholes, including prosecuting banks that invested […]
Landlords can take rental tax deductions for expenses such as travel, office maintenance, property depreciation, local taxes, and employee costs. In the US, owners can deduct the purchase price and building repairs, while UK landlords can choose between a wear and tear allowance or deducting replacement costs. Professional expenses, including travel, advisers, insurance, and office […]
