The Tax Questions Blog

Archive for January, 2009

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Question: Current market value of my property has falls below taxable value, What should I do?

I live in Northern California (Contra Costa County). Because of the Housing Crisis, I believe that the current market value of my property has falls below taxable value as shown on your tax bill.

I heard you can actually lower the Tax of the property, by filling out a form.
But, I do NOT know where the form or who i should contact with.

Could someone give me some guideline or steps, which shows what I should do in order to lower my property tax?

Answer: Property taxes are assessed annualy at your local appraisal district office. Google your local appraisal district and log on to their site. You should be able to find a dispute form. Fill out the form and submit it. You will be called to stand in front of a dispute committee and explain your reason. You should be prepared to answer their questions.

There is a yearly deadline to dispute, find out what it is. Ours in Houston, TX was on June 2nd.

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Town council tackles taxes, hears storm cleanup review

HYANNIS — During a Cape Cod winter, the only thing as certain as death and taxes is snow. And the Barnstable Town Council addressed two of the three last night.

Taxable Value (Part 1)

Question: A question about VAT...who is a taxable person?

I've read the VAT Act which says a taxable person is someone who requires to be registered. I then read that someone is required to be registered
''at the end of any month, if the value of his taxable supplies in the period of one year then ending has exceeded [£64,000]''

I'm so confused. I thought everyone had to pay VAT. Does this mean that if a little shop opened , with less than £64,000 in taxable supplies they wouldn't have to pay VAT?

Answer: Well done for actually reading the Act! It's not always easy, is it?

Unfortunately the language has to be very precise to avoid ambiguity although it doesn't always seem successful.

You are right that everyone has to pay VAT but the Act here is talking about persons who have to charge VAT. It is looking at the situation from the seller's point of view, not the customer.

If you start a business you do not have to register until the taxable turnover has exceeded the limit (which I think has now increased a bit from the £64,000 but I can't remember the new figure offhand). The only exception is if you expect to do that much business in the first month.

If you are not registered you do not charge VAT to your customers, although you will still pay VAT on any goods bought.

The rules produce some interesting effects. For example, if your turnover was a steady £20,000 per month you could sell £100,000 worth of goods without charging VAT. To see this look at the position at the end of each month.

At the end of each of the first three months the turnover is below £64,000 so no requirement to register.

At the end of the fourth month turnover is £80,000. This is above the limit so you become a taxable person. You send your application in and have the fifth month in which to complete the paperwork and are still selling without adding VAT.

You are registered from the start of the sixth month.

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Equal treatment will make e-invoicing easier - community blog from Bo Harald

“(8) Since the use of electronic invoicing can help businesses to reduce costs and be more competitive, current VAT requirements on electronic invoicing should be revised to remove existing burdens and barriers to uptake.

Question: What are the ways to legitimately reduce your taxable income in australia?

Answer: By claiming expenses which are allowable deductions, claiming tax offsets, deferral of income, prepaid expenses, salary sacrifice, converting income streams into capital gains subject to the 50% discount, foreign exempt employment income and/or by setting up a more tax effective business or investment structure - e.g., income splitting through family trusts and partnerships. There are lots of ways but to know what is suitable for you, and how to do it, you need to speak with a professional.

Rush for cars as grant ends

SMALL businesses have rushed to take advantage of the 50 per cent tax investment allowance for new cars before it runs out today

Danbro, the award winning specialist accountancy firm for contractors and temporary workers, are advising agencies to be tentative with the way they manage their construction industry scheme (CIS) contractors.

The Construction Industry Scheme (CIS) sets out the rules on how payments to subcontractors for construction work must be handled by contractors in the construction industry. The majority of contractors under the CIS scheme are operating as self-employed, where the amount of tax deducted and paid to HMRC is just 20% of their gross payment if registered and 30% otherwise. The main issue on which the Government aims to clamp down, is the fact that many of these self-employed CIS workers should be classified as employees, with PAYE and NICs being due on all the payments they receive.

The government has announced that they may tackle this issue of false self-employment in the next budget, with the construction industry being hailed as the primary area for concern.

The main benefit for the worker operating as self-employed is primarily driven by the differences in tax and NICs, which are as follows;

Due to these tax differences, many CIS construction contractors have a financial incentive to operate as self-employed via service providers that heavily promote their self-employed business model. At present many agencies outsource the administrative burden of managing and making the necessary CIS deductions to service providers. They simply pay over a gross amount, relying on the service provider to correctly deduct and pay the CIS tax due to HMRC and then the net amount to the contractor.

However, the agency has to be aware that:

Following on from this, it is likely that if the new proposed legislation (which will classify whether a worker is employed or self-employed) comes into effect in April 2010, many service providers promoting their self-employed solution will have to re-assess their business model. Furthermore, if agencies have relied on such service providers to administer the CIS deductions and payments to HMRC for their contractors, and the service provider has failed to make these payments, then the agency would be liable for any tax shortfalls, which could be a considerable amount.

Danbro's Gerry Gregoire explained, "Agencies need to be aware that it's only a matter of time before changes are going to be made and they need to be ready to embrace them. Danbro have the systems in place to provide each worker with an effective accounting solution to fit their individual circumstances. Whether they set up under our Umbrella as an employee or operate as self-employed under our CIS Construct service, we can help."

"It's inevitable that providers promoting their self-employed business model will be affected by the proposed legislation. They no longer will be able to pigeon hole all construction contractors as self-employed, and as a result many will have to use an alternative solution. Such changes could leave agencies dealing with hundreds if not thousands of contractors mid contract, with no payroll solution to use. Now may be the time for agencies to assess their current practices, ensuring the risks identified are minimised if not eliminated."

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Search FT.com

Mark Twain once said “buy land, they’re not making it any more” – and it seems private investors share his view. Many are now taking advantage of predicted rises in rural land prices, and favourable tax breaks.

Question: As pertains to taxes and Social Security are 'earnings' the same as 'income'?

I'm confused about AGI (adjusted gross income), it's effect on Social Security, 'taxable earnings', and 'income'. If I sell mutual funds are the proceeds considered 'income' or 'earnings'? (The only 'work' I did was to choose the fund that produced enough income). Is there a difference between 'earnings' and 'income'? I realize that only the capitol gain part is taxable but according to a letter from SS more than 6 months ago I'm faced with a reduction of SocSec in 2009 because my AGI in 2007 was over (about)$180,000 when sold funds and paid up front to move into a retirement home. I was 73 years old at the time. Two answers have been helpful already. I thank their authors. But the effect of AGI on Social security has not been addressed.. Thank you..

Answer: See http://ssa.gov/retire2/whileworking2.htm for info on the offset of social security due to other income. While it doesn't specifically address 401K's, I wouldn't have expected a 401K withdrawal to trigger the reduction in SS benefits. It's not your AGI that is supposed to affect it - on that page from the ssa website it specifically lists a number of income items that they do NOT take into account.

I suppose you have already talked to the social security people about this, and questioned it. If not, I'd give them a call, rather than just accepting the letter you got. Is there any chance that your 401K withdrawal was reported on the wrong line on your tax return?

Ninasgramma brings up a good point - since you were past full retirement age when this withdrawal occurred, by the rules you could have had a job and made a million dollars that year without affecting your social security. Something is badly wrong here - talk to the people at your ss office.

Good luck.

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The Annihilation of Wealth 2013: What successful Americans need to know to help survive the impending tax increases. $22.46 The 2013 tax increases will cause profound changes in tax rates and planning strategies. The Annihilation of Wealth 2013 is a must read compilation to understanding what changes are being made and how to plan to avoid significant increases. It contains numerous examples, tax planning tips, and easy-to-follow real world explanations and examples. Don't be caught unaware next year! Pick up your co...

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No cost-of-living increase for Social Security in 2010

There was no cost-of-living increase in Social Security benefits for 2010, making it the first time that benefits have not been increased each year since the cost-of-living adjustment (COLA) became effective in 1975.