Hurricane Katrina - How To Use Your Business Loss To Get A Refund on 2004 Taxes
With the massive losses caused by Katrina, the economy of the Gulf Coast region is in extremely bad shape. Fortunately, there is a quirk in the tax code that can help you generate a large refund from your 2004 taxes.
Apply Losses to 2004 Taxes
When a large geographic area suffers a disaster, the President can declare it a federal disaster area. President Bush has made such a declaration for the Gulf Coast area.
While you've probably heard such declarations occur over the years, I doubt it means much to you. The declaration, however, has major implications for recovery efforts. Initially, the declaration of a federal disaster area means the federal government is going to provide disaster relief loans, special grants that don't have to be repaid, unemployment benefits and a variety of other assistance. It also signifies a major tax break for impacted businesses.
When a business suffers a loss, the deduction must typically be made in the year the loss occurred. With Hurricane Katrina, the deduction would typically occur when you file taxes in 2006. The problem, of course, is 2006 is a very long time from now if your business is destroyed. You will find this hard to believe, but the IRS is here to help.
The IRS is going to give you cash. Under current tax law, you may make a special election to deduct your business losses caused by Katrina on your 2004 taxes. By doing this, you do not have to wait till 2006 to get a tax refund. You don't have to do this, but it may be the key to getting necessary cash.
To make the special election, you must claim it on your 2004 taxes. If you have already filed taxes for 2004, you can file an amended tax return claiming the deduction.
In Closing
Using this tax strategy can help generate badly needed cash. Make sure you pursue the strategy with the help of your tax professional. If all your records are destroyed, you can order copies of past tax returns from the IRS.
Richard Chapo is with http://www.businesstaxrecovery.com - recovering overpaid taxes for small businesses. Visit our article page - http://www.businesstaxrecovery.com/articles - to read more tax articles.
MORE RESOURCES:
Hiring demand for Accountants in the last quarter of 2011 grew 33% compared to 2010, with more than 76,000 new job ads posted online, according to WANTED Analytics™.New York, NY (PRWEB) January 31, 2012 During October, November, and December of 2011, more than 76,000 job ads for Accountants and Auditors were posted online, according to WANTED Analytics™ (http://www.wantedanalytics.com), the ...
TORONTO , Jan. 17, 2012 /CNW/ - The Canadian Institute of Chartered Accountants (CICA), Certified Management Accountants of Canada (CMA Canada ) and the Certified General Accountants of Canada (CGA-Canada) ...
TORONTO , Jan. 20, 2012 /CNW/ - According to the latest CICA/RBC Business Monitor, fewer Canadian executive chartered accountants are predicting a recession in Canada and a majority are forecasting a positive ...
The Certified General Accountants Association of Canada (CGA-Canada) has welcomed the release of the comprehensive report by the Red Tape Reduction Commission and congratulated the Commission for its dedicated work over the past year.
VANCOUVER , Jan. 18, 2012 /CNW/ - The Certified General Accountants Association of Canada (CGA-Canada) welcomes the release of today's comprehensive report by the Red Tape Reduction Commission and congratulates ...
Intuit Inc. is offering a free, mobile application to help taxpayers determine if they qualify for the Earned Income Tax Credit, or EITC.
CWB reports 2011 quarterly and annual results under IFRS
Avalara’s AvaTax and TrustFile™ also among CPA Practice Advisor magazine’s reader favoritesBainbridge Island, WA (PRWEB) January 10, 2012 Avalara (http://www.avalara.com), the market leader in automated, up-to-date sales and use tax compliance solutions, was recently honored by the readers of CPA Practice Advisor, as part of the magazine’s 2012 Readers’ Choice Awards.Based on votes submitted ...
Bountiful is not a religious commune and at best one of its leaders, Winston Blackmore, is nothing more than patriarch of a large, polygamous family.
With the scanning and OCR categorization of 62 T-Slips and source documents, the first production release of DoxCycle for the 2012 tax season brings new efficiencies and paperless organization to professional ...
Alas! In E-Commerce Taxland
In trying to comply with tax laws for your e-business, you may find yourself falling down the rabbit-hole, going through the looking glass, and attending a Mad Tea-Party.Common sense, logic, and fairness never did apply fully to the field of taxation but this is especially true of e-commerce transactions.
Tax Trap #2 -- Double Taxation: Isnt Once Enough?
Have you been thinking about incorporating your small business or self-employment activity? The advantages are many!For starters, you'll be protecting yourself and your family from the possible of a business ending lawsuit. Forming a corporation is Step One on the path known as "Asset Protection" -- you are moving from the world of unlimited liability to the world of limited liability.
1031 Exchange Rules and Requirements
Following is a reproduction of the IRS's rules and requirements for 1031 tax deferred exchanges with regards to real property. If you have any questions regarding the sale of your real property or questions about what qualifies for a 1031 exchange or not, please consult your tax professional.
The Tax Man Cometh... To Search
You're at your office, or home, and the doorbell rings - it's the Canada Revenue Agency ("CRA").The first thing to do is find out why they've come.
Highlights of IRS List of 2005 Tax Scams
Each year, the IRS lists various scams taxpayers get caught up in. The top 2005 scams include several that manipulate laws governing charitable groups, abuse credit counseling services or rely on refuted arguments to claim tax exemptions.
What Is Tax Law?
The federal tax code is complex. This complexity generally arises from two factors: the use of the tax code for purposes other than raising revenue, and the feedback process of amending the code.
Early Distributions From Retirement Plans
An early distribution from an Individual Retirement Arrangement (IRA) or a qualified retirement plan need not be a "taxing" experience. Fortunately, there are exceptions to early distributions.
Access to E-records by Taxing Authorities: A Case for Pakistan (Part I)
Background issues of access to recordsTo assess the records at hosted remote retained out of the jurisdiction of Pakistan root many legal issues which are needed to be addressed. Hereinafter there is description of the emerging legal issue of access to e-records.
Reducing Taxes Through Dividend-Salary Mix Calculations
Should I take wages or dividends from my privately owned corporation? What is the best way of taking money out of my company? In other words, what will result in the least amount of income taxes?A Canadian accountant will perform a dividend-salary mix calculation to determine the best way of withdrawing money from the corporation.Even though Canadian income tax laws are different from other jurisdictions, some of the same principles of tax planning will still apply.
Tax Trap #1 -- Waiting to Incorporate: What A Difference A Date Can Make
NOTE: This is the first in a series of 5 articles: "Small Business Tax Traps and How To Avoid Them"If you're a sole proprietor, perhaps you've considered incorporating your small business or self-employment activity.And so maybe you've been wondering, "When is the best time to incorporate?"From a legal standpoint, any time is the best time.
Tax Deductions - Mr. C.P.A. Can I Deduct a Pizza? You Too Can Deduct Your Fun By Using Tax Tips
Recently, I stumbled across a concept that could change your financial life. You can call it a paradigm shift or a new perspective or just a different way to look at things.
Tax Audits: What Signs Make You More Likely to be Audited by the IRS?
It's a major fear for most Americans: A notice from the Internal Revenue Service (IRS) summoning you for an audit.What is it about these three letters that strikes a cord of fear in Americans' hearts? Learning the signs that could put your tax return at the top of the list for an audit, and avoiding them if possible, may put your mind at ease.
Failure To Pay Employment Taxes - Penalties
As an employer, you must pay employment taxes if you have employees. Fail to pay and the IRS will rain all over your parade.
Send Your Kids To Summer Camp and Write It Off
If you paid someone to care for a child so you could work, you may be able claim a tax credit for child and dependent care expenses on your federal income tax return. This credit is available to people who, in order to work or to look for work, have to pay for child care services for dependents under age 13.
IRS Statute of Limitations: Do Taxes Ever Expire?
Many Americans believe that an IRS debt is a debt for life and that the tax collector can hound them to the grave. Thankfully, that is not the case and there are statutory time limits on the ability of the IRS to examine and collect taxes.
Furnishing Evidence in E-Tax Compliance
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This concept is recognised in all tax statutes, which sets out taxpayers' primary obligations, and clearly spells out that taxpayers are required to determine the amount of tax payable correctly and to pay it on time.
The Implications of Income Tax Charge on Estate Planning
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon Brown announced proposals to levy an Income Tax charge from 6th April 2005 in those circumstances where the transferor of an asset retains and interest or continues to benefit from that asset. In the instance of real property, the 'benefit' envisaged is the transferor continuing to reside in the property he/she has allegedly given away.
Fraudulent Tax Shelters - KMPG Goes Down Hard
In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars.
Understanding Basic Tax Terms
If your like many, you don't always understand what people are talking about when it comes to Taxes. It's important to know the main tax terminology, especially when tax season comes around.
Slash Tax when Buying a Business
When buying a business, how the "purchase price" is made up can affect what you pay in tax. The plan is to make as much of the price tax deductible for you and not the other party.