Home sales – Keeping the tax facts in mind helps you make the most of it

Like purchasing a home, trading one is a significant undertaking. When taking a decision to sell off your house, you have two options on hand. One option is to appoint the services of a real estate agent. Another one is to handle the entire home selling process yourself. If you choose to go for the first one, it’s advisable to understand all the different factors that contribute to a winning sale. When you opt for the latter option, understand that the home selling process can be quite time-consuming and entail an enormous amount of detail. Simultaneously, you can save a considerable amount of cash by avoiding payments. The more you’re aware of the home trading techniques, the more money you have in your pocket. However, there is another side of this story. Selling a home is usually a taxable affair, and perhaps one of the biggest financial dealings of your life. If not handled properly, it may also give rise to one of the major bills you obtain in your entire lifetime.

With the real estate market turning around a bit, a lot of people are purchasing new homes or trading their old homes. Lately, the IRS issued their Summertime Tax Tip 2012-14; this includes several tips that you need to have knowledge of when selling a home.

The IRS or Internal Revenue Service lays down some vital information for those who have already sold or are intending to sell their home. If you earn a profit from the sale of your home, you can exclude all or a fraction of that profit from your earnings. Following are 10 tips from the IRS to take into account when trading your home.

  • As a general rule, you are entitled to leave out the profit from income if you had the home ownership or used your home as your primary residence for two years out of the five years before the date of the transaction.

  • If you earn a profit from the transaction of your main home, you can leave out up to $250,000 of the profit from your earnings (usually, $500,000 on a mutual return).

  • You are not entitled to the full profit exclusion if you left out the profit from the sale of a second home at some point of time in the two-year period before the transaction of your home.

  • If you are eligible to exclude all of the profits, you no longer need to mention the sale of your home on your tax filings.

  • If you earn a profit that is not eligible of exclusion, it is fully taxable. You need to report it on Form 1040.

  • You are not supposed to withhold a loss from the transaction of your main residence.

  • Spreadsheets are incorporated in Publication 523, Selling Your Home, to aid you estimate the clarified basis of the house you traded, the profit or loss on the transaction, and the profit that you can leave out.

  • If you own in excess of one home, you are eligible to exclude a profit only from the transaction of your primary residence. You need to pay tax on the profit from trading any additional home. Again, if you own two homes and reside in both of them, your primary home is usually the one you reside in most of the time.

  • Exceptional rules may be applied when you trade a home for which you obtained the first-time homebuyer recognition.

  • When you change residence, see that you inform your new address to the IRS and the US Postal Service to receive letters from the IRS. Make use of Form 8822, Change of Address, to inform the IRS about your address change.

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How does IRS help when you start a small business?

If you’ve decided to start a small business, then there are some basic federal tax information from the IRS that’ll help you get started. Enlisted below are a few considerations that you should keep in mind when starting a new business. Read on to know more.

Type of business: One of the first things you need to decide upon is what type of business you’re going to establish. Sole proprietorship, corporation, partnership, etc. are some of the common types of businesses. The type of business you start is important. It’ll determine the tax form you’d have to file. Sigue leyendo

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Way out of your small business tax debt labyrinth

Small businesses having tax debts experience the intimidating powers of the IRS and the different methods that the agency may use to collect unsettled taxes – some of which can even bring an end to your business. Just as an individual taxpayer faces problems in making their tax disbursements, so too are small business exposed to tax debt issues. Small businesses have various ways to file their taxes, together with many other deductions that an individual doesn’t obtain usually. This could still result in huge tax load that must be paid, with a definite income just in the vein of an individual taxpayer. Now, how can a small business get tax relief while handling back taxes? Sigue leyendo

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IRS debt: Plans to rescue taxpayers

The Internal Revenue Service (IRS) knows about the plight of the people who are delinquent in filing timely tax returns. There can be hundreds of reasons that may force a person to fall back on tax payments. For instance, a person may be paying for his medical bills or making loan payments for his child’s higher education.

In such a case, people are bound to suffer with shortage of cash and start piling up on tax bills. Therefore, the IRS has planned out some structured repayment schedule to help out people in financial distress. Sigue leyendo

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Shanmugaratnam to simplify and reduce the taxation of foreign income

Shanmugaratnam to simplify and reduce the taxation of foreign income

Singapore´s Finanace Minister Tharman Shanmugaratnam wants to simplify and reduce the taxation of foreign income, so as to support companies that are internationalizing and earning a larger share of their income overseas. Foreign tax credit (FTC) pooling is to be introduced to give businesses greater flexibility in their claim of FTCs, reduce their Singapore taxes payable on remitted foreign income (FI), as well as to simplify tax compliance.

Under the FTC pooling system, FTC is to be computed on a pooled basis, rather than on a source-by-source and country-by-country basis for each particular stream of income. The amount of FTC to be granted will be based on the lower of the pooled foreign taxes paid on the FI and the pooled Singapore tax payable on such FI. This will take effect from the 2012 assessment year.

Shanmugaratnam then said that, while Singapore is making good progress to becoming a location of choice in Asia for global companies as well as a launch-pad for Asian enterprises to internationalize, he has made other tax changes in strategic business sectors to enhance its overall competitiveness as such a hub.

With effect from June 1, 2011, existing maritime incentives will be streamlined and enhanced. New tax benefits, such as certainty of WHT exemption for interest payments on loans to build or buy ships, will be introduced to further entrench international ship operators and encourage the growth of the shipping-related services sector in Singapore

For example, to facilitate access to a wider range of funding sources for their lending business and strengthen Singapore’s position as a regional funding centre, enhancements will be made to the withholding tax exemption (WHT) exemption regime for finance companies, banks and investment banks with effect from April 1, 2011. WHT exemption will be granted on interest payments made to all non-resident persons (including funding from non-bank sources, such as hedge funds and insurers).

There will also be a package of individual income tax benefits for all Singaporeans. All resident individual taxpayers will be given a one-off personal income tax discount of 20%, capped at SGD2,000 per taxpayer, in 2011/12, and a new personal income tax rate structure will take effect from 2012/13. Marginal tax rates will be reduced for the first SGD120,000 of chargeable income. While all taxpayers benefit, middle-income earners will enjoy the largest percentage reduction in taxes under the new rates.

After factoring in the various tax and other measures announced in his budget, he still expected a basic fiscal deficit of only SGD2.2bn, or about 0.7% of GDP, in 2011/12.

Shanmugaratnam disclosed that the government will continue to review Singapore’s top personal income tax rate, but saw no pressing competitive need for it to be reduced at present.

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Tax Handouts In Singapore’s Budget

Finance Minister, Tharman Shanmugaratnam, delivered Singapore’s budget plan for the 2011/12 fiscal year on February 18, and announced tax benefits to households and businesses totalling some SGD13bn (USD10.2bn).

He pointed out that Singapore’s economy had done particularly well in the past year. After two weak years in 2008 and 2009, when growth was close to zero, its gross domestic product (GDP) grew by a record 14.5% in 2010, and is forecast to grow by up to 6% this year. Thanks to the improved economic growth, the originally-expected budget deficit of SGD3.0bn, or 1% of GDP, in 2010/11, has been transformed into a much lower deficit of SGD0.3bn, or only 0.1% of GDP.

Singapore´s Finance Minister was therefore able to announce that, in 2011/12, companies will receive a 20% income tax rebate, capped at SGD10,000, or a small- and medium-sized enterprises (SME) cash grant of 5% of a company’s revenue, capped at SGD5,000. Companies will automatically receive the higher of the tax rebate or the grant when Inland Revenue Authority of Singapore assesses 2011/12 tax returns.

Shanmugaratnam said that the government’s long-term aim is to raise incomes by 30% in real terms over the next ten years by growing the economy, and helping businesses to invest, restructure and developing skills, while also introducing measures to expand support for lower- and middle-income Singaporeans.

To further encourage pervasive innovation and raise productivity efforts, the productivity and innovation credit (PIC) scheme will be simplified and enhanced. The amount of tax deduction or allowance will be increased to 400% (from 250%) of research and development (R&D) expenditure, for the first SGD400,000 (increased from SGD300,000) spent on each qualifying activity.

PIC benefits will also be made available to R&D made abroad; businesses will be allowed to combine the SGD400,000 expenditure cap per year for 2013 to 2015 into a new ceiling of SGD1.2m over the three years; and there will be an enhanced cash conversion option where taxpayers can opt to receive, in lieu of tax deduction benefits, a cash payout of 30% of the first SGD100,000 of qualifying expenditure, up to a maximum of SGD30,000.

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Good Prospects For The Swiss Economy

Switzerland’s federal administration reveals that, the Swiss economy showed rapid and strong recovery from the recession in 2010.

According to Credit Suisse data industry in the Confederation benefited from a recovery of international trade, while domestic market-orientated companies were able to rely on immigration and an excellent climate for consumption.

In its statement, the administration admitted that demand from abroad is expected to increase more than domestic demand this year, undoubtedly giving export-orientated sectors of the economy an advantage.

Factors, which have up until now contributed to the economic upturn, including various fiscal initiatives, are progressively disappearing, the administration notes.

Some sectors of the economy which are well represented in economically booming emerging countries are expecting to experience above average growth, the administration continues, noting that the watch industry will lead the way. Nevertheless, a strong Swiss franc could serve to slow export sectors, even though international economic climates have a much greater influence on exports than the exchange rate.

Especially surprising, the administration concludes, is the robust state of the job market in Switzerland, adding that unemployment rose less than in previous recessions on account of recourse to reduced working hours. This measure, the administration notes, was, in the short-term at least, able to prevent job losses

As a result of structural problems, weaker growth is expected in certain sectors of the country’s economy according to Credit Suisse, including the textile, clothing, printing and publishing industry as well as in the paper industry. The Confederation’s hospitality industry looks set to face the greatest challenges, the administration reveals, again as a result of the strong Swiss franc, and especially with regard to visitors from the euro area and the United Kingdom.

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Brussels is consulting on Financial Services Sector Taxation

Brussels is consulting on Financial Services Sector Taxation

The European Commission has informed about  the launch of a public consultation to receive feedback on the prospect of taxing the financial sector, especially through the application of FAT financial activities taxes) and FTT (financial transactions taxes).

Calling for answer from concerned stakeholders, the Commission said that thus far countries had encountered problems, due to public criticism of a possible under-taxation of the sector, fears about the promotion of greater risk-taking, and concerns that unilateral action could create incentives for tax-driven relocation either within the European Union or outside the European Union, distorting competition; and because of issues with double taxation.

The Commission said that stakeholders’ answer will be useful (i) to test its assumptions and collect related evidence as regards the problems of taxing the sector; (ii) to assess the impacts of the set of policy options; and, (iii) to consult on more detailed aspects of the feasibility and design of the policy options.

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Schäuble siad no to TAX cuts in Germany

Schäuble siad no to TAX cuts in Germany


Germanys Finance Minister Schäuble emphasized that he would only place fundamental reforms of taxation on the political agenda provided that he felt in a position to implement them. This is not currently the case, he remarked. Indeed, given recent experiences, the black-yellow coalition must very carefully consider which laws to initiate, the minister added

According to Schäuble, deficit reduction remains the coalition government’s priority. Until there is rate to do so, the government should under no circumstances discuss reform plans, since such discussions merely serve to generate expectations, which in the end it will be unable to meet, he explained.

Despite a positive prognosis for the country’s economy this year, Finance Minister Wolfgang Schäuble has once again underlined the fact that there is currently no range to implement tax cuts in Germany, not only in view of the high level of state debt, but also given the lack of a coalition majority in the upper house of parliament or Bundestag.

Bavaria’s Economy Minister Martin Zeil of the Free Democratic Party has recently called for a swift reduction of income tax in Germany. Alluding to abundant tax revenues, Zeil posited that tax cuts could be possible from January 1, 2012. If November’s tax estimate is as positive as the previous year, this should signal the go-ahead for the government, Zeil stated.

As regards a possible reform of VAT tax in Germany, Finance Minister Schäuble warned that unless the government is able to bring about a big reform, it should leave well alone.

Ever cautious, however, Finance Minister Schäuble highlighted the need for the government to maintain its current savings course, to avoid falling into the trap, as in previous legislative periods, of creating new holes in state finances following initial successes.

Suggesting that 2010 is the comeback year for Germany in terms of growth of the economy, the government recently confirmed record growth of 3.6% – the highest since reunification, and stated that 2011 is also expected to be a good year.

In its official release, the government announced that it expects an increase in gross domestic product (GDP) over the course of the coming year of 2.3%, up significantly from its autumn prognosis of 1.8%. Germany’s economy is growing considerably faster than the euro zone average, it noted.

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Israel is saying no to Corporate Tax Cut

Israel is saying no to Corporate Tax Cut

The Israeli government is redefining a planned reduction in corporate income tax in order to fund a series of new tax and spending concessions.

Benjamin Netanyahu informed that the decision to increase the gasoline excise by NIS0.23 (USD0.06) per litre, which went into effect on January 1, would be cancelled altogether. As a result, revenues will fall short by NIS760m a year.

The corporate tax rate was due to fall by 1% to 23% in 2012 but under an economic plan announced by Netanyahu on February 10, this has been cancelled and it is unclear when the planned tax cut will now occur.

The move will partially pay for government plans to ease tax on gasoline and roll back recent increases in water and public transportation prices to compensate for the effect of soaring commodity prices on Israeli citizens amid the threat of a general strike.

“We cannot control commodity prices. However, we can present responsible solutions for the current situation,” he added. “The cost of the solutions we are presenting today must not break the budget ceiling.”

The Prime Minister said: “There are signs of another crisis developing as commodity prices internationally are raising, which is also affecting prices in Israel. As a result, gasoline prices increase, as do the costs of transportation and food.”

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