The Tax Questions Blog

Archive for September, 2010

Question: Cash for Clunkers and taxes?

Will people receiving the $4500 for cash for clunkers be required to claim this money as taxable income on their income tax returns?
Has anyone even bothered to consider this?

Answer: I don't think so but this is an excellent question. Have you considered posting it in the Politics section (under Politics & Government) or the Taxes section (under Business & Finance)?

If you decide to ask this there, please post links to your questions. I'm interested in the answers.

Question: Indian house rent and income tax deductions?

Hi,
In India if I am not getting a House Rent Allowance (HRA) but I am renting a flat, can I get any any income tax relief in this situation? If so how is the deduction in taxable income calculated?

Answer: Section 80GG
DEDUCTIONS IN RESPECT OF RENTS PAID.
In computing the total income of an assessee, not being an assessee having any income falling within clause (13A) of section 10, there shall be deducted any expenditure incurred by him in excess of ten per cent of his total income towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence, to the extent to which such excess expenditure does not exceed two thousand rupees per month or twenty-five per cent of his total income for the year, whichever is less, and subject to such other conditions or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations :
Provided that nothing in this section shall apply to an assessee in any case where any residential accommodation is - (i) Owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu undivided family, at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or
(ii) Owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined under sub-clause (i) of clause (a) or, as the case may be, clause (b) of sub-section (2) of section 23.
Explanation : In this section, the expressions "ten per cent of his total income" and "twenty-five per cent of his total income" shall mean ten per cent or twenty-five per cent, as the case may be, of the assessee's total income before allowing deduction for any expenditure under this section.

HMT

As Cost Basis Regs Loom, Brokers Ponder

Industry participants say brokers have made a lot of progress toward meeting new cost-basis reporting requirements from the Internal Revenue Service, which take effect in January, but further progress is necessary.

Calculating Taxes : How to Calculate Sales Tax

Question: Can I still amend my 2008 tax return to get the new home buyer's credit?

I recently purchased a house this year and also got married. I don't want to file my 2009 taxes jointly in order to get the entire home buyer's credit. Am I too late to file an amendment for my 2008 taxes (where i filed single) and get the full credit? I am in the military and stationed overseas, and at the moment also currently deployed, if that offers any other kind of extensions)

Answer: yes, you can claim home buyer's credit on 2008 amended tax return. you can still file it.

On the amended tax return Form 1040X, enter the credit on line 15 of Form 1040-X and enter "Form 5405" in the white space at the end of line 15, and attach the Form 5405. Attach a copy of the HUD-1 or RESPA settlement sheet as proof.

Hume responds to complaints about DC trip

Citizen file photo. Pat Hume Earlier this year, Elk Grove residents and a local Internet blog pointed out inconsistencies in Elk Grove City Council Member Pat Hume’s economic disclosure forms from a 2009 lobbying trip to Washington, D.C.

Tax Forms & Deductions : How to File an Amended Tax Return

Eight ways to keep your business tax-healthy

(ARA) - The U.S. was home to 27.5 million small businesses in 2009 according to the U.S. Small Business Administration Office of Advocacy. To succeed, many business owners take on multiple duties, from executive and operational, human resources, to marketing and information technology.

Tax Extension

Question: What do we do when the IRS does an audit from 2005 and shows we had more income than reported on our return?

This extra income that they found was from part of an oil settlement inheritance through my father's estate. I was told by my estate lawyer that inheritance money is not taxable and I had the check made payable in my name, so it didn't actually go through the estate. The lawyer handling the oil settlement had me send in all the paperwork needed to show that my brother and I were the children and ones being the direct heirs. Is there any way to refute this? Sorry this is so long, but it is a little complicated. Would appreciate any advice:)

Answer: You need to get documentation to show that the money was in fact an inheritance. You may or may not owe tax depending on several factors. If you can show that the money was from an inheritance then that helps your argument for some/maybe all of it to be tax exempt. If you can not convince the revenue agent who is examining your return you can talk to his/her manager and then appeal it if you can show it was truly an inheritance.
You should get a good CPA or tax attorney to help you through this. I don't think I would use the same attorney as before.
Hope this helps.

Relocating to Gibraltar

There are many factors which would attract someone to relocate to Gibraltar. Situated on the southern tip of the Iberian peninsula, "the Rock" enjoys a temperate Mediterranean climate with mild winters and warm summers.

Credits, Stocks & Pension : Do You Pay Income Tax on an Inheritance?