The Tax Questions Blog

Archive for May, 2008

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Question: should I file my taxes online or go to a professional.?

I filing taxes with my husband again this year and I heard I can do it online for free or with a tax software. I usually do it with H&R block but they take a ton out of our taxes. Some advice, am just afraid I make a mistake and get less than what I'm supposed to. Is it easy to do online? Can anyone recommend a site?

Answer: I've been filing online for past 6 years with turbo tax, they guide you through it and then check for possible errors.

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How to turn in a tax cheat and other tax-season advice

Yesterday’s live chat on taxes had lots of answers for readers with questions on the homebuyer credit. Many of the questions had to do with divorce and separation and claiming the credit.

How to File Your Taxes Online : How to E-File Taxes

With so many homes falling to foreclosure in this current economic turbulence, many homeowners are struggling to keep on top of their mortgage payments so keep a hold on their homes. One of the best ways to help stretch out your funds to keep abreast of your monthly payments is by cutting down your monthly costs as much as possible in those areas that you can be flexible about. Two of the biggest areas that your family can cut back on their expenses are with your grocery and transportation costs each month.

One of the biggest expenditures that families have is that of the monthly grocery bill; while it is important to keep your family well fed, there are many extras that you can easily cut back on to keep your costs down. Take the time to look through store flyers to find the best deals on pricier purchases; don't drive all over town to save a few cents on items, but instead shop for your deals when convenient during the week. Stock up on items that have a long shelf life like canned goods; there are often good deals to be had at case lot sales on items that you will use regularly. Many fresh foods can be stocked up on as well; if you know someone with fruit trees or you can get a good deal on in-season fruit, it is easy to prep and freeze it for later use.

Try to shop around the outside edges of your grocery store where the milk, eggs, meat, and produce are. You may have to dip into the middle of the store to pick up items like basic baking supplies, cereal, canned goods, and the all-important coffee and tea; the key is resisting all the non-essential items.

For non-grocery items, like cleaners and paper products, it is most cost effective to shop at discount stores or watch for sales. Discount stores are also good for items like shampoo, razors, and sometimes prescriptions too.

Another big area that you and your family can cut back on expenses is with transportation; many families have two or more cars that they maintain and buy gas and insurance for. If you can manage it, cut back to one vehicle for the family. It's likely that not everyone in the family needs their own car. Look into car pooling or public transit; one monthly bus pass is far cheaper than driving for a month but may be somewhat of a sacrifice in convenience.

While many money saving strategies may not be very popular in your family at first, it's important to keep an eye on the goal here; sometimes it's necessary to take on a temporary sacrifice in order to keep control of your finances in these turbulent economic times. Try to get your family behind the endeavour for best results and less resistance from them.

Fifth Third Bancorp Reports 2009 Net Income of $737 Million

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Question: Are reimbursed respite care funds taxable income?

My son has special health care needs and our family is eligible for $80 month in respite care. We pay a provider, submit documentation monthly and are reimbursed. Is this "income" taxable?

Answer: no not if you were tax on the $80 when it was earned

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Savvy Senior: Financial help available for family caregivers

DEAR SAVVY SENIOR: I've been taking care of my elderly mother for nearly a year now and it's wearing me out both physically and financially. Is there any way I could get paid to be her caregiver?

Question: How the salary strcture of the employee can be redifined to reduce the tax burden ?

We are a small company , we generally provide employee the salary asbasic + DA _HRA , which all is taxable

What are innovative ways to reduce there tax burden ?

Answer: To get the maximum tax benefits under the Income-tax Act, 1961 (the ‘Act’):
A) pay your employees under the following sections/headings:
-Basic Salary
-Conveyance Allowance – Rs.9,600 p.a. (exempt u/s 10(14)(ii) of the Act, @ Rs.800 p.m., Rs.1,600 p.m. in case of disabled employee)
-Children Education Allowance – Rs.1,200 p.a. (exempt u/s 10(14)(ii) of the Act, assuming one child @ Rs.100 p.m. per child, maximum two children)
-Hostel Allowance – Rs.3,600 p.a. (exempt u/s 10(14)(ii) of the Act, assuming one child @ Rs.300 p.m. per child, maximum two children)
-House Rent Allowance - (HRA, exempt amount u/s 10 of the Act would be least of the following: (a) Actual HRA paid, (b) Rent less 10% of basic salary, (c) 40% of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi)
-Leave Travel Allowance – The amount actually incurred on performance of travel on leave to any place in India by the shortest route to that place is exempt. But the exemption shall be available only in respect of two journeys performed in a block of 4 calendar years (exempt u/s 10 of the Act)
-Food Allowance – Rs.18,000 p.a. (@ Rs.50/meal)
-Medical Reimbursement – Rs.15,000 p.a. (as per Proviso to Sec. 17(2) of the Act, but the employee has to submit the bills against this)
-Contribution to Employee Provident Fund (EPF) – 12% of the salary p.a. (EPF is a social security programme for the employees run by the Central Government as per the provisions of Provident Funds Act, 1925 and useful after their retirement. Employer and employee both contribute to the same. Full amount in EPF can be withdrawan by the member only:
-if attained 55 years of age;
-at the time of termination of service;
-if retired on account of permanent/total disablement;
-if shifted abroad permanemtly or
-on account of mass/individual retrenchment)

B) tell your employees to claim the deductions as follows:
a) The new version of Section 80C of the Act allows the salaried to invest up Rs.1,00,000 in any of the schemes below and it will not attract any tax: (Note: this list is illustrative only)
-Public Provident Fund (PPF) (with an annual tax-free return of 8.0%, PPF is a long-term savings plan with attractive tax benefits. It is suitable for those who are not looking for short-term liquidity or regular income. Normal maturity period is 15 years from the close of the financial year in which the initial subscription was made. The Maturity values for PPF account would depend on what you invest each year. It is open for all individuals, to subscribe to this you have to visit any of the scheduled banks (for eg. State Bank of India, Bank of India etc.) in India.)
-Equity Linked Savings Scheme (ELSS) – Mutual Funds (returns depends upon scheme to scheme, could be as high as 60%)
-National Savings Certificates (NSC) (fixed returns depending upon the terms of the certificate)
-Kisan Vikas Patra (KVP) (fixed returns depending upon the terms of the certificate)
-Life Insurance (returns depend upon scheme to scheme)
-Contribution to Provident Fund
b) Mediclaim insurance premia – Rs.10,000 (Section 80D)
c) Interest on loan taken for higher studies - Any amount of interest paid (Section 80E)
d) Donations to certain funds, charitable institutions, etc. (qualifying amount depends upon the fund invested in) – (80G)
This way the deduction from the salary could go minimum upto Rs.1,10,000 which will be deducted from the employees’ gross salary.

Should you require any more assitance wrt tax-planning (how to save tax) in India, kindly eMail us at Info@ThinkSynergy.co.in or drop in at www.ThinkSynergy.co.in. We 'll be more than glad to assist you.

Warm Regards,

per PulkitGoyal
ThinkSynergy

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Last-minute tax planning? Here is a quick guide!

Tax incentives are given to encourage savings / investments. Savings form part of your overall financial plan which in effect means tax planning is a subset of financial planning. Your financial plan will set objectives for you based on your aspirations, your life style, your age group, size of family, et cetera.

Though, Zip file format is a useful compression method, at the same time it is vulnerable to corruption, due to which you might come across an error message while trying to open the Zip file. Sometimes, you may receive an error message after downloading the Zip file with Internet Explorer. This happens if the HTTP compression is enabled for the .zip file The reason behind such behavior may be corruption of the Zip file, as a result of which the data stored in the Zip file may no more remain accessible to you. In order to access your data, you need to have a copy of a data backup file. But, in case you have not backed up your data, then the only way by which your data can be retrieved is by using a good-quality zip repair application.

Consider a scenario – Sometimes, when you download a Zip file using Internet Explorer 6 and try to open the Zip file, the following error message appears:

"The compressed (zipped) folder is invalid or corrupted."

After this error message, you will not be able to access the Zip file. Consequently, all the data that was stored in the Zip file becomes inaccessible. Furthermore, you will not be able to open the Zip file, no matter how many times you try to do so.

Cause: The above mentioned error message occurs if the HTTP compression is enabled or activated for Zip files on the web server, from where the Zip file is downloaded. And if the HTTP compression is enabled on the web server, the Zip file gets encoded and then sent to Internet Explorer. When Internet Explorer receives the HTTP-compressed Zip file, then it is directly transferred to the program that is configured to un-zip the zip file without decoding the HTTP compression.

Resolution: To resolve the issue, you need to repair zip file using a third-party application, known as zip repair software. These application are specially designed to resolve all the corruption issues associated with Zip file format. In addition, these tools are embedded with highly intuitive and innovative graphical user interface that makes them user-friendly and hence do no require any prior technical knowledge.

Legals for issue of 7-28

Dallas County R-I School District announced its revised free and reduced price policy for school children unable to pay the full price of meals served in schools under the National School Lunch Program and the School Breakfast Program.