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As with any other topic, the internet provides a wealth of resources for taxpayers. Here are some websites and web pages that provide information, tools and resources to help you with year-round tax planning and assist in preparing your Form 1040.

www.att.com/ir/ss/tbi

When you sell stock you need to determine the “cost basis” of the shares sold so you can calculate your capital gain or loss. With the “divestiture” of ATT in 1984, and all the splits, both positive and reverse, spin-offs and mergers that have followed, determining the cost basis of ATT stock sold, as well as the basis of the various spin-off companies’ shares, is a real project. Go here for Tax Basis Worksheets for each individual event in the history of ATT from 1959 through the present.

www.oanda.com/convert/classic

This “address” will direct you to a foreign currency converter that can provide current and historical exchange rates for 164 currencies.

www.bigcharts.com

You can use this site to find the price of any listed stock or mutual fund on any exchange for any given date. If you inherit an investment, your cost basis is the fair market value of the investment on the date of death of the person from whom it was inherited. This information is generally reported on the federal estate or state inheritance tax return. However, when you sell the stock you inherited you do not always have ready access to this information. You can calculate your basis by going to this site and, under “Historical Quotes”, enter the ticker symbol of the stock and the date of death, or the business day closest to the date of death, to get a price quote. If you sell stock that you received as a gift, your basis is either what the donor paid for the stock or the fair market value at the time the gift was made. You can also use this site to determine a cost basis for gifted property.

www.kbb.com

While the rules for claiming a deduction for donating a car to charity have drastically changed, there are still situations where you will deduct the fair market value of the automobile. Click on “Used Car Values By Make and Model”, enter your zip code, enter the year, make and model of the car donated, and click on “Kelley Blue Book Private Party Value”. You will then enter detailed information on the car donated, such as mileage and condition, and get a value. You should do this on the day you donate the car to charity. Print out the result and file it with the paperwork for the donation.

www.calctools.com/newrmd.htm

You must begin to take annual required minimum distributions from a traditional IRA or employer pension account by April 1st of the year following the year in which you turn age 70 1/2. This address takes you to a calculator that will determine the amount of your required minimum distribution for the year.

www.investinginbonds.com

Click on “CALCULATORS” in the menu at the top of the page. Then click on “Taxable/Tax-Free Yield Equivalent Calculator”. This calculator will allow you to determine what you need to earn on a taxable investment to equal the tax-free yield of a municipal bond or a bond fund.

www.easysaver.gov/sav/sav.htm

This section of the website of the Bureau of Public Debt provides a variety of information, calculators and services for individuals who have invested in or are thinking about investing in US Savings Bonds (all series). Click on “Savings Bond Calculator” under the heading “What Are Your Bonds Worth?” to determine the amount of interest earned on a bond for the year if you have elected to report accrued savings bond interest annually on your tax return. You can also go here to find out if your savings bonds have stopped earning interest and to purchase bonds online.

www.gsa.gov

If you travel for business, instead of deducting your actual expenses for meals and incidental expenses you can elect to deduct the federal per diem amount for the location of the travel. Click on “Per Diem Rates” under “Travel Resources” to find the federal per diem rates for Lodging and Meals and Incidental Expenses for domestic business travel effective for 2005 and prior years. FYI, “incidental expenses” include fees and tips for porters, baggage handlers and maids, but does not include the cost of laundry or phone calls.

www.state.gov/m/a/als/prdm/2005

This address will take you to the State Department per diem rates for Lodging and Meals and Incidental Expenses for international travel during 2005. Ust these amounts if you travel overseas for buisness. To check the per diems for a prior year, substitute the year for 2005 in the “address”.

www.toolkit.cch.com/p07_2740.asp

This brings you to a calculator that will help you determine your allowable home office deduction. It is from Commerce Clearing House, the premier tax law publisher.

www.charitynavigator.org

This site will help you to make intelligent charitable giving decisions. It provides information on and evaluates the financial health of over 4000 charities. It also has articles and guide on contributing to charity.

www.redleafinstitute.org

The Redleaf National Institute helps child care providers successfully manage their business. The site offers news, information and publications on recordkeeping, taxes, IRS audits, contracts, insurance, and other child care business issues. It provides access to other child care business resources and organizations, and has a state-by-state listing of tax professionals who prepare tax returns for child care providers.

The above web addresses, and many others, are listed on the FEDERAL LINKS Page of my website at www.robertdflach.net

Copyright (c) 2005 by Robert D Flach LLC

Robert D Flach is a tax professional with 34 tax seasons of experience preparing 1040s for individuals in all walks of life. He writes THE WANDERING TAX PRO weblog (http://rdftaxpro.tripod.com/weblog) and the free monthly online newsletter STUFF AND SUCH (http://rdftaxpro.tripod.com/stuffandsuch). He also writes and publishes THE FLACH REPORT, a quarterly print tax newsletter.

Tags: Federal Income Tax, federal tax, Income Tax, tax, tax planning, tax resources, tax returns, taxesFederal Income Tax, federal tax, Income Tax, tax, tax planning, tax resources, tax returns, taxes

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Because homeowners who protest their assessments, with a knowledge of how the property tax assessment system works, often recieve $500 to $1000 tax deduction, if not more annually on their property tax bill. Simply stated the property tax bill is calculated by multiplying the homeowner’s assessment times the local property tax rate and subtracting any tax deductions for which the homeowner is eligible.

The property tax doctor can show you how to lower your assessment and thereby reduced your property tax bill! The property tax doctor is a former tax assessor who knows first hand how difficult it is for the average person to penetrate the tax assessor’s bureaucratic jungle comprised of arcane terms and practices. No government document does this for the homeowners.

Just like going to a medical doctor’s office the first thing that you need to do is to gather the necessary information with which to do the paperwork. The primary sources for that information is the homeowner’s property record card obtained at the assessor’s office and comparable home sales. Most homeowners armed with one or both of these information items get their assessment reduced the majority of the time without going beyond their local tax assessor’s office.

Just as you ask your medical doctor informed questions to get some pain relief, so also you must ask your tax assessor (with the help of the property tax doctor) some informed questions in order to win some property tax relief. The best advice the property tax doctor can offer is to go to your local tax assessor’s office and check your property record card for mistakes of fact! Clerical errors and plain mistakes do occur during the valuation process. Here is a partial list of common mistakes you should check up on.

1. The dimensions of your home or the dimensions of your land are wrong.

2. Failure to note depreciation on adverse-onsite conditions or no depreciation or minimal deprecation shown for an older home.

3. The dimensions of your land are wrong.

4. Check all computations, whether or not you understand where the factors came from.

5. Failure to note depreciating off-site influences — a factory or landfill producing toxic fumes.

6. The quality of improvements are wrong — you have a stone not a macadam driveway, or — you have the low priced whirlpool tub not the big name expensive whirlpool tub.

7 Finished areas are listed incorrectly — basement is shown as finished and it is not.

8. The age of the home is listed incorrectly or the number of stories is wrong.

My father would not let the local tax assessor, who was also his best friend, go past the kitchen table at our farmhouse. My father was afraid he would see certain interior home improvements and he would increase our assessment. My father mistakenly believed that improvements he had made inside the farmhouse like a new bathroom sink, plaster repairs, wallpapering, new ceilings, new light fixtures would add to our assessed value. Likewise he put off making outside repairs until after the next revaluation because of fear of an increased assessment. Surprisingly, he was wrong. Outside repairs like roof replacement, repairing masonry, repair of porch, steps, stairs, etc. do not increase the homeowner’s assessment. Neither does replacing garage doors, or sheds, sidewalks, etc

Often establishing the proper combined property value for your home and the land under it is the key to your property tax appeal. To win your appeal the homeowner must establish his or her property’s value at a level lower than the one the assessor used.

To establish market value the homeowner can go to the web site http://www.zillow.com to get a rough estimate of the value of his home. The site uses some basic variables like square footage, number of baths, acreage and number of bedrooms to calculate a market value for the home based on a formula that is driven by other home sales in the neighborhood. Where zillow has the sales data this is a good first step to see if your home is assessed way too high.

In years after the revaluation year the homeowner should find out what the assessment to sales ratio for his or her taxing district is in New Jersey. This ratio is announced each year and is available from the local tax assessor’s office. It represents the average at which the assessed value for all properties that sold in the past year was compared to their sales value in the municipality. Why is it important? It may provides a key factor in proving that you have received an unequal assessment and are entitled to file a discrimination challenge to your property assessment to win a tax reduction.

An unequal assessment is one made at a higher proportion of market value than an average of the other parcels on the roll. A year or so after a revaluation housing inflation often makes the assessment your tax assessor placed on your home look low compared to sales prices of comparable sold homes in your neighborhood. But watch out!

A low assessment to sale ratio in a municipality can fool some taxpayers into thinking that they are being assessed below market value and are therefore getting a break. However, if all assessments are set below market value then the tax rate must be increased in order to collect the necessary amount of tax revenue. The same amount of tax is collected, but the taxpayers are fooled into thinking they’ve gotten a break and do not search for malassessments.

Now, do not forget that the assessment to sales ratio (or common level ratio) is a key factor in getting you property tax relief. Let me explain. An important test for fairness of your assessment is not just its relationship to market value. It is also whether or not it is fair in relation to assessments on other properties in your town. For example, if you have a home with a market value of $800,000, but it is assessed at $600,000, you may think you are getting off cheaply. However, if your neighbor’s house which is comparable to yours is assessed at only $200,000, you are paying three times as much real property tax as you should!

When your property is under appeal the County Board of Taxation can adjust your home’s value to the common level. The taxpayer should know the average ratio in the municipality where the property under appeal is located before filing a tax appeal. Remember the ratio changes annually on October 1, for use in the subsequent tax year. Also, remember this adjustment to the common level is not used in the year of revaluation or reassessment when all properties have been brought to 100% of market value.

Once the County Tax Board determines the true market value of a property they are required to automatically compare that true market value to its assessment value. If the ratio of the assessment to the true value exceeds the average ratio by 15%, then the assessment is automatically reduced to the common level. The homeowner gets his property tax relief. But watch out! If the assessment to true value ratio falls below the common level, the County Tax Board is obligated to increase the assessment to the common level. The homeowner would then get his property tax increased. If the assessment falls within the common level range no adjustment is made.

Each year on October 1 of the pre-tax year the assessor establishes a value for each of the properties in the municipality for the following tax year. The annual assessment value is considered tentative during the period of public inspection of the new tax list from January 1 to January 10th. The purposes of the inspection period is to enable the taxpayer to ascertain what assessments have been made against him or her and to confer informally with the assessor as to the correctness of the assessments.

At this point your approach can be informal and will not require a formal, written appeal. Taxpayers have an opportunity only once each year to file a formal property tax appeal. Get your tax form for property tax appeal purposes from your County Board of Taxation web site. Generally, it must be received by the County Board of Taxation on or before April 1 of the tax year. If the taxpayer misses the deadline for filing a formal appeal the taxpayer must wait until the following year to make a challenge for any tax relief.

The Property Tax Doctor can help the average homeowner win his rightful property tax relief. Under the common level adjustment, described above, the New Jersey’s statutory standard for an acceptable property tax assessment margin of error in its calculation is 15%. In New Jersey where the average homeowner in 2006 paid about $5,000 per year in property taxes that amounts to an acceptable error of $750 in the propertytax bill. If we administered our Federal Tax bill with that 15% margin of error we would have a taxpayer revolt.

Gerald Dowgin © 2006

About the Author:

Gerald Dowgin (The Property Tax Doctor) is the author of Homeowner’s Assessment Review Guide and has worked in the field of public finance at the State and local levels in New Jersey for more than three decades.
He has served as the Property Tax Assessor in 2 N.J. municipalities. He worked for the Division of Taxation principally on local property tax issues. Then he joined the (OLS) Office of Legislative Services and served as the Secretary to the N.J. Property Tax Assessment Study Commission for four years.

While working for the OLS a couple of his accomplishments include researching, drafting, and estimating the cost of such complex legislation that became law as the Senior Property Tax Freeze Bill and legislation that virtually stopped the tax assessment practice of “Spot Assessments” in New Jersey that had for years treated many property taxpayers unfairly. My web site will save you money on your next Property tax deduction by guiding the homeowner as to why, when and how to review his or Tax Assessment.

Tags: assessment, deduction, federal tax, form, homeonwer, property, property tax appeal, reduction, taxassessment, deduction, federal tax, form, homeonwer, property, property tax appeal, reduction, tax

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One of the first decisions that you will have to make as a business owner is how the company should be structured. This decision will have long-term implications, so consult with an accountant and attorney to help you select the form of ownership that is right for you. In making a choice, you will want to take into account the following:

- Your vision regarding the size and nature of your business.

- The level of control you wish to have.

- The level of structure you are willing to deal with.

- The business’ vulnerability to lawsuits.

- Tax implications of the different ownership structures.

- Expected profit (or loss) of the business.

- Whether or not you need to reinvest earnings into the business.

- Your need for access to cash out of the business for yourself.

Sole Proprietorships

The vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibilities for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.

Advantages of a Sole Proprietorship

- Easiest and least expensive form of ownership to organize.

- Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit.

- Sole proprietors receive all income generated by the business to keep or reinvest.

- Profits from the business flow directly to the owner’s personal tax return.

- The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

- Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk.

- May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.

- May have a hard time attracting high-caliber employees or those that are motivated by the opportunity to own a part of the business.

- Some employee benefits such as owner’s medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).

Federal Tax Forms for Sole Proprietorship
(only a partial list and some may not apply)

- Form 1040: Individual Income Tax Return

- Schedule C: Profit or Loss from Business (or Schedule C-EZ)

- Schedule SE: Self-Employment Tax

- Form 1040-ES: Estimated Tax for Individuals

- Form 4562: Depreciation and Amortization

- Form 8829: Expenses for Business Use of your Home

- Employment Tax Forms

Partnerships

In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. The partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed. Yes, it’s hard to think about a breakup when the business is just getting started, but many partnerships split up at crisis times, and unless there is a defined process, there will be even greater problems. They also must decide up-front how much time and capital each will contribute, etc.

Advantages of a Partnership

- Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement.

- With more than one owner, the ability to raise funds may be increased.
- The profits from the business flow directly through to the partners’ personal tax returns.

- Prospective employees may be attracted to the business if given the incentive to become a partner.

- The business usually will benefit from partners who have complementary skills.

Disadvantages of a Partnership

- Partners are jointly and individually liable for the actions of the other partners.

- Profits must be shared with others.

- Since decisions are shared, disagreements can occur.

- Some employee benefits are not deductible from business income on tax returns.

- The partnership may have a limited life; it may end upon the withdrawal or death of a partner.

Types of Partnerships that should be considered:

- General Partnership

Partners divide responsibility for management and liability as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently.

- Limited Partnership and Partnership with limited liability

Limited means that most of the partners have limited liability (to the extent of their investment) as well as limited input regarding management decisions, which generally encourages investors for short-term projects or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership.

- Joint Venture

Acts like a general partnership, but is clearly for a limited period of time or a single project. If the partners in a joint venture repeat the activity, they will be recognized as an ongoing partnership and will have to file as such as well as distribute accumulated partnership assets upon dissolution of the entity.

Federal Tax Forms for Partnerships
(only a partial list and some may not apply)

Form 1065: Partnership Return of Income

Form 1065 K-1: Partner’s Share of Income, Credit, Deductions

Form 4562: Depreciation

Form 1040: Individual Income Tax Return

Schedule E: Supplemental Income and Loss

Schedule SE: Self-Employment Tax

Form 1040-ES: Estimated Tax for Individuals

Employment Tax Forms

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Tags: federal tax, forms of ownership, proprietorshipfederal tax, forms of ownership, proprietorship

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