Finance Tax Time

1. Gain new professional and marketable skills while working at your own pace. - Every year there is a noticeable shortage of qualified Tax professionals. All 4 of the major Tax service Franchises (H & R Block, Jackson Hewlett, Liberty Tax, and Instant Tax) set up tax classes to increase the possibility of having enough tax professionals to work in their Franchises. Unfortunately, having taught these basic tax classes, the student drop out rate is high. It is serious pressure to work a full time job, learn tax law/codes, go to school two nights a week, do your homework, and prepare for Thanksgiving in the middle of the Tax Class Schedule. Online Tax School could be a life saver, especially if you have children. (Instant Tax does offer training starting any time of the year)

2. You can be enrolled, trained and certified to do Taxes in the state of California or any of the 50 States by the time the big boys offer their $200 Tax Class in September, October or crash course in November.

3. Train to the state of California’s standards. Not all states have a mandatory requirement to obtain a Tax License, however, once you qualify under California’s standards you will be qualified for an entry level position with IRS or to work for one of the major Temporary Accounting Agencies, such as AccountTemp or Accountants, Inc or Robert Half, International or a CPA or a Major Bookkeeping Company or to work for your self. Being able to take your time and learn at your own pace is extremely important when it can mean the difference of $7.50 per hour and $18 to $25.00 per hour

4. When you enroll in an Online Tax class, you don’t have to deal with class room dynamics, you just do your course work, take your test on line, email your teacher if you have a question and receive your certificate and follow through with your State’s requirements for Tax Professionals and of course register with IRS. No Problem, No fuss. All the information is provided in the class.

5. Taxes Will Travel a mobile Tax Service in the San Francisco Bay Area actually provides job placements for graduates from its Online Tax School and is one of the only mobile tax service Franchise available in the country. The TWT curriculum is provided by Educational wholesalers located on the East Coast. The Wholesaler for the learning material actually holds the licenses for the different state qualifications. The uniqueness of these programs comes with the policy and procedure of the different online schools.

6. Completion of Tax School will enable you to start your own tax business in your home or office. This will enable you to charge up to $50.00 per hour and in some cases much more if you go on to become an Enrolled Agent.

7. Online Tax Schools that can qualify you for California’s standards range from $199 to over $1500. Its very interesting because, remember the Educational Wholesale Provider I spoke of? They usually provide the training for over 50% of the Online Tax Training.

8. Tax School won’t make you rich, but it will give you options, a foundation for a new career and around $7,500 to $15,000 more income per year working part-time. The Big Boys, as I call them often pay their employees Bonus based upon the revenue after the Tax Season ends, plus they get a base hourly wage.

9. Enrolling and completing tax school will put you in the line up for what I call the “Half-Year Tax Professionals” They do taxes 5 or 6 months out of the year and spend the other half of the year traveling. How do I know? I meet them at the IRS Tax Professional Forum which is usually held in large cities such as Las Vegas! They adjust their travel schedules to accommodate and attend the IRS conventions; after all, you have to act like you work all year! This select group of people is the envy of all of the new tax professionals. However, you should know these Tax Professionals work hard and smart. They rarely loose a client, they send birthday cards to clients and gift certificates for special occasions and quarterly tax newsletters. They spend years building their client base while charging $150 to $200 (sometimes more) per tax return. They tend to stay out of their client’s personal lives and they live modestly while traveling to different parts of the world each year. (I personally give my client’s a gift when I deliver their taxes. My clients are spoiled, they don’t know what it is to sit in a tax office and wait. For them Taxes Will Travel is the way to go!)

10. There is a new, service that has consumers in the tax industry buzzing. It’s the “get your refund the last week of December or the first week of January” If your last pay period for the year is December 15 through the 28th and you had your taxes completed at one of the tax stores that provides this service you can get your refund, using your paycheck stub, before Christmas or New Year’s. At the time this article was published more information was still becoming available on this new service. This will surely generate more excitement in the Tax Industry. Tax stores more then likely will charge a little more for this unique service, and a little more times 5 to 10 million people is a LOT more, so this might be the time to enroll in your nearest online tax school.

Cassandra teaches basic tax classes in the San Francisco Bay Area. The balance of the year she can be found working in her small tax service providing tax resolution and accounts receivable lines of credit for small businesses.

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A point on a mortgage loan is one percentage point of the loan. For example, two points on a $200,000 mortgage loan would be $4,000 ($200,000 x 2%). Points represent prepaid interest.

A taxpayer who uses the cash method of accounting may deduct points paid on a loan to buy or improve a principal residence as long as the points are a normal business practice in the area, are reasonable in amount, and the loan is secured by the residence (Sections 163(h)(3)(B) and 461(g)(2)). Interest, including points, on a loan to acquire or improve the taxpayer’s residence is limited to the interest on the first $1,000,000 of the mortgage loan.

The limit on deductibility of interest on a loan to acquire a residence applies to the taxpayer’s principal residence and one other residence (Section 163(h)(4)(A). However, a taxpayer may deduct points paid in the year paid only in connection with a mortgage loan on the taxpayer’s primary residence (Section 461(g)(2)). If a taxpayer pays points on a mortgage loan to purchase a second home, the taxpayer must amortize the points over the life of the loan.

A taxpayer claims the deduction on Schedule A of Form 1040. A buyer may deduct the points even if the seller pays them (Rev. Proc. 94-27, 1994-1 CB 613). A taxpayer who uses the accrual basis of accounting must amortize the points over the life of the loan.

If a taxpayer pays points on a home equity loan, the taxpayer may not deduct the points immediately unless the taxpayer uses the proceeds of the home equity loan to improve the property. If the taxpayer does not use the proceeds of a home equity loan to improve the property, the taxpayer must amortize the points over the life of the loan (Sections 163(h)(3)(C) and 461(g)(1)).

The deduction of interest, including points, on a home equity loan is limited to the interest on a home equity loan up to $100,000 unless the taxpayer uses the home equity loan for business purposes. If the taxpayer pays the loan off early, the taxpayer may deduct the unamortized points in the year paid (Temp. Regs. Sec. 1.163-10T(j)(3)).

The same rule that applies to a home equity loan also generally applies to a refinancing of a taxpayer’s mortgage loan. The taxpayer may not deduct the points immediately. The taxpayer must amortize the points over the life of the loan. If the taxpayer pays the loan off early, the taxpayer may deduct the unamortized points in the year paid.

However, for taxpayers who live under the jurisdiction of the U. S. Court of Appeals for the Eighth Circuit, if the taxpayer pays points on a mortgage loan and uses the proceeds to pay off a short-term bridge loan, the taxpayer may deduct the points in the year paid (Huntsman v. Commissioner, 90-2 USTC Para. 50,340, CA-8, 1990, rev’g 91 TC 917). The U. S. Court of Appeals for the Eighth Circuit has jurisdiction over taxpayers in the states of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

If a taxpayer pays points on a mortgage loan to acquire undeveloped land, a commercial building, or rental real estate, the taxpayer must amortize the points over the life of the loan. If the taxpayer pays the loan off early, including a sale of the property, the taxpayer may deduct the unamortized points in the year paid.

Taxpayers should remember to deduct points paid in connection with a mortgage loan to purchase or improve their principal residence, whether the purchaser or seller pays the points. For points paid in connection with a refinancing of a mortgage, to obtain a home equity loan, or to obtain a mortgage loan on rental or commercial property, taxpayers should remember to deduct the points over the life of the loan and deduct the unamortized points in the year the taxpayer pays the loan.

Alan D. Campbell is a CPA in Arkansas and Florida and is self-employed primarily as an author of tax publications. He earned a Ph.D. in accounting with an emphasis in taxation from the University of North Texas. He is also admitted to practice before the United States Tax Court. He has published numerous articles on tax topics in professional journals. He is the co-author of the book Tax Strategies for the Self-Employed and the revision editor of CCH Financial and Estate Planning Guide, 15th edition. For more tax savings strategies, please see his blog: http://taxsavingsstrategies.blogspot.com

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Don’t let your accountant organize your receipts for taxes.
You and only you are responsible to the IRS if your receipts
are not categorized correctly. Take your time, lay out your
reciepts, and place them in the category you think they
belong in. Attach each category to a sheet, list the
category at the top of the sheet, list each item on each
sheet and why it is deductible.

1. Make two categories–Business and Home

You should have two sheets, one with Business written the
top and one with Home written at the top. Place your
business file in front of your home file and your personal
file in front of your personal file. List all of the
categories you can think of and you see on the list of a
typical schedule

2. Sub Caterorize your Business and Home Titles

Place several sheets on top of the Business sheet and
several on top of the personal sheet. Write down each
category that applies to Business and each that applies to
Home on each sheet. Take each sheet from your Business
category and one from your Home category and place
sub-category on them.

3. Your Groups of Receipts

Remove your receipts from your accordian file you have
stored all year. Attach the receipts that belong to each
Business sheet sub-category, you should have several sheets
with Business at the top and the sub-category. Do the same
with your Personal deductions.

5. Research Your Deductions

Research and read up at the IRS website to find out any and
all possibilities you have for tax deductions. Copy and
paste that sheet to sub-category. You can also find
potential tax deducations on the actual tax forms provided
to you by the IRS, find those on the IRS website at irs.gov.

6. You and your accountant

Make sure your accountant understands what you have done and you understand what he or she has done. Discuss your tax
deductions with your accountant. You are ultimatley
responsible for everything that goes on your tax forms.

7. The Importance of Honest Tax Preparation

It still amazes me how many business professionals do not
understand the importance of honesty in tax preparation. It
is very easy to get caught submitting dishonest tax
information, and you may not be caught for years to come.

www.msfinancialsavvy.com

Lois Center-Shabazz is the author of, Let’s Get Financial
Savvy! and the editor of the personal finance website,
http://www.MsfinancialSavvy.com, Get a free ecourse at,
http://www.msfinancialsavvy.com/register/ecourse7.php.

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