Flexible-benefits Plan (FBP) is an employee benefits plan which helps the employees’ to save considerable amount of taxes by paying certain expenses from their pre-tax income. Some of the eligible expenses from pre-tax income are medical, vision, dental, elder care, and dependent care. All state employees who get a regular paycheck are entitled to participate in the flexible-benefits plan.

Flexible-benefits Plan mainly boasts three components:

- Health Flexible Spending Account (HFSA)

- Dependent Care Reimbursement Account (DCRA)

- Health insurance premium deduction

Flexible-benefits Plan’s reimbursements are made occasionally, mostly once in a week. You will receive statements which helps you to keep updated on your account. Quick information about your account can be accessed with the help of customer service line or email.

Due to the program’s tax exempt features, the federal government strictly regulates the Flexible-benefits Plan. FBPs are regulated by sections 125 and 129 of the Internal Revenue Code (IRS). Hence it is advisable to review the IRS rules before you enroll. If you wish to enroll in the FBP, then it is better from your part to discuss how the program may benefit you with your financial planner or tax advisor.

How does a Flexible-benefits Plan work?

On enrolling in a flexible-benefits plan you first have to decide how much amount you need to earmark for your Dependent Care Reimbursement Account and/or Health Flexible Spending Account. After you have fixed a particular amount for your account, your employer will deduct the amount every month from your salary for the flexible-benefits plan. The deducted amount will be immediately credited to your accounts you have already specified.

A certified public accountant (CPA) is a professional individual who works on their own or is a part of an accounting firm. A certified public accountant (CPA) is generally in charge of monitoring and keeping track of the financial records of an individual or business. Each year millions of Americans wonder if they should hire an certified public accountant (CPA). Why hire a CPA is a question that many individuals ask themselves.

There are many individuals and business owners who are not organized. Being unorganized can make it virtually impossible for an individual or business owner to accurately keep track of all of their finances. This is why many individuals make the decision to hire a certified public accountant (CPA). Another reason why many individuals or business owners may hire a certified public accountant (CPA) is because they do not have enough time to keep track of financial records on their own. Another reason is because the majority of certified public accountants (CPAs) are trained and experienced professionals.

To become a certified public accountant (CPA) individuals need to meet certain requirements that are imposed by the American Institute of Certified Public Accountants (AICPA). These qualifications typically include around one hundred and fifty college hours that are applied towards an accounting program. A certified public accountant (CPA) also is required to pass a CPA exam that is developed by the American Institute of Certified Public Accountants (AICPA). There are some states that require an individual be certified or have a particular amount of work experience before operating an accounting business; however, not all states have these requirements. With all of the training and experience that a certified public account must have it is evident that they are more experienced in the flied of accounting. Although it is not guaranteed a certified public accountant (CPA) is likely to produce better results than a traditional accountant.

There are a few things that you can do throughout the year that may help you get through tax time with less stress. First, organize your documents and keep them organized throughout the year. Search the internet for free websites that give you organization suggestions. Some of them even have templates to help you put your tax records in order. Consider a good software program like Microsoft Money which has a 90-day free trial.

If you itemize your deductions, and you certainly should itemize if you are self-employed, keep all your receipts in an expandable folder that can be organized by month, alphabetically, or any way that you want to organize it. If you are ever audited, you will lose the deductions you claimed that cannot be verified by a receipt. If you make cash donations, IRS has a formula that calculates how much you can deduct, but, as with any other deduction, you must have a receipt in order to claim the deduction. Be sure your receipts have the name, date, address, amount, purpose, type, value, and any other information pertinent to the validity of the deduction.

Unless you are really knowledgeable in accounting and tax law, a good CPA is well worth the money. The tax laws are constantly changing, and the average person cannot keep up with the changes let alone understand them. Remember that you should always make the best use of your resources, and that includes using your talents for those things that you do well and outsourcing those things that someone else can do better.

There is no absolutely certain way to avoid an audit, but people say that certain things increase the likelihood of an audit. For example, make sure there are no math errors in your tax return. If there are inaccurate calculations, the IRS will have to take a second, more careful look at your return. Once IRS is looking more closely at your return, there may be red flags that could lead to an audit. It is best to do the math correctly so that IRS never has to take a closer look at your return.

There are blogs and websites for almost any topic, and doing a little research will help you be better educated and less stressed. Don’t forget that your local library has many book about income taxes and tax returns. You may also want to look into Turbo-Tax, Microsoft TaxSaver, or one of the other good tax software. Even if you hire a CPA, you will save yourself time and money by being well-prepared and by understanding the process.

IRS also has telephone help lines that can be really helpful. The IRS website at www.irs.gov is also very helpful and easy to use. It is alright to contact IRS and ask questions. You are not any more or less likely to be audited if you contact IRS and ask your questions. As previously stated, you are more likely to be audited if you make errors on your tax return. These are just a few basic suggestions that can help make tax-time less stressful for you.

A sales tax is a tax that is placed on the purchases of goods or services. The federal government does not have a national sales tax. Qualifying products or services are only taxable by a particular state government.

Each state has the ability to impose their own sales tax rate. At the current time Oregon, New Hampshire, Montana, Hawaii, and Delaware are the only states that do not impose a state sales tax. It is possible for different counties inside these states to impose their own local sales tax. The local sales tax generally depends on the preferences of local lawmakers and taxpayers. States that do impose a state sales tax also allow individual counties to impose an additional local sales tax. The combination of a local sales tax and a state sales tax is the total sales tax shoppers pay when purchasing taxable items.

In addition to imposing their own state sales tax, each state has the option of allowing tax exclusions on certain items. Each state will vary; however, it is not uncommon for certain foods and medications to be excluded from a state sales tax. There are also many states that regularly offer sales tax breaks for a period of time. New York, for instance, generally has a period of one week that clothing is excluded from the state sales tax. This week typically occurs before children go back to school; therefore, it gives many parents and other taxpayers a great deal when purchasing back-to-school or work clothing. While a state government may impose a state tax break each local county has the option of doing so too. A break from both local and state taxes does occur; however, it is completely optional and up to the lawmakers of a particular county.

There are certain circumstances when an individual who may be required by their state to pay a sales tax gets around doing so. These situations most commonly occur when an individual travels to an area that does not have a state sales tax or when items are purchased over the Internet. The majority of online business retailers will impose state tax when an item is purchased over the Internet; however, items purchased from a small online business or an online auction site are generally not taxed. These types of purchases must be reported on an income state tax return. Each state is likely to use a different method for determining how much sales tax an individual must pay on items or services purchased without being taxed. It is also possible for an additional local tax to be imposed on those items that were purchased outside of the state or county that an individual resides in.

If an individual reports the amount of sales tax they need to pay with their state incomes taxes, the information will be computed together. This allows many individuals to automatically apply their estimated state tax return to the amount of money they owe on any local or state sales taxes. As with traditional taxes owed, the amount of money owed on sales tax must be paid for by the April 15th tax deadline. Individuals can file for a deadline extension; however, the estimated amount of money owed must still be paid on time. Individuals who are unable to pay the amount owed on sales tax are subject to late fees and additional penalties.

Individuals who do not report items they purchased without paying state or local sales tax put themselves at risk for fines and penalties. To prevent yourself from being fined by your state, taxpayers are encouraged to keep documentations of all of their online and out-of-state purchases even if a sales tax was paid. Keeping yourself organized and prepared is the best way to prevent yourself from being audited or penalized by your state government

Tax preparation is an arduous task, which many people prefer to neglect until the last minute. It is an overwhelming task to wade through the paper work, calculate taxes, make provisions and file for the returns. However, it is mandatory so it has to be done.

Tax preparation involves various steps: choosing the tax form, preparing the return, and sending the return. For this, you need to know certain things, like: what forms do you require? How are the calculations done? Are there any penalties? How do you get the best refund? What are the various deductions that I am eligible for? How do I confirm whether IRS has received by my return? How do I know my filing status? What do I do if I moved during the past year?

Tax preparation has now become relatively easy with the Internal Revenue Service’s easy-to-understand books and web pages. There is a lot of useful information on the IRS’s website that can be used for tax preparation.

The information required for tax preparation is: wage statements (Form W-2), pension, or retirement income (1099-Rs), Social Security card(s), driver's license(s), dependents' Social Security numbers and dates of birth, last year's tax return, information on education expenses, commissions received and/or paid, sales of stocks and/or bonds, self-employed business income and expenses, lottery and/or gambling winnings and losses, state refund amount, Social Security and/or unemployment income, income and expenses from rentals, alimony paid or received, record of purchase or sale of real estate, medical and dental expenses, real estate and personal property taxes, estimated taxes or foreign taxes paid, cash and non-cash charitable donations, mortgage or home equity loan interest paid (1098), unreimbursed employment-related expenses, job-related educational expenses and childcare expenses and provider information.

There are also tax consultants and other professional tax preparers willing to help for a small fee. Using their services would help you to avoid any irregularities or blunders in filing. Tax preparation through these consultants can also be done online by using certain software tools. All the information has to be entered, and the form can be sent via e-mail to the IRS or it can be printed out and sent via post. There are special tax preparation software packages available that make it a very easy task. These can be downloaded from the internet. They can also be bought from stores. Some of the most popular tax preparation programs are: TurboTax, Quicken TurboTax and Kipplinger TaxCut.

It is that time of the year again, when we scram for last minute completing and filing tax return. You will be happy to know that Internal Revenue Service (IRS) allows you to deduct the interest and discount points.

Interest

Interest on mortgage can be deducted on your tax return. To claim interest on mortgage, you must meet the following requirements. First, your home must be your first or second home. Second, the purchase price must not exceed $1,000,000, and the home loans equity must not exceed $100,000. Third, there have a deed of trust that is recorded among land records against your house.

Discount Points

Many homeowner elects for discount points to lower mortgage payment. It works by paying a certain amount at closing to lower mortgage payment. Each point equals one percent. For example, Jim wants to bring down the interest rate from 7.5 % to 5.5 %. Jim elects for 2 discount points.

There are three situations to claim discount points. First, first time homebuyers may claim the full amount of discount points on the year paid. Second, the homeowners may claim the full amount of discount points, when the homeowners refinance towards the improvement of the home. Third, the homeowners claim the discount points over the life of the mortgage without the home improvement. If there is unused discount points towards refinance, the homeowners may claim the unused discount points on the year of refinance.

Internal Revenue Services (IRS) change rules and taxes regulations every year. You may want to verify with your tax advisor, mortgage advisor, and IRS for latest updates.

With the booming property prices of recent years, more and more people are finding themselves facing a large tax bill when they come to sell their investment properties. However, did you realize that there is a perfectly legal way of deferring payment of such taxes by utilizing the advantageous 1031 tax code that was introduced by the IRS in the early 1990s?

A 1031 exchange is a way of deferring payment of capital gains tax on certain types of real estate. Normally when an investment or business property is sold, capital gains tax has to be paid. However, with 1031 exchanges, by replacing the old property with a like kind property, within set time limits, payment of capital gains tax can be avoided.

Under the 1031 exchange real estate rules, a seller must have held a property for at least one year and a day for it to qualify. Another requirement is that both old (relinquished) and new (replacement) 1031 exchange properties must be of a likekind - either rental properties, vacant land, trade, business or investment properties.

1031 exchanges must be completed within strict time limits. There is a 45 day Identification Period from the transfer of the old property, in which a replacement property must be identified. The 1031 exchange rules stipulate that the exchange must be completed within the 180 day Exchange Period.

The 1031 exchange real estate issues are complex, so it is imperative to seek professional advice from a tax advisor or qualified intermediary who can assess your specific circumstances and explain other issues such as the reverse 1031 exchange or TiC rules. With careful financial planning, you can reinvest your capital gains in future real estate investments, thereby allowing you to leverage your money more efficiently and to reap greater financial benefits.

When an individual files their tax returns each year they are able to claim a number of tax deductions. Many times a tax deduction can reduce the amount of money that is owed to the Internal Revenue Service (IRS) or it can create a larger tax refund. The most commonly used tax deduction is the standard tax deduction; however, there are number of other tax deductions that many individuals fail to claim or even consider. Frequently overlooked tax deductions can prevent a taxpayer from getting additional money that they deserve.

Claiming a number of tax deductions often requires receipts or other documentation. For this reason there are many individuals who may be unable to claim some of these frequently overlooked tax deductions on this years tax return. To prevent yourself from losing even more money next year taxpayers are encouraged to spend the whole year preparing for tax season and tax deductions.

If you are writing a college tuition check, there may be a hidden tax break that will allow you to deduct a part of your college tuition payment. In order to do this, you must utilize a 'Section 529' College Savings Plan in one of the 26 states that provide a tax deduction or credit when you deposit the money.

People currently using Section 529 plans are well aware of these popular tax breaks. However, there are still plenty of others that currently pay state tuition but don't participate in the Section 529 plan. By first depositing the funds into a Section 529 plan and then withdrawing for the state tuition payment, you may qualify for deducting your state tuition. The deduction is allowed (in most cases) without regard to your income status.

A 'Section 529' College Savings Plan is best known for its Federal Benefits. The earnings on the plan are tax free if you use them for higher education expenses. The current Federal law is set to expire in 2010 unless an extension is passed. Most states conform to the Federal law in allowing tax free earnings on the Section 529 plan. However, they also award a state tax break for residents' contributions to the state's own 529 plan. Kansas and Maine, starting next year, will give deductions for deposits into any state's plan.

Since the state deduction to the plan is immediate, you can deposit the funds into the '529' account then withdraw from the account within a short period. The worth of the deductions depends on your state's tax rate and whether your annual tax break is limited for making a 529 deposit.

Buy a home, car, helicopter, NFL team or whatever for one measly dollar. Ah, we must be talking about IRS property auction hype.

The Basics of IRS Property Auctions

You may have seen commercials or advertisements on the web about the steals you can get at IRS property auctions. Whether you can actually get such deals is questionable, but there is no doubt the IRS does hold auctions. The purpose of the auctions is to sell off property of a taxpayer that owes the IRS money. Here are the basics of the auction process.

Perhaps the most interesting thing about IRS auctions is there is no set procedure. With some auctions, you must appear in person to bid. With others, you can mail in a bid. Still others require you to submit a sealed bid. So, how do you know which is which? You need to get a copy of the official notice of the auction. It lays out all the specifics and is binding on the property sale.

The second basic thing to know about IRS property auctions is the payment method. Ironically, the IRS is really into cash. If you intend to bid on a piece of property, you must be prepared to pay in cash, with a cashier’s check or certified bank check. You cannot finance the transaction, pay by personal check or even use a credit card. Again, make sure to review the official notice of auction for payment requirements.

This cash or equivalent attitude stymies many bidders. How can you get a cashier’s check before the auction if you do not know what the winning bid will be? To resolve this, many people will get a check for their minimum bid and then bring cash on top of it to make up the difference between the check and winning bid. Not the smoothest approach, but the IRS accepts this approach.