The Tax Questions Blog

Archive for August, 2008

Question: Are Corporate Gas Credit Cards Considered as Income and Taxable?

My company is offering gas/fuel credit cards to our technicians in lieu of a vehicle allowance. However, HR is advising the techs that the cards are considered income and are therefore taxable. Is this true?

Answer: It depends on the type of expense reimbursement plan that you have. If you have an accountable plan, then you must submit expense reports to your employer to verify your gas useage, in which case the gas card use would not be taxable. If your employer has a non-accountable plan, then you use the card, they include the use in your W-2 and then you have to claim the net business expenses or net gas card use income on your personnal tax return.

Tax Tip: first-time filers should use free file to prepare, e-File returns

The IRS has a tip for college students and first-time filers: use IRS Free File to file their federal tax return to avoid the April 15 rush and maybe get any refund due within 10 days.

Question: Irs Rejected Application.?

If two people can legally claim a child for eic ,and one person claims the child and the irs rejects application for dis allowance in previous years can the other person then claim that child? The person who the irs rejected said they did not want to go through the drama of filling out additional forms to complete taxes.What should they do?

Answer: Yes as long as the other person is absolutely sure then can legally claim the child.

If the two people live together though and the child lives with them, then the first person would have to amend their return dropping the dependency claim to the child, which is probably more paperwork than just filing the form needed to straighten out the EIC claim unless fraud was involved in the disallowance, in which case they can't straighten it out but should have known better than to try to make a claim again.

If the two people do NOT live together, then the person who doesn't live with the child can't claim EIC for the child anyway.

Food charity's funds still under review

Angel Food Ministries founders Joe Wingo, left, and Linda Wingo, third from left, leave Fourth United Methodist Church in York in February after meeting with local partners to answer questions about the nonprofit s finances.

Basic Explanation of W-4 tax Form : Personal Allowance Worksheet A thru D: W-4 Tax Form

Even for the healthiest person, it is not safe to avoid taking a health insurance. Sure, people can look after their health through myriad things like a good diet, exercises, good sleep, and posture. While these do help to maintain one's health, the fact remains that nobody has immunity from accidents, infections, and some diseases even the reasons for which have still to be unraveled by the medical science.

The State of California Health Insurance requirements are as big as the state. The state's Department of Health Care Services itself promotes several health care services. There are other private physicians and clinics operating all across the state. The facilities available with these different health care providers, and accordingly their charges, vary a lot. As such, getting the right California Health Insurance Quotes is a prime requirement for most residents of California.

While health care is expensive pretty much all over the world, in United States medical charges are exceptionally high. So much so that the situation has given rise to what is known as medical tourism. People find it easier to cross the national borders to go across to Mexico or Costa Rica to get a tooth extracted or a root canal done. In the background of such a scenario, as in the case of the residents of the rest of the country, awareness of medical insurance is important for the residents of California also. To compare and contrast the different California Health Insurance rates, one has to first of all get all California Health Insurance Quotes.

What has given rise to medical tourism is the availability of cheap medical care of excellent quality in developing countries. For those who do not have medical insurance, even with the traveling costs, and expenses for staying at a motel for a day or two, it works out cheaper than getting it locally done. In these developing countries where people from richer countries go searching for medical aid, transportation and lodging also are quite inexpensive. So it is an ideal solution to turn medical problems like dental care into a holiday package, by going to Panama for a weekend, together with one's family. However, this may not work for everyone money-wise, time-wise, and situation-wise. A more practical solution for them will be finding cheap California Health Insurance rates with the help of California Health Insurance Quotes, so far as they are residents of California.

In the state of California the state department of insurance is in control of California health insurance rates. This essentially translates into the truth that California Health Insurance rates are quite cheap compared to other states. By getting all California Health Insurance Quotes people can compare and select the best from among these cheap rates.

State, federal officials urge e-filing of taxes

When it comes to filing taxes, head to your computer rather than the mailbox.

Question: i lost my home through foreclosure. what are the "State" tax consequences in California?

my home is a "non-recourse" loan, therefore cancellation of debt income is not taxable in the Federal level; i'd like to know whether California slaps a state tax from a deficiency (foreclosure sale price is less than the outstanding amount of the debt)?

Answer: The sales price of your home for tax purposes will be the balance due on your loan.

Northern Michigan Tax Dispute Could have 'Bigger Ripple'

Taxes more than tripled after the death of one resident.

Taxes on Short Sale, Loan Modification & Mortgage Foreclosure 3 Nov08 Cancellation of Debt Income

Question: LLC vs S-Corp Tax Basis and Tax implication?

I am thinking about starting my first company and based on info from various website and from other sources such as books by NOLO, I have the following questions.

I read that S Corp tax basis in the business does not increase when the company takes on debt. Conversely LLCs can give their owner the tax benefits of any business debt. Since distribution of profit from LLC are taxable to the owner only when they exceed the owner’s tax basis, this mean that there may be tax advantage for LLC in the long run.

- If such is the case, if LLC borrow $1,000,000 to expand its business; this means it increases the owner’s tax basis in his capital (ownership) interest. The basis increases, in turn, means that the owner can receive up to $1,000,000 in distribution of profits from the LLC tax-free. By contrast, S Corp share-holders would have to pay taxes on that $1,000,000, as the the holders do not receive an increased basis when corporate borrow money. Is this correct?

Answer: Your basic assumptions are correct except that this method cannot be used to distribute PROFITS from the business tax-free. Owners of both LLCs and S-corps are taxed currently on a flow-through basis on the profits of the business. The owners get a corresponding basis increase as a result in both cases. The liability issue that you discuss does allow LLC owners to take distributions in excess of profits and cash investments without paying current tax. Note that this effectively creates a deficit in your investment in the LLC that will one day be treated as gain once the liability is paid off. Also note that the debt basis only allows you to take distributions. It does not give you additional "at-risk" basis with which to take losses, unless the liabilities are either recourse to you or are secured by a qualifying real property interest.

GST: Exemption list of panel shows error

If something is not taxable at all, can one exempt it? Obviously not. If one does it, it is conceptually meaningless and even absurd. Taking an excise example, it is like saying that free air is exempt. If free air is not taxable, it cannot be exempted by the government.

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