Category Archives: Tax

Indian Income Tax Slab/Rates for the F.Y. – 2015-16 and A.Y. – 2016-17

Income-Tax-Dept-India

On 28th of February 2015 Finance Minister Shri Arun Jaitley announced the budget of India for the Financial Year 2015-16. The Income Tax slabs/rates for the the Financial Year 2015-16 and Assessment Year 2016-17 is discussed below:
  
  

(I) For Individuals aged below 60 years (including Woman Assessees or any NRI/ HUF/ AOP/ BOI/ AJP):
 

Income

Tax Rate

Upto 250,000 Nil
250,000 to 500,000 10% of the amount exceeding 250,000Less ( in case of Resident Individuals only ) : Tax Credit u/s 87A – 10% of taxable income upto a maximum of Rs. 2000/-.
500,000 to 1,000,000 Rs.25,000 + 20% of the amount exceeding 500,000
1,000,000 & above Rs.125,000 + 30% of the amount exceeding 1,000,000

 

(II) For Senior Citizen (Individuals aged 60 years and above but below 80 years):

Income

Tax Rate

Upto 300,000 Nil
300,000 to 500,000 10% of the amount exceeding 300,000
500,000 to 1,000,000 Rs.20,000 + 20% of the amount exceeding 500,000
1,000,000 & above Rs.120,000 + 30% of the amount exceeding 1,000,000

 

(III) For Super Senior Citizen (For Individuals aged 80 years and above):

Income

Tax Rate

Upto 500,000 Nil
500,000 to 1,000,000 20% of the amount exceeding 500,000
1,000,000 & above Rs.100,000 + 30% of the amount exceeding 1,000,000

Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore.

Education Cess : 3% of the total of Income Tax and Surcharge.

Tax Credit U/S 87A: Finance Bill 2015 says nothing on the Section 87A. Hence this provision continues for AY 2016-17 as well and provides a rebate of Rs 2,000 for individual whose taxable income doesn’t exceed Rs. 500,000.

 

(IV) For Co-operative Society

Income

Tax Rate

i. Where the taxable income does not exceed Rs. 10,000/
10% of the income.
ii. Where the taxable income exceeds Rs. 10,000/- but does not exceed Rs. 20,000/-.
Rs. 1,000/- + 20% of income in excess of Rs. 10,000/-.
iii. Where the taxable income exceeds Rs. 20,000/-
Rs. 3.000/- + 30% of the amount by which the taxable income exceeds Rs. 20,000/-.

Surcharge : Where taxable income is more than Rs. 1 crore, Surcharge will be 10% of the Income Tax. (Marginal Relief in Surcharge, if applicable)

Education Cess : 3% of the Income Tax and Surcharge.

 

(V) For Firm

Income Tax Rate

Surcharge

Education Cess

30% of the taxable income. Where taxable income is more than Rs. 1 crore, Surcharge will be 10% of the Income Tax. (Marginal Relief in Surcharge, if applicable) 3% of the Income Tax and Surcharge. 

 

(VI) For Local Authority

Income Tax Rate

Surcharge

Education Cess

30% of the taxable income. Where taxable income is more than Rs. 1 crore, Surcharge will be 10% of the Income Tax. (Marginal Relief in Surcharge, if applicable) 3% of the Income Tax and Surcharge. 

 

(VII) For Domestic Company

Sl No.

Particulars

Tax Rate

Surcharge

Education Cess

Effective Tax

1.

Domestic companies (with total taxable income less than 1 Cr.)

30%

3%

30.90%

2.

Domestic companies (with total taxable income more than 1 Cr. but less than 10 Cr.)

30%

7%

3%

33.063%

3.

Domestic companies (with total taxable income more than 10 Cr.

30%

12%

3%

34.608%

 

(VIII) For Company other than a Domestic Company or Foreign Company

Sl No.

Particulars

Tax Rate

Surcharge

Education Cess

Effective Tax

1.

Foreign companies (with total income less than 1 Cr.)

40%

3%

41.20%

2.

Foreign companies (with total income more than 1 cr. but less than 10 Cr.)

40%

2%

3%

42.024%

3.

Other foreign companies

40%

5%

3%

43.26%

Income-tax-individual

Helpful Resources:

http://www.incometaxindia.gov.in/Pages/default.aspx

https://incometaxindiaefiling.gov.in/

Start Your Own Tax Preparation Business

Tax Preparation

They say there is nothing certain in life except death and taxes, so why not start your own tax preparation business. It is easy to start this type of business, and it is as close to as stable of a business as you will ever see. Regardless of the condition of the economy, there will always be a demand for people to prepare their taxes.

Although there is a lot to know about preparing taxes, the truth is that much of the work that is done today is done with software. It has become so simple that you do not need a degree in accounting to prepare someone’s tax returns. All you need to do is learn how to use tax preparation software.

There are companies that will license this type of software to you and train you to use it. Once you learn how to use the software, you only need to make sure your clients have the necessary information to enter the correct data. This type of software also has verification checks built into it to make sure the right data is being entered.

One of the best parts of starting your own tax preparation business is that you can operate the business right out of your own home. You can also do it part time throughout the year while you work another job. This takes much of the risk out of starting your own business.

There are several companies that will provide everything you need to get your tax business started. One example of this type of company is No Limit Tax Refunds. Their website has a click here button for more information.

Outsource Tax Work to an Accountant

Let’s face it, no one likes taxes. Taxes are a necessary evil in life and every business or person needs to follow through on the best tax prepartion Calgary every year. Otherwise, the business or person could face an audit or a general headache when the taxes are due.

Tax-AccountingThe main problem most organizations and people have with taxes, however, is not that they exist, it’s that the tax laws always change. From one tax year to another, a family or small business could expect their tax rates to change on a federal level, in Alberta or with their municipal taxes in Calgary. Although most people expect they can handle their taxes, it is always a good choice to consult with an accountant or accounting firm.

Accountants or accounting firms may seem like a financial investment, but the investment is worth the time and money. Accounting in Calgary can be quite complex and an accountant or firm is here to help their clients. Every accountant, whether they are independent or part of a firm, will know the complexity of the Calgary, Alberta and Canadian tax code. These professionals also keep up-to-date on how the tax code changes. They also know what benefits exist or are created in the tax code for families or businesses. Finally, these professionals can offer consulting advice on how to best prepare or handle tax issues with the government.

Outsourcing tax work to an accountant will help to alleviate any stress that comes from filing taxes. Instead of frantically keeping up with new tax laws and codes, have an accountant work on the taxes.

Why File Your Taxes Correctly the First Time?

For some people, trying to do their taxes is just too complicated. Whether they own a business, have investment income or have a combination of both, trying to file the correct paperwork and getting everything right on a tax return may not be possible without the help of a professional.

Having a professional prepare a tax return may be beneficial because a professional has years of experience in dealing with tax laws and filing complicated returns. Instead of making mistakes that could cause an audit, your return will be filed without errors. Even if the government audits you, you can rest assured that the odds of the government finding that you owe additional money are not high.

Using tax preparation services such as the ones found at Quon & Associates can help you make sense of your tax situation and find ways to possibly lower your tax burden. If you are in Canada and owe United States tax, having a US tax Calgary professional in your corner makes it easier to determine how much you owe and when you need to pay that money by.

The government is going to get every dollar that it is owed. Therefore, it is in your best interest to file your return properly the first time. This may eliminate the odds of getting an audit and having to spend untold hours and a lot of money proving that you filed an accurate return.

IRS tax penalties

Great_Seal_of_the_United_States_(obverse)When an individual is not paying taxes in accordance with the IRS tax laws, they use a program called penalty program. IRS tax penalties are placed on your account since you have not complied as per the rules of the IRS tax laws. The penalties are imposed so that you do not miss paying your taxes on time, according to proper filing procedures, and payment arrangements made. You can avoid paying penalties if you are filing your taxes properly.

  • Tax penalties review

If you miss paying taxes, you will be charged penalty on your tax account for some of the following reasons.

  1. You pay a penalty when you do not file your tax return within the due date. This will include the extension period given to you for filing taxes. It is necessary that you comply with the IRS otherwise they will charge you failure-to-file penalty. It cannot be more than 25% of the amount of taxes that you owe.
  2. You are required to pay a penalty when you have missed paying the penalty on your tax return in the past. This penalty is usually within 25% of your unpaid tax. However, if you can provide a good reason regarding why you were not able to pay the tax on time, chances are that you do not have to pay this penalty.IRS tax penalties
  3. The frivolous return is when you have to pay a penalty because your tax return does not show enough information to figure the correct tax or a tax return. This penalty is usually in addition to any other penalty that might be assessed to your account.
  4. If someone is neglecting paying the tax return, they will have to pay such penalties.
  5. The IRS tax agent should receive correct information from you about your identity and other information related to your taxes. If you fail to do you, you will have to pay a penalty for it.

If you have missed filing your taxes without any proper reasons, you will have to pay a small penalty. The penalties may vary depending upon the charge and in some cases will result in imprisonment. Therefore its very important to file your taxes on time.

Find other quality articles:

http://www.irs.gov/uac/Newsroom/Eight-Facts-on-Late-Filing-and-Late-Payment-Penalties

http://en.wikipedia.org/wiki/IRS_penalties

Preparing your own Taxes

It is a fact that millions of taxpayers in USA are losing millions of dollars to the government because of erroneously prepared tax returns. This is mainly because of the ignorance on their part, or because of the ignorance or negligence of the professionals they have paid to prepare their tax return.

Tax

Tax

This incidence of ignorance has increased to such a magnitude that the IRS is forced to take action. From 2013, anyone who prepares tax returns for a fee, unless he is an attorney, CPA or enrolled agency, they have to be certified by the IRS. They will have to pass an IRS competency examination and a background check, before the certificate is issued to them.

Preparing your own income taxes is not at all that difficult as your tax professional might want you to think it like. There are many advanced tax preparation softwares available that has made preparing taxes so easy. You do not need any knowledge of tax laws to understand the process. This holds particularly true with the Turbo Tax Home and Business Tax preparation software, which has now gotten much better in the recent times. As it is not that expensive, it is virtually just as easy and effective to use this tax software as it will be used by a professional tax preparer.

There are many benefits of preparing taxes on your own. You do not need to disclose your sensitive personal information to any other person. It will reduce the risk of your personal information being compromised. Your never know how much your personal information is safe after leaving from the doorstep of your tax preparer. The IRS has found a huge increase in taxpayer identity theft in the last couple of years. That’s why they are always advising to consult with honest tax accountants with whom your personal information is safe and secure.

You can actually save a lot of money when you prepare your taxes on your own. Hiring an accountant can be quite costly and tax preparation fees can range from $300 and upwards for an average tax return with a Schedule A. When you file taxes on your own, you will have full control over it. You can take as much time to prepare your own taxes and do your own research to ensure optimum results.

It will also motivate you to look at your own finances and as you immerse yourself in the process, you gain more knowledge about tax matters and money management issues.

More information:

http://www.irs.gov/

http://en.wikipedia.org/wiki/Tax_law

IRS Back taxes

Many people face troubles in paying their IRS debts and the back taxes. If you have not been paying your taxes for a long time, the government can take your home, car or many other valuable things to recover the previous dues. If you are facing similar problems, it is time that you should look for some solutions now before it gets too late. You will find many sources on the internet that can help you fight against these problems or help to settle it.

If you have not been able to pay your tax debts for a long time, don’t wait for something bad to happen. Your best bet is to contact the IRS and explain them about your current financial situation and why you had not been able to make payments in the past. This will make things a lot easier on your behalf. You may apply for a penalty abatement which will eliminate all your previous penalties.


If you are applying for a penalty abatement, make sure that you show a very genuine reason of not been able to pay taxes. This can be in relation to death, illness, receiving false tax information, or anything that has been a financial detriment for you. Not paying the taxes in time has fatal consequences like your work payment will decrease and you will be deprived of any social security or disability benefits. More importantly, the tax debt is not going to go away by not paying it. The longer you postpone filing for your taxes, the tax payment is going to get bigger and added with penalties over the period of time. So make sure that you get rid of this federal/state debt as soon as possible.

Facts about the escrow account


Every year thousands of people make big purchases on their homes. These new homes come equipped with all the latest amenities like granite counters, new appliances, the fresh smell of paint and new carpet. Borrowers are very excited to move to their new furnished home. It’s that home for which they have worked so hard to own. Later, facts start coming after the second year of their living on that home. The property tax comes due. Follow this simple illustration below. I and my wife together purchased a home for $200,000 in July of 2007.

Since the home was new, the taxes were on the land only since it’s an unimproved property. The tax was calculated by the cost of the land times three percent or $35,000 x 3% making the total $1050 per year or eighty-seven dollars per month. Everything is going fine until the taxes hit in the month of November 2008. Now, the new taxes will be calculated on the basis of improved property times three percent or $200,000 x 3% making the total new tax bill $6000 dollars per year or $500 dollars per month. Based on the old escrow account, I would have saved eighty-seven dollars per month times twelve months in the year. I accumulated $1050.00 but owe $6000. I am almost 5000.00 short in the escrow account. In case, I can’t come up with that money, the mortgage company will gladly pay it for me.

Now, since the mortgage company has paid my taxes, they will increase the mortgage payments by $500.00 per month to recoup the money they paid the taxes with and adjust the payment by $413.00 dollars per month to set the new escrow account up correctly. At the end, I realize that my mortgage payments have jumped up by almost $1000. I may not be in a situation to afford the new payment. The bank will foreclose the property and I will have to move to another apartment. My credit is ruined and the dream is turned over to a hard terrible reality.

Now, the question in your mind that comes first is to have a solution for a situation like this. First, it’s very important that you deal with a reputable mortgage lender. He will give you the time to explain how to set up the escrow account correctly. Anytime, when a new deal is finalized, the lender has the option of working with the borrower and set up the escrow account in such a manner so that you don’t fall into a shortage. They can set it up on the basis of improved or unimproved taxes. It’s always a good decision to have more than sufficient in your escrow account than to run short of the required amount. Before the escrow account shapes up a big problem, it is better to have a solution always ready and it can only happen when you have the required funds available. At the end you must question yourself one thing. Can you afford for a $1000.00 per month jump in your mortgage payment?

What kind of taxes must be paid?

Have you started a new business and are puzzled about tacking your taxes? Go through some of the tips here to know the basic idea on what taxes needs to be paid and how to pay them. All taxes are paid differently and it all depends upon the legal status of your individual business. Sole proprietorships and partnerships report their net income on the owners’ personal tax returns. Corporations will have to file a corporate tax return.

Sole proprietors – People doing sole proprietor’s business must report their company’s net business profit (or loss) under the Self-Employment Income section of their personal tax returns.

You must report the gross and net income for your business and file either a Statement of Business Activities or a Statement of Professional Activities form. The basic difference between the two is that some professional activities may differ from other types of businesses activities.

Partnerships – Two or more individuals can have a partnership business. They are more compared with a sole proprietorship than a corporation. The partnership does not pay income tax or file a tax return. Instead each partner reports his or her share of the partnership’s net income or loss. This applies whether you received your share of the income in cash or as a credit to a capital account in the partnership.

Partners also file either a Statement of Business Activities or a Statement of Professional Activities form.

A corporation is a separate legal entity. All its business transactions are entered into and conducted separately from its owners. It therefore pays tax on the income it generates and files its own income tax return.

Corporations use the T2 return form, even if the company has zero taxes payable as in the case of non-profit organizations, tax-exempt corporations and inactive corporations. If you are not clear with this, get the full explanation on the items on the T2 return or consult the T2 Corporation Income Tax Guide (T4012).

Corporate filings are complex and assistance from a tax professional is always recommended.

  • How do I calculate my net profit (or loss)?

To calculate your net profit (or loss) and complete your tax return you need to have detailed records of:

  • Get all business details showing all income
  • all expenses, and
  • All company assets.

Next: subtract the cost of goods sold and expenses you incurred in the fiscal year (whether or not you paid them in that period) from the income you earned in that fiscal year (even if you do not receive it during this year).

This is known as the accrual method, where income and expenses are reported for the year in which work is done, regardless of whether payables and receivables for the job are actually paid in that year.

  • What records do I need to keep?

If you wish to run your business more effectively, keep good records because you might need all the information of your business during auditing. You need to keep records of all income that you receive. You must also keep receipts for all of your business related expenses, including:

  • receipts
  • sale invoices
  • purchase invoices
  • vouchers
  • banking information
  • directors and shareholders minutes
  • general ledger
  • special contracts
  • agreements

What questions to ask an attorney before finalizing him!

These questions will vary as per your case. Go through these points and know how to get started.

  • What are your areas of specialization?
  • What is the cost of the initial consultation?
  • Have you handled cases like mine before? How many? What was the outcome?
  • Will you be the only attorney who works on the case? If not, who else will work on it?
  • How long will it take for this case to be resolved?
  • How much will my case cost? Can you take my case on a contingent fee basis?
  • Can I do some of the work on the case to keep the cost down?
  • Are there things I should do to improve my case, or to help you?
  • How will you keep me informed about the progress of my case?
  • If I contact your office with questions, how long will you take to return my call?
  • If you are unavailable or on vacation, who can I speak to about my case?
  • Can I reach you after hours, if I have an emergency?
  • How often do you go to trial?
  • If I am not happy with a settlement offer, and you want to settle, will you go to court anyway?
  • If I am happy with the offer, but you think we can win more at trial, will you follow my wishes?
  • Have you ever been disciplined by an ethics committee, or been suspended from the practice of law? If so, why?
  • What “continuing legal education” courses have you attended during the past few years?


A written agreement is a must

Always get the written retainer agreement so that you have your rights protected. Before signing the contract, go through the points carefully and if you have any queries, get it clarified by your attorney. If you are paying thousands of dollars just in fees, you might even like to get the contract reviewed by another attorney and compare. The retainer agreement should accurately describe the legal issues for which the attorney is representing you, the amount of fees and all terms that have been discussed.

Terminating the agreement

You have the right to terminate a relationship with an attorney in an ongoing case. It must be noted that you have to pay for the services that the attorney has already performed for you. If the attorney has mentioned about recovering the complete cost of the case even if you decide terminating the agreement in between, you will have to pay the full amount.

Dispute between you and your attorney

In the event a dispute arises between you and your attorney, dispute resolutions services are offered by the state bar councils. These services are particularly beneficial in the event of fee disputes. Each state has a “grievance” procedure where you can file complaint against your attorney and have them investigated.

Capital Gains Tax Exemption

If you are thinking about selling your house but are concerned about the capital gains tax you may have to pay on profit made from sale then there is some good news for you.

You might not have to pay any tax on the profit made if certain conditions are fulfilled. In the following sections we will look at how you can retain the total amount of profit made from sale of your house without having to pay any taxes.

When a person sells his house and makes a profit then this profit can be exempt from taxes up to the maximum exemption limit of $250,000 if:

  • He meets the use of house requirement and
  • The ownership requirement, and also
  • Had not used capital gains tax exemption in the last two years before the house is sold.

The exemption limit is $500,000 if:

  • The seller is married & files a joint return and
  • Both he and his spouse meet the use of house requirements and
  • Either he or his spouse meets the ownership requirement, and lastly
  • Neither he nor his spouse had used the exemption in the last 2 years before the house is sold.

Now let us look at what these, use of house and ownership requirements are.

To avail the exemption, during the five year period ending on the date house is sold a person must have –

  1. Lived in the house using it as his main house for at least two years and
  1. Owned the house for at least two years.

Let me add here that the two years of use & ownership during the five year period need not be continuous.

A person would meet the requirements if he can show that he owned & lived in the house using it as his main house for either twenty four full months or 730 days (365 x 2) during the five year period.

The exemption laws are somewhat different to accommodate the special needs of members of foreign services or uniformed services.

Members of foreign services or uniformed services can select to have the five year requirement period for use & ownership remain suspended during any period that such person or his spouse serves on qualified official extended duty.

It means that the person will be able to meet the two year use of house requirement even if, due to service requirements, he is not able to live in the house for the required two years during the five year period before the house is sold.

The suspension period cannot be more than ten years. Together, the five year requirement period & ten year suspension period can be as long as, but not more than fifteen years. In addition to it, the five year period cannot be suspended for more than 1 property at a time.

For applicability of this special rule, uniformed services & members of foreign services are defined as;

Uniformed services

  1. Commissioned corps of the Public Health Service.
  1. The Armed Forces (Army, Navy, Air Force, Coast Guard & Marine Corps) and
  1. Commissioned corps of National Oceanic & Atmospheric Administration.

Member of Foreign services

  1. An Ambassador at large.
  1. A Chief of mission.
  1. A Foreign Service officer.
  1. A member of Senior Foreign Service.
  1. Part of the Foreign Service personnel.

So by properly planning the house sale to keep note of how many years you have lived in it before it is sold & whether it was used as the main house for specified years, you can keep all of the profit made from sale without having to pay any tax on it.