Truths and Myths About Reputable Tax Return Preparers

After you become a tax preparer, the best way to attract clients is giving them instructions about how to find superior tax services. The next step is then to simply position yourself as ideally meeting the selection guidelines.

The IRS has issued six tips about choosing a professional for tax return preparer work. Using these same points helps you educate taxpayers. These are the IRS recommendations when examining a tax preparer list:

Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.

Avoid preparers who base their fee on a percentage of the refund.

Use a reputable tax professional who signs the tax return and provides a copy.

Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.

Check the person's credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.

Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

A notable feature of this list is what's missing. It does not contain a directive to examine every detail about a taxpayer's deduction claims. Any tax return preparer who charges by the hour can easily run up the bill for clients by asking for receipts, cancelled checks, or other forms of substantiation. Gathering these details is only necessary for an IRS examination. Unless a tax practitioner is hired to conduct an audit of a taxpayer's records, the professional services should not create extra charges for partial auditing. The public should know about the potential for such bill padding by unscrupulous hourly rate professionals.

However, a duty of tax preparer ethics is reminding individuals to retain records that support the numbers they provided to you. You probably only need to examine receipts if a taxpayer seems confused, uncertain, or contradictory. Your responsibility entails making a reasonable inquiry into the facts and circumstances. But, taxpayers normally don't need to present you with proof about their claims for deductions.

Keep in mind that the IRS permits taxpayers to make reasonable estimates of expenses when their records have been lost due to natural disaster. Conducting a tax return preparer job merely demands that you have reason to believe a person's statement about a deduction is true. If you know that a taxpayer is using estimates, attach a disclosure statement to the tax return. The taxpayer's signature on the return confirms that estimates are provided. You should terminate the relationship and not prepare the tax return only if you believe a client is lying about tax information.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Quiet Title: The Downside to Tax Deed Investment

At a time when the economy is in sore shape and the real estate market has seen better days, it is only natural that investors would look for new ways to profit from the real estate. One such way is buying up tax deed properties at substantially reduced rates, with the prospect of turning around and selling the home at market value. This can be an extraordinarily profitable endeavor, particularly for those people who are in the know when it comes to tax sales. Unfortunately, the road to riches is paved with more than just gold. In order to move forward, you'll need to go through a quiet title action, which can be costly and delay maximizing your investment.
One of the primary disadvantages of exploring tax deed investment is the myriad of time-wasting obstacles that stand in your way. In addition to waiting out any redemption period required by law, or market conditions, many investors face dealing with a slow and arduous court action in order to be able to resell the property for maximum profit.
As part of being able to take over a tax deed property and purchase title insurance, you'll have to go through a quiet title action. This involves initiating a court action that mandates all other claims to the title be silenced and gives you exclusive rights as the property owner. Unfortunately, this process can take anywhere from six months to a year or even longer. In the meantime, your money will be tied up in an investment that you can do absolutely nothing with. This frustration and lag time leads many to abandon their hopes of finding a profitable niche in the real estate industry, moving on to a different type of investment. This is unfortunate because there is certainly money to be made.
Of course, what no one will tell you is that there are viable alternatives to the quiet title process. Some companies advocate tax title services, which can help investors bypass the lengthy court process while still achieving the same effects. These services can ensure that no one else lays claim to your property and they will help you free up your investment in a matter of weeks, instead of months. For anyone who has grave concerns about having their money tied up for nearly a year while the creaky wheels of the court system struggle to turn, this is a much-needed alternative. If you're interested in exploring it, seek out a company that specializes in helping investors avoid the quiet title action process.

Article Source: http://EzineArticles.com/6840307

Singapore Personal Income Tax Rates for 2012

Singapore enjoys one of the world's lowest personal income tax rates. From the Year of Assessment (YA) 2012, marginal personal income tax rates for income levels below S$120,000 have been cut, while income tax rates for income levels above S$120,000 have been increased marginally.
Taxes differ for residents and non-residents in Singapore. A resident tax payer is a resident who is a:

• Singaporean; or
• Singapore Permanent Resident and have established your permanent home in Singapore; or
• foreigner who has stayed or worked in Singapore for 183 days or more in the tax year

Tax rates for resident individuals
Personal tax is calculated progressively, starting at 0% and ending at 20% above S$320,000. A different margin rate of tax applies depending on the individual's income. Depending on your chargeable income, you stand to benefit from the personal income tax cuts. If you are a non-resident, your tax computation is different.
Personal income for Singapore non-residents
A non-resident tax payer is a foreigner who stayed or worked in Singapore for less than 183 days in the tax year. Employment income is exempt from tax if you are here practicing as a on short-term employment for 60 days or less in a year.
This exemption does not apply if you are a director of a company, a public entertainer or exercising a profession in Singapore. In Singapore for 61-182 days in a year, you will be taxed on all income earned in Singapore. You may claim expenses and donations.
However claiming personal reliefs is not permissible. Employment income is taxed at 15% or the progressive resident rate (see rate table above), whichever gives rise to a higher tax amount. Director fees, consultant fees and all other incomes are taxed at 20%.
Treatment of tax earned abroad
Overseas income received in Singapore on or after 1 Jan 2004 is not taxable. This includes overseas income paid into a Singapore bank account.
There are certain circumstances under which overseas income is taxable, so you need to check careful:

• It is received in Singapore through partnerships in Singapore.
• Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
• You are employed outside Singapore on behalf of Government of Singapore. You need to declare the qualified taxable overseas income under 'employment income' and 'other income' (whichever applicable) in your tax form.

Futurebooks is Singapore's and Hong Kong's most progressive bookkeeping company. The firm offers affordable incorporation, bookkeeping, business planning and business brokering.
Whether your goal is to be acquired or to be more profitable this quarter, we provide planning to keep your business on track and bookkeeping services that streamline the journey.
To demonstrate our commitment our bookkeeping service is packed with extras, such as a 30 day money-back guarantee and free quarterly business consultancy from one of our practitioners.

Article Source: http://EzineArticles.com/6824009

IRS Issues Reminder About New Tax Preparer Requirements for EITC

The IRS has implemented new federal income tax preparation requirements for claiming the Earned Income Tax Credit. To claim the EITC on 2011 tax returns, Form 8867 is submitted to the IRS. This form is the checklist that paid tax preparers previously retained in their records but did not send with a tax return.
Form 8867 is a due diligence measure for tax practitioners who help taxpayers claim the EITC. The new rule simply mandates including the form with completed tax returns. Providing answers to the questions on Form 8867 has always been one of the tax preparer requirements. Doing so necessitates asking taxpayers for responses.
In addition, further questions arise in many circumstances when completing Form 8867. These matters clarify potentially conflicting or incomplete information. Most tax return preparer software automatically provides relevant questions to explain any details that could seem incorrect.
The due diligence requirement is designed to reduce errors in claims for the EITC. Because tax professionals prepare the majority of returns with EITC claims, Form 8867 was created. The IRS reports that nearly two-thirds of the EITC claims last year were associated with returns prepared by tax professionals. Over 26 million people received about $59 billion of EITC claims.
Eligibility for the EITC is based upon several factors. These include earned income from working, total gross income, and filing status. In addition, the most important feature of the EITC is that taxpayers increase their eligibility for the credit when they have qualifying children. An important part of tax preparer duties is identifying qualifying children that actually meet the IRS rules. Hence, due diligence questions normally relate to identifying the location of a child's other parent and determining who cares for the child while a single parent is working.
Beneficiaries of the EITC are families and single parents with less than average income. Because the EITC is a refundable credit, the IRS remits it to eligible taxpayers even when they owe no tax. The maximum credit for 2011 tax returns is $5,751.
According to the IRS, as many as one in five eligible taxpayers fail to claim the EITC. These people are most likely in need of professional tax preparation help. However, because of the refundable nature of the EITC, many bogus claims are made each year. This is a consequence of inaccurate computations as well as incorrect declarations of qualifying children.
Tax preparers should still retain copies of Form 8867 for prior year returns. These are kept for potential IRS inspection. Effective in 2012, a Form 8867 is submitted with each return prepared by a tax practitioner that claims the EITC. A $500 penalty is assessed on any tax return preparer who fails to comply with due diligence requirements.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Article Source: http://EzineArticles.com/6840752

IRS Tax Preparer Requirements to Assure Accurate Returns

Even before passing the registered tax return preparer exam anyone preparing tax forms must comply with IRS Circular 230 provisions. This publication contains several standards of practice for tax professionals. Critical parts of Circular 230 for tax preparer study are the guidelines for due diligence with taxpayer information.
The process for tax return preparation entails making a reasonable effort to determine that taxpayer representations are correct. This doesn't mean that tax return preparers are required to conduct a detailed audit verification of every figure a client supplies. But, the IRS Office of Professional Responsibility (OPR) does hold tax practitioners to a benchmark of quality.
A measure of OPR criteria is elucidated by a 2010 ruling to bar a CPA from the tax preparation business for failure to exercise due diligence under Circular 230. The case claimed that the CPA did not sufficiently determine that figures reported on tax returns were correct. The specific tax returns noted by OPR were those of a corporation and its married shareholders. In addition, the OPR alleged that the CPA failed to comply with the Circular 230 requirement to advise clients about potential penalties and provide opportunities to avoid penalties.
This situation is indicative of the control OPR is increasingly exercising over tax practitioners. OPR director Karen L. Hawkins pointed out the serious IRS tax preparer requirements to comply with accountability standards. Basically, OPR demands that tax practitioners make inquiries about information furnished by clients to assure that it appears correct, consistent, and complete. In addition, tax preparation professionals may not ignore the implications of known information. Any violation is considered malpractice.
Tax return preparers have obligations to represent their taxpayer clients rather than serve the interests of the IRS. However, honest taxpayers share the same objective as the IRS. Furthermore, the goals of a professional with a tax preparer license are aligned with any taxpayer who wants an accurate return and no IRS trouble.
The only difficulty for paid tax preparers is clients who want their tax returns manipulated to increase the refund. Tax practitioners should refuse service to these individuals.
Otherwise, licensed tax practitioners should not fear that OPR will conscript them to perform partial audits of taxpayer records. Although OPR has aimed slightly in this direction, Circular 230 only mandates reasonable acts to assure tax return accuracy. Consequently, tax return preparers may still rely upon mere statements from clients that appear accurate. However, a sound procedure for every tax practice is maintaining detailed notes about discussion with clients whereupon income and expenses are revealed.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Article Source: http://EzineArticles.com/6840757

Tax Preparer Job Separating Business Equipment Sales From Self-Employment Income

Many taxpayers assume that selling business equipment has the same income tax consequences as ordinary activities of an entrepreneur's company. However, an important aspect of any tax preparer job involving business equipment sales is identifying details about a sale.
The tax impact is different for a proprietor who trades in equipment instead of selling it with a separate transaction from a replacement purchase. Explaining the effect upon taxpayers is a common step in tax preparer work.
A trade-in permits a business owner to defer recognizing taxable gain. For example, a doctor may trade in an old fully-depreciated ultrasound machine. He acquires a new ultrasound machine with a cost of $150,000. No gain is calculated by his registered tax return preparer. But a sale first of the old machine for $100,000 creates a gain for the amount realized.
The gain or loss from selling business equipment is reported on Form 4797. Any cost basis that has not been depreciated is subtracted from sales proceeds in determining the gain or loss. A subsequent purchase of new equipment creates another starting basis. This allows a calculation of depreciation or Section 179 deduction using the RTRP training of the business owner's tax practitioner.
Our fictional doctor increases the basis for depreciation by avoiding the trade-in situation. The full $150,000 purchase price is eligible for depreciation. A trade-in arrangement giving the doctor an exchange value of $100,000 leaves only $50,000 of purchase price for the new equipment to depreciate.
The results addressed in tax preparation study indicate that depreciation and Section 179 are expenses that reduce self-employment income. Therefore, depreciating $150,000 provides a considerable benefit to the taxpayer compared to depreciation of only $50,000. Having more cost for depreciation simply requires not using a trade-in. Instead, the equipment is sold for a gain reported by tax return preparation on Form 4797. Using Section 179 and bonus depreciation will permit expensing of the entire $150,000 cost for new equipment in the first year.
The offset therefore of incurring a reportable gain on Form 4797 is having no trade-in. This increases depreciable basis for new equipment purchased. The reduction in business profit from the depreciation and Section 179 expense also lowers the associated self-employment tax. The gain on Form 4797 is not subject to self-employment tax.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Article Source: http://EzineArticles.com/6840771

Advantages of a FHA Mortgage Calculator

For many, owning a home is not only a great pride but can mean significant tax savings. FHA home loans were formed to aid home buyers to acquire a home. FHA represents Federal Housing Administration.
The key to any new loan is to evaluate your budget realistically. Determining how much you can afford is a vital factor when taking out a loan. FHA loan calculator lends you a hand in determining how much you can manage to pay for a housing loan.
What is a Mortgage Loan Calculator?
Mortgage calculators are the perfect companion for people who want to fix a budget when buying a home. Using mortgage loan calculator is the great way to find out roughly how much you can borrow for your home loan.
Just by entering personal and financial details, this great calculator works out the rough amounts depending on what you want to know.
Benefits of using FHA Mortgage Calculator
A mortgage loan calculator provides you a tremendous advantage when negotiating a new loan. Mortgage calculator helps you to find out the precise monthly payments for the mortgage.
• The prime benefit of using a mortgage calculator is that it allows the user to settle on the budget when buying a house. It is vital to know the monthly installment that you will have to pay. To avoid the possibility of over committing yourself, mortgage loan calculator comes in handy and helps to realize what your monthly liability will be.
• The mortgage calculator helps to choose the right mortgage amount. Just enter the amount you would like to borrow, the interest rate and the time period. Thus, loan calculator enables you to set a monetary limit beyond which it would be uncomfortable for you.
• Mortgage loan calculator is easy to use. You need not require providing much information. Usually, simple FHA loan calculator requires few things to determine the amount that you can afford to pay. They are the amount of the loan, the interest rate and the term of the long, the down payment etc.
• It is obvious that small difference in interest rates can affect the amount of monthly payments. Mortgage calculator enables you to play with amounts.
• Using a mortgage calculator, you can decide between fixed and adjustable mortgage rates. You can compare the monetary benefits achieved by choosing between fixed and the adjustable mortgage rates.
• Another great advantage of using mortgage loan calculator is that it helps the borrower to decide on refinancing options.
• Online loan calculator comes in handy to compare the rates and products of different lenders effortlessly.
• With a mortgage calculator, finding the amount becomes very easy. In few seconds, it determines the mortgage payment and evaluates the products of different lenders. Thus, it is quicker and trouble-free.

Article Source: http://EzineArticles.com/6843969