IRS (internal revenue service) charges interest rates to everyone who doesn’t meet the IRS deadline for filing taxes.

IRS charges interest on underpayments and late payments or even on family loans.

Internal Revenue Service announced that interest rates for the calendar quarter beginning October 1, 2009, will remain the same. The rates will be:

four (4%) percent for overpayments [three (3) percent in the case of a corporation];
• four (4%) percent for underpayments;
• six (6%) percent for large corporate underpayments; and
• one and one-half (1.5%) percent for the portion of a corporate overpayment exceeding $10,000.

The IRS rate of interest is determined every quarter and based on daily compounding.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

If you are a victim of a natural disaster or theft this summer, you  should know the rules for deducting your casualty losses next year when you file your federal tax return. Generally, you may deduct losses to your home, household items and vehicles on your federal income tax return.

IRS gives ten top tips for claiming tax deduction on casualty and theft losses:

1. You may not deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement. You must reduce your loss by the amount of the reimbursement.
2. A casualty does not include normal wear and tear or progressive deterioration from age or termite damage.
3. The damage must be caused by a sudden, unexpected or unusual event like a car accident, fire, earthquake, flood or vandalism.
4. If your property is not completely destroyed or if it is personal-use property, the amount of your casualty or theft loss is the lesser of the adjusted basis of your property, or the decrease in fair market value of your property as a result of the casualty or theft, reduced by any insurance or other reimbursement you receive or expect to receive.
5. If business or income-producing property, such as rental property, is completely destroyed, the amount of your loss is your adjusted basis in the property minus any salvage value, and minus any insurance or other reimbursement you receive or expect to receive.
6. To claim a casualty or theft loss, you must complete Form 4684, Casualties and Thefts, and attach it to your return. Generally, you may claim casualty or theft loss of personal use property only if you itemize deductions on Form 1040, Schedule A. However, you can deduct a 2008 or 2009 net disaster loss from a federally-declared disaster even if you do not itemize your deductions.
7. If the property was held by you for personal use, you must further reduce your loss by $100. This $100 reduction for losses of personal-use property applies to each casualty or theft event that occurred during the year other than 2009. For 2009, individuals must reduce their casualty and theft losses for personal-use property by $500 instead of $100. This $500 reduction for losses of personal-use property applies to each casualty or theft event.
8. The total of all your casualty and theft losses of personal-use property usually must be further reduced by 10 percent of your adjusted gross income. The 10 percent AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009.
9. In figuring your loss, do not consider the loss of future profits or income due to the casualty.
10. Casualty losses are normally deductible only in the year the casualty occurred. But if you have a deductible loss from a federally declared disaster you can choose to deduct that loss on your tax return for the previous year. If you have already filed your return for the preceding year, you can claim the loss on the previous year tax return by filing an amended return.

For more info, you may refer to IRS publication on Theft and Casualty Losses

It might just be possible that IRS owes you money instead of your owing them The IRS basically collected more taxes from your and would like to return to you. Now lets understand how this whole process works.

If you have not filed a prior year tax return and are due a refund, you should consider filing the return to claim that refund. If you are missing a refund for a previously filed tax return, you should contact the IRS to check the status of your refund and confirm your current address.

Unclaimed Refunds

Some people may have had taxes withheld from their wages but were not required to file a tax return because they had too little income. Others may not have had any tax withheld but would be eligible for the refundable Earned Income Tax Credit.

• To collect this money a return must be filed with the IRS no later than three years from the due date of the return.
• If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury.
• There is no penalty assessed by the IRS for filing a late return qualifying for a refund.
• Current and prior year tax forms and instructions are available on the Forms and Publications web page of IRS.gov or by calling 800-TAX-FORM (800-829-3676).
• Information about the Earned Income Tax Credit and how to claim it is also available on IRS.gov.

Undeliverable Refunds

Were you expecting a refund check but didn’t get it?

• Refund checks are mailed to your last known address. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service.
• You may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months.
• You can also ensure the IRS has your correct address by filing Form 8822, Change of Address, which is available on IRS.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).
• If you do not have access to the Internet and think you may be missing a refund, you should first check your records or contact your tax preparer. If your refund information appears correct, call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.

Now most importantly, When you get your tax money back, use it wisely in this bumpy economy!

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

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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.
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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.

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• Once installed you have the ability to prepare up to 5 returns.
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• 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.

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The answer to the above question is Yes and No. It really depends on If you fall under the Income Tax Regulation of UK to actually pay the Inland Revenue Income Tax for Students.

Lets see if students pay taxes in UK? or Do you Qualify for student tax exemption

If you’re a student in UK and you are currently working in UK. Your work can be full time or part time.  You’ll have to pay Income Tax and National Insurance if you earn over a certain amount. This still applies if you work abroad during your holidays, and if you’re a foreign student working in the UK

If you work part time or full time in UK, any Income Tax and National Insurance due will be deducted from your wages before you receive them. This is known as Pay As You Earn (PAYE). Your employer has direct access to PAYE and they can deduct your taxes as and when applicable.

Everybody can earn a certain amount before they start paying Income Tax – this is the personal allowance (£6,035 for the tax year 2008-2009). For the tax year 2008-2009, you start making National Insurance contributions when you earn above £105 a week.

If you’re a full-time student with a holiday job, you may not need to pay tax through PAYE, You can ask your employer for a form P38. If you think you have overpaid any taxes, you can always ask for a Tax refund.