MY working list --Tax Credits (Feb-7-2011, 71 days left)

• Foreign tax credit, except any credit that applies to wages not subject to U.S. income tax withholding because they are subject to income tax withholding by a foreign country.
• Child and Dependent Care Credit
• Credit for the elderly or the disabled
• Child Tax Credit & Additional Child Tax Credit

• Education credits

• Earned income credit, unless you requested advance payment of the credit

• Retirement savings contributions credit

• Mortgage interest credit

• Adoption credit

• Credit for prior year minimum tax (both refundable and nonrefundable) if you paid alternative minimum tax in an earlier year.

• General business credit.

• Alternative motor vehicle credit (including the plug-in conversion credit)

• Alternative fuel vehicle refueling property credit

• Plug-in electric motor vehicle credit

• Credit to holders of tax credit bonds

• Health coverage tax credit

• Residential energy credits

• Making work pay credits

• Carryforward from prior years of a qualified electric vehicle passive activity credit

• Credit for tax on undistributed capital gain

• First-time homebuyer credit

• Credit for excess social security tax or railroad retirement tax withheld

PSQ

Source: http://www.irs.gov

MY working list -- Standard Deduction & Itemized Deductions(Feb-6-2011, 72 days left)

• Standard Deductions
• Medical and dental expenses that are more than 7.5% of your 2010 AGI
• Taxes, like State and local income or property taxes
• Interest Expense

Deductible home mortgage interest

Investment interest up to net investment income

• Contributions

Charitable contributions

• Nonbusiness Casualty and theft losses that are more than 100 and 10% of your AGI
• Car Expenses and Other Employee Business Expenses
• Tax Benefits for Work-related education
• Fully deductible miscellaneous itemized deductions, including:

a. impairment-related work expenses of persons with disabilities,

b. Federal estate tax on income in respect of a decedent,

c. Repayment of more than 3,000 of income held under a claim of right that you included in income in an earlier year because at the time you thought you had an unrestricted right to it

d. Unrecovered investments in an annuity contract under which payments have ceased because of the annuitant's death

e. Gambling losses up to the amount of gambling winnings

f. Casualty and theft losses from income-producing property

• Other miscellaneous itemized deductions that are more than 2% of your AGI, including:

a. unreimbursed employee business expense, such as education expenses, work clothes and uniforms, union dues and fees, and the cost of work-related small tools and supplies

b. Safe deposit box rental

c. tax counsel and assistance

d. Certain fees paid to an IRA trustee or custodian

PSQ

Source: http://www.irs.gov

MY working list -- Gross Income & Adjustment (Feb-5-2011, 73 days left)

I am struggling for the best way to present tax rules as clear as possible about one week. Finally, I divide the tax issues into 3 categories: Gross income & Adjustments, itemized deductions, tax credits. OK, I am going to list out detailed items for each categories and try to go through each of them in the future.

Salaries and wages

Employee Compensation

Miscellaneous Compensation

Advance commissions and other earnings

Allowances and reimbursements

Back pay awards

Bonuses and awards

Differential wage payments

Government cost-of-living allowances

Nonqualified deferred compensation plans

Note received for services

Severance pay

Sick pay

Social security and Medicare taxes paid by employer

Stock appreciation rights

Fringe Benefits

General

Accident or Health Plan

Long-term care coverage

Health Savings Accounts (HSAs)

Medical Savings Accounts (MSAs)

Archer MSAs

Medicare Advantage MSAs

Flexible Spending Arrangements (FSAs)

Health Reimbursement Arrangements (HRAs)

Adoption Assistance

Athletic Facilities

De Minimis (Minimal) Benefits

Employee Discount

Financial Counseling Fees

Educational Assistance

Group-Term Life Insurance

Retirement Planning Services

Meals and Lodging

Moving Expense Reimbursement

No-Additional-Cost Services

Transportation

Retirement Plan Contributions

Stock Options

Restricted Property

Special Rules for Certain Employees

Clergy

Member of Religious Orders

Foreign Employer

Military

Volunteers

Sickness and Injury Benefits

Disability Pensions

Long-Term Care Insurance Contracts

Workers' Compensation

Other Sickness and Injury Benefits

Foreign Income

Tips

General

Allocated Tips

Interest Income

General

Taxable Interest

U.S. Savings Bonds

Education Savings Bond Program

U.S. Treasury Bills, Notes and Bonds

Bonds sold between interest dates

State or local government Obligations

Original Issue Discount (OID)

Dividends and other Distributions

General

Ordinary Dividends

Capital gain distributions

Nondividend distributions

Other distributions you may receive from a corporation or a mutual fund

Rental Income and Expenses

General

Rent Income

Rent Expense

Renting part of Property

Property Changed to Rental Use

Not Rented for Profit

Personal Use of dwelling unit (including vacation home)

Depreciation

Limits on rental losses

Retirement Plans, Pensions and annuities

General

Taxation of Periodic Payments

Taxation of Nonperiodic Payment

Rollovers

Special Additional Taxes

Tax on Early Distributions

Tax on Excess Accumulation

Other Income

Bartering

Canceled debts

Sales parties at which you are the host or hostess

Life insurance proceeds

Partnership income

S Corporation income

Recoveries (including state income tax refunds)

Rents from personal property

Repayments

Royalties

Unemployment benefits

Welfare and other public assistance benefits

PSQ

Source: http://www.irs.gov

[Individual]Do you have to pay Estimated Tax? (Feb-4-2011, 74 days left)

The person who meet both conditions must pay estimated tax:
First, you expect to owe at least 1000 tax liability after subtracting your withholding and refundable credits.
Second, you expect your withholding and refundable credits to be less than the smaller of 90% of tax on your current year file or 100% of the tax on your last year file.


You can use Estimated Tax Worksheet to figure out your estimated tax. Also don't forget the due date for each period(Apr-15, Jun-15, September-15, January-15). You may be charged penalty on your late filing.

PSQ

Source: http://www.irs.gov

[Individual]What's Backup Withholding (Feb-3-2011, 75 days left)

Certain incomes paid by banks or other businesses are not subject to withholding. However, "backup" withholdng is required in certain situations:

Payment may subject to backup withholding
• Investment payment (Form 1099-INT)
• Dividends (Form 1099-DIV)
• Patronage dividends, if at least half the payment is cash (Form 1099-PATR)
• Rents, profits, or other gains (Form 1099-MISC)
• Commissions, fees, or other payments for independent contractor work (Form 1099-MISC)
• Payments by brokers (Form 1099-B)
• Payments by fishing boat operator (Form 1099-MISC)
• Royalty payment (Form 1099-MSIC)
• Gambling winnings (Form W-2G)

Payment not subject to backup withholding
Payments reported on Form 1099-MISC unless one of the following situations applies:
• Amount you received is more than 600.
• Payer give you a Form 1099 last year
• Payer pay you last year and that payment is subject to backup withholding.

Usually, bank or businesses will give you Form W-9 to get your TIN. If they don't get correct TIN, or don't get TIN in time, they must withhold at a flat rate 28%.

PSQ

Source: http://www.irs.gov

[Individual]Who can claim exemption from withholding (Feb-2-2011, 76 days left)

In general, you can use the following figure to get the answer. But this figure doesn't apply to the following peoples:

Age is 65 or older Blind	Use worksheet in Pub 505 Page 12
Will itemize deductions Will claim an exemption for a dependent Will claim any tax credits	Use the Estimated Tax Worksheet in Form 1040-ES to figure your expected tax liability. Only if your total expected tax liability is zero, you can claim exemption

How to claim exemption?

Enter "Exempt" on line 7 Form W-4.

PSQ

Source: http://www.irs.gov

[Individual] Figure out your withholding allowances in Form W-4 --2(2-1-2011, 77 days left)

Form W-4 provides a set of worksheets to help you figure out your withholding allowances. But remember for nonresident alien, you usually can claim only one withholding allowance, except you are a resident of Canada or Mexico, or you are a U.S. national.

Change your allowances:

Once you feel you withhold too much or too little tax, you can change your withholding allowances by giving your employer a new Form W-4.

Please be aware of the following changes happen in your life, they may cause changes in your allowances:

Factor	Examples
Lifestyle change	Marriage, Divorce, Birth or adoption of child, loss of an exemption, Purchase of a new home, Retirement, Filing chapter 11 bankruptcy
Wage income	You or your spouse start to stop working, or start or stop a second job
Change in the amount of taxable income not subject to withholding	Interest income, dividends, capital gains, self-employment income, IRA distributions
Change in the amount of adjustments to income	IRA deduction, student loan interest deduction, Ailmony expense
Change in the amount of itemized deductions or tax credits	Medical expenses, Taxes, Interest expense, Gifts to charity, Job expenses, Dependent care expenses, Education credit, Child tax credit, Earned income credit

Source: Publication 505 Page 4

If your employer agrees to use Cumulative wage method, it means you may be able to compensate for this for the rest of the year. You must ask your employer in writing to use this method. To be eligible, you must use the same payroll period since the beginning of the year.

PSQ

Source: http://www.irs.gov