Tax Amnesty Program for Texas

Posted in Tax News

If you’ve ever failed to file a Texas tax report, underreported tax on a previously filed report, or operated a business without a tax permit, you may be able to get back into tax compliance without having to pay penalties and interest.

The Texas Comptroller’s office is offering a limited tax amnesty program called Fresh Start. Not every back tax is eligible (notably property tax and any federal tax) but all the state-level taxes like sales & use and franchise taxes, along with another 60 or so taxes the Comptroller’s office administers, are included in the program.

Participating in the program is fairly easy: figure out how much you owe in back taxes (you can even call and they’ll help you calculate), then file your delinquent tax reports or update your underreported returns. You’ll still need to pay the back taxes owed but any penalties and interest (which can add up) won’t be assessed so long as you complete your filing and paying by August 17, 2012.

There are some other restrictions, so be sure to check our the Fresh Start site at http://www.freshstart.texas.gov/

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Oops, I Missed the Income Tax Deadline

Posted in Tax Tips

The IRS has some advice for taxpayers who missed the tax filing deadline.

Don’t panic but file as soon as possible. If you owe money the quicker you file your return, the less penalties and interest you will have to pay. Even if you have to mail us your return, the sooner we receive it, the better.

E-file is still your best option. IRS e-file programs are available for most taxpayers through the extension deadline – October 15, 2012.

Free File is still available. Check out IRS Free File at irs.gov/freefile. Taxpayers whose income is $57,000 or less will qualify to file their return for free through IRS Free File. For people who make more than $57,000 and who are comfortable preparing their own tax return, the IRS offers Free File Fillable Forms. There is no software assistance with Free File Fillable Forms, but it does the basic math calculations for you.

Pay as much as you are able. Taxpayers who owe tax should pay as much as they can when they file their tax return, even if it isn’t the total amount due, and then apply for an installment agreement to pay the remaining balance.

Installment Agreements are available. Request a payment agreement with the IRS. File Form 9465, Installment Agreement Request or apply online using the IRS Online Payment Agreement Application available at irs.gov.

Penalties and interest may be due. Taxpayers who missed the filing deadline may be charged a penalty for filing after the due date. Filing as soon as possible will keep this penalty to a minimum. And, taxpayers who did not pay their entire tax bill by the due date may be charged a late payment penalty. The best way to keep this penalty to a minimum is to pay as much as possible, as soon as possible.

Although it cannot waive interest charges, the IRS will consider reductions in these penalties if you can establish a reasonable cause for the late filing and payment. Information about penalties and interest can be found at Avoiding Penalties and the Tax Gap.

Refunds may be waiting. Taxpayers should file as soon as possible to get their refunds. Even if your income is below the normal filing requirement, you may be entitled to a refund of taxes that were withheld from your wages, quarterly estimated payments or other special credits. You will not be charged any penalties or interest for filing after the due date, but if your return is not filed within three years you could forfeit your right to the refund.

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Work at Home? You May Qualify for the Home Office Deduction

Posted in Tax Tips

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The IRS has the following six requirements to help you determine if you qualify for the home office deduction.

  1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:
    • as your principal place of business, or
    • as a place to meet or deal with patients, clients or customers in the normal course of your business, or
    • in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
  2. For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively.
  3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.
  4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
  5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on Form 1040 Schedule C, Profit or Loss From Business.
  6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.

For more information see IRS Publication 587.

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