Income Tax Loopholes Get Odder Every Year

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Congress and the president may have passed an extension of the Bush tax cuts, but that certainly does not mean everything is the same.
Tax laws change every year and businesses big and small, as well as average families are wise to seek professional advice for their income tax preparation.
New tax laws are all about minutiae, and this year the Internal Revenue Service has actually asked Congress to appropriate an increase of over five percent in funding for enforcement activities such as collections, examinations and investigations.
This is above the agency's already increased audit and collection efforts from the last two years.
With so many detailed changes, as well as a push for more even more audits, the need is higher than ever for a qualified professional for tax avoidance.
Some of the changes to understand before this year's tax prep are far-reaching.
One positive is the ability to convert a traditional IRA to a Roth IRA and being able to pay the resulting tax over two years.
Most of the others can increase tax liability, however.
State and local sales tax is no longer allowed to be deducted on a federal return.
For those who use a personal vehicle for work, the rate of mileage deduction has been reduced.
The tax credit for buying a new vehicle has been eliminated.
For businesses, there has been a nearly fifty percent reduction in the deduction allowed for equipment purchased and maintenance.
Banks are also now required to report merchant transactions processed via credit or debit cards, PayPal and all electronic transactions.
Businesses are now required to report any payments to other businesses of just $600 or more.
Individually, the exclusion of the first $2,400 in unemployment benefits has been eliminated, and people who used the 2008 new home buyer's tax credit will have to start paying it back this year.
The Glenwood Springs area has numerous qualified individuals and agencies for tax planning and preparation.
However, business owners and individuals need to inquire as to the specialties of a CPA firm, as many do not perform tax prep.
It is best to look for someone who is an enrolled agent, meaning they have been vetted by the IRS.
These individuals are generally tax specialists with tremendous resources regarding the small details of tax law and can adroitly maneuver through even complex returns.
Should the situation arise, a tax attorney can prepare complex tax strategies and business structure issues.
Some tax attorneys have a background in accounting, but are not in the business of income tax preparation.
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