In 2010, the U.S. government instituted a new excise tax that applied only to establishments that provide indoor tanning. This additional charge, called the Indoor Tanning Services Excise Tax, took effect on July 1, 2010, and was part of a government program to increase revenue and discourage the practice of indoor tanning, which has been shown to pose substantial health risks. Establishments that offer indoor tanning are now required to submit a 10 percent tax based on their revenues from their businesses.
The IRS imposes two common tax penalties on taxpayers who fail to file their tax returns or fail to pay their tax liability. Depending on the circumstances, some taxpayers may actually be subject to both penalties, significantly increasing their tax bill. However, simply failing to submit a tax return does not necessarily mean that a taxpayer will have to pay a tax penalty. Much depends on whether the taxpayer owes an additional balance due to the IRS.
When the IRS issues a federal tax lien, it lays claim to the profits from a sale of property. For taxpayers who owe large amounts of money to other obligations, though, this can pose real financial problems, especially if they are unable to meet their other obligations on their own. In some cases, the IRS is willing to allow other creditors to receive profits from the property sale ahead of the government. This process is done by applying for a certificate of subordination of a tax lien. However, since the agency does not grant all of these requests, it is essential that taxpayers who apply for the certificate follow the application guidelines carefully.
In some cases, employers who hire workers may find that their employees actually meet the standards for independent contractors. If this is the case, these business owners may be submitting payroll taxes on their employees' income when it is not legally required. The good news is that the IRS now allows these employers to change the status of their workers for tax purposes if they meet certain conditions. The arrangement for this change is called the Voluntary Classification Settlement Program (VCSP).
Service businesses such as restaurants, bars, and salons often receive tips in addition to their payments for services rendered. Tips are usually given in appreciation for exceptional service or to ensure that the individual server or salesperson receives a portion of the profits. While business owners do not receive income from the tips, they are often required to match FICA taxes, which include Social Security and Medicare taxes, on these payments. Under a special tax credit called the FICA Tip Tax Credit, though, small business owners can claim a tax credit that reduces their share of the matching FICA taxes on tips.
The prospect of resolving a federal tax lien can be a frightening one for any taxpayer. Owing a large amount of money to the IRS can make it difficult for taxpayers to take care of their other responsibilities, which may prevent them for collecting funds to repay their obligation. Once a tax lien has been enforced, the IRS will only remove it after the full obligation has been paid. However, the agency can do this through either a tax lien withdrawal or a tax lien release. The end result of both processes is the same, but the manner in which the IRS removes the lien can have a significant impact on taxpayers' credit ratings.
Following the economic recession of 2008-10, the United States government took extraordinary measures to attempt to shore up the national economy. One of the major areas of concern was unemployment. Rising unemployment figures pushed the national unemployment rate up to 10 percent, placing a strain on federal unemployment funds.
Taxpayers who are subject to foreign income taxes may qualify to take a foreign tax credit against their U.S. tax liability. In most cases, these foreign income taxes are levied on individuals who have partial-year residency in a foreign country or who receive income from foreign-based business activities. The IRS has created the foreign tax credit to help taxpayers offset these additional charges.
Adjusted gross income (AGI) is one of the most important figures on Form 1040. This amount determines your applicable tax rate and, by extension, your actual tax liability for the year. However, many taxpayers are unfamiliar with how adjusted gross income is calculated, which means that they may not be aware of how their AGI amount fluctuates from year to year. Knowing how to calculate your AGI can help you prepare for your taxes based on the potential change in the amount of income tax you owe.
College students have been using work study as a way to earn additional income for school for many years. While work study provides a regular stream of income, it is not actually classified as a job because it is a form of financial aid provided for needy students. Despite this classification, though, receiving work study income can have an impact on your federal income tax liability at the end of the year. For this reason, it's important to know why work study is significant and how to include this school related tax on your tax form.
