Showing posts from January, 2007

Bush Health Insurance Plan to Hike Taxes

How much of a tax break or hike would you see under the proposal?

Figure out the difference between the total cost of your healthcare plan and the federal cap on your health tax benefit ($7,500 for single coverage; $15,000 for family coverage). Then multiply that difference by the sum of your top tax rate plus 7.65 percent (which is the portion of payroll taxes you pay for Social Security and Medicare).

This will give you a ballpark idea of your tax savings or tax increase.

So if your plan costs $12,000, the difference between your expense and the $15,000 family deduction is $3,000. If you're in the 25 percent tax bracket, you'd multiply $3,000 by 32.65% (25% + 7.65%), which would give you tax savings of about $980.

Conversely, if you pay $3,000 more than the deduction cap for insurance, you'd pay an extra $980 in income tax and payroll tax.

Democrats push for more IRS Audits!

Democrats push for more IRS Audits!

January 17, 2007 -House Democrats are holding hearings on whether federal tax collectors are too quick to close audits of large companies, potentially leaving billions of dollars in taxes uncollected. Reps. Richard Neal, D-Mass., and Rahm Emanuel, D-Ill., said they were concerned about a recent story in the New York Times in which IRS employees said they were under pressure from superiors to quickly close audits with agreements to collect only a fraction of the taxes that are potentially owed.

IRS officials told the Times that the complaints by the IRS employees were misguided. Debbie Nolan, the I.R.S. official in charge of auditing large and medium-size businesses, denied that audits were being closed over the objections of agents who had evidence that significant additional taxes were owed, the newspaper reported.

IRS to Target Schedule C Filers

IRS to Target Schedule C Filers

In a recent telephone conference, IRS commissioner Mark Everson said that they will be conducting more audits on individuals running unincorporated businesses (i.e. self-employed individuals).

While Schedule C filers have long been audit targets for the IRS, they are now stepping up their audit efforts because they believe that self-employed individuals represent a large portion of those individual taxpayers underreporting their income.

If you are self-employed and file Schedule C, always keep detailed and organized records, don't deduct your personal (non-business) expenses on your Schedule C and make sure you report all of your income. You are already on the IRS radar; there's no need to make their job easier.