Income Tax Return- haven't filed till yet?

If you have got delayed in filing your tax return or have other prior year returns that have not been filed, you should consider the consequences of not filing the returns.

All the tax returns that are due, should be filed by the taxpayers, regardless of whether or not full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.

Some basic Facts about filing Tax Returns

• Late filing of return or failing to file a return can be costly.  If taxes are owed, a delay in filing may result in penalty and interest charges that could substantially increase your tax bill. The late filing and payment penalties are a combined 5% per month (25% maximum) of the balance due.
• If a refund is due, there is no penalty for late filing or failing to file a tax return. But by waiting too long to file, you may lose your refund. In order to receive a refund, the return must be filed within three years of the due date. If you file a return and later realize you made an error on the return, the deadline for claiming any refund due is three years after the return was filed, or two years after the tax was paid, whichever expires later.
• Taxpayers who are entitled to the Earned Income Tax Credit must file a return to claim the credit, within three years of the due date in order to receive the credit, even if they are not otherwise required to file.
• If you are self-employed, you must file returns reporting self-employment income within three years of the due date in order to receive Social Security credits toward your retirement.

Taxpayers who continues non filing of required return and fail to respond to IRS requests to do so may be subject to a variety of enforcement actions, all of which can be unpleasant. Thus, if you have returns that need to be filed, please contact http://www.work2india.com/ so we can help you bring your tax returns up-to-date, and, if necessary, advise you about a payment plan.

Arguments against Outsourcing Services

Outsourcing business processes overseas is increasingly common in the banking, financial services, retailing, insurance, and telecommunications sectors. Economists and accounting professionals expect this trend to accelerate.

One concern about outsourcing tax preparation is the privacy and security risk of posting confidential client information to a facilitator’s website. For example, some clients may not want their information sent to a third party that is not directly supervised by their CPA. Fortunately, the growth in e-filing of tax returns has spurred tighter security controls, which are also available from facilitators. Secure data facilities, private networks, firewalls, and sophisticated data-encryption techniques now mitigate online privacy and security concerns about outsourcing. Although no electronic transmission of data, including the e-filing of tax returns, can ever be completely secure, outsourcing overseas can increase privacy and security concerns because of the interjection of a third-party preparer not directly supervised by the outsourcer.

A second concern about outsourcing is that it limits the tax-preparation experience of entry-level accountants. Veteran CPAs may remember similar concerns in the 1960s and 1970s, when electronic systems replaced manual accounting systems. Newer staff accountants in offices using outsourcing may require new or expanded training to replace experience preparing returns. The role of these staff will likely involve less routine preparation work and more client interviews, expanded tax-planning engagement responsibilities, and an expanded apprenticeship period working with veteran tax consultants to review processed tax returns. Some are concerned that it will take longer for new staff to understand the tax effects of transactions because they will miss the learning that takes place when someone actually works with and comes to understand the internal logic of the forms.

Although outsourcers may also be concerned that political instability in the country of the facilitator may interrupt processing operations, such concerns have not prevented many large financial-service organizations (e.g., Citibank, American Express) from outsourcing operations.

Another barrier to effective outsourcing is technology capability. Hardware, data storage, software, and knowledgeable staff are required to move tax preparation from manual processing to a web-based processing system.

Finally, both clients and CPAs may have concerns about the quality of outsourced services as well as the patriotism of overseas outsourcing.

Explanation of Tax return form 1040

If your income is on US taxes and you are living abroad, fortunately your income will be reported in the same way when you live abroad as it would be if you were living in the US: via IRS Form 1040.

Good record-keeping throughout the year is essential for the accurate preparation of your US tax return– no matter what form you are filling out. This is particularly important when it comes time to report all of your foreign earned income, because leaving anything out could get you in trouble with the IRS. Note that income must be reported regardless of where it was earned, what foreign taxes were already paid on it, and what currency it was earned in.

The following types of income are going to be included on form 1040 for your US expat taxes:

• Wages and salaries
• Taxable interest – Schedule B
• Ordinary dividends
• Refunds , credits, or other offsets and local income taxes
• Alimony received
• Business income (or losses). – Schedule C or C-EZ
• Capital gains (or losses) – Schedule D
• Other gains (or losses) – Form 4797
• IRA distributions
• Pensions and annuities
• Rental real estate, royalties, partnerships, S-corps, and trusts – Schedule E
• Farm Income
• Unemployment compensation
• Social security benefits
• Other income

If your income is earned from any of the forms listed above, then there is a need to give documents to explain the source of earning and to prove that the amount reported under US tax return is genuine.

You are also going to need to gather information about applicable deductions that need to be reported on your US expat taxes. These include:

• Educator expenses
• Certain business expenses – Form 2106
•  Health savings account deductions – Form 8889
• Moving expenses – Form 3903
• Penalty on early withdrawal of savings
• Alimony paid
• IRA deductions
• Student loan interest
• Tuition fees paid
• Other deductions

You should receive many of these documents from their respective distributors throughout the calendar year, but it is important to keep everything organized so that filling out your 1040 is as easy as possible.

How to outsource tax preparation

Whether you are a small business operator or individual taxpayer, tax preparation can take up an enormous amount of your time. Even with the help of tax preparation software, the time involved in gathering receipts, compiling financial statements, and searching for tax deductions, tax credits, and other line item entries can seem all-consuming. Perhaps you should consider hiring a tax preparer or certified public accountant (CPA) to handle your tax preparation.

There are certain things which you should keep in mind while outsourcing tax preparation services:

1)  Consider who you want to do your taxes. You can outsource tax preparation to a professional living in the United States or someone overseas. Both have their advantages and disadvantages. An American professional is closer and easier to stay in contact with, but their costs may be high. An overseas tax preparer may be harder to keep in touch with, but you may be able to save money. In any case, you want to find a tax preparer well-versed in federal and state tax law, someone who can get the job done right without taking up too much of your time.

2)  Compare their services. If you are considering working with someone overseas, how much of the tax preparation process do you want them to handle? You may want someone to do everything including handling your important documents and tax filings or you may prefer that your tax preparer provide select services such as creating monthly or quarterly financial reports including profit and loss statements, earnings and cash flow.

3)  Negotiate needed services. Once you determine what you want your tax preparer to provide for you or your business, submit your plan to interested parties. If you have an individual tax return, then a tax preparer or CPA can handle your taxes. If you have a small business, then a CPA or accounting firm should be considered. Get price quotes based on your expectations and needs, and obtain references from other customers who have used their service. Choose a tax preparer based on cost, service and recommendations.

You should always be alert on this following tip:

If working with an overseas tax preparation company, find out who is in charge of your account and what their level of licensing and expertise is. You want to save money, but you want a qualified person to manage your taxes. I assure you that you can always trust for your tax preparation services on Work2india.com.

Save your time outsourcing Tax Services

Technology has made it possible to achieve a much better rate of production, and worldwide there are many companies that benefit from advances in information technology and employing the use of methods such as outsourcing. 

Over the last decade, accounting firms ranging in size from small local firms to large international ones have embraced tax outsourcing as a way to improve efficiency, client service, and staff retention. This article will provide an overview of those benefits. 

Tax outsourcing improves efficiency in at least three ways. First, it increases the annual billable hours per tax professional by enabling firms to staff for off-season rather than peak-season workload. Second, tax outsourcing moves firms toward a paperless tax workflow. Third, when offshore tax outsourcing is used, firms can significantly reduce costs due to the wage differential between U.S. and offshore preparers. 

Tax outsourcing improves client service in at least two ways. First, with most tax outsourcing vendors providing a one to three day turn-around time, firms can get tax returns back to their clients’ days if not weeks earlier. Second, by outsourcing the tax processing and tax preparation services of a tax department the firm can focus on improving your client relationship. 

Finally, firms say that tax outsourcing improves their ability to attract and retain qualified staff by “taking the edge” off tax season. Long busy season hours drive many people out of the profession. Tax outsourcing enables firms to get the work done while providing staff some semblance of a normal life during tax season.