The Tax Questions Blog

Archive for December, 2010

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Question: Is personal vehicle Mileage Reimbursement Taxable in Alabama?

I am a salaried employee who uses her personal vehicle for travel with my company. I am paid the standard IRS mileage reimbursement rate. However, I have noticed recently that this mileage reimbursement is being taxed on my check stub. Things such as health-care etc., are not. I thought mileage reimbursement was a reimbursement of a prepaid employee expense and that it shouldn't be counted as taxable income. Please help!

Answer: There are 2 types of employee expense reimbursement plans. An accountable plan and an non-accountable plan.

Under an accountable plan, the employee has to account for every expense requested for reimbursement with the employer. This includes the who, what, where and why of an expense. This includes mileage. It also means that if an advance is given, any excess is returned to the employer.

Under a non-accountable plan, no such accounting is needed. The employee usually receives a flat allowance each month for expenses (usually car expenses) and does not have to report then expenses to the employer.

Expenses reimbursed in an accountable plan are not taxable and should not be taxed on a paycheck (although my wife's former employer did include the reimbursement on her paycheck, it was not subject to income tax withholding.)

An allowance in a non-accountable plan IS subject to withholding and is taxable. The employee excludes the amount actually incurred for expenses by filing a From 2106 and Sch. A. to excludxe those expenses from his income.

State rules vary, so you need to check with a local expert.

Small firms, tax-exempt groups with employees should check out health care tax credit

In general, the health care tax credit is available to small employeres that pay at least half of the premiums for single health insurance coverage for their workers, according to the IRS.

Tax Tips & Advice : How to Avoid an IRS Audit

Question: Does Canada have an Estate Tax and, if so, what is it and where can I find more about it?

I am an Executor of an Estate of a person still living; however, I want to be prepared. I know that in the United States there is an estate tax. Is there an estate tax in Canada and what is it, how do I find out more about it. I need to know how it affects the handling of the estate, the persons receiving disposition of the estate's income, what is reported to Revenue Canada, and, is it taxable in the first place.

Thank you.

Answer: There is no estate tax as such. If the person owned any capital property, these properties are deemed sold at their fair market value on the date of death. This would include things like stocks, land, buildings, and units of a mutual fund, but not the person's principal residence. Also, if the person help any RRSP or RRIF, these plans are deemed to have collapsed on the date of death, and the entire value of these plans must be reported on the final return.

These amounts can be deferred if the person had a surviving spouse who was listed as the beneficiary of the capital property or RRSP, or listed as the beneficiary of these things in the will.

Beyond this, if the estate still holds assets after death that are still earning income (interest, dividends, capital gains, royalties), these things would be reported each year on a T3 Trust return.

Free and Clear Equity Files Registration with S.E.C. for All Cash Real Estate Investment Trust (REIT)

Free and Clear Equity, Inc. today announced the recent filing of an S-11 registration statement with the Securities and Exchange Commission for an all cash Real Estate Investment Trust to invest in commercial real estate and mortgages backed by triple net lease commercial properties in the U.S.

(Life Insurance Proceeds Taxable) - Get A Life Insurance

Question: I contributed to my Roth IRA in 2005 and my AGI was over the 150K limit. What are my options?

I filed my taxes before the April 15 deadline, is it too late to recharacterize my 2005 contribution without penality? If not, should I recharacterize now and pay the 6% penalty or not do anything? What are the odds that the IRS will check and penalize me at a later date?

Answer: The truth is you need to recharacterize now and pay the penalty. You will get it again if you don't. It repeats every year until it is fixed.

Edwards County Senior Citizens Board president resigns

President of the Edwards County Senior Citizens Board of Directors, Frances Roosevelt, submitted her resignation, effective immediately, at a special meeting held on Monday, Jan. 3, according to the Edwards County Times-Advocate. Board member Keith Pritchett also resigned his position on the board.

Income Tax Filing: Tips To File Income Tax On Time

Question: selling Avon in Australia?

Is it true that selling Avon is classed as a hobby and is not a taxable income. If that is true does that mean you do not need to inform centrelink of any profit you make.

Answer: Nope - its income, however since you are a subsidery of Avon you dont have to worry about GST etc (which occurs after you usually sell 50K of product a year) as this is handled by Avon

Taxpertise: The Complete Book of Dirty Little Secrets and Tax Deductions for Small Businesses the IRS Doesn't Want You to Know $10.71 Keep Your Money! Taxpayer champion and enrolled agent Bonnie Lee puts the IRS under the microscope and uncovers proven methods, and surprisingly simple strategies to minimize your taxable income, maximize deductions, and, ultimately-add thousands back to your business' bottom line! Do you owe an insurmountable sum to the IRS? Pay pennies on the dollar. Secret formula the IRS uses to determine an...

The Complete Tax Guide for E-commerce Retailers including Amazon and eBay Sellers How Online Sellers Can Stay in Compliance with the IRS and State Tax Laws With Companion CD-ROM $15.14 Fed up with the numerous violations of tax law by individuals and businesses selling goods on eBay and other Web sites, the IRS is pushing Congress to make online marketplaces responsible for reporting sales information to the IRS. eBay's own statistics suggest that there are 1.3 million people around the world who make their primary or secondary source of income through eBay, with just over 700,0...

Book Publishing 101: Inside Information to Getting Your First Book or Novel Published $24.95 Nothing rivals the sense of accomplishment that comes from getting your first book published. It is thrilling and exciting to see your name in print. As a first-time author, you are eager to share your work and voice with the world, but you may be wondering just how to break into this challenging and ever-changing industry. The Complete Guide to Getting Your First Book Successfully Published is he...

How to retire without losing your identity

Family Finance: Husband's apprehension about retirement has little or nothing to do with money

Calculating Taxes : How to Calculate Taxes for Hobby Expenses & Income

Question: Why am I getting so much less this year Part 2?

ok, so I dont know how to reply to these after an answer.
last years return (2006) my gross income was $28,850, and $0 on Standard Deductions, Exemptions, and Taxable Income. I claimed $1500 or so in student loan interest paid.

This year (2007 return) I have 2 jobs instead of one, with a total gross income of $42,452. The fed tax withheld is $4,506.01, SS withheld $2,632, and Med withheld is $615. These are all totals from both W2s together.
I paid 1420.22 in student loan interest this year.

2007 Standard Deduction $5,350
07 Exemptions $3,400
07 Taxable Income $32,281

why were the above all $0s for '06, but not now? heh, Did I go into some other bracket that screws up my ability to get money back? My refund over the past 4 years has been between 700-800$, but this year inputting the same info I seemingly get a grand total of $13.
what else should I post numbers-wise? Is there anyone who has a possible answer as to why I'm getting so much less bak?

Answer: If those are actually your numbers from your '06 return, it sounds like there was a serious mistake made.

Just think about it for a minute. You earned $28,850. You then claimed zero in deductions (when you really should have claimed the standard deduction, but that's beside the point right now) and zero in exemptions (when, again, you should have claimed at least yourself, so that would have been even more to deduct from your income before you calculated your tax)

Anyway -- if you deducted NO deductions from your income, then your taxable income should still have been $28,850! The fact that you reported NO taxable income, in my opinion, means your taxes were not done properly.

I'll be interested to see if anyone else has another possible explanation. I hope for your sake that it turns out I'm wrong.

The 10 Money Moves to Consider Before 2010 Expires

New Year's Eve is almost here, but don't let that stop you from making some important money moves now, before Dec. 31, so you can reap the benefits in 2011.

i wanna be a big CEO, santa!