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Archive for the ‘Taxes’ Category

Making energy-efficient home improvements and purchasing fuel-efficient hybrid electric vehicles is no longer just an environmentally friendly move -making these purchases could save you money at tax time.

That’s because the Energy Policy Act of 2005 will offer consumers federal tax credits for making energy-efficient purchases.

Using energy-efficient appliances and installing better windows and insulation can provide many benefits. In addition to lower energy bills, individual energy-saving action can increase comfort in the home and reduce air pollution.

By driving or buying or leasing a new hybrid gas-electric automobile fuel-efficient vehicle you can get an income tax credit of $250-$3,400 plus better mileage-meaning lower gasoline prices–and fewer emissions.

What Are Tax Credits?

One of the best benefits this year is the new tax credit offered by the Energy Policy Act. Qualifying products and vehicles can mean having to pay less at tax time.
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Buying a hybrid car gives the phrase “go green” a whole new meaning. Not only is it good for the environment, it’s also good for your pocket book. Check out the tax benefits of hybrid vehicles for yourself.

The government has decided that encouraging drivers to do their part to protect the environment could be better enhanced by offering tax incentives. So 2006 sees a variety of incentives from tax credits to tax deductions.

But before you get too excited, be sure you understand all the regulations. It is a bit complex and not all vehicles that call themselves hybrids actually qualify for the hybrid tax relief programs.

The full on hybrid vehicle uses both a gas engine and an electric engine. The Toyota Prius is an example of a full on hybrid. However some of the other models that call themselves hybrids aren’t classified as such by the government. That’s because some vehicles that do no more than shut the engine off at idle wear the hybrid designation.

The full tax credit is applicable to only the first 60,000 cars sold by the car maker. After that, the amount of the credit goes down. So if you want to be able to take the full tax credit you need to be buy early. Be aware that leasing doesn’t qualify for a tax credit.

The new tax incentive programs are much more valuable than the old programs that were in place. For the exact amount and rules you need to contact the IRC, but ACEEE has provided the following estimates to give you an idea of the tax benefits you might reap.
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Hit a big one? With more and more gambling establishments, keep in mind the IRS requires people to report all gambling winnings as income on their tax return.

Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos. Unfortunately, gambling income also includes the fair market value of prizes such as cars, houses, trips or other non-cash prizes.

Generally, if you receive $600 ($1,200 from bingo and slot machines and $1,500 from keno) or more in gambling winnings and your winnings are at least 300 times the amount of the wager, the payer is required to issue you a Form W-2G. If you have won more than $5,000, the payer may be required to withhold 25 percent of the proceeds for Federal income tax. However, if you did not provide your Social Security number to the payer, the amount withheld will be 28 percent.

The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.
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In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars. KMPG has agreed to pay a fine of $456 million dollars, but nine of its executives still are under indictment.

Son of Boss Tax Shelters

From 1996 to 2003, KMPG promoted a tax strategy known as the Son of Boss. This shelter was used to create phony tax losses that could be claimed by wealth individuals looking to write off tens of millions of dollars. KMPG promoted the structure despite the fact it’s own internal tax attorneys warned the structure was fraudulent and could result in criminal charges. So far, wealthy individuals participating in the scheme have paid over $3.7 billion dollars to the IRS.

There should be no mistaking the impact of the plea agreement in this case. KMPG may have enjoyed the huge fees earned from the scam, but it is paying an incredible price for pursuing this practice. The price paid includes:

1. 456 Million Dollar Fine,

2. Permanently barred from providing tax services to wealthy individuals,

3. Permanently barred from involvement in any pre-packaged tax strategies,

4. Permanently barred from charging a contingency fee for work,

5. All actions monitored by government appointee for three years,

6. Full cooperation with government in indictments of individual KMPG employees.
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Accelerated depreciation in the fourth quarter of 2004 can provide significant tax shelter to many parts production job shops or tool and die shops, according to capitol equipment financing specialists at Makino, a global provider of advanced machining technology.

Operations that invest in new equipment technology and receive delivery before December 31, 2004, may see significant corporate and personal owner refunds in the spring of 2005. In some cases, the corporate tax savings/refund will offset the first year’s expenses associated with operating the machine.

After the terrorist act of 9/11, Congress passed a tax relief act in 2002 allowing companies that purchase new machinery to immediately depreciate 30 percent of the value of those acquired assets. The remaining book value would be subject to MACRS depreciation as per Internal Revenue Service guidelines. Additionally, the act permits a company to reach back five years (as opposed to three years) for a tax refund.
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