Income tax – Eshcinsel http://eshcinsel.net/ Thu, 24 Nov 2022 04:34:55 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://eshcinsel.net/wp-content/uploads/2021/10/icon-41-120x120.png Income tax – Eshcinsel http://eshcinsel.net/ 32 32 Can I avoid paying high income tax on my super contributions? https://eshcinsel.net/can-i-avoid-paying-high-income-tax-on-my-super-contributions/ Tue, 22 Nov 2022 18:05:00 +0000 https://eshcinsel.net/can-i-avoid-paying-high-income-tax-on-my-super-contributions/ I am 45 years old, I am married and I have two children at school. I’m the breadwinner, I earn $270,000 a year, and my partner, who has limited earning capacity, earns $41,000. Our house is paid off as the balance of $220,000 is fully covered by an offset account. We have two investment loans, […]]]>

I am 45 years old, I am married and I have two children at school. I’m the breadwinner, I earn $270,000 a year, and my partner, who has limited earning capacity, earns $41,000. Our house is paid off as the balance of $220,000 is fully covered by an offset account. We have two investment loans, mostly income covered, but representing a loss of about $10,000 a year. My super is $520,000 and my partner’s is $185,000. We were hoping to renovate or modernize our house, but the market is too unstable for that and it leaves us with a surplus of $20,000 per year. I thought this might be a good opportunity to improve our super position and get the benefits of compounding over time. However, due to my income, I am subject to Division 293 tax, which means that I lose 30% of my preferential contributions. I can’t find any way around this.

Should my husband sacrifice his salary to the super or should I make after-tax contributions to his account? Is there any other advice you could give regarding maximizing our super without me having to pay more and more taxes, which seems to wipe out the profit?

There’s no way around the high-income pension tax, but you can take comfort in the fact that it’s not even higher.Credit:Simon Letch

There’s no way around the division 293 tax that hits high earners, but I guess you can take comfort in the fact that you’re losing 30% on deductible contributions instead of the 47% you would lose if you took the money in hand. You’re in a great long-term position, but I’m afraid to tie up money in a superannuation when your main goal seems to be to renovate or move.

Given your age and that of your children, I think your main goal should be to work on strategies to make this happen as soon as possible. Then you can enjoy the benefits while the kids are still young.

I own my own home and my wife is in a nursing home after suffering a severe stroke. I want to add my two daughters’ names to the deed, but I’m afraid I’ll lose part of my pension if I do. There would be no money exchanged, just the cost to change the two names. Can I do this without affecting my pension?

Loading

If you donate part of your home, you will convert an exempt asset into a taxable asset and, depending on your other assets, this could have a significant negative effect on your pension.

You would need an advisor to do the calculations as your overall financial situation would determine the outcome. It doesn’t matter if the money changes hands or not.

A better option may well be to leave the property to them in your will.

]]>
WILLIAMS: A different kind of income tax | Columns https://eshcinsel.net/williams-a-different-kind-of-income-tax-columns/ Mon, 21 Nov 2022 19:00:00 +0000 https://eshcinsel.net/williams-a-different-kind-of-income-tax-columns/ As we get closer to Thanksgiving Day, it reminds me of the opportunities we have to reduce our taxable income. The important thing to remember is that most humans in the United States are calendar year, cash taxpayers. There are many more tax planning strategies available to us before the end of the year than […]]]>

As we get closer to Thanksgiving Day, it reminds me of the opportunities we have to reduce our taxable income.

The important thing to remember is that most humans in the United States are calendar year, cash taxpayers. There are many more tax planning strategies available to us before the end of the year than after the start of a new year. The idea of ​​deferring income and accelerating deductions can be a good method of tax planning, unless you are subject to alternative minimum tax (AMT).

This secondary system of personal and corporate taxation originated from a period in time when very wealthy individuals and large corporations could control their tax obligations by purchasing certain types of investments and spending money on special deductions. Taxpayers with significant assets and cash can purchase municipal bonds, for example, which pays them tax-free interest. Some municipal bonds are exempt from federal, state and alternative minimum tax! As you can imagine, if you were ultra-rich, you would want to stay as rich as possible while avoiding the top marginal tax rate of 37% (unless additional surcharges apply based on your type of income).

Just when you thought you were done calculating your tax return, your CPA calculates alternative minimum tax. You initially thought that your income would be taxed at the individual rate of 15%. However, depending on the amount of interest you have earned on the private activity bonds, the percentage of royalty income exhaustion from your investments in oil and gas properties as well as the accelerated depreciation of your commercial property, your Alternative Minimum Taxable Income (AMTI) is now higher than the AMTI Exemption exposing your income to a 26% tax rate.

Why did Congress do this to the American people? The purpose and history of the alternative minimum tax was to ensure that certain high-income taxpayers paid taxes. Our tax system is based on income attributed to the taxpayer and certain types of income may be tax exempt, tax deferred or partially taxed. However, the AMT exemption amount for 2023 is $126,500 for married spouses and surviving spouses and $81,300 for singles and heads of families, which is higher than the national average per worker in the states. -United.

Slice “creep” has been a significant challenge for middle-class taxpayers in recent years. Congress has not consistently addressed exemption amounts for inflation. When this happens, there is little difference between the tax exemption and the alternative minimum tax exemption, forcing those who can least afford it to pay the higher tax rate of 26%.

When planning for your tax obligations in 2022, it is essential that you understand the intricacies of the Internal Revenue Code. Doing your own tax returns can save you a few hundred dollars today and cost you a lot more if the IRS corrects your returns for errors.

I live with a variety of life philosophies. One such philosophy is that it is not unpatriotic to pay even the smallest amount of income tax that one rightfully and legally owes. Planning is an activity that gives you more control over how much tax you want to pay each year. It is essential that you understand the different types of income and the rates applied to income during the tax year. “A penny saved is a penny earned,” according to poet George Herbert. If you had the choice of investing your earned money in something that directly pays you interest or dividends rather than paying the US government, wouldn’t you? Contact a CERTIFIED FINANCIAL PLANNER™ professional to help plan your tax cuts for 2022 and beyond. I wish you and your family the most blessed Thanksgiving!

Registered securities offered by Cambridge Investment Research, Inc., a broker/dealer, Member FINRA/SIPC. Jimmy J. Williams is an Investment Advisor representing Compass Capital Management, LLC, a Registered Investment Advisor. Cambridge and Compass Capital Management, LLC are not affiliated. 321 S. 3rd, Ste. 4, McAlester, OK 74501. Cambridge does not provide legal and tax advice. Please consult your legal and tax advisor for specific estate and tax planning strategies.

]]>
Taxpayers Oppose Efforts to Collect Capital Gains Tax Ahead of State Supreme Court Ruling » Publications » Washington Policy Center https://eshcinsel.net/taxpayers-oppose-efforts-to-collect-capital-gains-tax-ahead-of-state-supreme-court-ruling-publications-washington-policy-center/ Thu, 17 Nov 2022 16:11:21 +0000 https://eshcinsel.net/taxpayers-oppose-efforts-to-collect-capital-gains-tax-ahead-of-state-supreme-court-ruling-publications-washington-policy-center/ Almost eight months after the Capital gains tax declared unconstitutionalthe Attorney General (AG) filed a petition on November 3 asking the state Supreme Court to authorize the Department of Revenue (DOR) to collect capital gains tax before a final decision on the case. In fact, the AG argued that those challenging the capital gains tax […]]]>

Almost eight months after the Capital gains tax declared unconstitutionalthe Attorney General (AG) filed a petition on November 3 asking the state Supreme Court to authorize the Department of Revenue (DOR) to collect capital gains tax before a final decision on the case. In fact, the AG argued that those challenging the capital gains tax “would be better off” if the Supreme Court allowed the DOR to collect the tax before it weighed in on the case. Taxpayers challenging the tax responded last night, opposing the AG’s request to allow a new income tax to be levied which was ruled unconstitutional before the case was finally resolved.

Here are some of the quotes from brief objection to the motion to suspend the GA:

  • “A stay on appeal is not warranted based on speculation that this Court may rewrite nearly a century of precedents that hold personal income subject to state constitutional limits on taxation of property. The state tries to sidestep the constitutional restrictions by calling the tax an “excise tax,” but the tax clearly does not meet the well-established test for excise taxes.”
  • “In short, the state will be little affected if the status quo prevails pending the resolution of this Court, while the taxpayers of Washington will be materially and inevitably harmed if the state is allowed to collect tax pending the resolution of the call.”
  • “On March 22, 2022, the court issued an order declaring ESSB 5096 unconstitutional and “void and of no effect at law.” The State and intervenors sought direct review by the Court, which was granted on July 13, 2022. The briefing was completed by all parties on October 7, 2022. At no time in the preceding 226 days has the state questioned the superior court’s order declaring ESSB 5096 ‘void and unusable. ‘ Rather, it was only after a non-party to this case submitted a letter to the Department of Revenue objecting to the agency’s regulatory activities that the state filed its petition on November 6, 2022. . »
  • “Here, capital gains tax is imposed because of a Washington resident’s ownership of property – capital gains income – not because the person ‘sells, transfers, or uses property’. , as the state asserts. The state ignores the plain language of the law which states ‘[t]The tax applies when Washington capital gains are recognized by the taxpayer. Under long-established law in Washington, a tax on the collection of revenue, independent of any privilege conferred by the state to engage in business or exercise a privilege within the borders of the State, is a property tax and not an excise tax. This Court did “not hesitate” to conclude that an income tax not based on the amount of “any business in this State” and “based on federal income tax laws” is “a simple property tax’ masquerading as an excise.’ “There is no longer any question in this court that income is property.”
  • “In this context, however, the state-requested stay would radically disrupt the status quo by allowing the state to enforce a recently enacted tax – which has never been collected before and has been found to be contrary to nearly a century of precedent – on the eve of our Court’s ruling on its constitutionality The state’s unusual request to apply this “brand new tax” after the Superior Court struck it down but before the Court had decided, the appeal must be dismissed.
  • “The state has identified no good reason to disrupt the status quo – and certainly no good reason to do so now, when nearly eight months have passed since the superior court’s decision without any motion to stay the trial. nor any request for interim relief. The state articulates no concrete harm to its own interests in the absence of a stay, and its claims of taxpayer confusion and delays in implementation are without merit. if the superior court judgment is stayed pending appeal, taxpayers may be forced to go through a lengthy and costly process to obtain refunds if the decision below is upheld, not to mention incur professional expenses for prepare unnecessary tax returns.
  • “The state appears to believe that if taxpayers pay tax during the pendency of this appeal, and this Court later upholds the superior court’s decision, those taxpayers can be compensated by obtaining a refund, with interest.” This ignores the fact that the refund process will require a lot of time and expense, including professional fees, that taxpayers will never be able to recoup. Additionally, if the superior court is upheld, taxpayers will also have been harmed by needlessly incurring the legal and accounting fees that come with filing new state tax returns, in addition to taxpayers’ personal time and effort, to comply with state capital gains reporting. terms. And paying interest after the fact cannot fully compensate taxpayers for the opportunities they lose as they are deprived of funds that are rightfully theirs.

According to the lawyers involved in the filing of the stay opposition brief, it is highly unusual for a losing party to wait almost eight months before requesting a stay of a decision.

Ironically, yesterday I received public documents from the Department of Revenue with this draft statement which was released within the agency on March 3:

“Decision Against Tax – On DATE, the Douglas County Superior Court granted Plaintiff’s motion for summary judgment. In doing so, the court ruled that Washington’s capital gains tax was unconstitutional. Until further notice, the Department of Revenue is prohibited from administering Washington’s capital gains tax.

Instead of issuing this draft statement, the DOR has decided to move forward with its full implementation plans despite a Decision of a Superior Court judge appointed by Inslee on March 1, that the capital gains tax “is declared unconstitutional and invalid and, therefore, void and unenforceable at law”.

In related news, a former IRS lawyer recently said this about the state’s capital gains income tax arguments:

“Washington State is wrong to believe that just because there is a transfer of property involved does not provide a basis for the imposition of an excise tax. Frankly, I don’t see why this issue is considered controversial. That is to say, I see no reasonable argument for saying that a capital gains tax is not an income tax and that for this reason it could be subject to a tax of excise. I’m somewhat stunned as to why Washington State thinks it has a reasonable chance of ever winning this case.

The state Supreme Court has scheduled an en banc administration conference on Nov. 29 to consider the AG’s stay motion request to allow the DOR to collect capital gains tax before a final decision. A decision should be available that day.

Further information
AG asks state Supreme Court to allow collection of capital gains tax before final decision
Ex-IRS lawyer ‘stunned’ by Washington’s capital gains tax arguments
DOR Responds to Cease and Desist Capital Gains Income Tax Letter

]]>
O’Hara’s draft 2023 budget contains no labor and estate tax hikes https://eshcinsel.net/oharas-draft-2023-budget-contains-no-labor-and-estate-tax-hikes/ Tue, 15 Nov 2022 19:18:47 +0000 https://eshcinsel.net/oharas-draft-2023-budget-contains-no-labor-and-estate-tax-hikes/ O’Hara officials plan to keep the line on property taxes with next year’s budget. Council voted 5-0 in a combined workshop and regular meeting on Nov. 9 to approve first reading and announce its draft 2023 budget. Council President Robert Smith and Councilor Richard Hughes were absent. The second reading and the formal adoption of […]]]>

O’Hara officials plan to keep the line on property taxes with next year’s budget.

Council voted 5-0 in a combined workshop and regular meeting on Nov. 9 to approve first reading and announce its draft 2023 budget.

Council President Robert Smith and Councilor Richard Hughes were absent.

The second reading and the formal adoption of the budget are scheduled for 13 December.

The township mileage rate is expected to remain at 2.1 mills. The budget documents indicate that the tax on earned income will remain at 0.8%.

Manager Julie Jakubec said the township has traditionally had a strong collection on both revenue streams.

“We are lucky to have a good tax base for real estate,” she said. “Furthermore, as income increases, the dollar amount of tax on earned income increases with that income. If someone gets a 3% raise, they will pay the next year 3% more than they paid this year. We really watched that one up close. We are budgeting revenues very conservatively due to the economy. Everything here is a rule of conservatism.

O’Hara’s most recent property tax hike came in the 2021 budget. The rate increased from 1.9 mills to 2.1 mills.

Projected revenue and expenses for 2023 were approximately $15.59 million.

Revenue includes approximately $2.7 million in property taxes, $4.86 million in earned income and property transfer tax, $4.1 million in utility costs, $1.15 million in revenue sharing and grants, $214,500 in business licenses and permits, and $25,000 in fines.

Expenses include $1.12 million for administration, including salaries and benefits; $2.31 million for policing; $487,000 for fire, ambulance and emergency management; $556,000 to repay debt; $368,000 for community development and $222,000 for pensions.

Approximately $3.38 million is allocated for capital improvements. These projects include upgrading stormwater management facilities along Epsilon Drive in RIDC Park, stabilizing trails at O’Hara Community Park, upgrading several police vehicles and gates. entrance to the township offices.

A stormwater treatment project along Ravine Street and Powers Run Sanitary Sewer Upgrade that was scheduled for 2022 has been moved to 2023.

Officials plan to use about $2.03 million of township reserve funds to help balance the budget and fund capital improvements.

Jakubec said the reserve fund, also known as the township fund balance, is expected to reach $3.6 million by the end of this year.

“We have a very healthy fund balance,” she said.

Councilman George Stewart praised Jakubec for his thorough financial analysis.

“She’s the best accountant,” Stewart said. “She always tries to work within our means. We receive a number of grants. We can do a little more when we have more money.

Budget planning began in July. The 145-page budget is available for public viewing at the township office, 325 Fox Chapel Road.

Michael DiVittorio is a staff writer for Tribune-Review. You can contact Michael at 412-871-2367, mdivittorio@triblive.com or via Twitter .

]]>
Income tax: TDS rules on the sale of undivided property https://eshcinsel.net/income-tax-tds-rules-on-the-sale-of-undivided-property/ Sun, 13 Nov 2022 07:48:16 +0000 https://eshcinsel.net/income-tax-tds-rules-on-the-sale-of-undivided-property/ I plan to purchase a property held in the joint name of husband and wife for ₹2 crore. The lending bank I am taking out a home loan from is willing to issue two separate checks to a joint bank account held by husband and wife. The husband who is one of the co-owners of […]]]>

Answer: In practice, a house is generally purchased in common name in order to ensure a harmonious succession in the event of the death of a co-owner. Just because a person is added as a co-owner of the property in the purchase contract does not mean that he or she becomes the beneficial owner of the property. The effective ownership of such a condominium house belongs to the respective joint owner in the proportion in which the contribution for the purchase of the property has been made. In the event that a person has contributed nothing for the property, he has no ownership rights to the property, even if he is added as the first co-owner in the purchase contract. Thus, when selling the condominium, it is the beneficial owner who has the right to receive the money if he has fully contributed to the cost of the property.

If the seller asserts that he is 100% beneficial owner of the property and is prepared to provide you with a certificate to that effect, you can consider him to be the sole owner for the purposes of withholding tax at the source. The income tax department does not care on whose behalf the tax is deducted as long as the entire tax is deducted in respect of the total consideration for the property. To avoid any complications, I advise you to mention the husband’s name only in the 26QB form that you must fill out when paying the TDS. For tax purposes, it is the beneficial owner who is treated as the beneficial owner and not the one joined for convenience. Please ensure that full payment is also made on behalf of the husband by you and the lender.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

Catch all the trade news, market news, breaking news and latest updates on Live Mint. Download the Mint News app to get daily market updates.

More less

]]> No addition due to typographical error in the tax return: ITAT https://eshcinsel.net/no-addition-due-to-typographical-error-in-the-tax-return-itat/ Fri, 11 Nov 2022 06:04:00 +0000 https://eshcinsel.net/no-addition-due-to-typographical-error-in-the-tax-return-itat/ By Gayathri CH – On November 11, 2022 11:34 The Income Tax Appeal Tribunal (ITAT), Bombay benchrecently, in an appeal before it, ruled that no addition should be made due to a typographical error in the tax return by the assessee. The aforementioned finding was made by the ITA when an appeal was lodged before […]]]>
Typographic error - Tax return - ITAT - taxscan

The Income Tax Appeal Tribunal (ITAT), Bombay benchrecently, in an appeal before it, ruled that no addition should be made due to a typographical error in the tax return by the assessee.

The aforementioned finding was made by the ITA when an appeal was lodged before it by a notary, against the order of 15/10/2019, issued under item 250 of the Income Tax Act 1961, by the Commissioner of Income Tax (Appeals) of Mumbai, for the tax year 2014-2015.

The brief facts of the case were that the assessee was a person who for the reporting year had electronically filed his tax return on 29/03/2015, declaring the total income at Rs. 1,53,634.

From the details filed during the valuation proceedings, it was observed by the department that during the 2013-14 financial year, the assessee sold a residential apartment in Bandra for a total consideration of Rs 1,00 20,000, and that the said property was jointly owned by the assessee and her son, Shri Pravin Madanlal Shah.

Upon verification of the return filed by the son of the assessee, it was further observed that he had offered under the heading of “capital gain”, the value of the consideration for the sale of the said property at Rs. 14,50,000 only, against which he had claimed deduction under Section 48 of the cost of acquisition, unindexed at Rs. 7,09,827, with the balance of Rs. 7,40,173 being offered for taxation.

Along with the bank statement of the assessee’s son confirming the amount of Rs. Section 143(3) of the Income Tax Act, treated the balance of Rs. 85,70,000 (Rs. 1,20,00,000 less Rs. 14,50,000) as sale consideration received by assessee during the financial year concerned, since the assessee’s bank statement also reflected the credit of said amount from the sale of said property to Bandra. And accordingly, the AO calculated the long-term capital gain of Rs. 1,08,637 and added the same to the total income of the assessee.

Further, it was observed that the assessee had declared the total value of the consideration in the return of income at Rs. 23,72,161, and it was submitted by the assessee that he had received Rs. 15,16,161 on the sale of gold ornaments.

Since no explanation has been offered regarding the balance amount of Rs. 8,57,000 (Rs. 23,73,161 minus Rs. 15,16,161), the AO has added the differential amount as income from other sources, and subsequently refused the exemption of Rs. 7,23,711, claimed under Section 54F for the sale of gold ornaments.

On appeal, the CIT(A) voids its order dismissed the appeal filed by the assessee in its entirety, and it is aggrieved that the assessee preferred the current appeal to the ITAT Panel.

With Sri. Bhavya Sundesha on behalf of the assessee saying that this was due to the error made while filing the tax return, the consideration for the sale of a residential apartment was declared at Rs. 8,57,000 instead of Rs. 85,70,000 and hence the total value of the consideration upon transfer of two long term fixed assets, disclosed in the return at Rs. 23,73,161 (i.e. Rs. 15,16,161 + Rs. 8,57,000), Smt. Smita Nair, Sr.AR vehemently relied on the orders issued by lower authorities, thus asserting that the entire consideration for the sale of the residential apartment should be taxed, and that since the assessee’s son declared only part of the consideration received in his account, the amount of the balance credited to the assessee’s bank account was to be taxed solely in the hands of the assessee.

However, upon hearing the arguments of both parties and going through the documents available on file, the ITAT bench consisting of Om Prakash Kant, the accountant member, as well as Sandeep Singh Karhail, the judicial member, observed what follows:

“In the present case, there is no allegation that the amount of Rs. 8,57,000 has been received by the assessee or credited to his bank account and no document has been registered in this regard. Simply because that the assessee could not explain the amount of the balance of Rs. 8,57,000, as mentioned in his calculation of income and yield, the same was added to the total income of the assessee stating the same as income from other sources”

“Thus, in view of the above, we find no basis to maintain the addition of Rs. 8,57,000, which appears to be merely a typographical error on the part of the assessee, when filing the tax return The ITAT bench added.

Thus allowing the assessee’s appeal, the Mumbai ITAT ruled:

“We order the AO to remove the addition of Rs. 8,57,000 contributed to the total income of the assessee”

Subscribe to Taxscan Premium to view the judgment

Support our journalism by subscribing to Tax scan premium. follow us on Telegram for quick updates

Pawan M. Shah v Income Tax Officer

Counsel for the Appellant: Shri. Bhavya Sundesha

Counsel for the Respondent: Smt. Smita Nair

CITATION: 2022 TAXSCAN (ITAT) 1657

]]>
2023 Tax Refund: Year-End Income Tax Checklist https://eshcinsel.net/2023-tax-refund-year-end-income-tax-checklist/ Tue, 08 Nov 2022 15:25:04 +0000 https://eshcinsel.net/2023-tax-refund-year-end-income-tax-checklist/ Eeven if you will not have to produce your 2022 income tax return until the end of January at the earliest, there are a few steps you can take now that may come in handy when it’s time to complete your Form 1040 on April 18, 2023. Taking stock of your tax situation at the […]]]>

Eeven if you will not have to produce your 2022 income tax return until the end of January at the earliest, there are a few steps you can take now that may come in handy when it’s time to complete your Form 1040 on April 18, 2023.

Taking stock of your tax situation at the end of the year is a wonderful way to minimize your tax bill and increase your tax refund.

Although some of these tax planning techniques can significantly reduce your tax liability, you must act quickly. There are only a few months left in 2022 to make the most of your tax status, and some of these actions will require planning and time before the tax deadline. The 31st of December.

It’s worth considering your tax status, because a little work now could mean big savings in the future. To prepare for the upcoming tax season, read on for year-end tax tips.

Check your paycheck for tax withholding

Since income tax in the United States is “pay as you go,” your employer deducts money from your paycheck, and independent contractors are required to pay estimated quarterly taxes. A penalty may be imposed at tax time if insufficient taxes have been paid throughout the year.

Your Tax Form W-4, which includes information about your filing status and estimated tax deductions, is used by your employer to calculate the amount withheld from your paycheck. Reviewing your W-4 and current withholding at the end of the year is a fantastic opportunity to decide if you want to make any changes.

To modify your Form W-4, you can estimate your current tax withholding and anticipated tax refund using the IRS Tax Withholding Estimator Tool. You can provide your employer with a revised Form W-4 at any time, and your employer must implement the changes at the start of the first payment period that begins more than 30 days after you provide the updated Form W-4.

Sell ​​losing stocks to offset capital gains

The S&P 500 index is down more than 20% in 2022 and corporate price increases have been few. It was a tough year for the stock market. All of these potential stock losses present a perfect opportunity to “harvest tax losses,” which is one of the benefits of a bear market.

The tax plan works by realizing losses or selling stocks and other assets that have lost value, to offset any potential capital gain.

Any income you receive from the sale of assets, such as stocks, real estate, automobiles, furniture, or other tangible property, is called a capital gain. However, to realize losses and offset gains, you must actually sell the assets in question.

Maximize your contributions to your retirement account

One of the most effective tax deductions comes from retirement accounts like 401(k)s and IRAs because you can reduce your tax burden while building up savings for the future. Contribute as much as you can before the end of the year to any retirement account.

For 2022 taxes, employer contributions are not included in the $20,500 deduction limit for 401(k) contributions. A worker in the 24% tax bracket could reduce his taxable income by more than $5,000 just by setting money aside for the future.

To maximize your possible retirement deductions for the last pay periods of 2022, increase the percentage of your normal 401(k) contribution.

Make your home more energy efficient

There are several compelling reasons to make your home “greener” now that the American Recovery and Reinvestment Act of 2009 is in effect.

The amount of tax credits you can receive for improving your home’s energy efficiency has been tripled by law, although the credit percentage has fallen somewhat from its maximum of 30% for improvements made before. 2020.

Tax deductions have a lesser effect on your tax bill than tax credits. Tax credits immediately reduce the amount of taxes you owe the IRS, while deductions only affect your level of taxable income.

You can now receive 26% of the money back if you install a solar power system, wind turbine or geothermal heat pump before January 1, 2023. The credit drops to 22% the following year.

Alternative energies are not the only source of tax credits for energy efficiency measures. Although less than for alternative energy, tax credits can also be earned by simply installing new Energy Star-certified qualifying furnaces and boilers.

Since not all Energy Star certified products are eligible, be sure to review the manufacturer’s tax certification statement.

Consider deferring year-end bonuses and payments

It’s not always easy to ask your employer to defer payment, but if you’re on a year-end bonus and want to minimize your taxable income this year, consider asking them to pay you in January. instead of December.

Similarly, if you’re self-employed or a contractor and want to reduce your taxable income for 2022, consider deferring paying your bills until January instead of sending them in November.

The only thing you’re doing is delaying paying taxes on that money until 2023, so you’ll have to decide whether this year or the next would be the best to earn that money.

Complete all your charitable contributions

If you prefer to make financial contributions to the causes and organizations you support and itemize your tax deductions, do so before the end of the year to best reduce your taxable income for 2022. Up to 50% of their taxable income is often allowed. as a charitable deduction for most taxpayers.

Check the IRS’ directory of tax-exempt organizations to see if your donation will be tax-deductible before giving it to anyone. A tax identification number that identifies them as tax-exempt will also be provided to all legitimate charities and nonprofits.

Check your required minimum retirement account distributions

The SECURE Act of 2019 raised the age from 70 12 to 72, for people reaching 70 12 after December 31, 2019. Under US tax law, Americans must begin receiving distributions from their own retirement savings or that of the employer when they reach a specific threshold. age.

For 401(k) plans, regular IRAs, profit sharing programs, and pensions, these distributions are required. As long as the owner of the Roth IRA is still alive, they are not needed.

Combine all medical expenses in one year

For many taxpayers, medical expenses can be a significant tax deduction, but the IRS only allows you to deduct costs that exceed 7.5% of your AGI.

It may be beneficial to consolidate all of your major medical expenses into one year. These expenses can include procedures, routine maintenance, hospital visits, dental care, prescription drugs, eyeglasses, hearing aids, and therapy for mental health issues, as well as travel to and from providers.

Plan your business expenses

If you are self-employed or self-employed, you can significantly reduce your tax liability by deducting your business expenses. You may consider paying next year’s expenses up front before the end of 2022 to reduce your tax liability, based on what you have already spent on your professional work this year.

The timing of your deductions may vary depending on whether you use the cash method or the accrual method.

It is crucial to remember that each person has a unique tax status. There’s no one way to file taxes, but these year-end tax tips may be helpful. Before making any important tax decisions, be sure to speak with a tax professional.

]]>
What Indians living in the UAE should know about tax returns – News https://eshcinsel.net/what-indians-living-in-the-uae-should-know-about-tax-returns-news/ Fri, 04 Nov 2022 02:00:00 +0000 https://eshcinsel.net/what-indians-living-in-the-uae-should-know-about-tax-returns-news/ NRIs could be required to submit returns in certain scenarios even if there is no tax payable The objects of a trust in India would fall under the category of “furthering any other object of general public utility”. Published: Fri 4 Nov 2022, 06:00 Last update: Fri, Nov 4, 2022, 8:07 PM If you are […]]]>

NRIs could be required to submit returns in certain scenarios even if there is no tax payable



The objects of a trust in India would fall under the category of “furthering any other object of general public utility”.

Published: Fri 4 Nov 2022, 06:00

Last update: Fri, Nov 4, 2022, 8:07 PM

If you are an Indian living in the UAE and you have a PAN card, you might be wondering whether or not you should submit tax returns?

Deepak Bansal, Associate at Ask Pankaj Tax Advisors, UAE explains the process in detail and what can and cannot be done.

Are NRIs holding PAN cards required to submit tax returns?

There is a general misunderstanding that a tax return need not be submitted if there is no taxable income in India. A Non-Resident Indian (NRI) may be required to submit a tax return in certain scenarios even though there is no government tax payable (Ref: Income Tax Rule 12AB) .

>Scenario I

For example, when the total deposits in a financial year in the NRI savings bank account (including the NRE/NRO account) exceeds Rs 5 million, he/she is required to submit a tax return. Deposits can come from any source like remittances from UAE or sale of property in India etc.

>Scenario II

Another scenario covers a situation where the tax withheld at source (TDS) during the financial year is Rs 25,000 or more. It is important to note that the TDS on an NRO account is deducted at 30%. NRIs think they are paying extra to the government by not submitting tax returns and not claiming tax refunds. However, the “no harm, no fault” philosophy may not work here.

>Scenario III

In another scenario, an NRI may have sold a property for a value of more than Rs 250,000. He can save tax by reinvesting the sale proceeds in another property or in selected funds. Even though there is no income tax payable in such cases, it is mandatory to submit a tax return as the total income before tax deductions has crossed the threshold of Rs 250,000.

>Scenario IV

Similarly, in some cases of overseas travel expenses as well, a tax return might be mandatory.

When are NRIs exempt from tax reporting?

If an NRI’s income from India is zero or less than Rs 250,000, there is no need to submit a tax return.

Also, a tax return is not required if an NRI’s income from India, even if it exceeds Rs. adequate have been deducted. The prescribed items cover dividends, interest income from specified bonds and/or debt funds, mutual funds purchased in foreign currencies, etc.

However, if there is other income in addition to the prescribed items, such as interest on a savings account or time deposits, a tax return may be required.

What are the penalties for not submitting the tax return?

If the total taxable income is more than Rs 500,000, the penalty for non-submission of tax return is Rs 5,000. Otherwise, the penalty would be Rs 1,000.

What are typical tax filing errors/misunderstandings?

Not having a permanent account number (PAN) is not decisive for the obligation to submit a tax return. The requirement to obtain the PAN is a consequence of a person’s requirement to submit a tax return, not the other way around.

Similarly, the threshold of Rs 250,000 for income from Indian sources must be calculated before any tax deduction. To illustrate, an NRI can earn Rs 300,000 of income and be eligible for a tax deduction of Rs 75,000 on account of home loans, life insurance or medical insurance premium. When the gross income exceeds Rs 250,000, a tax return is mandatory even if the taxable income after deductions is less than Rs 250,000. The most common mistake is to believe that a tax return is not necessary if no tax is payable.

Special provisions apply to NRIs carrying on business or professional activity in India which they must assess in detail.

]]>
Is it worth moving to a low-income tax state to save money? https://eshcinsel.net/is-it-worth-moving-to-a-low-income-tax-state-to-save-money/ Wed, 02 Nov 2022 17:08:40 +0000 https://eshcinsel.net/is-it-worth-moving-to-a-low-income-tax-state-to-save-money/ Many people in the United States have decided that it would be a good idea to switch to a low-income tax state – or to a tax-free state – for to save money. Although it might sound like a good idea – it’s time to find out – is it worth it? An article by […]]]>

Many people in the United States have decided that it would be a good idea to switch to a low-income tax state – or to a tax-free state – for to save money. Although it might sound like a good idea – it’s time to find out – is it worth it?

An article by The Washington Post reported that the states that recently lost the highest percentage of their taxpayers were the states that had the highest taxes. These states included California, Illinois, New York, Massachusetts, and New Jersey.

Many professionals have made calculations over the years on the value of the move to save money on taxes. Unfortunately, they report that many people who made this move did not calculate enough other factors to accurately determine whether or not it was worth it before making the move. In many cases, they only looked at one or two questions, usually whether or not a particular state levies income tax.

Low income tax states

According TurboTax, five of the states where people pay the most income taxes in 2021 include California (12.3%); Hawaii (11%); New Jersey (10.75%); Oregon (9.9%); and Minnesota (9.85%). Each state determines the rates of deductions, exemptions, credits, etc.

Eight states have no personal income tax. They include Wyoming, Washington, Texas, Tennessee, South Dakota, Nevada, Florida, and Alaska.

If you only use the information above to base your decision on whether to stay or move, the decision is easy. This is where many movers have made their mistakes.

Taxes will be raised one way or another

When a state does not levy income tax, you can be sure that the money needed to run the state will come from other sources, i.e. other taxes. Most often, this will be either sales tax, property tax, or both. Due to each state’s reliance on tax money, a state with no income tax is likely to have higher sales and property taxes than where you currently live.

If you have a business that produces income in another state, you may still have to pay income taxes in that state after you move. You’ll also pay sales tax and property tax in the state you’re moving to, which means you might not save a lot of money, if any.

States without sales tax

According money geek, only four states have no sales tax. These states include New Hampshire, Oregon, Montana, and Delaware.

State comparisons showing income, sales and property taxes

MoneyGeek has a chart that rates each state’s taxes from best (A) to worst (E). The chart looks at the three most common taxes and provides a monetary amount indicating the average amount someone living in that state would pay if they earned about $82,000 a year, owned a home worth $349,400, and had a kid.

The graph reveals that someone living in Wyoming would pay the least tax (4% of their income) and people living in Illinois in the same situation would pay the most: $13,894 (16.8% of his income). Four other states with the lowest taxes are Nevada (4.7%), Alaska (5.4%), Florida (5.6%) and Tennessee (6.5%).

When calculating whether or not it will cost less in another state, you need to consider any taxes you may have to pay. Property tax depends on the size of the property you buy when you move. If you buy a larger property, your taxes may not be much different from where you are now.

Lower income sources

In states or areas with a lower cost of living, you will generally find that the earning potential is also lower. You’ll likely make less money, which also means you’ll pay less tax.

If you’re looking for places to move to with lower taxes and a lower cost of living, you need to consider other factors as well. Forbes rates the 10 cheapest states to live in.

Mississippi is considered the cheapest state to live in. It also has the lowest housing and transportation cost. It also has a warm climate and mild winters. It has problems in its education system, poverty rate and fewer job opportunities.

Kansas, the nation’s second-cheapest state, has low unemployment and housing costs are 27.4% lower than the national average. Problems include considerable distances to airports and frequent tornadoes.

Cost of living comparisons

When you move from one region to another, the cost of living changes. You also need to know the cost of groceries, health care, utilities, and transportation. A cost of living calculator can show the difference between where you are now and where you intend to move. Best places can give you a good idea of ​​the cost differences.

Some states that do not have an income tax have recently seen a larger influx of people leaving states with an income tax. While these states can benefit from having plenty of employees, the lack of income tax can come at a price. According to an analysis of the United States Census BureauSouth Dakota and Wyoming spent the least on education of all other states.

Other factors to consider in your calculations

When doing your calculations, you should also look at other factors to help you determine if changing to a different state is really a good idea. Kiplinger suggests that you need to think about your starting income, your spouse’s income, known tax rates, your income, and how much disposable income you have left after paying your monthly bills.

Before moving, think carefully about the costs. Learn all you can about the new location. Find out what you like and dislike about the new area. If you are planning to downsize or retire, can you afford to live there for many years?

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are intended for general informational purposes only and should not be construed or construed as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or other personal finance advice. Epoch Times assumes no responsibility for the accuracy or timeliness of the information provided.

Follow

Mike Valles has been a freelance writer for many years, focusing on personal finance articles. He writes articles and blogs for businesses and lenders of all sizes and seeks to provide quality, up-to-date, easy-to-understand information.

]]>
Income tax notice to liquor trader Sameer Mahendru, his wife in the Delhi excise policy case https://eshcinsel.net/income-tax-notice-to-liquor-trader-sameer-mahendru-his-wife-in-the-delhi-excise-policy-case/ Mon, 31 Oct 2022 11:25:34 +0000 https://eshcinsel.net/income-tax-notice-to-liquor-trader-sameer-mahendru-his-wife-in-the-delhi-excise-policy-case/ The Income Tax Department has issued a show cause notice to liquor trader Sameer Mahendru and his wife in connection with an alleged liquor scam in Delhi. Bombay,UPDATED: October 31, 2022 4:54 PM IST Sameer Mahendru is the owner of Indospirits. By Divyesh Singh: The Income Tax Department is currently investigating the Benami properties angle […]]]>

The Income Tax Department has issued a show cause notice to liquor trader Sameer Mahendru and his wife in connection with an alleged liquor scam in Delhi.

Bombay,UPDATED: October 31, 2022 4:54 PM IST

Sameer Mahendru is the owner of Indospirits.

Sameer Mahendru is the owner of Indospirits.

By Divyesh Singh: The Income Tax Department is currently investigating the Benami properties angle in an alleged Delhi excise policy matter which is being investigated by the CBI and ED. The Benami Property Unit issued a show cause notice to liquor trader Sameer Mahendru and his wife, Geetika Mahendru, in connection with the case.

The Benami Property Prohibition Unit of the Income Tax Department also issued a show cause notice to Khao Gali Restaurant Private Limited, which had obtained an alcohol retail license under the New Delhi’s excise policy, which was later dropped.

WHAT THE DEPT ALLEGED

The IT department sent a notice to Sameer Mahendru and his wife, Geetika. The Benami unit found that Geetika Mahendru was promoting the company Indospirit Distribution. The companies promoted by Mahendru Indospirit Distribution and Indospirit Marketing Private:limited reportedly paid Rs 13 crores to Geetika Mahendru.

READ ALSO | ED seizes Rs 1 crore in cash from Delhi businessman’s house in excise policy case

Geetika Mahendru allegedly paid money to Geetech Dynamics Systems Private limited and then Geetech Dynamics Systems Private limited allegedly paid money to Khao Gali Restaurant Private limited.

Geetika Mahandru reportedly received Rs 6.01 crore from Indospirit on July 14, 2021 and Rs 1 crore on July 15.

Simultaneously, Geetika transferred him to Khao Gali restaurant on July 14 and 15 for 1.29 crore shares at a price of Rs 10.

Mahendru already has a wholesale distribution license, so they cannot apply for a retail license.

The Income Tax Department has now issued a show cause notice to Sameer and Geetika Mahendru in connection with an alleged excise policy case in Delhi.

Last month, The Directorate of Execution (ED) arrested Sameer Mahendrumanaging director of Indospirit Group, in connection with the agency’s money laundering investigation into an alleged alcohol scam in Delhi.

]]>