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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Benefits of Outsourcing

One of my friend has given a very good comment “What is the benefit of outsourcing?”, so I have issued this postings which will give a fair idea as to why we have to outsource. Many are under the impression that outsourcing can happen for data entry kind of job is outsourced but it is totally wrong.

Now BPO has taken a new name KPO i.e. Knowledge process outsourcing. Cost reduction is one of the main benefit of outsourcing but at the same time we are adding more business as we are diverting our precious time in getting new clients than looking into routine activities or non-core activities which can be easily outsourced to a third party service providers in countries like India, china, Philippines etc. Where we have skilled and trained resources availability at a very competitive pricing.

Cost is no longer one of the top benefits of outsourcing. Many companies are now looking at strategic value and speed to market as the primary benefits of outsourcing.

Here are the some of the benefits from outsourcing….

• Save on manpower (Payroll) and training costs
• Control operating costs
• Improve speed and service
• Increase processing capacity specially for a seasonal nature of job

• Eliminate peak staffing problems
• Provide the best quality services, products and people to the customers
• Be reliable and innovative
• Be competitive in the market in terms of pricing to the customers

• Provide value-added services
• Increase customer satisfaction
• Enhance tactical and strategic advantages
• Focus on strategic thinking, process reengineering and managing trading partner relationships
• Benefit from the provider's expertise in solving problems for a variety of clients with similar

requirements.
• Obtain needed project management and implementation consulting expertise
• Acquire access to best practices and proven methodologies
• Avoid investment in technology
• Concentrate more on diversifying the business
• Leverage the provider's extensive investments in technology, methodologies and people
• Reduce the risk of technological obsolescence
• Increase efficiency by consolidating and centralizing functions
• Reduce the overall management burden while retaining control of strategic decision making.
• Reduce overheads, free up resources
• Minimize capital expenditure
• Eliminate investment in fixed infrastructure
• Offload non-core functions
• Redirect energy and personnel into the core business
• Free your executive team from day-to-day process problems
• Focus scarce resources on mission-critical projects
•Get access to specialized skills new technology in communication like

VOIP,Teleconferencing,Screen sharing applications like Gotomeeting
• Reduce need for internal commitment of specialists

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