US Tax series -3

Capital Gains and Losses

-Definitions and Basics.
-Classification of Gains /Losses.
-Treatment of Losses.
-Schedule D

Capital Assets

Capital assets are properties specified in the tax law that give rise to capital gain or loss.
All property is considered a capital asset, except:
•Property held for resale (inventory)
•Real or depreciable property used in a trade or business (i.e., operational or fixed assets) (see IRC §§1231, 1245, and 1250)
•Accounts or notes receivable acquired in normal course of business

•Copyrighted or a literary, artistic, or musical composition in the hands of the creator or anyone who assumes the creator's basis (i.e., the property was received as a gift)
•U.S. government publications received from the government at a reduced price
•Almost everything you own and use for personal purposes or investment is a capital asset.

Holding Period:

length of time an asset has been owned (held).

In general, Assets owned longer than one year have been held long term. Assets owned one year or less have been held short term.

Cost Basis:
The basis of property is usually its cost. The cost is the amount paid in cash, debt obligations, other property, or services. It includes:
• Sales tax.
• Freight.
• Installation and testing.
• Excise taxes.
• Legal and accounting fees (when they must be capitalized).
• Revenue stamps.
• Recording fees.
• Real estate taxes (if assumed for the seller).

Adjusted Basis:
Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, certain adjustments (increases and decreases) are made to the basis of the property. The result of these adjustments to the basis is the adjusted basis.

Fair market value (FMV): is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, who both have reasonable knowledge of all the necessary facts.

Sales of similar property on or about the same date may be helpful in figuring the FMV of the property.

Short-term capital gain is taxed at the same rates as ordinary income, regardless of the seller's tax bracket.
Long Term Capital Gain is taxed at 20%.(Reduced to 15% rate this year for assets sold after May 05, 2003)

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US Taxation series -2

Income-wages

There are three main categories of income:

Active income :
Income for which services have been performed.
E.G. Wages, commissions and income from businesses.

Passive income :
Income from business activities in which a taxpayer does not materially participate.
E.G. Rental Real Estate

Portfolio Income:

Income from investments.
E.G.
Dividends, interest ,royalties capital gains.

Earned Income –

Compensation for personal services rendered.
Wages, salary, Tips, Professional fess also includes Scholarships.


Unearned Income –

Basically investment type income.
Interest, Dividend , Capital gains, Pensions, Annuities


Wages mean employee compensation and it includes

fringe benefits.
bonuses.
retirement plan contributions.
stock options.

Wages are reported on Form W2, which is provided by the employer.


FORM W2

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Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years

Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years

WASHINGTON — First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.
Available for a limited time only, the credit:

Applies to home purchases after April 8, 2008, and before July 1, 2009.
Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the following questions and answers may help you determine whether you qualify for the credit.

Q. Which home purchases qualify for the first-time homebuyer credit?
A. Only the purchase of a main home located in the United States qualifies and only for a limited time. Vacation homes and rental property are not eligible. You must buy the home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.
Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.
If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return.

Q. How much is the credit?
A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more. Whatever the size of the credit a taxpayer receives, the credit must be repaid over a 15-year period.

Q. Are there income limits?
A. Yes. The credit is reduced or eliminated for higher-income taxpayers.
The credit is phased out based on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.
This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

Q. Who cannot take the credit?
A. If any of the following describe you, you cannot take the credit, even if you buy a main home:
Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You stop using your home as your main home.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.
Your home financing comes from tax-exempt mortgage revenue bonds.
You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.

Q. How and when is the credit repaid?
A. The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.
You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

However, some exceptions apply to the repayment rule. They include:
If you die, any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount.
If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions. Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale. If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.

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US Tax return preparation series

The trend of outsourcing preparation of income tax returns overseas, particularly to India, began about five years ago and shows no signs of abating. Its popularity has grown as tax practitioners have come to appreciate its advantages

Outsourcing tax preparation services offshore, particularly to India, began about five years ago and has grown at a phenomenal rate. Its popularity has grown as tax practitioners have come to appreciate its advantages. The tax return outsourcing business has dramatically changed and expanded beyond the client to tax preparers and now, to back-office outsource processing. More and more CPA and accounting firms are opting to outsourcing tax return to India to help minimize operating costs and maximize efficiency and gain competitve advantages.

Poupular tax return outsourcing services using leading tax software like Lacerte, Creative Solutions, ProSeries, Drake, ATX, Pro Systems or any other tax software that you work with. Tax Compliance during the busy season becomes easy to manage with our backoffice tax support

Basics about US Taxation

Overview of 1040

Who needs to file a 1040 ?

Following persons may need to file a Federal Income tax return if:

•Citizen or resident alien or elects to be treated as a resident alien of US.
•Resident of Puerto Rico .
•A non-resident alien with income from US sources.

When and where to file a return?

When a person has a gross income of taxable nature and has taxes withheld he needs to file a tax return.
Filing Deadline: The returns needs to be filed by the 15th day of the 4th month after the tax year ends.
For 2008 tax year we need to file the return by 15th April 2009.
An automatic extension for filing the return is available (Oct 15th).Form 4868 needs to be filed.

Filing Status

There are 5 types of Filing Status available:

•Single
•Married Filing Jointly
•Married Filing Separately
•Head of Household
•Qualifying Widow(er) with dependent child

Dependents

A Person Can be claimed as a “Dependent” if he meets following 5 tests:

•Joint Return Test
•Relationship Test
•Citizenship Test
•Gross Income Test
•Support Test

Benefits of Claiming Dependents

Taxpayer is eligible to claim maximum personal exemption of $3,400 each for 2007 as a deduction from the Taxable Income.

Certain credits are available with respect to the Dependents.

Form 1040

Income
(-) Adjustments to Income
= Adjusted Gross Income (AGI)
(-) Deductions
= Taxable Income
Multiplied by Tax rate equals Tax Liability

The form is divided into following parts:

1.Personal Information
2.Income Section
3 Adjusted Gross Income
4.Taxes and Credits
5.Other Taxes
6.Payments
7.Signatures.

Form 1040

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Quickbooks training in india

Bookkeeping is a growing profession - it is demanding, exciting, challenging and above all, rewarding. It is about understanding how a business works and then providing accurate figures that enable the business to know exactly how well it is doing. For men and women of all ages and from all backgrounds it provides an outstanding career opportunity.

Bookkeepers become accountants and inventory control experts at a higher rate than any other profession. Those who leave the record-keeping industry altogether use their bookkeeping skills to understand various tasks within an industry, then move to positions of managerial control. The people who take this route, however, usually supplement their bookkeeping skills with business courses, seminars, or second positions where they can demonstrate their management ability.

There is only one company in India specifically in Bangalore (Silicon valley of India) cosmic IT services Pvt. Ltd. which is providing training in Quickbooks from 2002 and they are the pioneers in this area.

Cosmic has been providing corporate and individuals QuickBooks training for over 5 years. Our philosophy is to provide "Quality training at affordable rates". Cosmic unlike any other training institute provides you with hands on experience

Cosmic Training, an ISO 9001:2000 certified accounting training firm and, has provided accounting and bookkeeping training since 2002. Cosmic offers training courses to students throughout the India.

This training is dedicated to providing you with a flexible, high-performance learning system. This dedication has resulted in a unique and progressive training method. Unlike other training methods that focus on theory or high-tech training products that overwhelm you, this training method provides a simple approach to learning QuickBooks software. If you are using the software for the first time, you will be introduced to its primary features. If you are familiar with the software, you will quickly learn the new features and functionality of this version. Regardless of your skill level, you will learn with the greatest of ease.

Cosmic is also a local partner of 8020 Accounting Systems LLC, USA and provides QuickBooks training in India. After the techies, it is now the turn of the finance professionals to strike it big in KPO. Also for those who are migrating to US or any US based companies having branches in India needs to maintain their books of accounts in QuickBooks. Our training program equips them best.

They offer 3 types of training :

Training schedule - 3 days

Lesson 1: Setting Up a CompanyTopic 1A: Creating a QuickBooks CompanyTopic 1B: Using the Chart of AccountsTopic 1C: Entering Account Opening Balances

Lesson 2: Invoicing for ServicesTopic 2A: Setting Up a Service ItemTopic 2B: Changing the Invoice FormatTopic 2C: Creating a Service InvoiceTopic 2D: Entering Statement ChargesTopic 2E: Creating Billing Statements

Lesson 3: Processing PaymentsTopic 3A: Receiving Payments for InvoicesTopic3B: Making DepositsTopic 3C: Printing Statements

Lesson 4: Working with Bank AccountsTopic 4A: Writing a QuickBooks CheckTopic 4B: Using Bank Account RegistersTopic 4C: Entering a Handwritten CheckTopic 4D: Transferring Funds between AccountsTopic 4E: Reconciling Checking Accounts

Lesson 5: Entering and Paying BillsTopic 5A: Handling ExpensesTopic 5B: Using QuickBooks for Accounts PayableTopic 5C: Entering BillsTopic 5D: Paying Bills

Training schedule - 5 days

Lesson 1: Getting StartedTopic 1A: Starting QuickBooksTopic 1B: Identifying Components of the QuickBooks Operating EnvironmentTopic 1C: Opening QuickBooks CentersTopic 1D: Opening Other QuickBooks WindowsTopic 1E: Identifying Common Business TermsTopic 1F: Setting Up QuickBooks in Multi-User ModeTopic 1G: Exiting QuickBooks

Lesson 2: Setting Up a CompanyTopic 2A: Creating a QuickBooks CompanyTopic 2B: Using the Chart of AccountsTopic 2C: Entering Account Opening Balances

Lesson 3: Working with ListsTopic 3A: Creating Company ListsTopic 3B: Working with the Customers & Jobs ListTopic 3C: Working with the Employees ListTopic 3D: Working with the Vendors ListTopic 3E: Adding Customized FieldsTopic 3F: Managing Lists

Lesson 4: Invoicing for ServicesTopic 4A: Setting Up a Service ItemTopic 4B: Changing the Invoice FormatTopic 4C: Creating a Service InvoiceTopic 4D: Entering Statement ChargesTopic 4E: Creating Billing Statements

Lesson 5: Processing PaymentsTopic 5A: Receiving Payments for InvoicesTopic 5B: Making DepositsTopic 5C: Printing Statements

Lesson 6: Working with Bank AccountsTopic 6A: Writing a QuickBooks CheckTopic 6B: Using Bank Account RegistersTopic 6C: Entering a Handwritten CheckTopic 6D: Transferring Funds Between AccountsTopic 6E: Reconciling Checking Accounts

Lesson 7: Entering and Paying BillsTopic 7A: Handling ExpensesTopic 7B: Using QuickBooks for Accounts PayableTopic 7C: Entering BillsTopic 7D: Paying Bills

Training schedule - 10 days

Lesson 1: Getting StartedTopic 1A: Starting QuickBooksTopic 1B: Identifying Components of the QuickBooks Operating EnvironmentTopic 1C: Opening QuickBooks CentersTopic 1D: Opening Other QuickBooks WindowsTopic 1E: Identifying Common Business TermsTopic 1F: Setting Up QuickBooks in Multi-User ModeTopic 1G: Exiting QuickBooks

Lesson 2: Setting Up a CompanyTopic 2A: Creating a QuickBooks CompanyTopic 2B: Using the Chart of AccountsTopic 2C: Entering Account Opening Balances

Lesson 3: Working with ListsTopic 3A: Creating Company ListsTopic 3B: Working with the Customers & Jobs ListTopic 3C: Working with the Employees ListTopic 3D: Working with the Vendors ListTopic 3E: Adding Customized FieldsTopic 3F: Managing Lists

Lesson 4: Setting Up InventoryTopic 4A: Entering Products into InventoryTopic 4B: Ordering ProductsTopic 4C: Receiving InventoryTopic 4D: Paying for InventoryTopic 4E: Manually Adjusting Inventory

Lesson 5: Selling Your ProductTopic 5A: Creating Product InvoicesTopic 5B: Making Cash Sales

Lesson 6: Invoicing for ServicesTopic 6A: Setting Up a Service ItemTopic 6B: Changing the Invoice FormatTopic 6C: Creating a Service InvoiceTopic 6D: Entering Statement ChargesTopic 6E: Creating Billing Statements

Lesson 7: Processing PaymentsTopic 7A: Receiving Payments for InvoicesTopic 7B: Making DepositsTopic 7C: Printing Statements

Lesson 8: Working with Bank AccountsTopic 8A: Writing a QuickBooks CheckTopic 8B: Using Bank Account RegistersTopic 8C: Entering a Handwritten CheckTopic 8D: Transferring Funds Between AccountsTopic 8E: Reconciling Checking Accounts

Lesson 9: Entering and Paying BillsTopic 9A: Handling ExpensesTopic 9B: Using QuickBooks for Accounts PayableTopic 9C: Entering BillsTopic 9D: Paying Bills
Appendix A: Using the Easy Step InterviewTopic AA: Using the Easy Step Interview

Appendix B: Using Online BankingTopic BA: Setting Up an Internet ConnectionTopic BB: Activating AccountsTopic BC: Reading Online StatementsTopic BD: Creating Online PaymentsTopic BE: Transferring Funds OnlineTopic BF: Canceling Online PaymentsTopic BG: Sending E-mail to Your Financial Institution

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Obama still playing anti-outsourcing card

Continuing to play the anti-outsourcing card, Democrat presidential front-runner Barack Obama said on Wednesday while America cannot "shy away" from globalisation, it would have to take measures to ensure that jobs are not shipped overseas.

"We have to stop providing tax breaks for companies that are shipping jobs overseas and give those tax breaks to companies that are investing here in the United Statpes of America," Obama said in during a debate with rival Senator Hillary Clinton in Ohio, Cleaveland.

The Illinois Senator, playing to the gallery of those workers who have been displaced in manufacturing jobs as a result of the North American Free Trade Agreement (NAFTA) and generally to the anti-outsourcing crowd, said he would ensure that every pact the US signs has environmental, safety and labour standards to protect workers and consumers alike.

"We can't have toys with lead paint in them that our children are playing with. We can't have medicines that are actually making people more sick instead of better because they're produced overseas," Obama said.

At the same time, he said, Americans cannot "shy away" from globalisation. "We can't draw a moat around us." "The problem is we've been negotiating just looking at corporate profits and what's good for multinationals," the African-American Senator said adding, "as President, what I want to be is an advocate on behalf of workers".

Facing the heat from US presidential hopefuls who blamed "shipping jobs" to China and India for rising US unemployment, the India Inc had last week launched a counter-offensive here through the media, telling Americans that the industry is creating new work opportunities for them.

Obama and Clinton were at a 90-minute debate in Cleveland a week ahead of a critical group of primaries -- an event that was devoid of any major fireworks but a mere reiteration of stated positions on issues as universal health care and Iraq.

Speaking about NAFTA, the trade pact with Canada and Mexico that is seen as unpopular with the workers, Obama said Clinton's views on the issue were not consistent.

"I think that it is inaccurate for Senator Clinton to say that she's always opposed NAFTA. In her campaign for Senate, she said that NAFTA, on balance, had been good for New York and good for America. I disagree with that...Now, I think that Senator Clinton has shifted positions on this." Clinton, on her part, said "I have said I would renegotiate NAFTA...I will say to Mexico that we will opt out of NAFTA unless we renegotiate it."

On the Iraq war, both the Democrats slammed President George W Bush's record and restated long-held disagreements over which of them was more opposed to the invasion.
Clinton also said as far as she knew her campaign had nothing to do with circulating a photograph of Obama wearing a white turban and a robe during a 2006 visit to Kenya which appeared on the internet.

"We have no evidence where it came from," Clinton maintained.
"I take Senator Clinton at her word that she knew nothing about the photo," Obama said. ...

source:http://www.financialexpress.com/news/Obama-still-playing-antioutsourcing-card/277682/

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