Simply Junior

Have you ever completed your tax return to find out that you owe the federal government thousands of dollars? If so, I expect it was because you raided your pension or retirement plan. If you haven’t learned this painful lesson yet, you should read this article so that you don’t end up owing the IRS thousands.

“NEVER TAKE MONEY OUT OF YOUR RETIREMENT PLAN!” read the sign that hung in the tax accountant’s office. I knew this was an overstatement, but understood why the accountant had such a sign in his office. Too many times did I, as a tax accountant myself, have to console crying or angry clients after explaining to them that they owed the government thousands of dollars because they withdrew money from their retirement or pension plan. The worst part is that these people that withdrew were often already facing immense financial problems – job losses, foreclosures, and bankruptcies.

If you take money out of your pension or retirement plan, you will first find out that the law requires retirement plan administrators to withhold 20 percent of your money for the federal government. Most people are upset by this news and believe withholding this amount will cover their tax bill. After all, it is a lot of money. What’s important for you to know is that it’s only the beginning.

Most taxpayers still need to worry about more federal and state taxes due. If you’re in the 28 percent tax bracket, you’ll owe the federal government another 8 percent of the amount you withdraw. Worse yet, if you’re under 591/2 years of age, you’ll most likely be penalized another 10 percent. In addition, most states will tax you 5 to 10 percent.

How will this affect your tax bill? If you withdraw $20,000, the plan administer will withhold 20 percent, leaving you with $16,000. By April 15 you’ll realize that you owe another $3,600 to the federal government and $1,500 to the state. So by taking out $20,000 of retirement savings, you end up with only $10,900. Now you’re probably beginning to understand why that tax accountant hung the sign “NEVER TAKE MONEY OUT OF YOUR RETIREMENT PLAN!”

Sure, there are exceptions. There are a number of ways to avoid the 10 percent penalty – using the retirement proceeds for tuition, medical costs, or to buy your first time home (up to $10,000). Some states don’t have an income tax. And, of course, these penalties and taxes don’t apply to ROTH Individual Retirement Accounts.

What’s important to remember is that your tax advisor will be able to explain to you the financial consequences that specifically pertain to your situation. He or she may even be able to suggest alternatives, such as taking a loan out against your retirement plan. Remember, contributing to a retirement account is a wise choice, just don’t make the very unwise choice by liquidating your account before speaking to a tax professional.

If you are planning to move to Arizona or if you are yourself a new Arizona resident who are not familiar with Arizona State taxes, you can read this detailed summary about your state taxes. Another site that will provide elaborate information about Arizona State taxes will be their official website, but I believe it is enough to see below for the taxes and complete descriptions that you are supposed to know.

If you are a working resident of Arizona state, then the most crucial Arizona State taxes is that you will need to pay attention for is the income tax rates. They are divided into five different groups, ranging from about 2.7 percent to about 4.8 percent. For the complete list of the five groups and their respective rates, you can refer to the data below

For single or married who filed separately:
- 2.73% will be taxed on the first $10,000 of chargable income
- 3.04% on chargable income from $10,001 to $25,000
- 3.55% on chargable income from $25,001 to $50,000
- 4.48% on chargable income from $50,001 to $150,000
- 4.79% on all chargable income over $150,000.

The deadline of filing income levy returns is on the 15th of April. It is not fixed though; if it is on a weekend or if it is on a public holiday, then it will be shifted to other dates. There are also extra days that are provided to you by the tax company. For more information of the deadline for the current tax year, you can go to the Arizona State taxes official website directly. There, you can find what the deadline is so that you will not be fined for paying late after the deadline. Remember, deadline is always important because you will not want to spend extra money only because you miss the deadline, won’t you?

The law of Arizona needs the residents and the visitors of Arizona to add in extra goods to Arizona gross product. This comprises of interest income from civic trades that do not come from Arizona state. The capital income must also be included and taxes will be applied to it. For the taxpayers, sales tax is also crucial every time we talk about Arizona State taxes. The current rate for the sales tax is at, more or less, 5.6 percent. Medicine that the residents take and sustenance that the residents possess will not be taxed. However, not all the cities do this; some still charge Arizona state taxes for these two needs. To check for more elaborate information, you can just visit the Arizona official website, so that you know it very well.

Another important information is that Arizona State taxes will comprise of private property taxes. Insubstantial personal property taxes, however, are not charged.

The income tax rates are important information that every person should be aware of as it would help them in filing their taxes appropriately. For the year 2010, the income tax rates would remain largely similar to the rates that were prevalent in 2009. Going into 2010, the IRS announced that due to low inflation and slow economy the rates have not changed much. Keeping the consumer price index (CPI) in mind and the stagnated growth, the IRS decided to keep the personal exemption amount and the standard deduction bracket similar to the 2009 tax rates.

Understanding federal and state taxes isn’t that difficult if you understand the rates. Once you know about the rates, then you can easily decide which bracket applies in your case and thereby you can estimate your taxes on your own. The state income taxes generally range between 1% and 10%, and for every state there is a different rate. In some states there are also city income taxes so you must be aware of that too. With the start of 2011, it may be predicted that President Obama might cut down the Bush rates and go back to the income tax rates prevalent in 2001 to 2003. The top income tax rate might go back to 39.6 percent while the low bracket of 10 percent might be eliminated in future.

For the coming year 2011, the tax we pay might see an increase in capital gains and dividend rates. The capital gains rate might go back to 20 percent from 15 percent that was prevalent in 2010, and your dividend income might be taxed as your ordinary income so you must keep all these points in mind to calculate your tax correctly in future.

The rates keep changing yearly and unless you are well aware of the rates then you might suffer tremendously if you calculate your taxes with the old tax rate. You should keep track of your previous year income and taxes to chalk out your future taxes correctly. You must also look into child tax credit and the estate tax rates to calculate your taxes correctly.

Lastly, income tax rates can be checked online from any government site or you can also download them for easy reference. You can check on the rates table from any place, as long as it is reliable and you must use the correct rates to calculate your income taxes.

Each year, a great number of tax payers have found out that they can be able to get rid of the trepidation these tax payers usually link with taxes. This good riddance of tax hassles can be done by means of taking advantage of income tax software, which can be easily found online. Some websites provide for the most excellent and effective tax preparation software, which tax payers can avail at a price that is reasonable. Because of this software, tax payers definitely can save the money they would have to spend for hiring a professional tax preparer when they file federal and state taxes online. And also they get back more in refunds. This will surely make an electronic file tax return sound so good, which most people who tried this would agree. For you to simply file your income tax return online, just surf the internet and try out all the available tax prep software, which are widely comprehensive and very affordable. Read the important information on this online software or ask assistance from people who tried this.

During the early 2006, the IRS or Internal Revenue Service had released and promulgated to the general public the accurate results of a deliberate study of the country’s 2001 taxing cycle which made known some of the frightening scenarios with reference to the Americans’ compliance and adherence with taxation rules and regulations. Based on this three-year research study, the American people went amiss of paying their taxes – and paying their taxes on time – by an enormous $345 billion during that year. This amount, widely known as the ‘tax gap’, stands for the discrepancy between what these taxpayers were obliged to pay and what they in point of fact paid on time. Underpaying, under-reporting or not filing at all has left a multitude of taxpayers in grave debt to the IRS, which maybe brought out of ignorance or merely confusion about the tax laws. With the aid of the online professional tax software, many of these American people can now have negotiated the perplexities of their returns with no problem and have avoided unnecessary fines and penalties for non-payment of taxes or evasion.

Amusingly, the research study further disclosed that taxpayers were much more to be expected to be in compliance of taxation laws when taking advantage of the assistance of online tax return software. By means of taking advantage of affordable and convenient free online income tax software, one can do away with the peril of under-reporting one’s earnings or one’s taxes, with bringing upon to oneself the wrath of the IRS and notching up hundreds, and even thousands, of dollars in interest and penalties on unpaid taxes. The online professional tax software makes it really trouble-free for you to precisely report earnings and trace all the essential information from year to year for regular tax compliance. As a response to the tax gap result of the research study, the Internal Revenue Service (IRS) gave a boost to its enforcement budget in 2005 – the year which the case study was entirely completed – strongly enabling the agency to carry out 1.2 million audits during that year, as compared to less than one million in the preceding year.

You should not have to be in this tax hassle situation. As much as possible, stay away from unnecessary audits and prevent the anxiety of filing season with the help of our online professional tax preparation software. Carefully peruse on useful money saving tips, and also information and changes in taxation in relation to programs which can absolutely make filing uncomplicated and hassle-free.

The United States real estate market is growing faster then ever before. Sarasota has become a pre-construction real estate hot spot. Pre-construction is the most profitable phase of investment in real estate. New construction offers a wider choice of location and layout, with the most desirable finance options. Pre-construction is considered a healthy investment, making investors wealthy beyond their wildest dreams. Investors in pre-construction real estate are willing to take bigger risks for a chance to make huge profits.

Sarasota has for long been an upper class vacation destination with its pristine white beaches, exciting nightlife, 5 star restaurants and hotels, and its interesting mix of cultures. The Sarasota pre-construction market has witnessed a boom in the last few years. There are downtown condos, beachfront high-rise condos, single-family residences and mansions under development. Sarasota is a sellers market and most properties remain on the market only for small period.

Prices of Sarasota real estate in its pre-construction stage are significantly lower and more affordable to the investor. Pre-construction sale has shown a significant increase over the years and continues to grow. Investors have the advantage of not having to pay any local and state taxes for many years.

Pre-construction deals are usually not advertised in the initial stages. Deals are mostly brokered via a network of estate agents who sell directly on behalf of the developers. Brokers reserve a number of units for their top clientele. The second stage of construction brings on a 10% increase in price. On selection of a property, an investor pays a deposit of around 10% of the purchase price. An additional 10% is usually paid within the next three months. Investors are able to sell their units within a year at a profit of 20% or more.

The increasing interest in Real Estate investment trusts shows that real estate investment return is becoming an important part of a Sarasota investor’s investment portfolio.