This is the time of year when the issue of a tax audit is most on the minds of the average California residents, because many are in the process of preparing their yearly income tax return. Tax audits are a generally intimidating proposition and most people do everything they can to avoid an audit. However, without insight into how the IRS works and what types of things can trigger an audit, this can be hard to do.
This time of year, tax audits are on everyone’s minds as we rush to compile financial paperwork and sit down for the task of completing our annual income tax returns. The ominous threat of the tax audit lurks in the background, waiting to jump out like a boogeyman if we make a mistake or miscalculate our tax liability. One of the reasons why so many people are nervous about a tax audit is because we have some ideas in our minds that might not be totally true, urban tax audit legends, if you will.
Data from the 2012 fiscal year shows that there may be some relationship between the reduced budget for the Internal Revenue Service and the percentage of tax returns that are audited each year. Between the 2010 and 2012 fiscal years, the IRS suffered from a three percent reduction in its budget. This in turn lead to workforce reductions, sending 8,000 full-time employees packing. Out of those 8,000, about 5,000 were auditors. Given those numbers, it is not a big surprise that the IRS collected 13 percent less revenue through audits in 2012.
If you own a business in California, you know how much work it can be. You are in charge of everything from maintaining the premises, to payroll, to filing the taxes. While every detail that goes into running a business is important, making sure you are compliant when it comes to your taxes is especially crucial. If you are not, the state or the IRS will come after you.
Last week we talked about a few common income adjustments that California taxpayers can use. For example, unemployment compensation and some disability benefits are not taxable in the state, which can lead to an adjustment of your taxable income and help you keep more of your money.
California income tax is a large part of your tax bill, as you have doubtless noticed if you have started your return. California income tax is calculated similarly to federal income tax, but with a few extra rules.
It is that time of year again when Alameda residents and others around the country begin to think about preparing and filing income tax returns. With tax laws constantly in flux these days it can be a good idea for many who do not normally enlist the services of a professional tax preparer to consider doing so this year. As previously reported, the fiscal cliff has resulted in a number of changes to tax law that could affect many.
As Alameda County residents celebrated the end of one year and the beginning of a new one, members of Congress were busy reaching an agreement that prevented the country from going over the so-called fiscal cliff. While most people were just happy to learn that a deal had been reached on New Year's Day, the question soon became: What does the deal mean to me?
If you've ever tried to get someone to do something they don't want to do, you may agree with the concept that people do things for their own reasons, and not for yours. We may never truly know the reasons that led a Facebook executive to renounce his U.S. citizenship and leave our sunny California skies. However, we do know the result of that decision.
Many in Alameda are breathing a sigh of relief now that tax day is behind us. For some, the refunds will be processed shortly. For others, their tax payments are about to clear. For yet others, they may get a notice to provide additional information.