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IRS CIRCULAR 230 NOTICE:
To ensure compliance with requirements imposed by the IRS, we inform you that
statements on this website, that could be construed as federal tax advice, are not intended or written to be used and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or
regulations of other governmental taxing authorities or agencies. Furthermore, this website is not intended or written to support the promotion or marketing of any tax schemes.
Date last modified:
01/09/12
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Tax News You
Can Use
- Generally, the
sale of personal residence
is not taxable if certain conditions are met. If the taxpayer's primary
residence has been used as
a rental, vacation or second home it has periods of "nonqualified use". Taxpayers may not be able to exclude
all the gain
from the sale of a residence that has periods of nonqualified use.
- Debt Forgiveness/Cancellation can generate taxable income. Generally, this is reported on a 1099-C.
It is important to include this information on your tax return, even if
it turns out you don't have additional income to claim.
- Selling online (such as via Ebay)
is considered a taxable
activity. If you are a 'casual seller', meaning you sell
occasionally without intent to make a profit, you probably don't need
to report the activity. If you are a more active seller, selling items at a profit or you are selling collectibles, you
must report the income either as a hobby venture or a business.
Beginning in 2012, merchants will receive 1099-K forms reporting
payments/income received from third-party handlers.
- Barter and Trading for services and/or products
is considered taxable income and must be counted as such.
- In some cases, the IRS will permit a taxpayer to take the
mortgage interest and property tax deductions
even if he or she is not liable for the mortgage. The taxpayer
must have paid all the mortgage payments, property taxes and general
upkeep for the home. The home must be considered the
taxpayer's in all respects other than having his/her name on the
loan.
- The IRS permits taxpayers receiving refunds to
split their refund among one, two or three accounts,
including IRA accounts, when choosing direct deposit. Form 8888 will
be required when designating more than one account.
-
Health Savings Accounts (HSA)
help alleviate the burden of medical expenses and provide some tax
advantages. Only high deductible health insurance policies qualify.
- You can open a
Roth IRA for 2011 or contribute to
an existing one up until April 15, 2012. The maximum annual contribution is $5,000 per year;
after-tax dollars. Those over 50 can contribute an additional $1,000. Earnings on your Roth are federally tax-free if your
account has been open for five years and you are at least 59½ years
old. Contact Bill for more information on Roth IRAs.
- The Retirement Saver's Credit
offsets the cost of contributions to IRAs, 401(k) plans and
certain other retirement plans. The credit is figured as a percentage of the
qualifying contribution; the maximum credit is $1,000, $2,000 for married
filing joint. On 2011 returns, the federal tax credit applies to Individuals filing
as single with incomes up to $27,750; filing as head of household up to $41,625
and married couples up to $55,500. Other requirements are the taxpayer must be
18, not a full-time student and not claimed as a dependent on another person's
return.
- For 2011, if you have a household employee, like a nanny or caregiver, you must report and pay payroll taxes
when gross wages exceed $1,700
per year.
- Oregon Residents can take advantage of a tax
credit program to encourage purchase of certain new energy-efficient
appliances and power systems. You must have a
special state certificate to claim the credit on your tax return.
For more information, instructions on how to get the mandatory
certificate and a list of eligible appliances, go to:
Oregon
Department of Energy - Conservation Division Residential Energy Tax Credits
. In general the consumer must complete and send in the form for the
credit. Your salesperson will probably not do this as part of the sale.
Please note that 2011 is the last tax filing year in which you can claim
the credit on appliances. Purchases made in 2012 and after will not
qualify for a credit.
- Washington State residents do not pay individual
income tax. Businesses need to collect sales tax and fulfill other
reporting requirements. Visit the
Washington State Department of Revenue's website for more information.
If you are an Oregon-based business and conducting operations in Washington, you
may be subject to sales and excise tax reporting and payments.
- Absolutely, DO NOT ignore letters from the IRS or state revenue
agencies. Respond promptly, or seek professional assistance, when information
is requested. Procrastination can be costly because you can lose certain
rights and even potential refunds by missing key deadlines. Incorrect
mailing address is never accepted as a reasonable excuse, so be sure to keep
your mailing address current.
- Employer's wishing to provide non-taxable fringe benefits for their employees can reference
IRS Publication 15-B.
Links to More Tax Tips and Information
◊
Social Security
◊
Rental Income and Expenses
◊
Education Deductions and Tax Breaks
◊
Tips for Sole Proprietors and Business Owners
◊
Tax Filing Deadlines, Extensions and Quarterly
Estimates
◊
Life Planning in the 21st
Century
◊
Important Documents to Keep
Resources You Can Use
- To stay on top of Social Security news, you can sign up
for a free monthly email newsletter. To get it, go to www.ssa.gov/enews
- You can download forms, publications and information
from the IRS website. Go to www.irs.gov
- For the Oregon Department of Revenue, go to
http://www.oregon.gov/DOR/.
You should be able to access other states from the IRS website.
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