The Small Business Tax Help Blog

Archive for February, 2010

Question: What is the reason for deductions and credits?

I am just wondering why we have so many deductions and credits in our tax system. Wouldn’t it be much simpler for everyone (businesses, the public and the government) if we all just paid our share and we had fewer deductions and loopholes? I understand some of the deductions we give such as deductions for children (obviously a family should pay less than a single guy only supporting himself), and some other deductions which offer incentives for doing things that are beneficial (such as tax breaks to green energy companies to research new energy). But why do we have SO MANY deductions and credits?

Answer: While I agree that the tax code is extremely complex, it is not because of the deductions and credits.

Deductions and credits serve two purposes. First, they do encourage behavior that the government support. Second, they stimulate the economy. If we paid more money to the government, we would have less money to spend on things such as housing. Without a deduction for mortgage interest, people would be less inclined to buy houses.

As far as supporting large families, taxpayers only get credits for the first two children they have. They get dependency exemptions, but without them people would go broke. Furthermore, families with large incomes get exempt from lots of the deductions and credits. Notice at the bottom of schedule A where you have to determine if your deductions are limited. These deductions and credits do help the people they are intended to.

The only reason the tax code is so complicated is because people try to beat the system. They attempt the breaks allowed by the government to benefit themselves even if they were not originally intended to. If you really look at each deduction and credit, they are all useful.

Tax Credit Elimination Bills Passed- Local Businesses Seeing Red

COLORADO SPRINGS- The State House of Representatives sends two Tax Credit Elimination Bills to the Senate; but business leaders keep fighting.

Recovery: Home Energy Credit - June 09

Question: Government and private sector propaganda regarding inflation and rates ?

What do you think of the greatest propaganda machines of all the government and private business as the two instutions in the past clashed on what was right for public and now has become money hungry liars that deceive the innocent public from any enriching life style .1 when an politician is in the media talking about inflation rising(the politician is realy saying that they will let the price of food and products rise so that the government will have some more tax money and say again because the price of food has risen the government has a right to put up the cost of rates (the private sector raises a dollar on produce and the government raises a dollar on rates)as the government is put in place to control inflation not cause inflation as well.Australia is supposed to be a fair nation and its becoming a (advanced australia un-fair ).Australia needs new political blood to form an once more industrial australia.The government is now creating inflation ?.

Answer: If the Asker is suggesting that governments try to increase the inflation rate will not find anybody in support of that since it cannot be true. No gevernment will want to do that since people do not like to pay more for the same stuff that they bought yesterday (a year ago).

Australia’s Rudd takes hit in opinion polls over carbon trading scheme

Australian Prime Minister Kevin Rudd has taken an election-year opinion poll hit as a resurgent opposition capitalised yesterday on voter unease over the government’s climate change plan by offering a simpler alternative.

Sydney Chartered Accountants

Question: HMRC unfair demands?

I received a telephone call from a member of the HMRC recovery office with a warrant and a demand for £2000, I informed this person that I had paid all due taxes and I could provide proof, He repeatly told me that if I failed to pay this amount he would enter my business premises by force and remove goods. I could not provide him with the details of my previous payments as I was away from the office so I contacted my accountant who again confirmed all payments were up to date, still this person insisted that I pay the amount, by this point I was both furious and in fear of losing assets so I telephoned the HMRC and questioned them regarding this alleged non payment, they confirmed to me that I did owe them the said amount, being in a state of confusion and anger I paid only to be told the day after the payment had cleared that I had infact paid them £150.00 too much prior to the £2000.00 they claimed I owed them. So they now owe me £2,150.00 what can I do?

Answer: Tell your accountant. He can phone HMRC and talk to the Manager who can arrange an immediate refund. If you phone you'll get sent all around the houses!
It would be useful if you had details of who phoned you.

AEGON Sells Dutch Funeral Insurance Business

THE HAGUE, The Netherlands, February 2 /PRNewswire/ -- AEGON announces the sale of its funeral insurance business in the Netherlands to Dutch investment firm Egeria for an amount of EUR 212 million.

Tips for Filing Taxes : How the IRS Selects Audits

Question: Cost of living in Canada, Ontario.?

Hello,

My husband and I are thinking of moving to Barrie, Ontario. My husband was born in Canada, but left when he was a teen. He currently works for a computer firm as a computer technician, with 10 years experience. I am a Veterinary assistant, although I haven’t had any formal training. I have also worked in an office environment, and have a great reference from my former employer. We would like to know what our chances are if we were to move to Canada. Would we be able to live comfortably with average incomes? What would we be left with after taxes have been deducted from our salaries? Would it be enough to cover our rent, and other expenses? And how much is car insurance, on average? At least one of us will need a car. My husband has been driving for 15 years, and has a clean record. We would like to rent first before buying our own home. Would the mortgage payments be too high for a modest home? We will have $27,000 CAD for a down payment.

Please advise! Thank you

Answer: When coming to a new country there are many things to consider. Many independent immigrants come to Canada with a sum of money to help to get established in their new community. It is important to know what the real cost of living and employment conditions are in Ontario. It is very important that you are budgeting your money; that first job might take some time to get.

Check out the link below for more information

http://www.canadaimmigrants.com/Torontoliving.asp

First Merchants Corporation Announces 4th Quarter 2009 Earnings and 1st Quarter 2010 Dividends

MUNCIE, Ind.----First Merchants Corporation has reported a fourth quarter 2009 net loss of $11.7 million, or $.55 per fully diluted common share. The Corporation’s fourth quarter loss contributed to an annual fully diluted common share loss of $2.17, down from the prior year income of $1.14.

Forum on Modernizing Government: Maximizing Technology Return on Investment

Question: is the earned income credit and child tax credit the same thing? or whats the difference. Im filing head of?

household, with two dependent students, and a full-time college student.
*** i meant two dependent children not students

Answer: The Earned Income Credit is money paid to you when your income qualifies as sufficiently low and you have qualifying children. With two children and income in the range of $15,000 - $20,000, your EIC can be over $4,000.

The Child Tax Credit is a reduction of taxes you owe in the amount of $1,000 per child. If you do not "use up" all the Child Tax Credit because you do not owe that much tax, you may get some or all of the difference as "Additional Child Tax Credit" paid to you. You need to make over approximately $12,000 to get any ACTC. The ACTC can go as high as $1,000 per child.

You can qualify for the EIC with any filing status except married filing separately. You can qualify for the CTC or ACTC with any filing status.

Coaltion aims to get more low-income earners in Berks to claim federal tax credit

Too many Berks County residents don't claim the Earned Income Tax Credit when they file their taxes and it could be costing them thousands of dollars in refunds every year.

Community TAx Center-Shadow Brook VITA