Landlord Tax Tips
Nov 27, 2011 Taxes Income
If you are a landlord and rent out one or more of the properties you own, you could be subject to landlord tax i.e. tax on the income you receive from your property, often called rental income tax This is the tax on the money you earn through the rental of your property.
As a landlord, you will be required to submit a rental income tax form to the Revenue Commissioners once a year as a proof of earnings. This form will be used to calculate the amount of tax you owe. The form can sometimes be very confusing as you decide what you should and should not declare, and which expenses you can and cannot deduct from your rental income.
A good tip is to look at the expenses that you may be able to deduct from your rental income before you submit your tax form. The deductions can be made from the gross income you earn, therefore reducing the amount of tax you have to pay. The tax on rental income can be reduced by making expense deductions such as insurance, prtb registration fees and repairs and maintenance of the property. Landlords may also be able to claim for wear and tear maintenance and insurance, as these are both expected expenses that landlords will have to pay.
Another good tip is to keep receipts and invoices for all transactions that relate to the properties you are renting. These will be essential when it is time to fill out your rental income tax form as you will have a clear record of the money you have earned and the amount of money you have spent on upkeep of the property. Thereby reducing the tax you owe if any.
But perhaps the biggest tip is to seek the help and advice of a registered professional such as a chartered accountant. Chartered accountants are highly trained and experienced in dealing with tax, mortgages and finances. They also regularly submit rental income tax forms for many businesses and individuals. By seeking the knowledge that such professionals have, you could save time and money as they help you to complete your forms correctly. They are also experienced in dealing with the deductions mentioned above, and will be able to show you exactly what you can and cannot deduct, meaning you will pay less tax on the remaining rental income after expense deductions. The less tax you have to pay, the more money you will have as income from renting your property.
Tags: Taxes Income
Tax Tips For Self-Employed Barbers And Hair Stylists
Nov 15, 2011 Taxes Income
No matter how good your tax professional is, if you don’t provide all of the necessary information and figures, your return will be wrong. And, any tax return that is done wrong will fail an audit if exposed.
Undocumented cash income, inventory mistakes, overlooked deductions, and missed benefits are common within this industry. Some of these errors increase your federal tax bill; others shortchange your future. Self-employed people can take advantage of the same IRS rules used by large corporations, allowing them to lower their tax bill without cheating on their taxes.
The following tips will help self-employed hair-care professionals to survive an audit.
Tax Tip 1 – Without receipts, you will always fail an IRS audit. When every expense and all income has a paper trail you nearly always survive an audit. Tax returns should be kept for a minimum of 10 years, and tax receipts for at least 6 years.
Tax Tip 2 – All items purchased or created for resale are considered inventory by the IRS. Inventory expenses can only be deducted as that inventory is sold.
Products used on clients are never considered inventory, allowing for the immediate deduction of all business supply expenses. However, many stylists supplement their bottom line by selling hair products or other goods to their clients. Knowing how inventory is tracked will keep non-deductible inventory costs to a minimum, and show you how easy it is to beat an IRS inventory audit.
Tax Tip 3 – Overlooked deductions mean you put less money into your own pocket, and pay too much tax. Even though you create a paper trail each time you use your debit card, credit card, or write a check, it’s not an easy trail to follow at tax time.
And, trying to figure out that paper trail three years later, when you need to produce your receipts for an audit, will be nearly impossible. Because your business is small, when you work from actual receipts it’s easier, faster, and everything you need to fight an audit is always ready, should you be called upon to explain your deductions to the IRS.
Tax Tip 4 – Anyone who does not stay current on IRS laws will miss out on tax benefits. Tax laws change every year, sometimes offering huge savings for only a short period of time. Even if you do your own taxes, it is wise to speak with a tax professional occasionally, just to keep up on new tax credits and planning opportunities.
Tax return preparation begins on January 1st for the profit-minded independent business person. Starting early is a good way to increase your odds of surviving an audit. Learning how the IRS sees the industry where you make your self-employment income will show you how easy it is to cut your tax bill while growing your business.
Tags: Taxes Income
Personal Income Tax – Is it Constitutional?
Jan 28, 2010 Taxes Income
The furtherance of the personal income tax in the United States has a lengthy – and some would say shaky – history. The Founding Fathers included explicit speech in the Constitution regarding the authority of the Federal Government to tax its citizens. Specifically, Article 1; Section 2, Clause 3 states:
“Representations and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers…”
The word apportioned becomes crucial in discerning the original intent of the instruction. The definition of apportionment means to distribute or allocate proportionally. Consequently, the Founding Fathers directed a distribution corresponding to their respective numbers or in other words it was based on the number of people in each state. Then Article 1; Section 9, Clause 4 it states:
“No Capitation, or other direct tax, shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”
Again, we have to understand a Capitation Tax. This type of tax is imposed upon a person at a fixed rate, regardless of the taxpayers ability to pay, occupation, assets, or income.”
Much of the opposition to a graduated income tax contends that it is unconstitutional because an indirect tax cannot be required upon property and that compensation for labor is property therefore no indirect tax may be legally imposed. What is more, they claim that the Right of Labor is an inalienable fundamental right upon which a privilege tax cannot be imposed. This was set forth in Murdoc v. Pennsylvania, 319 U.S. 105, at 113 which stated, “A State, or The Federal Government, may not impose a charge for the enjoyment of a Right granted by the Federal Constitution.”
But, as a matter of course, the confirmation of the 16th Amendment was a direct result of the Supreme Courts decision in Pollock v. Farmers Loan & Trust Co. in 1895. The Courts decision thwarted Congresses effort to tax income uniformly throughout the US. This decision was based on Article 1; Sections 2 & 9 as stated above. Their rationale was that under these Articles, Congress could not impose a direct tax unless apportioned according to population and supported by the census. Why the Court voted this way this time is unclear since just fifteen years beforehand, the Justices had unanimously affirmed the collection of similar taxes in order to help fund the Civil War.
Consequently, in order to facilitate the power of the Congress to lay and collect taxes on incomes, the Constitution was amended to get the better of the language used in Article 1; Sections 2 & 9. The 16th Amendment to the Constitution states:
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
