The Small Business Tax Help Blog

Posts Tagged ‘tables’

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Question: What is the difference between the Foreign Earned Income Exclusion and the Foreign Tax Credit?

I am a US Citizens living abroad. I am in the process of filing tax return for 2008 for foreign earned income based on IRS’ publication 54. Our earned income has already been taxed once by the country we live in.
I see that there are two ways to avoid double taxation on your income -the foreign earned income exclusion and the foreign tax credit.
Can somebody please explain the difference between the two and point out advantages to use one over another?

Answer: The foreign earned income exclusion allows you to exclude from tax a certain amount ($87,600 in 2008) of your foreign earned income (wages and self-employment earnings). You claim the exclusion on form 2555 and must reside outside the US and meet certain other requirements. If your income is above the exclusion amount you can still take a foreign tax credit for taxes paid on the the income in excess of $87,600, and this calculation is quite complicated.

The foreign tax credit is available to avoid double taxation of foreign income. The credit is claimed on form 1116 and must be calculated separately for certain defined categories of income. That is, one credit for general limitation income (wages, etc.), one credit for passive income (interest, dividends, rents, etc), and so on. In calculating the credit, deductions claimed on your tax return must be allocated to both foreign and non-foreign income.

If you don't want to take the credit, you can instead take any foreign taxes paid as an itemized deduction on Schedule A, if you itemize. Most of the time, this is the least attractive alternative, but not always.

Usually if your foreign earned income is under the exclusion amount and you do not have lots of other income, then the foreign earned income exclusion is the simplest and preferred option, if you qualify to use it. However, if you still owe US taxes after using the exclusion, a detailed calculation of your tax liability using the foreign tax credit is necessary to know which leads to the lower tax.

Advice was prepared based upon understanding of the tax law in effect at the time it was written and the facts and circumstances described. See my profile for more information.

IRS five tax tips for New Jerseyans

MOUNTAINSIDE NJ - While the tax filing deadline is about three months away, it always seems to be here before you know it. Here are the Internal Revenue Service’s top 5 tips that will help your tax filing process run smoother than ever this year.

Question: Regarding the new “Obama” payroll withholding amounts…………………………………………………?

…….the new payroll withholding tables have been out since Feb 09 with reductions to the withheld amounts. Has there been a corresponding tax reduction to the taxable amounts on an individuals income when they file form 1040? Or is it that the IRS will continue looking for the same amount of tax due, and the taxpayer will have less “saved up” to pay the tax liablility?

Answer: The tax liability has not changed. However, they've added the "making work pay" tax credit.

Since this is a refundable tax credit, it counts as a payment. This means it applies toward taxes owed and if there's anything left you get the difference as a refund.

Example, lets say they would normally withhold $2,000 from your paychecks, you'd normally have a tax liability of $1500 and get a $500 refund.

If your single you'll get the making work pay credit for $400. So they'll withhold $1600, your tax liability will still be $1500. However your total payments will be the $1600 you actually paid, plus the $400 tax credit (since refundable credits count as payments), so you'll get credit for making $2,000 worth of payments, and you'll get a $500 refund. The difference is that your paychecks were a little bigger all year.

Calling the IRS? Good luck

WASHINGTON — Need help with your taxes? Good luck reaching the IRS. Three out of 10 people who call the toll-free help line this tax season won’t get through to a human being — and that’s if the agency meets its goals for service.

Question: Stimulus Question/ Turbotax?

My question is if they are sending this years stimulus package straight to your paycheck but you were laid off then how do you get it?
The article I read leads me to believe you can ask for it in your taxes but Turbotax has no button or section for it and I cant find any answers in the Faq.

“I clipped the below passage from a turbotax article on the obama stimulus package”.

The IRS will get the money to taxpayers by adjusting the withholding tables, thereby boosting paychecks. The increase could be as much as $40 per month per worker, depending on when the withholding tables are changed. Self-employed workers will claim the credit on their tax returns. In the meantime, they can reduce their Estimated Tax Payments for 2009.
Let me clarify a bit more I was self employed, and am not eligible for unemployment I have no income. I simply want to know if I can still somehow receive the stimulus package or if every one that is laid off and cant get unemployment is just F@#%ed.

Answer: If you're unemployed and are collecting unemployment, you get a better deal: An extra $25 per week in your unemployment checks. That's an extra $108 a month vs $40.

If you are working, the withholding tables will be adjusted to give you the extra money in your paycheck automatically.

National Players should be Tax Exempted!

On the 12th February, 2010, the whole world became aware of the fact that the Ghana Black Stars players have been exempted from tax deduction, not by the Government, according to Mr. K.N.S Mensah’s(Goal.com) article entitled, “IRS Chase Ghana Players For Tax Bonuses.”

Question: Where do I find the Earned income credit tax table for this year?

Does anyone know where I can locate that. I would love to file my taxes the second week in Jan as always and Im trying to get everything prepared but I have no idea where to find the table I need. It is the one that shows what you made vs. what you would recieve.

Answer: I printed out the table over a month ago for my clients. It's in the instructions for the 1040, which you can find online.

Go to irs.gov. In the search box, type just the number 1040. In the results find the 2009 Instructions for Form 1040. Page through until you find the table.

Rex Energy Corporation Announces Year-End Reserves, 2010 Capital Budget and Marcellus Shale Operational Update

STATE COLLEGE, Pa. -- Rex Energy Corporation announced today its total proved oil and natural gas reserves as of December 31, 2009 increased 90% from 2008 year-end estimates to 125.2 billion cubic feet of natural gas equivalent .

President Obama: Health Reform Town Hall at North Carolina High School

Question: Is Obama’s “Making Work Pay” tax credit another lie?

Rude surprise awaits taxpayers

WASHINGTON – Millions of Americans enjoying their small windfall from President Barack Obama’s “Making Work Pay” tax credit are in for an unpleasant surprise next spring.

The government is going to want some of that money back.

The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.

But new Tax Withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.

http://news.yahoo.com/s/ap/20090430/ap_on_go_ca_st_pe/us_tax_credit_pickle;_ylt=AlNuKBh0lJn1TU61uI37BWGWwvIE;_ylu=X3oDMTJuMGwzMXJxBGFzc2V0A2FwLzIwMDkwNDMwL3VzX3RheF9jcmVkaXRfcGlja2xlBGNwb3MDNwRwb3MDNwRzZWMDeW5fdG9wX3N0b3JpZXMEc2xrA21pbGxpb25zZW5qbw–

Answer: I posted a question about this earlier today. Take a look at the goofy responses I got from libs.

http://answers.yahoo.com/question/index;_ylt=Ah1TlVttrpHiPEyIG5DNdt7sy6IX;_ylv=3?qid=20090501032729AAyMoke

1. Claiming the Making Work Pay credit

Last year, your paychecks probably were slightly larger thanks to the Making Work Pay credit that was enacted as part of the 2009 stimulus bill. That change was thanks to adjusted payroll withholding tables, but to officially get that credit, you must claim it on your tax return this year.

Honorable Andy Jacobs exposes bi-partisan sellout of US