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Sales Tax Rules And Prepared Foods

Sales taxes are a fact of American life, and they are really noticeable in the area of fast food. Lets review some Sales Tax Rules to make sure you are following the law.

For instance, when a hungry consumer drives through his favorite drive-thru, he should expect to pay the price of his burger plus additional coinage to cover sales tax. Most states, counties and municipalities feed their coffers by charging a local sales tax on most every kind of purchase imaginable. Local law regulates what purchases are taxable and at what rate.

Sales Tax Rules
English: Picture of an authentic Neapolitan Pizza Margherita taken by Valerio Capello on September 6th 2005 in a pizzeria (“I Decumani”) located on the Via dei Tribunali in Naples. Italiano: Fotografia di un’autentica pizza Margherita napoletana scattata da Valerio Capello il 6 settembre 2005 nella pizzeria “I Decumani” situata in Via dei Tribunali a Napoli. (Photo credit: Wikipedia)

Application of sales tax regulations is not always straightforward, though. “Prepared food” sales tax rules are different from sales tax rules on single items such as milk or bread. For example, a take and bake pizza at your local eatery incurs sales tax, but some people, and states, are confused and upset about that. Is a cold pizza that the customer has to take home and bake actually prepared food?

Amazingly, the states of South Dakota and Arkansas wrote and published rules which say that pizza which is put together in a store and the baked at home is actually a prepared, and taxable, food because the restaurant had to assemble two or more ingredients to put the product together.

The Streamlined Sales and Use Tax Governing Board says a take and bake pizza is prepared food and therefore, taxable. The state of Wisconsin has a flow chart that its Department of Revenue employs to apply sales tax regulations to pizza and everything else.

Recently, an amendment to the Streamlined Sales and Use Tax Agreement says all states can make their own decisions on which pizzas are subject to sales tax. Yes, even pizza can get complicated when it comes to the tax man.

H&R Block specializes in navigating the muddiest of tax waters for the American taxpayer.

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10 Tax Tips For Small Businesses

Come tax time, owning a small business can be even more overwhelming than it normally is. Taxes can be confusing for any business owner, but may be more manageable if you keep these ten tips in mind.

  1. Keep a log of all of your business’ expenses. This can be a daily or weekly log, but it needs to be thorough. Detail the date of the expense, whom or what the money was paid to and the exact amount of money that was spent. Should you receive any confirmation numbers or other pertinent information in regards to an expense paid, be sure to attach it to your expense log so that it is easy to find come tax time.
  2. Know what you can and cannot deduct on your tax returns. Most small business owners end up losing money because they are not taking all of the deductions that they are legally allowed. A business owner can deduct for expected things such as home offices, travel time and insurance, but most don’t know that they can also claim deductions for things such as entertainment and meals. Be sure to keep receipts for your deductions as you will need to know the exact amounts that you have spent.
  3. Although deductions are great, be sure not to trap yourself. Try not to claim more in deductions that you actually earned as income in a tax year. This raises a red flag to the Internal Revenue Service (IRS) and may cause you to be audited. In the event that you are audited by the IRS, those receipts from the above will come in very handy.
  4. Save for retirement. Nobody wants to work his life away. You must earn income every year in order to qualify for a tax-deductive small business retirement plan.
  5. Don’t forget to save information about the equipment you buy for your business. A small business that spends less than 2 million on equipment may be eligible for up to $500,000 in deductions on that equipment. Repairs can also be tax-deductible on your return.
  6. Pay your payroll taxes. This may sound obvious, but many small business owners spend the taxes they withhold on payroll for other items for the business. This could leave you with a big bill come April 15. It is best to pay taxes quarterly.
  7. Look into health insurance credits. If you provide health insurance to your employees, you may be eligible for a tax credit. Check with a CPA for eligibility requirements.
  8. Hire a veteran. Veterans are in dire need of jobs and can benefit your business in many ways, including on your taxes. Certain veterans will allow you to be eligible for an expanded tax credit if you hire them during the tax season.
  9. Donate to charity. Not only is it a great community builder, it will benefit your tax return. Keep records of any non-cash items that you donate to charity. It will earn you extra tax credits with the IRS.
  10. Don’t be afraid to ask for help. If you are at all confused, it is best to call a professional CPA. It is better to pay for a CPA now than to mess up on your tax return and pay the IRS much more than the CPA would have cost.

Taxes don’t have to be confusing. Do some research and decide if it is more beneficial for you to prepare your return yourself or hire a professional. Either way, do not hide them in a corner and hope they go away as they will not!

[photo credit]

Michele Golden is a driven blogger and artiat from Vermont. Shes loves helping people save money, and make better decisions for their future. When she isn’t blogging shes studing to be a registered financial advisor or stock broker, whatever pays the bills.

Tax Filing Assistance For Taxpayers

If you are yet to file your federal income tax returns for 2012, luck is at hand. This year, you will have a couple of additional days to do it.

Rather than the usual 15th April deadline, taxpayers can send their returns in as late as midnight 17th April.

A spokesman for the IRS, Christopher Miller, assured people that they have no need to panic.

The 2 day extension has been granted because the 15th falls on a Sunday, followed by Emancipation Day on the 16th, which is a federal holiday in the Colombia District.

As ever, according to Miller, lots of tax filing assistance is provided for filers completing returns at the last minute. For example, taxpayers can visit www.irs.gov/freefile and utilize the free IRS File on the internet. It provides complimentary software to e file and prepare taxes.

Miller stated that the group of tax help software businesses, called Free File Alliance, have affiliated with the IRS Volunteer Program for Income Tax Assistance to aid a greater number of lower and moderate level taxpayers. With this new affiliation, software is accessible at self serve computer terminals located in virtually 300 areas throughout 29 states, which includes the Quad Cities.

The group executive director, Tim Hugo, said that the Free File Alliance aims to offer online e filing and preparation services for US residents who may not be capable of paying for professional tax filing assistance or tax software.

The program, that started in 2003, offers people who earn $50000.00 or below complimentary tax preparation, along with personal tax help at nationwide locations. IRS certified voluntary staff assist taxpayers in the completion of their yearly tax returns, and offer tax credit information about credits that some taxpayers may be able to claim, like Child Tax Credits, Credits for the Disabled or Elderly and Earned Income Tax Credits.

At a local level, this program is managed by Quad Cities United Way and by additional sponsors, according to Scott Crane, who is president of the Quad City United Way company.

Crane said that, during the previous year, they did 5500 returns and that this year, by the 1st March, they were 15% up. Apparently, this meant that $5.5 million was returned back to the community last year.

The program ends on 14th April and is reachable in numerous local sites. These include the offices of the United Way in Davenport.

Paul Gilbert is a retired agent for the IRS from Davenport, who recently decided to volunteer for the program. Gilbert claimed that he has seen a constant stream of clients, while he was helping a client in the offices of the United Way.

LaVaughn Narbone, from Moline, started at the United Way the previous week, having learned about the program through a referral.

Narbone said that she had her taxes for this year completed in the Rock Island Martin Luther King Center, but that she also needed to complete her returns for the previous two years. The King Center, unfortunately, did not possess the correct software for doing this.

Sharon Scott from Davenport, another client, has used the program for a decade. She said she loves it because it is free and extremely thorough.

The H&R Block manager at Rock Island (1610 2nd Ave), Darnett Aldridge, claimed that lots of people are making use of his business’s offer to re assess tax returns which have been completed somewhere else.

Aldridge stated that many people who complete returns do it incorrectly and that he can sometimes save people as much as $10000.00.

The IRS said that most tax returns are electronically filed. A taxpayer that e files utilizes tax software which usually incorporates a question and answer style format. This format ensures that taxpayers get all of the deductions and credits to which they are entitled. Generally, the rate of error for e filed returns is lower than 1%, compared to about 20% for paper filed returns, according to the IRS.

Miller stated that people who are falling behind schedule can request a deadline extension on the internet, or by completing a 4868 Form.

Miller said that deadline extensions relate to tax filing, not to the time people have to pay the taxes they owe.

People who are unable to meet the tax paying deadline can phone the IRS to make arrangements for payment.

Miller added that a Fresh Start initiative was recently expanded by the IRS, which tries to help struggling taxpayers review their options for payment.

The owner of 4 Liberty Tax Services franchise offices, Theresa Harris, said she can see identical trends occurring this year that mirror trends which have occurred in the past.

Harris said that some people wanted their cash instantly, but then everything slowed down by March. Now though, she said the business owners who have to pay and the procrastinators are appearing. Apparently, this is exactly what happened over the past few years.

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Learn About Tax Liability

Tax liability can have you make wrong choices. However, the IRS has been helpful to some people in difficulties such as these. For example, the unemployed and people running small business will benefit from the ‘fresh start’ initiative. In fact, their installment agreement will ensure that there is easier and rational payments made.

Doug Shulman, the IRS commissioner stated that the agency has a duty to work with troubled taxpayers to meet their tax liabilities. Taxpayers have to understand the penalties against defaults arising out of failure to pay taxes on time. For example, 5% of unpaid taxes will be imposed against returns filed late on a monthly basis.

» The analysis for such failures is done at a lower limit of 0.5% and upper limit of 25% each month.

Therefore, if you are unemployed or self-employed, you will have about six months delay for you to pay your taxes. This will only apply to taxes due in 2011 and only if you had requested for an extension through IRS form 4868.

This form however does not excuse you from paying due taxes.

The initiative permits the delay to run up to 15th of October. You will need to show that you have been unemployed for more than 30 days continuously in 2011 or before the 17th of April 2012. Incase of self employment, show that your business earnings has dropped for more than 25% because of the economy.

Form 1127-A can be found at the IRS website: IRS.gov, should help you apply for the program and is due in April 17th.

You should be aware of a couple of things. For example, the earning and time limits that will accrue penalties.

Another thing to be aware about is the compounding interest payable on unpaid taxes.

If you do not have a financial statement then you should know that the threshold for the part payment has been increased by the agency. The fines are lowered, the interest will still be compounding.

In such cases, the IRS will increase the time for your part payment when you owe $50,000. The time can be increased to 72 months. This extended time can only be permitted if you consent to a monthly direct–debit payment.

This agreement can be set up online. To get an approval, you will need to have filed your returns and avail your personal details.

It is necessary that you file your tax returns even if you may accrue tax liability. Try not to make decisions that are irrational. Consult with the IRS through their websites and understand their conditions to qualify for the initiative.

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Paying for College: Student Loan Interest Deduction Explained

Interest on student loans can get overwhelming. Luckily, the IRS allows for the Student Loan Interest Deduction which can be taken by qualified filers. The deduction allows for any paid interest to be deducted from amount of income earned annually and provides a valuable tool to help balance finances for those in the throngs of repayment.

Eligibility

Any loan taken out for the sole intention of covering eligible expenses related to the pursuit of a higher eduction is considered a “qualified” student loan with deductible interest. The elegibility of expeneses includes those for which the Tuition and Fees deduction is applicable.

Those attempting to claim the deduction must be indepedent of caregivers and cannot be considered an dependent or exemption on any other tax return. The deduction also carries other conditions and must meet certain criteria related to annual income, a legal obligation to pay interest, and the amount of interest actually paid during the year one is filing.

Interest on student loans can get overwhelming. Luckily, the IRS allows for the Student Loan Interest Deduction which can be taken by qualified filers. The deduction allows for any paid interest to be deducted from amount of income earned annually and provides a valuable tool to help balance finances for those in the throngs of repayment.

Eligibility

Any loan taken out for the sole intention of covering eligible expenses related to the pursuit of a higher eduction is considered a “qualified” student loan with deductible interest. The elegibility of expeneses includes those for which the Tuition and Fees deduction is applicable.

Those attempting to claim the deduction must be indepedent of caregivers and cannot be considered an dependent or exemption on any other tax return. The deduction also carries other conditions and must meet criteria related to annual income, a legally-observed obligation to pay interest, and the amount of interest actually paid during the year in which one files.

Married couples can claim the interest deduction only when filing jointly. The IRS allows one to deduct up to $2,500 annually for any interest paid on student loans which meet federal requirements. Any amount of interest above the threshold of $2,500 doesn’t count, nor can any deduction exceed the actual amount of interest paid.

Interest generated via the various types of educational loans can qualify for the deduction, including: interest on the loan itself, interest on any consolidations, and interest accumulated via lines of credit. The most important qualifier for determining eligible interest involves the intention of money borrowed, any money was used for educational expenses is generally applicable.

Deductions Versus Credits

Tax deductions differ from credits. Credits reduce the total of tax owed whereas deductions reduce the amount of income which can be taxed. The Student Loan Interest Deduction can be taken for up to $2,500 of any interest actually paid in the previous tax year. Deductions lower one’s revenue by the amount of the deduction. Therefore, the actual amount of income tax is lowered along with the tax burden and total bill which one pays.

Forms

Appropriate filing procedures for the Student Loan Interest Deduction are claimed as an adjustment to income, and therefor do not need to be itemized. Filers cannot take such deductions on Form 1040EZ. However, the deduction can be taken on line 18 of Form 1040A or on line 33 of Form 1040, both of which can be submitted via the free IRS efile process.

The cost of college seems never-ending to someone in the doldrums of student loan debt. However, interest paid can often be replenished via a tax return for those who qualify, which helps ease the burden. As with most tax scenarios, understanding the proper filing procedures and following the correct protocol can contribute to a much larger tax reimbursement.

Citations:

Katei Cranford is a writer who shares her expertise of financial situations for students and graduates.

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Proposed Changes From Taxes

The current administration’s proposed budget for 2013 includes some items from 2012 taxes with a wish list of ideas added. Although Congress isn’t obligated to accept all items on the list, in the past, it has accepted some of the ones proposed. Since the U.S. tax code has not had a major overhaul in more than two decades, some analysts expect public debates on everything from tax brackets to tax return filing.

Some of the proposed budget includes changes from 2012 taxes, including individual taxes, corporate taxes, international provisions, and manufacturing tax breaks. Although there are others, the ones listed are the most significant to the average American individual and American corporations. These plans are to be gradually integrated into the budget over the next decade.

Changes to individual 2012 taxes include cutting payroll taxes and gradually ending the tax cuts from the Bush administration. Other individual tax changes proposed include carried interest, the Buffet Rule for millionaires, and an itemized tax cap for those making more than $200,000 per year or families with incomes over $250,000. Some of the changes take place during the current year, so tax return filing may be more challenging. Taxpayers need to have up-to-date information before filing their 2012 taxes.

The administration would like to drop the 35 percent currently charged to corporations down to the upper 20 percent tax range. The United States now has one of the highest corporate tax rates in the world. Although this won’t change tax return filing for individuals, the change will lower what corporations pay from the 2012 taxes.

There are other changes from 2012 taxes that will affect tax return filing for American corporations. These include the administration’s proposal to close a loophole in sheltering overseas intangible property profits, moving expense deductions for companies that move their overseas operations back to the United States, adding a minimum tax on profits from overseas, and restricting tax deferrals from other countries.

Some of the proposed changes may affect 2012 taxes. Seek professional assistance from the IRS, a CPA, or tax return filing professional. If you choose to calculate your own taxes, update your software and research the most current tax codes before filing.

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