*** Ask TaxMama Volume 7, Issue #319 July 29, 2005 ***
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http://taxmama.com/taxcalendar.html
08.01.2005 2nd Quarter Payroll Taxes Due
08.01.2005 2nd Quarter Sales Taxes Due
08.16.2005 Personal Returns or Extensions are due
09.15.2005 Corporate Tax Returns Due
10.17.2005 Personal Tax Returns Due
09.21.2005 - 09.22.2005 EA Exam - www.irsexam.com
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JOB OF THE WEEK visit the NEW http://taxmama.careerbank.com
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Executive Vice President & Chief Financial Officer
Texas Health Resources is one of the largest faith-based,
nonprofit health care delivery systems in the United States.
http://taxmama.careerbank.com/job.cfm/190601.htm
Take the new 2005 Salary Survey
http://www.careerbank.com/resource/ssurvey/salary_survey.cfm
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Dear Family,
Well, the secret is out.
IRS is on the auditpath again.
Target - S Corporations
The good news - only 5,000 returns out of over
3 million will be audited. Yours is apt to be
missed.
The bad news - the selection is totally random,
so good tax reporting won't matter.
To keep up with the news on that, stay tuned
here to TaxMama.com. But my buddy at AccountingWeb
has generously offered a gift of a Lifetime
Premium subscribtion to AccountingWeb.com to
TaxMama's tax and financial professionals.
Use this link to get the no-cost membership:
http://www.accountingweb.com/promotion/premium.html
For a change of pace, Jacqueline and Patty have
Fermented Cherries in their Friendly Haven
http://www.friendlyhaven.com
Hmmm...maybe that explains the actions of my
squirrel last week. No, Gnawing branches and
carrying the leafy camouflage in front of his
face while he stalks his shadow, nah, that
can't be written off to fermented orange
juice. Maybe under-ripe black walnuts?
Did you know that paperback books were introduced
on July 30, 1935? The first Penguin paperback was
published by Sir Allen Lane at London. Penguin
number 1 was Ariel, a life of Shelley by
Andre Maurois. You can see it here:
http://www.users.globalnet.co.uk/~mcgoni/penguins/
Soon, paperbacks be replaced by e-book readers
which contain 20 or 30 books at one time in the
same amount of space. So, it's important that
we all preserve this art form, which will have
less than 100 year life-span.
To celebrate, I think I'll run out and buy
a bunch of paperbacks! I think they're the
greatest invention since the lightbulb - and
the flashlight that let you read under the covers
so you parents did know you were still up.
(uh, yeah..)
Have a lovely weekend.
Best wishes,
Eva Rosenberg, EA
Your TaxMama is watching...out for you.
P.S. If you're in business, you MUST read
Small Business Taxes Made Easy
http://www.taxmama.com/AskTaxMama/book/
P.S.S. TaxMama has baby clothes!
http://www.cafepress.com/taxmama/138360
P.P.S. TaxMama is scheduling speaking/teaching
engagements for summer 2005. (Calendar is filling up)
mailto:taxwriter@gmail.com?Subject=Speak4Bucks
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To comment on any articles in this issue, please,
DON'T send me back the whole issue. Send a note to
mailto:taxmama@taxmama.com?subject=AskTaxMamaComment
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ADDRESS CHANGES - Please, do NOT send them to me to do.
There is a link at the bottom of this issue. Please click
on it and you will be able to make updates and changes
yourself. And faster.
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Media Tour and Classes
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Next Webinar - Save the Date!
September 14, 2005
How to Run Your Business Instead
of Letting it Run You.
Guests, Joseph & Jacqueline Freeman
who've moved back to the farm...
and now control their lives and finances
Learn to get rid of your stress and
increase your income.
[Registration Details to come]
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TaxMama's IRS Exam Review Class - Self-Study
Listen, read, test yourself - pass the exam
http://irsexam.com/register.php
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Our Offer in Compromise workshop this week was terrific.
Order your copy http://go.asktaxmama.com/OIC-audio
EAs can get 1 hour CPE for this workshop
http://go.asktaxmama.com/OIC_EA-CPE
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USE THESE QUICKIE RESOURCES!
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101 WAYS TO BE YOUR BEST
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Small Business Taxes Made Easy
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This Week's Tax Quips
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This weeks pearls of wisdom are at:
http://www.asktaxmama.com/podcast/
MONDAY - The Year That Husband Dies
http://www.asktaxmama.com/podcast/index.php?id=19
TUESDAY - Late-Filed Refunds
http://www.asktaxmama.com/podcast/index.php?id=21
WEDNESDAY - Dark - too busy answering e-mails
THURSDAY - My Acting Career
http://www.asktaxmama.com/podcast/index.php?id=22
FRIDAY - Just the Fax
http://www.asktaxmama.com/podcast/index.php?id=23
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Retiring Right
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Last week, Mark from Hayward asked about
retiring with a small pension and Social Security.
http://www.taxmama.com/AskTaxMama/318/article4.html
<A TaxPro Replies>
Hi Eva,
I rarely do this, but I must humbly disagree
with your assessment of Mark's situation.
Since he lives in one of the nine community
property states (AZ, CA, ID, LA, NV, NM, TX,
WA, WI), he'll have a rough time filing separately.
Anything considered community income (e.g.,
wages, self-employment income, etc.), or any
deductions paid with community income, must
be claimed one-half by Mark and one-half by his
wife if they file separately (assuming they
live together).
By the time they pay someone to figure it
all out, they might as well file jointly.
JMHO.
Lucie Sample, EA
San Diego
<TaxMama Comments>
Hmmm....I re-read my answer.
Lucie isn't the only one who contacted me
about why didn't I mention community property.
They and Lucie are right. For a healthy couple,
where the wife just has a simple office job,
it would probably not be worth the money to
figure the taxes separately and together.
However, I repeat, I don't know enough about
the couple to suggest they won't benefit.
Yes, they'll need to split all their income
50-50 in a community property state.
But the Adjusted Gross Income (AGI) on each
person's tax return will be much lower. So,
suppose that brings it down to $40,000 each,
taking the maximum taxable Social Security
income into account.
That means that 2% of AGI is only $800 instead
of $1600. So if the wife's job involves lots
of out of pocket expenses, or union or association
dues, she'll be able to deduct $800 more than she
could have.
Or if they have tax preparation fees, investment
fees or subscriptions or other miscellaneous
deductions
And 7% of AGI on $40K is only $2,800 instead
of $5,600. So if he has out of pocket medical
insurance, or medical expenses, he'll be able
to start deducting them after only $2,800
instead of $5,600.
And since you may have up to $500 per tax
return worth of non-cash contributions without
having attach a separate form and substantiation,
the couple as a whole may deduct an extra $500
without receipts. (Assuming, of course, that
they really did drop those things off at the
charity, but didn't go to an attended facility.)
So if they split the mortgage and property
taxes between them, they'd be able to increase
their combined deductions just with the things
I've mentioned, by nearly $4,000.
In California, that's worth about $1,200
in tax savings.
And that's even before either of them run up
high medical bills or pay for long-term care
insurance! The savings can only increase.
So, yes, if I were in that position, I'd
certainly invest the money to have a tax advisor
review our combined finances for the best tax
return options.
Yes, Lucie is absolutely right - except.
And when it comes to taxes...there's always
an except.
Besides, the extra tax preparation fee is
deductible to the person who pays it!
Best wishes,
Eva Rosenberg, EA
Your TaxMama
Always seeing the possibilities.
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A Penny For Your Thoughts
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From: Seattle, WA
Dear TaxMama,
When you file your federal taxes, when is it
ok to omit the pennies, and just use whole
dollar numbers?
Example, $580 instead of $580.50
Aaron
<TaxMama Replies>
Dear Aaron,
ALWAYS!
You'll rarely find tax software that uses pennies.
(Do they even write tax software that tracks
pennies?)
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
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JOB CANDIDATE OF THE WEEK
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Special new feature for Financial Employers -
Since I know how hard it is to find good help,
we'll start running a new feature -
JOB CANDIDATE OF THE WEEK
Shawnn in New York - MBA, Audit/Tax Associate
Salary Requirements - $45,000.00 or $20-$25/hour
HIGHLIGHTS OF QUALIFICATIONS
* Managerial, Leadership, and Supervisory skills
* tax Research & Analysis Experience
* Individual and Partnership tax Return Preparation
* Financial Statement Preparation
* Excellent Communication & Organization Skills
* Applications: MS Office 2003, taxWise, QuickBooks
You can find him, and people like him at the
employer pages of taxmama.careerbank.com
http://taxmama.careerbank.com/employer/default.cfm
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Too Late For Refund
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From: Richmond, VA
Dear TaxMama,
Is there anyway to file for and get tax
refunds for years that are past the "3 year
refund limit" that IRS says I've missed?
Barry
<TaxMama Replies>
Dear Barry
Nah, it's never too late to ask.
But...getting it is another matter.
You can file a claim for refund, asking IRS to
waive the 3 year statute for cause, if you didn't
file because:
1) You were ill all that time and just recovered.
(Note: illness includes addictions, like drugs and alcohol.)
2) You were incapacitated somehow and unable to
file or function.
3) You died, and your heirs are just now finding
out that returns weren't filed. (Not a great option for you.)
4) Someone very close to you was ill and you had to
spend all your time caring for them, to the neglect of
your own affairs.
5) All your records were lost or destroyed in some
major casualty (fire, theft, earthquake, tornado...)
and you've been diligently working to reconstruct
them all this time. (Note: if your income was primarily
via W-2 and dividends or interest, and your expenses
consisted primarily a mortgage and property taxes,
there's no excuse. You can get those documents in
no time. OK, a couple of months...but that's a
lot less than three years.)
You're getting the general idea.
(Those are not the official reasons that IRS
accepts. They're just kind of a distillation of
the reasons.)
Looking at this from an IRS perspective,
if you were able to work, get your wages, run
your business, or earn a living and show other
signs of high-functioning, you don't have an
acceptable argument.
IRS will simply say, you were able to do your job,
you could have filed a tax return.
Now, that doesn't mean I wouldn't send IRS a letter
begging them to help me find a way to get the money
back. If you can write a great letter, play on the reader's
sympathy and/or sense of humor, you just might get
someone to help you. Probably not...unless you
fall under the general guidelines above.
Good luck!
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
The BOOK is out!
Small Business Taxes Made Easy - read all about it!
http://www.taxmama.com/AskTaxMama/book/
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Because We Care
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MONEY FUNNIES
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Martial Trust
When Shane Warne and Simone got married
Shane said, "I am putting a box under the bed.
You must promise never to look in it."
In all their 10 years of marriage, Simone
had never looked.
However, on the afternoon of their 10th
anniversary, curiosity got the best of her and
she lifted the lid and peeked inside.
In the box were 3 empty beer cans and $81,874.25
in cash. She closed the box and put it back under
the bed.
Now that she knew what was in the box, she was
doubly curious to know why there even was such
a box with such contents.
That evening, they were out for a special
anniversary dinner. After dinner, Simone could
no longer contain her curiosity and she confessed,
saying, "I am so sorry. For all these years, I
kept my promise and never looked into the box
under our bed.
However, today the temptation was too much and I
gave in. But now I need to know, why do you keep
the 3 beer cans in the box?"
Shane thought for a while and said, "I guess after
all these years you deserve to know the truth.
Whenever I was unfaithful to you, I put an empty
beer can in the box.
Simone was shocked, but said, "I am very disappointed
and saddened by your behaviour. However, since you
are addicted to sex, I guess it does happen and I
guess 3 times is not that bad considering your problem."
Shane thanked her for being so understanding.
They hugged and made their peace.
A little while later Simone asked Shane, "So why do
you have all that money in the box?"
Shane answered, "Well, whenever the box filled up
with empty cans, I took them to the recycling centre
and redeemed them for cash.
------
Contributed by Gary in San Diego, CA
[Remember, we're always looking for SHORT, clean humor!]
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IRS and Tax NEWS
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WASHINGTON – Internal Revenue Service officials
announced today the launch of a study to assess
the reporting compliance of S corporations. The
study, carried out under the National Research
Program (NRP), will examine 5,000 randomly
selected S corporation returns from tax years
2003 and 2004.
S corporations are entities whose income and
deductions pass through the corporate structure
to the shareholders. Since the mid-1980s, the
number of S corporations has risen rapidly,
growing from 724,749 in 1985 to 3,154,377 in 2002.
The growth rate has been even faster among S
corporations with more than $10 million in assets.
From 1985 to 2002, the number of these larger S
corporations grew more than ten-fold, from 2,305
to 26,096.
Program officials expect these audits to begin
later this year. The last reporting compliance
study of S corporations involved about 10,000
returns from tax year 1984, prior to the tax law
changes that spurred the growth in S corporations.
The new NRP initiative will use a study approach
designed to reach statistically valid conclusions
regarding compliance behavior, while using a
smaller sample of returns than in the past.
For more information - visit the IRS Newsroom
http://www.irs.gov/newsroom/article/0,,id=141441,00.html
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TaxMama On the WWW & Tooting Her Own Horn
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Ask TaxMama is published by the good folks at http://taxmama.com
ISSN 15320790 © copyright, Eva Rosenberg, 1999 - 2005
TaxAnxiety Inc. P.O. Box 280549, Northridge, CA 91328
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