Finance Articles

You’ll need to find out what home the tax assessor has used for his estimate of your home’s value. This is necessary in order to counter his argument for imposing his valuation by point out areas that are not similar and introducing more similar comparables that you have chosen.

Sometimes the tax assessor might not give you the information you have requested. If so, make or fax a written appeal to the appraisal district and get that information by way of the Freedom of Information Act. Appealing your taxes is adversarial and you need to know what information the other side is using.

Take photographs to back up your property value contentions. As the adage says, a photo is worth a thousand words, use them to your advantage. Offer examples you found that are more similar. Adjust for dollar differences for location, square footage, quality, age and condition, etc. of the home to nail down an exact value.

When choosing your comparables, look for ones that are similar, most importantly, in location. It should be in a similar neighborhood as yours. This location factor is vital and one of the main reasons that your comparable or the assessors comparable is or is not appropriate.

Focus on other similar features such as number of bedrooms, baths, quality and style of home, number of garages and make adjustments accordingly. The tax assessor will likely cherry pick the more expensive homes and they may have dissimilar features that you’ll need to address in your analysis.

There will be differences in square footage, number of garages, with or without decks, patios, swimming pools, etc. and you need to make dollar adjustment to equalize features that are not similar to your home. These are simple plus or minus adjustments.

When you have all this information assembled, first speak to your tax assessor and ask for a reduction based on your findings. Likely, they will not go along with your conclusion since they perceive their job as to preserve the aggregate tax base. They are there to make sure that there is money for the town government to spend. If you don’t get satisfaction, appeal to the municipal level.

Even with tax cuts, towns are still asking for tax hikes and are forcing many who are on the edge into foreclosure. If you can find sales of homes for the tax year you are appealing whose market value is less than your home, you’ll have savings for many years in the future. Seems like few people want to go through the work it takes to appeal their property taxes. When one looks at the money they will save over the period of time before the next blanket reassessment (which may be 10 or more years in the future), appealing an unjust property tax makes more than enough sense.

It pays to have well-informed and highly skilled representation on your side. The former IRS attorneys and agents who comprise the Preferred Tax Relief team bring their vast inside knowledge and experience to the table, as they handle all correspondence and communications regarding your tax situation.

The stress of any IRS issue can be overwhelming, especially when the future of your financial standing is at stake. The IRS collection tactics cannot threaten the representative from the preferred Tax Relief. As they negotiate terms on your behalf, they know your legal rights as a taxpayer, and they faculty enforce those rights. Experienced CPAs, former IRS staff, and other tax professionals are on your side, as you confront what can otherwise be one of the most stressful events in a persons life.

Preferred Tax Relief is at your service to tackle tax issues much as pay garnishment, bank levies, and composing a substance in compromise. Their hard-working tax professionals are serious about helping you deal with filing an overdue tax return dealing with government liens, and arranging payments that dont strap you financially. If you are being audited by the IRS, they will provide the strong representation that you will need. The fact that the tax professionals of perfect Tax break have worked within the system means that they know the internal workings of the group, and the desires to be done to best help give the best potential tax suggestion.

An ideal tax relief website will give a form without much of complication. The relief team can help us after seeing the filled out form they assist you in determining which choice leave affect the optimum for you, within a few minutes of your initial contact. Customer service and follow-up are important to any client, and are equally as important to the Preferred Tax Relief team.

Staff guarantees you advice and their word after your tax issues have been completely assessed. Unanswered questions such as “What if I have years of unfiled returns” or “When will the IRS stop its threats” may be worrisome to you now, but Preferred Tax Relief will not only answer those questions, but they will move immediately to implement the necessary remedies.

Their commitment to good service is in their policy of a one-time fee per case. Your account will not be billed for hourly fees, phone calls, or other exorbitant extra charges with which CPAs and attorneys inflate your final bill. Best of all, though, is Preferred Tax Relief’s commitment to providing the highest quality tax help to you, with the least amount of pain and worry.

The procedures for donating a car are quite simple. First you must have a vehicle that you are no longer need. Secondly you must actually be prepared to donate it. Finally there are some questions you need to ask yourself before attempting to donate the car.

Is your vehicle in reasonable condition? Lets be honest, the last thing you want to transpire is to donate a vehicle then have it collapse when someone goes to use it. Does the vehicle require maintenance? That is another thing to ask yourself as you don’t want to donate a car to charity if they have to sink money into it.

Out of all the people that need it, who need it the most, and why should I care? The answer to this question is very simple. If you have a vehicle sitting there not being used then its taking up space that you could use for other things. As far as who needs it, compile a list of everyone you think who could use it then come back, go ahead we will wait.

Now ask yourself this. I only have one vehicle so who do I give it to? Lots of needy folk may need one badly but you only have one to give. Well, for starters you have municipal outreach programs, churches, and the groups who try to tackle world issues.

If none of these options grabs your heartstrings, you could always ask family members.

Students can always use a reliable car if they do not already have one of their own. Or you could give it to a family member in need. Barring any of these you can also give it to a destitute person, entire families can live out of car if they have to.

Medical research groups always need cars, as well as local outreach programs. Cars, trucks and jetskis are a resource for them. A single vehicle helps out immensely, far more than you can imagine.

The last choice to consider is your hometown. Donating a car to them can save them a lot of money. It also gives you a sense of giving back to their community. Your neighbors will like you better if you appear to love your community.

To whom you donate the vehicle to is completely up to you, but make sure that you check the condition of the vehicle before you donate it. You definitely don’t want to donate a vehicle that turns out to be a lemon.

Saving for college is always hard and is even more so during the current economic downturn. One of the most popular college savings plans is the “529 plans.” Recently, the IRS announced that participants in 529 plans will be able to change their investments more often in 2009 than in past years. The IRS will now allow a change in investment strategy twice in 2009. This is good news for 529 plan participants, especially those that may have otherwise been locked into a mix of investments that has turned out to be more speculative than initially contemplated.

Tax-Free Distribution A 529 plan is qualified tuition program. By contributing to a 529 plan, taxpayers contribute to an account established for paying a student’s educational expenses. Eligible educational expenses may include the costs of tuition, books, and fees at eligible institutions, such as colleges, vocational schools, and other ostsecondary institutions.

Contributions to 529 plans are not tax-deductible, however, although earnings are tax-free, and distributions used to pay the beneficiary’s qualified education xpenses are tax-free.

A 529 plan should not be mistaken with a Coverdell Educational Savings Account (Coverdell ESA). The latter is also a savings account for education expenses that offers tax-free distributions, but funds saved in a Coverdell ESA can be used for elementary and secondary school expenses as well as college costs.

Investment Choices Generally, participants in 529 plans must select only from among broadbased investment strategies designed exclusively for the program. Now, the IRS has traditionally permitted a change in investment strategy only once a year.

In response to the economic slowdown and the turmoil in the financial markets, the IRS will allow investments in a 529 plan to be changed during 2009 on a more regular basis. A 529 plan will not violate the investment restriction if it permits a change in the investment strategy more than once in calendar year 2009, as well as upon a change in the designated beneficiary of the account.

Saving for college is always hard and is even more so during the current economic downturn. One of the most popular college savings plans is the “529 plans.” Recently, the IRS announced that participants in 529 plans will be able to change their investments more often in 2009 than in past years. The IRS will now allow a change in investment strategy twice in 2009. This is good news for 529 plan participants, especially those that may have otherwise been locked into a mix of investments that has turned out to be more speculative than initially contemplated.

Tax-Free Distribution Options A 529 plan, a type of qualified tuition program, allowed taxpayers to contribute to an account established for paying a student’s educational expenses. Eligible educational expenses may include the costs of tuition, books, and fees at eligible institutions, such as colleges, vocational schools, and other ostsecondary institutions.

Contributions to 529 plans are not tax-deductible, however, although earnings are tax-free, and distributions used to pay the beneficiary’s qualified education xpenses are tax-free.

A 529 plan should not be mistaken with a Coverdell Educational Savings Account (Coverdell ESA). The latter is also a savings account for education expenses that offers tax-free distributions, but funds saved in a Coverdell ESA can be used for elementary and secondary school expenses as well as college costs.

Investment Decisions Generally, participants in 529 plans must select only from among broadbased investment strategies designed exclusively by the program. Additionally, the IRS has traditionally permitted a change in investment strategy only once a year.

In response to the economic slowdown and the turmoil in the financial markets, the IRS will allow investments in a 529 plan to be changed during 2009 on a more frequent basis. A 529 plan will not violate the investment restriction if it permits a change in the investment strategy twice in calendar year 2009, as well as upon a change in the designated beneficiary of the account.

The deadline for filing your 2008 income tax return is rapidly approaching. Each year money is left on the when filing income tax returns. Dont let this be something that happens to you.

Earned Income Credit The earned income credit is for a specific group of filers with or without dependents. This credit can garner a bigger income tax refund if you meet the criteria and should not be overlooked.

Criteria Valid Social Security Number Earned income, employer or self Can NOT claim married filing separate US citizen or resident alien for entire year You cannot be the qualifying child of another If you have no children and meet the income guidelines you must be 25 or over and under age 65 at end of filing year Cannot file 2555 or 2555ez Must meet income threshold

The maximum earned income credit is available to those qualified tax filers who have 2 qualifying children. The IRS defines a qualifying child as a dependent who is under age 19 at the end of the year or a full time student under the age of 24. They do not have to be your child they can be:

Son, daughter or qualified foster child or a descendant of any of these

Brother, sister, step brother or sister, half brother or sister, or any descendant of these

All of these qualify for the EIC if they lived with you in the United States for more than half the year. The residency is not affected by incarceration, school or treatment facility, they are still considered to live with you if they will be returning to your home.

Tax Act There is an old saying that says a penny saved is a penny earned and this is certainly true when it applies to your taxes by taking advantage of all available deductions and credits. There are also several tax preparation companies that allow certain taxpayers free tax filing.

One example is Tax Act, a free online tax preparation software which provides for a 100% guarantee as well as aiding in preparing your taxes on time and online.

Deadline to File If you dont file your taxes on time you could be in for penalty and interest and possibly jail time. Therefore remember every year the tax filing deadline is April 15th unless that day falls on a weekend, then its the Monday if no legal holiday occurred or the 1st business day following the fifteenth.

Stimulus The Recovery Rebate Credit is a one-time benefit available to people who didnt receive the full economic stimulus payment last year and whose circumstances may have changed, making them now eligible for some or all of the unpaid portion. If you are using a tax preparation software or service the amount will be calculated for you and included in your 2008 tax refund or reduce the amount owed on your tax return. Again lets make the most of every available opportunity to save those hard earned dollars.

Everyone dreads the Inland Revenue, no matter what your occupation. We have the idea that they are always asking for more money and if you are unlucky enough to pay late or not at all, you could well find yourself in financial difficulties. Small business operators have even more to worry about because they have to deal with the payroll taxes of their employees.

So, what does this mean? When you have people working for you there are further taxes to pay and returns to be made. Have you heard about the adage, “There are only two certainties in life: death and taxes.”? It’s true and as well as having to pay your taxes and file the returns, there are other issues of which you may not be aware.

Those new to the responsibilities of operating a small business should understand the workings of employee taxes. Immediately your doors are open you will have to pay payroll taxes and once you have employees you will also have other responsibilities including withholding taxes from cheques to send to the Inland Revenue, filing quarterly tax returns, etc etc.

Please don’t underestimate the lengths to which the Inland Revenue will go to get these taxes; even after your business ceases to operate! We all understand that late payment will result in heavy fines. As your business becomes larger and you employ more people, the tax bill will also rise.

Are you able to stand the heat? You may think you can, but consider this salient fact: if you become bankrupt and the business still owed taxes to the Inland Revenue, it may possibly fall to you to be considered responsible and have to make the payment. Bankruptcy court will not protect you from these demands.

Consider this “hypothetical” situation: A small business owner was experiencing difficulties with paying bills due to cash flow issues. This worsened when he was no longer able to meet the payroll tax payments and he had to file for bankruptcy and close the business. The bankruptcy court repossessed his assets. He did not have enough in his bank account to meet the tax payments. These remained unpaid and the Inland Revenue was then listed as the top creditors. This was despite the fact that, as a creditor, the Inland Revenue should have filed a claim but did not do so.

What was the conclusion for the business ooperator? Because he was the signatory of the tax returns, he was deemed to be responsible for the payment of the tax returns. In our “hypothetical” case, it was around 28,000. This situation could have been avoided had the tax returns been paid on time (our business owner did not possess the funds to do this).

There was a more positive ending to this story: as the business operator had filed for bankruptcy, he was not expected to pay the taxes, because he had been able to prove to the Inland Revenue that he was not able to raise the capital himself. Other business ooperators may not be as fortunate as each case is treated differently.

The moral of this story is that all business person must make sure that they are completely cognisant of their responsibilities regarding the payment of payroll taxes if they are to avoid falling into the same trap that our unlucky “hypothetical” business owner had done.

When the real estate market is declining like it is now and has gone below your assessed value, you are allowed a break in your property taxes. Prop 8 Reduction is an exemption to California Property Tax Law which determines all property taxes today for property owners in California. Prop 13 was enacted in 1978 to control the property taxes paid by homeowners. Prop 8 Exemption is an exemption to Prop 13 which states that your property tax value should not be higher than the current market value.

This appears to be good information yet, it is only a SHORT TERM answer. The Prop 8 Exemption is usually something you have to file for. The way The Prop 8 Exemption works is like this: your date for the current fiscal year is January 1st for your property taxes. So, the comparable sales for your residence for this exemption, need to have closed within the first quarter of the given year; January 1 to March 31 based on the language of the law. So to get a Prop 8 Decline in Value reduction for 2009, the comparable sales need to have closed between January 1st, 2009 and March 31, 2009. To qualify for this reduction in value there has to be comparable sales of homes similar to yours within the first quarter of the designated year that are lower than your assessed value for that year.

This is a major problem for several reasons: one of the worst is that the first quarter of the year has the fewest comparables because those sales started during the holiday season which is the slowest time for real estate, no matter what type of market we’re in. Real estate sales take 30-60 days to close, so most of the sales that close within the first quarter of the year opened escrow during the holiday season. The comparable sales to choose from are much less than later on. When the decline really starts to show during the second and third quarters of the year you can’t use those sales for a Prop 8 Decline in Value reduction.

This is not a great solution because it is only a TEMPORARY reduction in value, so when the real estate market goes back up, and it always does, your assessed value goes back to what it would have been had you never gotten the break. Numerous property tax specialists appear in declining markets offering to save you on property taxes. They send direct mail that look official and from the Assessor which they are not and unfortunately , people pay hard earned money to have their property taxes “reduced” only to have their tax bills revert back once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already! Generally, the form you will out with the Assessor is simpler than the form these companies send you in the mail!

Let me give you a typical example of a Prop 8 Reduction applied to a home. Lets say, I purchased a residence in 2005 for $500,000, at a 2% trend my current assessed value for 2008 is now $530,604. Lets say my market value as of the first of the year is around $430,000 and of course because I am a knowledgeable tax payer I apply for a Prop 8 Reduction to get a reduction. So, for 2008 I get a nice property tax break, Im paying my property taxes on a value that is $100,000 lower than my trended base value and saving near $1,250 this year! Of course the market continues to decline and based on the Assessors review, the Prop 8 Exemption value is maintained for 2009. So for 2009 I am paying again based on the $430,000 which is even better this year since my trended base in 2009 would be $541,216 and so I am saving at least $1,390! Fantastic right!

The real estate market turns around, and the market values are rising and for 2010 my market value is higher than $500,000, so the Assessor changes my Prop 8 Exemption value to $500,000 which is below my 2010 trended base value of $552,040. Definitly, not as nice as having $430,000 as my value. Yet, I am still saving money and this year my Prop 8 Exemption value is $52,000 lower than my trended base value I am saving $650 a year in property taxes. Its now 2011 the real estate market is rising again and now my market value is near $600,000 and the assessor restores my value to the trended base, which now is $563,080. So, I’m paying $7,038 in taxes. If I still had that $430,000 property tax base

There is a way in California to PERMANENTLY reduce your property tax base in today’s declining market, utilizing Prop 13 and essentially bypassing the Prop 8 Exemption and all of its limitations. Additionally, find out how to avoid reassessments when you have inherited property and also how to utilize all the exemptions allowed by Current Property Tax Law.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com

It is surprising just how many people try to escape their duty to pay tax to the federal government each year. Anyone found doing this is committing an offence under the tax laws of the United States. Each person and business has a duty to pay taxes to their government so it is able to function properly and fulfill its duty to its citizens. Normally, when this type of crime is committed, it is by people that have no previous record with the police or authorities.

The term Tax Fraud covers all the crimes relating to tax that has not been paid for whatever reason, even for those who are just late in submitting their tax returns. Tax fraud lawyers are specialized attorneys that deal with issues of tax fraud and represent clients who are accused of tax fraud.

Tax fraud lawyers have only one function and are not used for advice on how to plan for future tax commitments. Clients specifically employ them when they anticipate government interrogation regarding their taxes or after they have been charged for tax fraud. Though the issue is morally wrong, tax fraud lawyers work on ways to negotiate with tax authorities and help their clients legally evade taxes to a limited extent and mitigate their situation with regard to the charge of tax fraud.

It is not uncommon for people and even companies to fail in their tax responsibilities through lack of knowledge or understanding of their responsibilities. Tax advisors can also be responsible for the predicament of their clients with poor advice which create a situation where tax evasion is the result.

If an attorney proves that his client is the innocent victim of wrong tax advice by some tax consultants, it’s likely that the charges against them might get dropped or a lenient sentence might be passed. The need to choose a tax consultant that has proper qualifications cannot be underestimated in circumstance like this if investigation by the IRS is too be avoided.

The most common method adopted by tax fraud lawyers to get relief for their clients is by convincing the tax authorities that prosecuting the defaulter will do more harm than good and would not fetch them the recoverable tax dues. When this line of reasoning is well presented, the authorities might settle for a compromise by accepting payments in installments or waiving off a part of the tax dues instead of prosecuting them.

When the real estate market is declining like it is now and has gone below your assessed value, you are allowed a break in your property taxes. Prop 8 is an exemption to Prop 13 which determines all property taxes today for homeowners in California. Prop 13 was put into place in 1978 to limit the property taxes paid by taxpayers. Prop 8 Exemption is an exemption to Prop 13 which states that your property tax value should not be higher than the current market value.

Seems like great news but, it is only a TEMPORARY answer. The Prop 8 Exemption is something you have to file for most of the time. Sometimes the Assessor will automatically lower your property taxes because he is an elected official and will do what he can to maintain voter approval. The Prop 8 Exemption works is like this: your date for any fiscal year is January 1st for assessment purposes. The comparable sales for your property for need to have closed within the first quarter of the given year; January 1 to March 31 based on the language of the law. So to get a Prop 8 reduction for 2009, the comparables must have closed between January 1st, 2009 and March 31, 2009. To get this reduction in value there has to be comparable sales of residences similar to yours within the first quarter of the designated year that are lower than your assessed value for that year. If there are no comparable sales that show a lower value for your house during that first quarter, your are out of luck.

This is problematic for several reasons: one of the biggest is that the first quarter of the year has the fewest comparable sales because most of those transactions began during the holiday season. Real estate sales take 30-60 days to close, so many of the sales that close within the first quarter of the year opened escrow during the holiday season when the market is barely moving. So, there are less comparable sales to choose from. When the decline really starts to show during the second and third quarters of the year you are unable to use those comparable sales for a Prop 8 Exemption reduction.

This is not the best solution because it is only a TEMPORARY reduction in value, so when the market starts to climb back up, and it always does, your old base value gets restored to what it would have been had you never gotten the reduction. Many property tax specialists appear in declining markets claiming to be able to save you on property taxes. They send mailers that look like they are from the Assessor which they are not and sadly, taxpayers pay good money to have their taxes “lowered” only to have their tax bills revert to higher rates once the market recovers. Truthfully you never pay the Assessor for any service or review of your value - you pay for that with your property taxes already!

Let me illustrate the way Prop 8 Reduction works on an average home in California. I purchased a home in 2005, at the hight of the market, for $500,000, at a 2% trend my current assessed value for 2008 is $530,604. My market value as of the beginning of 2008 is near $430,000 and since I am a knowledgeable homeowner I apply for a Prop 8 Decline in Value to get a break. So, for 2008 I have a break, Im paying on a value that is $100,000 below my trended base value and saving about $1,250! The real estate market declines and based on the Assessors review, the Prop 8 Reduction value is given for 2009 also. So for 2009 I am paying based on the $430,000 which is even better this year since my trended base in 2009 would have been $541,216 and so I am saving near $1,390! Awesome!

Now, the real estate market starts to turn around, and the market values are going up and for 2010 my market value is upwards of $500,000, so the Assessor’s Office alters my Prop 8 Decline value to $500,000 which is lower than my 2010 trended base value of $552,040. Absolutely, not as good as having $430,000 as my value. Yet, I am still saving and this year my Prop 8 Decline value is $52,000 lower than my trended base value I am now saving $650 a year in property taxes. Its now 2011 the market is going up again and now my market value is somewhere around $600,000 and the assessor restores my value to the trended base, which now is $563,080. So, now I’m paying $7,038 in taxes. I so wish I still had that $430,000 property tax base

California Property Tax Law offers a way to PERMANENTLY reduce your property taxes with today’s declining real estate market, based on Current Property Tax Law and essentially avoiding Prop 8 Decline in Value and all of its limitations. In addition, find out how to avoid reassessment when you inherit property and how to use the exemptions allowed by Prop 13 to your maximum advantage.