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January 12, 2018

How To Qualify As A Dependent On A US 1040 Tax Return

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Other than fitting the description of a constant liability, what other qualifying attributes must one have, to be classed as a dependent, and how do you determine this for tax purposes? The following paragraphs explain the qualifying tests for determining dependency as it relates to your tax status, liability and available credits. First, we need to make you aware that there are two different types of dependents.

There are several “qualifying tests” an individual must pass, in order to be qualified as a dependent on a US 1040 tax return. The tests for dependency are centered around the actual support tests that the candidate must pass; first, the qualifying individual must be the taxpayer’s child, stepchild, foster child, sibling or stepsibling, or a descendent of one of these (such as a niece or nephew), second the qualifying individual must have the same principal residence as the taxpayer for more than half the year and there are exceptions for children of divorced parents, kidnapped children, and for children who were born or died during the year, third the qualifying individual must be under the age of 19, or 24 if a full-time student and fourth, the qualifying individual must not have provided for more than one-half of their own support during the year. There are some additional rules that a dependent must pass, that really have nothing to do with the amount of support provided, but do determine their eligibility as US citizens and the ability to be considered for dependency. First, the qualifying individual must be a US citizen or national, and their marital status must be single, unless the are married but did not file a joint return for that year, or there was no tax liability that existed for either spouse had they filed separately.

If the qualifying individual can pass all four of the above described qualifying tests, as well as the additional rules, then any of the deductions, exemptions, and credits that are available can be used. For instance, child care expenses, child tax credits, dependent care expenses, earned income credit, and any associated itemized deductions may be claimed if the qualifying individual is determined eligible.

Determining eligibility in many cases means the difference between owing tax on your return, and the eligibility to file as head of household, and receive a refund that would include earned income credit. The earned income tax credit is a negative tax, and an attempt by the government to provide lower and poverty level income families with the opportunity to receive much needed assistance with caring for and supporting their families. Today, however, the earned income credit is becoming an opportunity for some segments of the public to abuse the goodwill of their government and falsify claims of dependency qualifications.

The child and dependent care expenses cover things like daycare, after school care programs, and any other form of paid care that is necessary for the qualifying individual to receive while the taxpayer is away at work. The only thing to watch here is that all qualifying individuals for the child and dependent care expenses must be under the age of 13.

The child tax credit is comparable to the earned income credit, in that it is a straight credit, dollar for dollar deduction of your tax liability. The child tax credit may only be taken by individuals with a qualifying dependent that is under the age of 17.

As you undertake the task of determining if your dependent meets the qualifying tests, and can actually provide some benefit in tax reduction at the end of the year, remember that it may take a little work, but the potential payoff could be well worth the time it takes to determine if you are single with no dependents, or head of household with a dependent and the opportunity to claim earned income credit, child care expense deductions, as well as file for the child tax credit. The result could be amazing!

Dassana Jayalath is the author of WebSuperTips newsletter. Download Free eCourse : Newbie’s Guide To Profitable Internet Home Business

January 8, 2018

Form 4868: Top Five Reasons to File an Extension For Your Personal Tax Return

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Looking for a reason for put off until October 15 what you can do on April 15? Do you need some encouragement to join America’s largest group of procrastinators? Then read on to discover five good reasons to join millions of other loyal American taxpayers who legally file their tax return late, without any late filing penalties and without being harassed by the IRS.

Reason 1: It’s free. It won’t cost you a dime to file Form 4868. Well, it’s almost free. If you file Form 4868 by snail-mail, it will cost you a whopping 42 cents.

Reason 2: It’s automatic. You don’t have to have a good reason, a bad reason, or any reason at all. Just send in the form and that’s all there is to it. No need to come up with some lame excuse like “My dog ate my W-2.”

Reason 3: It’s relaxing. Remember how you’ve spent April 14 or April 15 in previous years? It’s way past your bedtime, coffee pot still brewing, an opened bottle of Tylenol on top of your calculator, papers strewn all over your desk, receipts everywhere. Is this anyway to prepare your tax return? Of course not. Do you really need another source of stress in your life? File the extension and now imagine what you’ll be doing on April 15 while thousands of frantic taxpayers are stuck in traffic at their local post office; instead, you’ll be working in your garden or reading a good book, because you’ve got all summer to finish your return.

Reason 4: It’s easy. As tax forms go, this is one of the easiest tax forms to complete. You put in your name, address and social security number – and you are already halfway done! Only four more lines to go: an estimate of your 2008 tax liability, the total amount of 2008 tax payments (from W-2 or 1099 withholdings and/or quarterly estimated tax payments), any balance due, and the amount you are paying with the form. A tax form can’t be any easier than that.

Reason 5: It’s fast. You can use your tax preparation software program to e-file Form 4868. Talk about fast. You push the Enter button on your keyboard and the data gets transmitted to the IRS in a nanosecond. You’ll then receive an electronic confirmation from the IRS after the form has been processed and accepted. If you use a tax professional to prepare your return, he/she should be able to e-file the form for you, and since no signature is required on this form, getting it done quickly can take as little as a 5-minute phone call.

Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies. For a free copy of his Special Report “How To Instantly Double Your Deductions”, visit .

December 20, 2017

DIY Accounting Self Employed Accounting and Tax Return Answers

Filed under: Tax — Tags: , , , , , — admin @ 12:47 pm

Why is the monthly profit and loss account not updating from the sales and purchases entered.

Updating the profit and loss account in the financial accounts file is automated. If the financial accounts file is not updating automatically the links from the sales spreadsheet and or the purchase sheet are not working. This may be because the file names have been changed which breaks the links between the files.

The most common reason is the way the files were originally saved when initially downloaded from the website by opening the files first before saving them. When a excel workbook is opened before being downloaded the computer stores the workbook in a temporary internet folder and changes the links to temporary links within that temporary folder.

Saving a file still in a temporray internet folder saves the temporary links rather than the original links. Temporary links creaqted in a temporary internet folder are not recognised by the other accounting files that have the original lionk structure. The solution is to delete the files and save the files again direct to your accounts folder without opening them first thereby preserving the original links. Accounting entries on sales and purchases appear on the profit and loss account but do not appear on the list of expenses on the self employed tax return.

The self employed tax return required to be completed in the UK is dependent upon the sales turnover. Small business with total sales income exceeding 64,000 pounds for the financial year ending 5 April 2008 are required to complete the full self employed tax return while businesses with a turnover under 64,000 pounds may complete the short version of the self employed tax return.. Coincidentally the threshold is the same as the vat threshold.

In addition if the sales income is less than 30,000 pounds then it is not necessary to complete all the individual expense classifications. The excel formulae within the financial accounts file automatically fill in the short or full tax return and only fill in the detailed expense classifications if required to do so.

Does the package produce my quarterly vat returns when a vat flat rate scheme is being operated.

The user guide contains notes on how to enter the value added tax flat rate percentage on the sales bookkeeping spreadsheet. The bookkeeping single entry of the flat rate vat percentage on the sales sheet updates throughout the package including the subsequent months on the sales sheet and also each month on the purchases bookkeeping spreadsheet automatically calculating value added tax at the flat rate percentage and expenses value added tax paid on purchases at the zero vat rate producing a quarterly vat return. Does the self employed accounting software package produce a balance sheet.

Balance sheets are optional requirements for self employed self employed business. The self employed package is based upon single entry bookkeeping and does not produce a balance sheet which requires double entry bookkeeping while the limited company package does produce a balance sheet as it is a legal requirement for a limited liability company.

As the self employed accounting software includes sales and purchase spreadsheets and also cash and bank spreadsheets it is possible to manually produce a balance sheet if required but the accounting software does not produce it automatically. Do I purchase new accounting software each year or can the accounting software be updated and be used for a second set of accounts.

As the accounting software and payroll packages include the current financial year tax rules that enable the financial packages to automate the production of that years tax returns then each year has new tax rules embedded and being on excel rather than an accounting database then it is necessary to purchase a new accounting or payroll package each year.

Terry Cartwright is a qualified accountant in the UK designs Accounting Software UK on excel bookkeeping spreadsheets providing complete Small Business Accounting Software solutions for small to medium sized business that produce self employed tax returns and Payroll Software for 1 to 20 employee that automate the revenue payroll tax return

December 18, 2017

Outsource Tax Return Preparation

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Paying taxes in time is one of the tasks that every business has to do in order to meet statutory and legal compliances. However this demands the proper maintenance of accounts and corrects record of financial transactions. This demands expertise that most people don’t have. Most business firms appoint accountants and financial experts to get the job done. This demands lot of resources as they have to be kept on payroll. Generally these accountants keep record of financial data, make the entries on day to day basis, and keep balance sheets updates. This makes taxation process more convenient and feasible.

This handicap can be overcome by the use of outsourcing vendors who can perform the same task in comparatively low prices .Tax return outsourcing is gaining popularity amongst all the business organizations that are entitled to pay taxes to government. This is however the most convenient and viable means of getting your finances and accounts maintained and updated on time by professionals in outsourcing firms. Professionals in tax return outsourcing companies are trained to perform bulk task in short span of time and for this they are equipped with all the essential tools and software to furnish the work with swiftness and ease.

By choosing to outsource tax preparation, companies derive many benefits:

1) Reduction in tax preparation cost: Cost savings up to 50% or more: outsourcing of tax return preparation gives company a cheaper alternative to in-house accountants. It has been calculated that by outsourcing tax return preparation companies can save up to 50% of their cost.

2) Getting expert services at affordable cost: Outsourcing gives the businesses the advantage of going in for professional services. Since the professionals in outsourcing firms are specialists they are well prepared to meet with all sort of work pressure efficiently.

3) Improve speed and services : Outsourcing of tax return preparation results in increase in customer satisfaction as the turn around time is quite low; in most cases around 1-2 business days.

4) Helps in business growth: Outsourcing is the best option for practicing CPAs who can use it as a tool to shield themselves to the fluctuating staff in peak staff season.

Outsourcing tax preparation services offshore, particularly to India has got its own advantages which has made it highly popular among businesses. More and more CPA and accounting firms are opting to outsourcing tax return to India to help minimize operating costs and maximize efficiency and gain competitive advantages. As such it is hardly surprising to find businesses that are integrating it into their core strategy and are reaping its benefits.

Sukant, an accountant by profession is the co-founder of APT Services,an accounting firm based in India that caters to the accounting and tax preparation needs of its Clients based in US.Please follow the link to know more about the services provided by APT Services.

December 14, 2017

Who Must File a Tax Return

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If you are a US citizen, you must file for income tax return if your income is above certain levels. Other factors such as age and type of income you receive are also taken into consideration. If you are unsure as to whether you are required to file for income tax return, you can find out more information from the official IRS website, or you can consult professional tax service providers. If you wish to avoid getting into any kind of trouble with the IRS, it’s always wise to file, whether you need to or not. There are situations where even if your income level falls below the stipulated level of income, you should still file your tax returns. For example, you may quality for certain income tax refunds. Such refunds will be credited to you only if you file for tax returns. Refundable credits include Earned Income Tax Credit, Additional Child Tax Credit, and Health Coverage Tax Credit. Sometimes, it is difficult or cumbersome to try and determine whether you qualify for the refund credits or not. In this case, you can consider filing for tax returns online. This method of tax filing is commonly known as e-filing. E-filing is an electronic process that any US citizen can use to file for tax returns. Of course, the assumption here is that whoever is e-filing should know how to operate a computer. Anyone who knows how to use the computer to surf the Internet will have no problems submitting file returns using e-filing. You should only e-file with IRS authorized websites. This is to ensure that security measures are implemented. Obviously, security measures are important because e-filing means submitting sensitive information through a public network. Therefore, it is only right to submit personal financial information through an IRS authorized site. E-filing is simple. It can take a little bit of time though. But you can speed up the process by having your numbers at hand. The entire process is guided. When you start submission, read the instructions carefully. There will be fields that are mandatory, and fields that are optional. These will be clearly indicated. As you submit, you may find that there are some pieces of information that you do not have at that moment. Don’t worry about it. You can proceed filling in the rest of the information. You will then be allowed to save the submission, and come back at a later date to fill in the missing information. Also, when you e-file, the system will automatically do the calculations to see whether you qualify for credit refunds. So you don’t have to worry about change of policies. Unless you are retired with no (or very little) income, chances are you must file for tax return. You may even end up with more money in your pocket!

For more information on Filing tax returns and eFile tax returns please visit our website.

December 5, 2017

Tax Return Outsourcing Will Give you Peace of Mind!

Filed under: Tax — Tags: , , , , — admin @ 12:47 am

Tax return is the official entry related to the financial expenses of an individual or a company in a given financial year. Any individual who has an income is supposed to pay taxes annually to the government. The amount that a person, a company or any business has to pay as the tax amount differs depending on various factors. The tax preparation season in the United States witnesses hectic activity in the office of the accountants and CPAs. Everyone wants to pay their taxes in time and become tax free as soon as possible. Tax return outsourcing is the best bet for accounting firms to deal with this heavy influx of customers during the tax paying season.
Outsourcing means to give out the work of your firm to a third party. Outsourcing is one of the most successful business processes that have been undertaken in recent times. The amount of success and profit associated with this is immense and everyday many new businesses are undertaking this process. Paying taxes in time is very important if you want to rest easy during the tax paying season. And to pay taxes in time, you need to have your tax return prepared well in advance. There is no point in rushing to your accountant’s office at the eleventh hour.
If you have an accounting firm and are looking forward to undertake tax return outsourcing, there are certain things you need to take special care of. Any individual who works in the United States of America is required to file tax returns and pay income tax by the 15th of April every year. So, your accounting firm must be prepared very well to deal with this and tax return outsourcing is the appropriate means for this. First things first, you have to find out the best outsourcing firm that will do the work for you efficiently without any fault.
Due to the advancement in the field of science and technology, communication has become very easy no matter in which corner of the globe you are in. Outsourcing work is also done using these advanced means of communication. The third party that does your tax return outsourcing work begins the work once you have provided them with all the documents containing the financial details of your customers. While transferring the financial details of your customers you have to be very careful about the security of that data. For this you will have to check out the security features that the outsourcing company has in place to protect your customer information.
While doing tax return outsourcing through a third party, you are basically handing over a very important aspect of your business to them. So it becomes all the more important for you to do this entire process systematically and in a well planned manner. The very success and failure of your business depends on the kind of outsourcing work that you undertake for your accounting firm.

Michelle Barkley is a CPA working for Ifrworld.She specializes in Accounting Outsourcing ,Bookkeeping Outsourcing and Tax Returns Outsourcing.To know more and to use the services visit

November 28, 2017

Tax Return Outsourcing – Cost and Time Effective Services

Filed under: Tax — Tags: , , , , , , — admin @ 12:47 pm

As a responsible citizen of a country we all must pay our due taxes. It helps us in improving our economy and taking it one step ahead. It is not always our morals which hinder us from paying the taxes, but the complicated process of calculating the amount of tax to be paid and the payment procedure. To make it easy and hassle free, now you can go in for tax return outsourcing. Outsourcing tax return services helps the business to economize on the coast of maintaining officials for computing the tax amount. This helps the business to invest that money in more needful business operations.

The most important aspect of a business house is to pay timely and exact amount of taxes to evade any sort of complications. The business house must clear all its due taxes, so as to carry on its operations successfully. If even a single payment is missed, the government would levy huge fines on your company, affecting its goodwill and working.

To avoid last minute complications and fuss, it is better to account the amount of taxes, regularly. Calculating the tax is not easy. It requires sincere efforts and hard work. Most employees in the accounting department are not well trained or experienced in calculating the amount due for the taxes. It’s no cake walk to maintain the records of the taxing details. As it is of prime importance it is advisable to look out for professional and exclusive services for the computing of the tax amount. These days there are many tax return outsourcing service providers available in the market and they offer personalized services.

The tax return outsourcing service providers recruits a team of highly qualified and professional employees. They are certified CPA’s, thus they offer supreme quality services to its various clients. The team is efficient in computing taxes for different companies accurately. They keep a watch on the changes in the policy of taxes and its affect on the process of computing the amount of tax to be paid by a business. These professionals make sure that they file the data, create track sheets, and other necessary things needed to file the right amount of taxes.

You can look out for Tax Return Outsourcing service providers easily on Internet. You can shortlist two or three names and then scrutinize the details. Read the company profile, the list of existing clients and read reviews if they are given. This would help you choose the best service provider, without much trouble. If someone in your friend or family has recently made use of such service provider, ask them about the company and their reviews. If the reviews are satisfactory, you can even catch hold the same service provider, for outsourcing their services.

While selecting the tax return outsourcing service provider make sure that the company is reliable and your data is not misused. The company must follow the policy of honesty and should not cheat the client with their valuable and confidential information.

Michelle Barkley is a CPA who advises people on tax preparation and tax calculation. She specializes in Bookkeeping outsourcing, accounting outsourcing, Tax Return Outsourcing,back office outsourcing. To know more about Accounting outsourcing Service visit

November 26, 2017

Form 4868: Should You File An Extension For Your Personal Income Tax Return?

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April 15 is fast approaching but there’s no way you can get your personal income tax return done by then. What’s a procrastinator to do? File an extension, of course.

But perhaps you are wondering whether this is the best option for you. Read on to find out.

You can automatically extend the April 15 due date to October 15 by filing Form 4868, “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” So now you have six more months to file your personal income tax return.

The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don’t have to have a reason. Just sending this form to the IRS on or before April 15 gets you the extra six months.

But here’s another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return.

So, if you usually get a refund on your personal tax return, you are OK. But, if you think you might have a balance due, or if you are not sure, then you should go ahead and prepare the return to the best of your ability, do the calculations, and see where you stand.

If you are getting a refund, great. If you’re not in a hurry to get the refund, then file the extension form and wait until October 15 to send in the return. But if you have a balance due on the return, then you should send in your balance due with Form 4868. That way you avoid any penalty and interest for late payment of tax.

When October 15 rolls around, you send in the return, showing the Form 4868 payment as a credit. The end result is this: you paid your tax on time (April 15), and you filed your tax return legally late (October 15) because you filed the extension form on time.

Obviously, the key here is whether or not you have a balance due on your return. If you have a balance due, but don’t send in the payment with Form 4868, then you will have penalty and interest charges for paying the tax after April 15.

Bottom line: Do not overlook the fact that Form 4868 does not grant you an extension of time to pay the tax. It only gives you an extension of time to file the return.

Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies. For a free copy of his Special Report “How To Instantly Double Your Deductions”, visit .

November 23, 2017

Steer Clear your Accounting Goof Ups Via Tax Return Outsourcing

Filed under: Tax — Tags: , , , , , — admin @ 12:47 pm

Any business, irrespective of its size; needs to maintain account books and ledgers regularly to keep a track of business along with the profits and losses it is incurring. However, the metal of one’s patience is tested during the taxation period as the work load of the company increases because the financial department has to handle large accounting books in a minimum period of time. Hence, it leads to many accounting goof ups. Thus to try to get rid of such problems, it is helpful to hire tax returning outsourcing firms as they offers services with experience and accuracy.

Well, tax returning outsourcing understands the day-to-day and minute-to-minute issues that many businesses faces during tax season; they recognize the need for a complete tax return. Hence, they utilize such a workflow process- that is simple to use and understand, secure, efficient, and accurate in tracking every detail of the tax return. Therefore, if one is looking for an accounting solution then hiring tax returning outsourcing firm is a good idea. Any firm, regardless of size, only needs a scanner and high-speed internet access to get started, along with handful of experts. These experts not only do the accounting work proficiently but also execute it in a short span of time. The services offers by tax return outsourcing include the tax organizers are individually sorted, scanned and electronically send to the client’s data file with the previous year’s return. These outsourcing firms utilize various processes like ProSystem, Ultra Tax, ProSeries or Lacerte to secure hosting site.

The outsourced chartered accountants access the files using a secure virtual private network connection and process them remotely. The accountants from tax returning outsourcing firms prepare review notes and send them to the firm for clarification. Additionally, e-mails are forwarded that indicate review notes for a specific taxpayer posted to the site and are awaited review are automatically generated to appropriate contacts at the client’s company. Moreover, once the queries have been answered and open items cleared, these firms complete the return, submits it to a supervisor for review and posts it to the website for the final review and processing. However, it has been noticed that several companies battle time constraints during the busy season and struggle with low utilization in the off-season.

Hence, trained chartered accountants are answers to your never ending accounting woes. In fact, the accountants of tax returning outsourcing firm prepare returns while your in-house staff focuses on return review, audit or other service functions. It can prepare corporate, partnership, fiduciary and individual tax returns. The professionals are trained to prepare high quality returns that are on par with what your business would produce. In fact, you do not have to change your process just to fit their processes. They cater accordingly to your needs. Outsourcing helps stabilize otherwise overworked staffing constraints by enabling firms to better utilize staff throughout the year. Therefore, forget your worries, as tax return becomes easy by utilizing right sources in a form of tax returning outsourcing.

Michelle Barkley is a CPA who advises people on tax preparation and tax calculation.She specializes in Tax return preparation,Tax Return Outsourcing

and Outsourced Accounting.To know more about Accounting outsourcing services and accounting outsourcing in India and to use the services visit

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