Taxable or Non-Taxable?

Taxable or Non-Taxable Income? 

Although most income you receive is taxable and must be reported on your federal income tax return, there are some instances when income may not be taxable.

The IRS offers the following list of items that do not have to be included as taxable income:

• Adoption expense reimbursements for qualifying expenses
• Child support payments
• Gifts, bequests and inheritances
• Workers' compensation benefits (some exceptions may apply; see Publication 525, Taxable and Nontaxable Income)
• Meals and lodging for the convenience of your employer
• Compensatory damages awarded for physical injury or physical sickness
• Welfare benefits
• Cash rebates from a dealer or manufacturer

Some income may be taxable under certain circumstances, but not taxable in other situations. Examples of items that may or may not be included in your taxable income are:

• Life insurance If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Life insurance proceeds, which were paid to you because of the insured person’s death, are generally not taxable unless the policy was turned over to you for a price.
• Scholarship or fellowship grant If you are a candidate for a degree, you can exclude from income amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify for the exclusion.
• Non-cash income Taxable income may be in a form other than cash. One example of this is bartering, which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties

NOT SURE?? Call us- we can answer all your questions. 718-326-0500

October 2011 Halloween snow storm tax relief

Governor Andrew M. Cuomo has declared a State Disaster Emergency for 13 counties
that sustained extensive damage in the early-winter storm that started October 29, 2011. As a result of this declaration, Commissioner Thomas H. Mattox has postponed certain tax filing and payment deadlines for taxpayers who were directly affected by the snow storm that occurred in these counties. The relief provided for in this notice applies to taxpayers directly affected by the snow storm that occurred in the counties of Albany, Columbia, Delaware, Dutchess, Greene, Orange, Putnam, Rensselaer, Richmond, Rockland, Sullivan, Ulster, and Westchester.
 
Deadlines have been postponed for the period beginning on or after October 29, 2011,
and ending before November 16, 2011. For more details check out the official announcement:

http://www.tax.ny.gov/pdf/notices/n11_12.pdf

Bogus IRS Email may steal your identity.

BEWARE OF THIS OFFICIAL LOOKING EMAIL THAT REPORTS TO BE FROM THE IRS. IT IS AN ATTEMPT TO STEAL YOUR IDENTITY AND MAY CONTAIN A VIRUS.

THE IRS NEVER EMAILS TAXPAYERS ABOUT THEIR ACCOUNT. IF YOU RECEIVE AN EMAIL LIKE THIS FORWARD IT TO THE IRS AT phishing@irs.gov AND DELETE IT!

CONTACT TAXMASTER INC. IF YOU HAVE ANY FURTHER CONCERNS.

Tax year: 2011
Notice date: Sun, 9 Oct 2011 12:02:54 +0700
Page 1 of 1

Important information about your tax return
We are unable to process your tax return

We received your tax return. However, we are unable to process the return as filed.

Our records indicate that the person identified as the primary taxpayer or spouse on the tax return was deceased prior to the tax year shown on the tax form. Our records are based on information received from the Social Security Administration.
Based on this information, the tax account for this individual has been locked.

What you need to do

Visit review page on irs.gov
Keep this notice for your records.

Tax Relief in Disaster Situations

The Internal Revenue Service has updated its page providing details for victims of natural disasters. If you have been impacted by a recent storm, wildfire or other disaster, please visit their page:

www.irs.gov/newsroom/article/0,,id=108362,00.html

IRS Urges Taxpayers to Avoid Becoming Victims of Tax Scams

The Internal Revenue Service today encouraged taxpayers to guard against being misled by unscrupulous individuals trying to persuade them to file false claims for tax credits or rebates.

The IRS has noted an increase in tax-return-related scams, frequently involving unsuspecting taxpayers who normally do not have a filing requirement in the first place. These taxpayers are led to believe they should file a return with the IRS for tax credits, refunds or rebates for which they are not really entitled. Many of these recent scams have been targeted in the South and Midwest.

Most paid tax return preparers provide honest and professional service, but there are some who engage in fraud and other illegal activities.   Unscrupulous promoters deceive people into paying for advice on how to file false claims. Some promoters may charge unreasonable amounts for preparing legitimate returns that could have been prepared for free by the IRS or IRS sponsored Volunteer Income Tax Assistance partners. In other situations, identity theft is involved.

Taxpayers should be wary of any of the following:

• Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
• Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.
• Unfamiliar for-profit tax services teaming up with local churches.
• Home-made flyers and brochures implying credits or refunds are available without proof of eligibility.
• Offers of free money with no documentation required.
• Promises of refunds for “Low Income – No Documents Tax Returns.”
• Claims for the expired Economic Recovery Credit Program or Recovery Rebate Credit. 
• Advice on claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income.

IRS Increases Mileage Rate to 55.5 Cents per Mile

The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

Taxes Getting You Down?

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Tax Tips for 2011

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