Filing Taxes As a Contractor
By: Wilmer Irwin | Posted: 17th February 2011
Income Tax cuts do not work anymore since the extra money spent at the retail level quickly fans out to where the products are made in places like China etc. The money does not stay here to regenerate our economy up and down the line. Worst yet, the Payroll Tax is used like any other taxes in the General Fund. It now acts as a flat tax on the working poor. 70% of all workers pay more in Payroll Taxes than they do in Income Taxes. At the same time, Income tax breaks are isolated to only a few while the working poor and small businesses have to pay up to 15% taxes. A person making only $10,000 a year, pays the payroll taxes no matter what and up to 20% total in many cases when local and state taxes are included.
A friend of mine ("Sara") recently purchased her first rental property. Sara is single with no kids, takes the standard deduction and makes $60,000 a year. If Sara hadn't purchased a rental property she would have owed the federal government $9,286 in income taxes in 2007. On the other hand, once she bought the rental property for $300,000 with a building worth $270,000, and renting it out to cover all of her expenses, she is saving $2,500 in taxes. How is this possible? Every year she can write off 1/27th of the value of the building because of her depreciation deduction. The depreciation deduction equals $270,000 multiplied by 1/27th, which multiplied by her marginal tax bracket of 25 percent equals $2,500 of tax savings. And this does not even include her state and local tax savings, which is almost another $1,000.
Say you travel 102 miles during a business day and you do this 2 times a week. Lets do the math. For the first half of the year you did 26 weeks of 2 x 102 miles = 5304 x 50.5 cents per mile = $2679 for the first half of 2008. For the second half of 2008 the amount of deductions for the business miles would be: 5304 x 58.5 cents = $3103 for the same period of time. The total mileage deduction for business miles alone would be $5782.00
There's a popular misconception here in Britain that students are exempt from paying income tax. In this article, we uncover the fact and the fiction behind student taxes, and take a look at how to claim back any overpaid tax that you've already paid.
If you are going or have gone bankrupt, you may have tax which you have unpaid and also tax which you are due to pay on account in July this year. For statement of affairs purposes and for debts that you owe, you need to include both the unpaid tax that you currently owe and also the tax which is due to be paid on account.
When someone who is facing financial difficulty decides to file for bankruptcy there are many secondary choices they must make. They may be able to decide which chapter of bankruptcy they should file, Chapter 7 liquidation or Chapter 13 reorganization. The tenants of these decisions have been addressed previously in this blog. Once that decision has been made the Debtor then needs to decide, should they keep their home; should they keep their boat? Depending on their income and assets though the biggest choices typically revolves around their more liquid assets though. Which assets should they protect from the Trustee in a Chapter 7 bankruptcy case, and which ones should they expose.
The first flakes of what the sages predicted as a mild winter were beginning to fall when Bernie packed a satchel & checked the batteries yet again on his favorite calculator. He'd decided, finally, that the solution to his land's bitterness was a journey. He'd walk the treacherous road to the capital and personally petition King Taxalol to send his township a full copy of the country's tax code, thereby relieving poor Lord Bernie his obligation to give federal income tax advice. It was difficult to believe the King would even meet with Bernie, much less send one of the coveted tax guides to such a far-flung subsidiary. These things were true, thought Bernie as he shouldered the pack as if imagining its weight 30,000 paces later. True, but. This was his land he was walking away from. And though he mightn't have been a particularly imaginative man, he was a determined one.
Taxes influence many business and some personal decisions. Your ability to understand and work with the various complex rules and regulations of the federal tax law can provide an advantage. Many people believe many tax changes are on the horizon. Taxpayers and their professional advisors will be required to learn, understand and act on these changes if they are to succeed in their endeavors. Numerous pieces of legislation contained tax changes affecting individuals and their businesses
Like the four seasons, ever new year brings us a time of reporting and filing taxes. If you listen very closely around the first week of April, you can hear millions of people grinding their teeth in frustration as they attempt to complete this annual task. Half the battle with taxes is understanding the verbiage being used. In this article, we take a somewhat humorous look at some of the common terms you need to know to get through the tax preparation process without going mad.About the Author
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Tags: misconception, small businesses, period of time, time income, extra money, mileage, business day, rental property, income taxes, state taxes, depreciation, payroll tax, standard deduction, payroll taxes