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Same sex couples are not recognized when filing federal income tax returns. In 1996, the Defense of Marriage Act defined marriage as between one man and one woman, prohibiting federal recognition of same sex married couples and polygamists. So, same sex couples cannot file joint federal returns.

Some states, however, do recognize same sex marriages, domestic partnerships, or civil unions. In these states, a same sex couple may file a joint return for their state taxes. As of now, these states are Massachusetts, California, New Jersey, Connecticut, New Hampshire, Oregon, Vermont, Washington D.C., and the state of Washington.

Massachusetts is the only state recognizing same sex marriage. Therefore, any legally married same sex couple in Massachusetts can file a joint state return.

Since tax year 2007, you can file a joint return in California as a same sex couple.

If you are married or in a civil union by the last day of the tax year, you may file a joint return in New Jersey. If, however, you are not married or a partner in a civil union, you may not file a joint state income tax return. This especially applies to registered domestic partners, which status does not qualify to file a joint income tax return in New Jersey.

Since tax year 2006, civil union couples can file a joint state income tax return in Connecticut.

Since tax year 2008, if you are a civil union couple residing in the state of New Hampshire, you can file a joint state income tax return.

Oregon has a very complicated domestic partner tax structure. In some cases, same sex couples may be able to claim a subtraction status from income, but by no means under all conditions. It is best to check with the state of Oregon department of Revenue for more details.

If you are registered civil union partners in Vermont, you can file a joint state income tax return.

Since 2006, registered domestic partners in Washington, D.C. can file a joint income tax return.

The state of Washington does not allow joint filing for domestic partners.

These state regulations are often in flux due to the constant battle and litigation over same sex couples rights. At almost any point in time, it seems the laws governing civil unions and domestic partnerships can be changed or modified. It is highly recommended that you check with the Department of Revenue in your state in order to be up to date regarding the income tax filing requirements and restrictions regarding civil unions and domestic partnerships.

By: Chintamani Abhyankar

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The silver lining to doing taxes for most people is getting a tax refund. If you are feeling a money crunch these days, asking the IRS to directly deposit the refund in your bank account will speed things up.

When filing your taxes, it is important to remember that the date you file is only the starting process of getting money back from the IRS. If you file at the last moment, like many do, then you need to take into account that your personal return is only one of a few hundred million returns being received by the Internal Revenue Service.

There are a couple of ways to speed up the payment of your tax refund. Going with direct deposit definitely will cut the time by as much as two to three weeks. It cuts out some of the process and printing time for checks at the IRS. It also cuts out mailing time and the like.

Another way to speed up the refund period is by going with the electronic filing option for your tax return. Computers are much faster at processing tax returns than going through the mail and the like. If you select to file electronically and get a direct deposit of your refund, you can see turn around times of as little as two weeks to receive your tax refund.

Although getting a tax refund as quickly as possible would seem to make sense, some people have concerns. One is a nervousness about giving the IRS a bank account number. There is no risk. The IRS can already access your bank account if it wants to. The concept of privacy in the United States is dead for all intensive purposes.

A quick mention should be made regarding the value of a tax refund. Yes, we all like getting them. Who couldn’t use an extra bit of cash? Well, there is a downside to a tax refund. If you are getting back a sizable chunk of money, you need to reconsider your tax planning. Why? Well, you are effectively giving the government a free loan throughout the year with that money. Try to take less tax out of your paycheck so you pay yourself instead of Uncle Sam.

By: Richard Chapo

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Self-employment offers a multitude of tax benefits. Opportunities to maximize your income while increasing your income may actually mean you are paying more tax, but at a lower percentage of your income. As Americans it is our duty to pay our fair share of tax to support our government, however, IRS and legislature have provided many opportunities to maximize personal benefits while minimizing personal tax debt.

The following tips are commonly known, although many do not use them well.

1. Keep good records. While a good accountant may be beneficial to your business, and services of a quality accounting service are fully deductible, this is often not a financial option for smaller businesses. However, good record keeping is always an option. Most computer programs have minor accounting programs that will handle basic record keeping for a small business.

2. Office space is deductible. Maintaining an office in your home or business site, both require space and there are allowances for a home office. Specifically the square footage that is dedicated office space for your business, any and all equipment purchased to operate your home office, and improvements made for the purpose of efficiency.

3. Business expenses are important. Along with keeping good records, it’s extremely important that you keep records of all business expenses. A daily diary where you log any expenses for business costs is an excellent way of managing your petty cash. A checking account to pay all larger costs is imperative. If credit cards are used, you must keep detailed expense records, in order to deduct interest on cards. (Mentioning these in your daily diary is an excellent method to keep track of them.)

4. Childcare is deductible. Even when your business is home based, childcare is a deductible personal expense. Often household help is overlooked as a deduction, when in fact it is often a necessary expense, and the reality is you are creating income for another person. Lawn care and household help are both business related expenses.

5. Set up a Retirement Plan. A retirement plan not only benefits you later in life. It is a method of reducing your current tax liability, and often reducing taxable payment on a set amount of money during any point in time. Your taxable income at retirement will most likely be a lower bracket than your working income.

6. Employ family members legitimately. If you have family members who can do various aspects of your business, it makes sense to employ them and offer benefits related to health care and retirement/college funding. (Although these benefits must be paid for all employees, your tax savings may benefit this payment.)

7. Defer billing/income. If you work on a cash basis and realize payment of a specific job is going to shoot you into a higher tax bracket for a specific year, it is acceptable to defer billing/income to the next year, decreasing your tax bracket. This method isn’t recommended for many uses, but if your next year income will increase you to a higher level in the next bracket, this method may be recommended.

8. Use cost analysis and investment savings. By using depreciation wisely, your costs in any given year, and your investment savings in equipment purchases can be beneficial to your tax plan.

9. Year-end investment purchases. A continuation of the depreciation benefits, year-end purchases of necessary equipment for your purchases can increase the value of your business while decreasing your tax liability. Planning for new purchases when the year has been particularly profitable, makes sense for several reasons. Your business will be more profitable with newer equipment, resulting in increased income.

10. Get the right help. Often a small business denies themselves quality advice because of the cost, without realizing those costs are deductible, and pay off in the long run. A quality accountant, or a tax consultant who knows the law well enough to advise about purchases, investments, and appropriate deductions can save your business money, by offering excellent advice.

Valuable Tax Advice can improve the longevity and financial structure of your business. Scrimping on quality tax advice is like scrimping on safety concerns. Ultimately, it may cost you more.

By: Jan Verhoeff

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The Golden State is definitely golden as it serves as a beacon for those who would like to make their entry to America through the Pacific, as the waves of migrations by Asians, Latinos, and Chinese would attest. The nickname “Golden Gate” would not have been tagged to the state if gold had not been discovered there a century and a half ago, ushering in what is known as the great travel to the west setting thousands on a cross-country voyage. This not only proved to be meandering, but also hazardous both from the tempests of nature and wild animals as well as from the band of Native Americans who frequently staged attacks on the wanderers. And in case gold wasn’t found there, the state may have been nothing more but a barren expanse similar to Nevada’s desert to the east.

The Tax Rates in California

Today, California is one of the more progressive states in the United States. In 2007, it posted a gross state product of $1.812 trillion, which is the largest in the United States. One of the answers to this amazing income are the tax brackets that California uses, these have served the state well in good stead. The tax rates call for taxing rich citizens proportionate to their income, resulting to the fact that the richest 3 percent of taxpayers shoulders a huge 60 percent of all state taxes.

For corporate tax rates, California levies 10.84 percent on banks and financial institutions. For corporations aside from banks and financial institutions, the tax rate is 8.84 percent. For income taxes, the minimum rate for individual taxpayers is 9.3 percent. Apart from these, the state also allows its citizens many forms of rebate such as those afforded to senior citizens, widower, or for couples who have children.

By: Dean Sturridge

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Income tax relief is a program created by the Internal Revenue Service (IRS) to assist willing tax payers in lowering the amount they owe in taxes, often times waiving or eliminating altogether their total owed to the government. This relief act is not a widely advertised program. The main reason, of course, is the fact that the IRS does not want people abusing this privilege, claiming hardship and inability to pay only because there is an option available that allows them to. Each person is reviewed on a case by case basis and is either confirmed or denied based on a number of factors including their net salary, their assets as well as other personal questions.

Meeting with a tax attorney or a tax accountant is a good place to start with your tax needs. These highly trained counselors are available to offer assistance and guidance concerning your income tax relief. Most online tax services offer many options, not just relief from taxes. The norm for what these online tax relief companies provide is IRS wage garnishing advice, penalty abatement, innocent spouse and audit defense. Penalty abatement is a tax debt resolution process in which a tax debtor challenges interest and penalties for a designated length of time. The taxpayers may request penalty abatement on the basis of with an administrative waiver, such as bad advice from a tax practitioner, reasonable cause like a death in the family or an error on the part of the Internal Revenue Service. Wage garnishing is a process what is granted by an order of the court or by the government by which the Internal Revenue Service obtains part of the salary of the tax payer directly from an employer who is behind in payments to the government.

Income tax relief is a way for you get a small break during the stressful tax time. It is a way to encourage tax payers to not be negligent on the taxes that they owe by giving them a little break on the entire amount. The IRS appreciates people taking the initiative to contact them and inquire about the offered relief. You are approved or denied on a case by case basis. You may have a large portion of what you owe waived, or just a small amount depending on your current financial situation. Any way you look at it, when it concerns your taxes, any relief is a good relief!

By: Matt Murren

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What is the inheritance tax rate? There is no such thing as a federal inheritance tax rate. The inheritance tax is imposed on a state level, and not all states have one. For example, Texas does not impose an inheritance tax, and some states refer to an estate tax and an inheritance tax as the same thing even though they are technically very different. Other terms you may hear used in place of inheritance tax are “death duty” in the United Kingdom, “estate duty” in Hong Kong, or “stamp duty” in Bermuda. Some places such as Australia and the British Virgin Islands do not currently have an inheritance tax nor have they ever had one.

DIFFERENCE OF AN ESTATE TAX AND INHERITANCE TAX

The difference between the estate tax and the inheritance tax lies with who is actually responsible for paying the taxes owed.

WHO PAYS THE ESTATE TAX?

With an estate tax it is the responsibility of the Administrator, or Executor, of the estate to pay the taxes. The taxes are calculated based on the entire value of the estate, and if the Administrator cannot pay the taxes out of the estate’s value then it becomes the responsibility of the heirs to pay the taxes. The federal government will impose this tax according to established guidelines which include the value of the estate.

WHO PAYS THE INHERITANCE TAX?

An inheritance tax is the individual responsibility of each heir. Determining the financial responsibility of the heirs for the inheritance tax is based on several key factors.

WHAT IS THE INHERITANCE TAX RATE? IT DEPENDS…

The inheritance tax rate varies depending on the relationship of the heir to the deceased (decedent). Each state may determine this rate, and if the heir is a distant relative or friend the inheritance tax rate will be much higher than if the heir is a spouse or child of the decedent.

A child may be entitled to an exemption of the first $3000 of their inheritance and be responsible for only a 7.5% tax on inheritance valued over $100,000. In contrast, a friend of the decedent may be taxed as much as thirty percent and only receive a tax exemption on the first hundred dollars.

Another consideration state government will make when determining the inheritance tax rate will be the fair market value of the property being transferred. Fair market value is not what it would cost to replace the property, but what you would be able to sell the property for if needed.

WHAT ARE THE INHERITANCE TAX EXEMPTIONS?

Your heirs may receive tax exemptions for taxes that have already been paid on the property and it is important to have all documents in a readily accessible location to prove that little or no debt is owed upon your death. If any of the inheritance has been designated for charitable organizations your heirs will not be held accountable for paying an inheritance tax on this portion of the estate.

FRAUDULENT INCOME TAX RETURNS TO AVOID THE INHERITANCE TAX

Opponents of the inheritance tax feel that in addition to an estate tax, the inheritance tax is harmful to families who may need the money immediately and cannot afford to pay harsh taxes imposed on them during an already emotionally difficult time. Critics also feel that taxes such as these encourage individuals to file fraudulent income tax returns by placing their money into annuities both on and offshore, and to establish trusts for their heirs to remove large amounts of property from their listed estate.

Call a professional estate planner such as Estate Street Partners if you wish to know more about how to reduce your estate tax, eliminate your inheritance tax, possibly eliminate some of your income tax and learn how to strategize your money and assets to be in compliance with the IRS and federal and state-specific regulations. Estate planning can be complex and taking the route of doing it yourself can lead to severe financial penalties.

SEEK KNOWLEDGEABLE AND PROFESSIONAL ESTATE PLANNING ADVICE

Inheritance tax information can be obtained by seeking the services of a knowledgeable estate planner. Since each state differs in the amount taxed to heirs, an estate planner will be able to provide accurate information involving up-to-date tax laws and ways to protect assets.

One of the more common means of protecting inheritance from taxes is to place money into trusts and elect a trustee to transfer the property to your beneficiaries upon your death. Once money has been allocated into a trust it is removed from you listed estate and upon your death it will be distributed to your heirs free from estate and inheritance taxes.

Some people also choose to give their money in the form of gifts to organizations and establish a charitable gift annuity. Receiving money from an annuity protects your heirs from paying any inheritance tax, although they may still be responsible for an early withdrawal penalty from the IRS. Failure to consult with an advisor could result in unnecessarily high taxes for your heirs. Please seek professional advice on these important financial matters.

By: Rocco Beatrice

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