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If you are just starting out in the stock market, you may be wondering how you will be affected by taxes. Will you owe money on your gains and how much? What if you lose? And what if you lose on some stocks and have gains on others?

Lets use an example and say that you bought and sold your first stock and made a gain. That’s great but you now you will owe taxes! You will have to send the IRS the tax at the end of the quarter and you will have to learn how to do that. It is not like your paycheck where the taxes are automatically deducted. If you invest in stocks, you are going to have to keep track of everything and send the IRS their cut every quarter you have a gain.

When tax time comes you are going to have to fill out Schedule D and report your gain. If you are going to be investing in the stock market you are going to have to keep track of every transaction whether it is a gain or a loss. Again, the government is not going to do it for you and you will have to request an estimated payment form and send in your money quarterly.

Every stock sale you make, including losses, is going to have to go on that Schedule D at the end of the year. If you are going to trade stock, you have to understand and accept this. There is no getting around it as the brokerage companies are required by law to report all your transactions to the IRS. If your records do not match what is reported, this will trigger a red flag and you may very well be audited. If not audited, you will at least be contacted by the IRS and told that your records don’t match what was reported by the IRS. Can penalties be far behind?

If you sell stock and have a loss for the year, you can use up to $3,000.00 of that loss. If your stock trading loss is bigger than $3000.00, the amount over that has to be carried over until the next year. This is difficult to understand and is a very unfair rule made up by polititians who think that only rich people invest in the stock market. If you have an overall loss of any amount over $3000.00, you really are allowed to only deducted $3000.00. This can be very problematic for someone who has big losses for the year.

The stock market is a hard enough place for beginners and when you add in the tax record keeping it can become a little overwhelming. Unfortunately for all of us, the government doesn’t care.

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Tags: Stock Market, tax, taxesStock Market, tax, taxes

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Allowable costs for tax purposes include the cost of goods bought for resale including the cost of raw materials and all costs of production after adjusting the cost of sales for changes to the opening and closing stock of stock including stores being held, work in progress and finished stock.

The adjustments of opening and closing stock values being to adjust the cost of sales to represent the cost price of the goods included in sales turnover. Also included in the calculated cost of sales are commissions paid and discounts given to suppliers.

Contractor costs are allowable at the gross invoiced value before deduction of any with holding taxes. Where sub contractors costs and expenses directly produce goods or services for resale they may also be considered for inclusion in the cost of sales.

All employee costs are included as allowable costs at the gross value paid including salaries and wages of both employees and directors of the business and temporary staff and consultants employed by the business. In addition to the gross wages businesses may also claim employment costs such as fees paid to employment agencies, bonuses paid to staff and the costs and contributions made to pension schemes on behalf of staff employed.

Employer national insurance and additional medical insurances are allowable as business expenses.

Travelling and distribution costs are permissible business expenses and include running costs of cars, vans and lorries which would consist of fuel and servicing costs, repairs, insurance, vehicle licence fees and membership of breakdown organisations. Also included in travel costs would be bus, train, air and taxi fares, and hotel room costs including private accommodation and meals or subsistence allowances in respect of food during the business trip.

Allowable expenses fro property include business rent, rates and other invoices for use of the property including local government charges for general rates and water rates. The cost of maintaining the property, repairs and maintenance and environmental expenses include light, heat and power costs plus expenditure on property insurance and security arrangements.

The same costs as applicable to use of the home are also claimable in so far as the extent of the use of the home for business purposes.

Repairs and maintenance of tools and equipment would also include renewals of smaller items of expenditure on tools and equipment where these items had not been capitalised as fixed assets.

General administrative costs of running the business would include telephone and stationery costs, fax and mobile phones, printing and postage, computer software and small office equipment costs that have not been capitalised. Other general costs may include trade and professional journals and subscriptions including the expenses of employees in respect of these items.

Advertising and promotion costs in all media areas such as newspapers, magazines, websites, television, posters, mail shots and free samples are allowable. Internet website costs including hosting and promotion would be advertising expenses.

Business bank interest payable including business loans and financing arrangements on overdrafts and loans plus bank charges and business credit card charges are claimable. Other allowable expenses would include hire purchase interest, leasing payments and other finance payments. Financing costs also including the administration charges for the potential various finance arrangements.

Legal and professional expenses to be claimed are accountants, solicitors, architects, surveyors and other fees from members of professional bodies including professional indemnity insurance.

Specific sales income which has been included in sales turnover in the current or previous years and remains unpaid and unlikely to be recovered would be designated as a bad debt and may be deducted as an expense but also has to be written back if the money owed is subsequently recovered.

Depreciation on fixed assets that have been capitalised and the profit and loss on sale of assets are not claimable but instead replaced with capital allowances which write off the costs of those fixed assets over a period of years according to the tax rates and rules applicable.

Any other costs properly incurred in the business may also be claimed subject to specific items disallowed under the tax authority rules.

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Terry Cartwright is a qualified accountant in the UK designs Accounting Software on excel spreadsheets providing complete Small Business Accounting Software solutions for with single and double entry bookkeeping software solutions for limited companies and self employed business

Tags: Reduce UK Tax Bills, taxes, UK Tax, UK Tax BillsReduce UK Tax Bills, taxes, UK Tax, UK Tax Bills

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We have all heard the claims of being able to settle tax debts for “pennies on the dollar”. It sounds great, but does it really work? It may seem too good to be true, and the truth is that it is not for everyone. But for those who qualify, it can be a real lifesaver.

An Offer in Compromise, or OIC, is an arrangement with the IRS that allows an individual or business to negotiate a settlement amount that is less than the total amount owed. It is important to realize that the IRS considers this a method of last resort; fewer than 1% of all balance due accounts are resolved this way. The IRS greatly prefers installment payments that will result in the eventual collection of the entire balance that is due. However, the OIC option is out there, and if you meet one of the following conditions, it could work for you.

There are three conditions that a taxpayer can fall under to apply for OIC:

1. Doubt as to liability–you are claiming that the IRS made a mistake, and you do not owe the money they are saying that you do.

2. Doubt as to collectibility–you as the debtor are telling the IRS that you do not have the money or assets available to pay the debt, and you never will. The IRS will calculate your available assets through a formula to determine your settlement amount, such as:
Settlement Amount = 60 months of disposable income + the equity in all of your assets.

3. Effective tax administration–you are claiming “special circumstances” because collection of the debt would create an undue hardship and would be unfair. This option is most often used for elderly or disabled taxpayers.

Recent tax legislation requires that those applying for an OIC submit a $150 application fee, along with a 20% payment of the proposed settlement offer. These fees are non-refundable; even if your offer is rejected, the IRS will keep this money. There are exceptions to the fee requirement. If you qualify for a low-income waiver, or if claiming doubt of liability, you will not have to pay the fees. The IRS has two years to make a decision on your offer.

If your OIC does get accepted by the IRS, it is essential that you remain in compliance with the filing and payment of all taxes for a period of five years or until the amount offered is paid in full, whichever is longer. Failure to do so will cause you to be in default on your OIC agreement.

A large past due tax debt can be an intimidating thing; after all, it’s not just some annoying collection agency pestering you, it’s the federal government. However, it is important when faced with such a challenge to take a deep breath and examine your options carefully and realistically. If you fit into one of the categories described above, an Offer in Compromise with the IRS could be just the thing to get that burden off of your shoulders.

Article Source: http://www.article-outlet.com/

Tags: IRS, OIC, tax, tax debt, taxesIRS, OIC, tax, tax debt, taxes

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