Anyone starting a new business this year should be aware of their federal tax responsibilities. Here are the top seven things the IRS wants you to know if you plan on opening a new business this year.

1. First, you must decide what type of business entity you are going to establish. The type your business takes will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.
2. The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
3. An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.gov for more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.
4. Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.
6. Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.
7. Visit the http://www.irs.gov/businesses/small/article/0,,id=99336,00.html for resources to assist entrepreneurs with starting and operating a new business.

IRS is reminding all Individuals and organizations reporting 25 or more vehicles on Form 2290, Heavy Highway Vehicle Use Tax Return, are required to file electronically. The annual filing season for most Forms 2290, Heavy Highway Vehicle Use Tax Return, is approaching and the IRS reminds taxpayers that electronic filing is now required for individuals and organizations reporting 25 or more taxable highway vehicles.

Form 2290 is used to report and pay the highway use taxes that pay for America’s roads and interstate highways. Last year truckers and others paid more than $1 billion in federal highway use taxes.
For most Form 2290 filers the due date for tax period July 1, 2009, through June 30, 2010, is August 31, 2009. For vehicles placed in service after July 31, 2009, Form 2290 and Schedule 1 must be filed, and the tax paid, by the last day of the month after the month the vehicle is first used in the tax period. For example, if a taxpayer begins using a taxable highway vehicle in September 2009, the due date for filing Form 2290 and paying the tax is October 31, 2009.

Although filing Form 2290 electronically is not required for taxpayers reporting fewer than 25 vehicles all taxpayers are encouraged to file their forms electronically.

The best part of 2290 e-file is that taxpayers will receive their Schedule 1 almost immediately.

“There is no more waiting for Schedule 1 to come in the mail and truckers can then register their vehicles right away.” Most states require a stamped Schedule 1 before a trucker can register their vehicle and obtain proper license tags.

E-filing Form 2290 will also reduce errors that can occur with paper filing which means less correspondence with the IRS.

Internal Revenue Service reminds individual taxpayers there is no better time to check their 2009 federal income tax withholding levels to make sure they do not face any surprises when returns are due next year.

The Making Work Pay Credit lowered tax withholding rates this year for 120 million American households. However, particular taxpayers who fall into any of the following groups should review their tax withholding rates to ensure enough tax is withheld: multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers and pensioners.

Failure to adjust your withholding could result in potentially smaller refunds or may cause you to owe tax rather than receive a refund next year. So far in 2009, the average refund amount is $2,675 and 79 percent of all returns received a refund.

Because retirees typically have withholding from their pension payments, pension plan administrators or pension payors should be aware of the optional adjustment procedure for pension withholding announced in Notice 1036-P, Additional Withholding for Pensions for 2009.

Social security beneficiaries, supplemental security income recipients, disabled veterans and railroad retirees that receive this year’s one-time $250 economic recovery payment should be aware that the Making Work Pay credit will be reduced by the $250 payment amount. They may also want to review their withholding.
The IRS withholding calculator on IRS.gov can help a taxpayer compute the proper tax withholding. The worksheets in Publication 919, How Do I Adjust My Withholding?, can also be used to do the calculation. If the result suggests an adjustment is necessary, the taxpayer should submit a new Form W-4, Withholding Allowance Certificate, to his or her employer or adjust the amount of quarterly tax paid.

In addition, the IRS reminds unemployed workers that the first $2,400 of unemployment benefits they receive during 2009 are tax-free for federal income tax purposes. People who expect to receive more than that should consider having tax withheld from their benefit payments in excess of $2,400. Use Form W-4V, Voluntary Withholding Request, or the equivalent form provided by the payer to request withholding to begin or end.

Taxpayers should visit IRS.gov for more information about how to adjust federal income tax withholding. The Web site also has details on various tax incentives in the American Recovery and Reinvestment Act as well as downloadable forms and publications.

IRS might be enforcing a new Cell Phone Tax for 2009-2010 for those who have a work cell phone and make personal calls on it, then you must pay a tax on those personal calls through your employer.

Employees are supposed to log those personal calls and report them to their business office but Indianapolis CPA Gino Johnson with Peachin, Schwartz and Weingardt says that happens rarely. IRS wants a new rule to help it collect uncollected cell phone taxes. it could cost some users effectively over a year it would cost you an extra $50 in taxes.

Do you like the idea of getting taxed for using a cellphone? Let us know.

The Internal Revenue Service and Treasury Department today announced that a tax break for the purchase of new motor vehicles is available in states that do not have a state sales tax. Under the American Recovery and Reinvestment Act of 2009, taxpayers who buy a new motor vehicle this year are entitled to deduct state or local sales or excise taxes paid on the purchase.

The IRS and Treasury have determined that purchases made in states without a sales tax – such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon – can also qualify for the deduction.

The IRS said today that taxpayers who purchase a new motor vehicle in states that do not have state sales taxes are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee. According to the IRS, Congress intended for these fees or taxes to qualify for this special tax deduction.

“This special tax break is available for people purchasing a new car this year, and that can include people in states without a sales tax,” said IRS Commissioner Doug Shulman. “This means that more people can take advantage of this deduction when they file their tax returns next year.”

To qualify for this deduction, the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010. Taxpayers can claim this special deduction only on their 2009 tax returns to be filed next year.
The deduction is limited to the fees or taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return. The IRS reminded taxpayers the deduction may not be taken on 2008 returns.

TaxSlayer Online Tax Preparation Efile Service

TaxSlayer is recognished as one of the most popular Online Free Efile Services. We indeed agree with Tax Slayer when they claim to be one of the leading Free IRS Efile service on the web.

There are various reasons why TaxSlayer is able to score over other competitive Efiling Services.

1. TaxSlayer is one of the most price competitive online tax software and free file service.
2. Taxslayer.com offers free efile for both your Federal and State taxes. Most of the other free efile services only cover federal efile.  Please note that you need to pay $9.95, if you want to e-file using TaxSlayer.com
3. Tax Slayer is the only Tax Preparation service offering totally free efiling for United States Armed Forces (Military). Free Tax Filing for Millitary is only available with TaxSlayer Classic Version.

TaxSlayer comes in two flavors:

1) TaxSlayer Classic Version:

• TaxSlayer Classic version costs $9.95 for Federal and State e-File.
• Free Federal and State Tax Preparation.
• Expect to Receive your refund in as little as 8-15 days.
• TaxSlayer offers customer support and also has online help center.
• TaxSlayer.com checks your return for errors and missing data to ensure that your return is processed without delay.

2) TaxSlayer PRO or TaxSlayer Premium Version:

• Taxslayer Pro or Premium version costs $14.95 for federal and state efile.
• TaxSlayer PRO Includes all features of Taxslayer online classical version + 5 new features.
• TaxSlayer Deduction Finder guides you through available deductions to maximize your refund.
• The Deduction Finder walks you step by step to find all deductions for you based on the information you have entered.
• TaxSlayer’s Life Events Wizard will tell you exactly what forms you need to ensure your biggest refund. This wizard will guide you through how life events, such as buying a home, can affect your tax return.
• TaxSlayer Audit Assistance: This is a unique service. TaxSlayer.com professional taxmens will help you just in case there is a IRS audit on your tax filing for 2008 2009.
• TaxSlayer.com help center, live chat, and phone support.
• Taxslayer offers Text Messaging Alerts that will notify you when your return has been accepted.

TaxSlayer offers services beyond the classic and pro version. you can also download the latest TaxSlayer 2008 2009 Version Software for $19.95 one time fee.

3) TaxSlayer Downloadable Software Version:

• Once installed you have the ability to prepare up to 5 returns.
• You can work offline on TaxSlayer Efile software  and use it from anywhere in the world.
• You can do your whole family or friends tax return for the low price of only $9.95 pere-File
• TaxSlayer.com Download is a full working tax preparation package.
• TaxSlayer offers the same customer service and help portal for Downloadable version.

OverAll, we believe TaxSlayer is a great Tax Preparation Service for electronic filing your taxes in 2008 2009.

These are some Real life Taxslayer Reviews from their website:

Seriously this is an awesome program because it doubled the return I got compared to what I had it calculated at last year. Way cheaper than any of the H&R Block type services, and very simple to follow.
- Becky

This is a great online tax prepartion program! No downloading software. It is only $9.95 to e-File and the state return is FREE! I used it last year and it is much easier than TurboTax and had the same result.
- Dana

 TaxAct 2008 Deluxe Edition

TaxACT 2008-2009 is a great tax software for budget-conscious people looking for a cheap alternative to TaxCut or Turbotax. Both these softwares are costlier than TaxAct. However don’t yet rule out the power of TaxAct 2008-2009 .

While it may lack some of the features  of the premium services, at $12.95 (including a free e-file; state is $13.95). In our Opinion, Tax Act 2008 provides much needed Tax services at affordable cost. Lets look at closely how Tax Act works in relation to filing a Income Tax for 2008- 2009.

Tax Act 2008 has multiple version, a FREE version of the Tax Act is available as well. The Free option however doesn’t give you a state filing option and several more features. We believe Tax Act 2008 edition is more suitable for Individuals and Businesses. It really is cheaper at $12.95.

Lets Quickly look at the TaxAct 2009 Features:

1) Unlimited Federal tax returns, 1 free Federal Efile, Efile up to 5 Federal Returns

2)  Donation Assistant provides certified values for nearly 700 commonly-donated items. This is a cool feature and comes in handy while deductions are calculated for rebates.

3)  Maximum Refund Pledge guarantees you’ll get your largest refund, or we’ll pay for your software. A new feature included in Tax Act 2008 Deluxe edition.

4)  Unlimited Support via phone or email at no additional cost. You can call them email them. Remember during Tax Season, Tax software companies work extremely hard so getting a quick reply shouldn’t be too hard.

5)  FAFSA Worksheet simplifies completion of the Free Application for Federal Student Aid.

TaxAct 2008 2009 Deluxe Edition Review

There’s a new customer import report, and overview screens for income, deductions, and credits. The average tax filer will probably want more help, but if you can work your way through the 1040 and assorted forms and schedules without the additional help and more comprehensible language that competitors employ, this is the app for you.

Start-up is simple, and is similar to the process employed by TurboTax and TaxCut, though you can import W-2 information directly only if your payroll is handled by Paylocity or TALX W-2 eXpress.

Another good feature is if you had used Tax Act 2007, you can import your last year data into Tax Act 2008, which makes it lot easier and cuts down

TaxAct comes with TaxAct examiner feature which examines you completed e-file and helps you identify any errors or things you might have missed. This is one heck of a great feature coz almost everyone one of us makes mistakes and do you want to do a wrong E-file ? Never. This feature will ensure you file taxes properly and get the rebates you entitled for.

We suggest if you are looking for a simple and cheap Tax preparation and Tax efile service then nothing beats Tax Act 2008.

You may Order Tax Act 2008 Deluxe Edition from Amazon which is at discounted price of $12.95 only. (ships same day)