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Tax reduction and tax deferral are the primary benefits of obtaining a cost segregation study. Income taxes are a substantial burden for most real estate investors. Tax deductions help with this burden. While some level of taxation is necessary, it is both inappropriate and imprudent to pay more than your fair share.

Income tax is based on net profit or taxable income. The basic formula for calculating taxable income is revenue less expenses (tax deductions). Expenses can include both direct payments to third parties (labor, rent, supplies, etc.) and non-cash deduction. The primary non-cash deductions are depreciation and amortization. Tax reduction (tax cuts) are a direct result of increasing tax deductions.

The tax deduction benefit real estate owners gain from cost segregation is a higher level of depreciation. This non-cash tax deduction reduces taxable income and income taxes. For example, if the amount of depreciation increased by $100,000 (as result of a cost segregation study), taxable income would decrease by $100,000, and the owner experiences a $35,000 reduction in taxes (based on 35% tax rate).

Most real estate owners depreciate real estate based upon splitting the cost basis between land and improvements. The property owner or tax preparer typically estimates the portion for the land and attributes the balance to long-life improvements. Long-life improvements depreciate over 27.5 years for rental residential property and 39 years for commercial property

While this simplistic method is lawful, it cheats the real estate owner of tax deductions. A cost segregation study identifies up to 130 short-life components. (Cost segregation is different than component depreciation, which was available until the early 1908s. However, the result of both is to increase depreciation and tax deductions during the early years of ownership.) These short-life components typically comprise 20-50% of the improvement cost basis and are depreciated over 5 years (20.0% per year), 7 years (14.29% per year) and 15 years (6.67% per year).

Depreciation effectively changes the character of income from ordinary income to capital gains income. While the maximum income tax rate for ordinary income is 35%, the maximum rate for capital gains is 15% (less than half the ordinary income tax). This affects substantial income tax reduction.

Increasing depreciation also affects deferral of payment of income taxes. Instead of paying taxes (at the ordinary income tax rate) in the year income is earned, taxes are paid (at the capital gain rate) in the year the property is sold. Cost segregation effectively generates an interest free loan (until the property is sold) and reduces the tax rate (from 35% to 15%).

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.

City:

• Miami, FL
• Bridgeport, CT
• Washington, DC
• San Francisco, CA
• Atlanta, GA
• Dallas/Ft. Worth, TX
• New Orleans, LA
• New York, NY
• Baltimore, MD
• Hartford, CT
• Indianapolis, IN
• Wichita, KS
• Detroit, MI
• Charleston, SC
• Providence, RI
• Grand Rapids, MI
• Jacksonville, TN
• Boise, ID
• Santa Rosa, CA
• Columbia, SC
• Columbus, OH
• Oxnard, CA
• Greensboro, NC
• Allentown, PA
• Harrisburg, PA
• Louisville, KY
• Fresno, CA
• Akron, OH
• Chicago, IL
• Portland, OR

Cost segregation produces tax deductions for virtually all property types.

Property Type:

• Manufacturing/processing
• Tennis club
• Retirement home
• Auto service garage
• Mini-warehouse
• Single-tenant retail
• Medical facility
• Hotel
• Retail
• Vacant land

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:

• Wood product manufacturing
• Warehousing and storage
• Truck transportation
• Transportation equipment manufacturing
• Textile product mills
• Textile mills
• Real estate lesser
• Publishers
• Printing activities
• Plastic and rubber products manufacturing

O’Connor & Associates is a national provider of investment property consulting services including cost segregation studies, due diligence, insurance valuations, tax reduction, property tax, market research,expert witness,private bond activity,taxes,residential property appraisals,Tarrant Central Appraisal District,Tips and Tricks for Appealing Your Property Taxes in Dallas,Dallas county appraisal and Federal tax reduction. Our appraisers are competent to appraise virtually all types of property including land, neighborhood shopping centers, warehouses, bowling alleys, motels, mobile home parks, self-storage units, retirement homes, multifamily housing, movie theatres, veterinary clinics, single-tenant retail centers, funeral homes, bars, amusement parks, hospitals, schools, night clubs, apartments and medical facilities.

Like many American’s last month I went and visited my tax mistakes to prepare and file a federal tax return. Many thoughts raced through my mind on how to spend my newly found fortune, new clothes, a well-deserved night out or possibly pay down the credit card. Although all of them sounded appealing, like many of us I used my tax return to pay my property tax bill. This is a common way for many; use our tax return to pay our property tax.

This vicious cycle has been played out every spring since I became a homeowner. It was not until last year that I thought about all of the planning and preparation that went in to my federal taxes only to glance at my property tax bill and write a check without question or a second thought.

After utilizing many available tax deductions and credits many may find that the amount of federal taxes paid is less than the amount of their annual property tax.

When we examine our local property tax the same concepts apply as federal tax, however we rarely take notice. For example most municipalities allow for tax deductions and credits to offset the amount of property tax due. Many states give you a lower tax rate just for owning the home as your primary residence, being a veteran, or if you are over 65 years of age to name a few.

While these credits and deductions are important to take note of the more important issue is what your local government has valued your home at. This can often make the most impact to taxpayers. Known as your assessed value, this is what is used to multiply your local tax rates in order to arrive at the amount of property tax you will owe for the year. This can be one of the most overlooked aspects to homeowners, especially as of late in this current housing meltdown.

It is first important to find what your local assessor has for a property description of your home as mistakes often occur. Verify the square footage, the number of bedrooms and other data on your property record card is correct. Most assessors never look at your home, rather employ mass appraisal systems and rely on public record information to assess your homes value.

Why are we entrusting our local taxing authority to tell us our homes value? According to the Tax Foundation over 60% of homes in America are over assessed. More than half of us are paying too much property tax. All areas do allow taxpayers to dispute their annual assessment while less than 5% take corrective action. Maybe the IRS should take note of our local taxing authorities and make certain assumptions about everyone’s annual income, I would imagine a few more than 5% would disagree with the figure they propose.

The bottom line is we need to take notice of our own property taxes just as closely as we do our federal income tax filings. In this current housing tax where a 10% reduction in home value could equal $500 in tax savings it is up to each taxpayer to assess their own assessment.

The taxes http://www.LowTaxRate.com is a free resource for taxpayers to better understand their property tax, tax assessments and offers help to dispute inflated tax assessments. It is important that we all make certain we are paying our fair share of tax.

Ryan Richmond

LowTaxRate.com

A great way to stimulate the economic rise of this country is by giving out federal tax rebate checks. All you need to do is pay for your income tax for the year 2007. You basically do not have to do anything to qualify for this rebate, just pay and then the IRS will do the rest.

The communication between the IRS and the taxpayer will be done through mail. So do not fall for scams that ask you to give out your personal information. They are not from the IRS. People from IRS cannot remind the people enough that they will be sending a notice; nobody from the IRS will call. They will send two notices that state about the federal tax rebate checks and the principle behind that and the second notice will tell the taxpayer that they are qualified to receive the check and the amount of money they get and the timetable of when they will be getting the rebate.

A lot of people are so angry with the government for giving the people such measly amount of money when there is a financial crisis going on. The crisis if felt everywhere. Banks, who in the past gave out credits like money was just tissue paper, are now cutting off their credit loans and are restricting their requirement so that they would be assured that the person will have the ability to pay back his credits. With all these going on, it is helpful of the IRS to give federal tax rebate checks to their taxpayers. The only problem is, some people think the amounts are too low and that these amounts would not change things very much.

But beggars cannot really be choosers. One should just accept their federal tax rebate checks and get on with their lives. Just think of it as bonus money for a job well done. In the past, we have not been receiving checks from the government, so we should just be grateful that this year is different. And how can one expect the government to give out more money than they can afford. The idea here is to stimulate the economy to get our country out of this crisis, not to push the government to bankruptcy.

Let us just receive the federal tax rebate checks with an open mind and hope that in the years to come, IRS would not need to rebate us with anything to stimulate us in getting our economy going.

Robert Grazian is an accomplished niche website developer and author.

To learn more about tax rebates visit Financial Freedom And You for current articles and discussions.

October 15, 2008, is the deadline to file your 2007 IRS tax return if you applied for and received an extension last April. It is also the deadline to claim your economic stimulus check.

If you are a retiree or disabled veteran and you normally don’t file a tax return, you must file a tax return to qualify for your $300 check (you also receive $300 for each qualifying child you have).

If you are a retiree or disabled vet, you must have at least $3,000 in qualifying income from earned income, nontaxable combat pay or certain benefits from Social Security, Veterans Affairs and Railroad Retirement.

Qualifying income from Social Security includes retirement, disability and/or survivor benefits. Qualifying income from Veterans Affairs includes disability compensation and/or pension and/or survivor benefits. Dependents or those eligible to be dependents on someone else’s tax return are not eligible for an economic stimulus payment.

To qualify for your payment you also must have a valid Social Security Number unless your spouse is a member of the military.
The IRS can’t give out any economic stimulus payments after Dec. 31, 2008. However, if you are eligible for an economic stimulus payment, you can claim a credit in 2009 by filing a 2008 income tax return.

If you have filed your 2007 tax return but who have not received your economic stimulus payment, you can check on the status of your check by going to the IRS.gov Web site and clicking on the link entitled: “Where Is My Economic Stimulus Payment.”

Remember, you must file your tax return by October 15. And in this economy, couldn’t you use an extra few hundred dollars?

Discover if you qualify to have your taxes e-filed for FREE. Visit http://efile.123easytaxfiling.com

It is a safe, secure and easy way to file many of your Federal tax forms, as well as many state returns.

Estate tax, or the death tax as it is sometimes referred to, is an issue often bandied about at election time. If the innuendoes of the sound bites are to be believed, the instant someone dies, the government collects a huge amount of tax from the estate just as a general principle. The specter of estate tax is looming in the corner of every hospital room in America, or so goes the story, waiting to deprive widows of their husbands’ hard-earned pensions and children of their college funds, if Mr. X is not elected to Congress or the White House.

While it is true that a decrease in estate tax benefits the wealthiest two percent of Americans, it is also true that only the wealthiest two percent of Americans are subject to estate tax to begin with-at least under present law.

Estate taxes are taxes assessed on property transferred at the time of death. They are based on the gross estate, including real estate, insurance, trusts, annuities, cash, business interests, securities, and all other assets. The items are not assessed at their value at the time they were purchased, but rather at their fair market value at the time of death. For example, if you purchased a home for $50,000 in 1970 and the value of the property has appreciated in the meantime to be worth $175,000 based on sales of comparable properties in the same neighborhood, estate taxes would be assessed on the present worth of $175,000.

Once the gross estate is calculated, applicable deductions are subtracted from that value. Deductions include property that passes to surviving spouses, mortgages and other debts, and estate administration expenses. In some cases the value of operating business interests or farms may be reduced, according to the IRS, “for estates that qualify.” The value arrived at after deductions is referred to as the “taxable estate”. Lifetime gifts are added back in and an available unified credit is applied before the estate tax is actually assessed. The good news for most of us is that your taxable estate, as an individual, must exceed $1,000,000 for estate tax to apply, as the law currently stands.

The federal Tax Act of 2001 changed several provisions of the law regarding estate taxes. The rate at which estate taxes were assessed in 2001 was 55% of the gross estate less all applicable exemptions. The 2001 Tax Act began stepping estate taxes down gradually in 2002 to the present rate of 46% in 2006 and on down to 0% in 2010.

The premise behind the 2001 Tax Act is that some of the revenue lost to the U.S. Government through reduction and eventual abolishment of the estate tax will be recouped by capital gains taxes that your heirs will have to pay if and when they dispose of the property bequeathed to them. Prior to 2001, heirs automatically received a “full basis step-up” to fair market value on inherited property and did not have to pay capital gains tax when they sold the property. At present, heirs do not enjoy that benefit. If, for example, you paid $60,000 for five acres of land in 1965 and you leave it to your son or daughter when you die. The son or daughter sells the land for $200,000 in 2006 and has to pay capital gains tax on $140,000, or the difference between what you paid for it at the time of purchase and the fair market value at the time it was sold.

Needless to say, estate tax issues are extremely complicated and, if you fall into the category of wealth that would require payment of estate taxes on your demise, be sure to discuss them with your attorney or other estate planner.

Ronald Hudkins is an advocate for consumer awareness. He has noted that more than 70% of the American public fails to make appropriate estate plans prior to death or incapacitation and as such; authored an Ebook “Asset Protection and Estate Planning for All Ages” It is available for free download at http://stores.lulu.com/rhudkins

Like many American’s last month I went and visited my accountant to prepare and file a federal tax return. Many thoughts raced through my mind on how to spend my newly found fortune, new clothes, a well-deserved night out or possibly pay down the credit card. Although all of them sounded appealing, like many of us I used my tax return to pay my tax mistakes tax bill. This is a common way for many; use our tax return to pay our property tax.

This vicious cycle has been played out every spring since I became a homeowner. It was not until last year tax I thought about all of the tax and preparation that went in to my federal taxes only to glance at my property tax bill and write a check without question or a second thought.

After utilizing many available tax deductions and credits many may find that the amount of federal taxes paid is less than the amount of their annual property tax.

When we examine our local property tax the same concepts apply as federal tax, however we rarely take notice. For example most municipalities allow for tax deductions and credits to offset the amount of property tax due. Many states give you a lower tax rate just for owning the home as your primary residence, being a veteran, or if you are over 65 years of age to name a few.

While these credits and deductions are important to take note of the more important issue is what your local government has valued your home at. This can often make the most impact to taxpayers. Known as your assessed value, this is what is used to multiply your local tax rates in order to arrive at the amount of property tax you will owe for the year. This can be one of the most overlooked aspects to homeowners, especially as of late in this current housing meltdown.

It is first important to find what your local assessor has for a property description of your home as mistakes often occur. Verify the square footage, the number of bedrooms and other data on your property record card is correct. Most assessors never look at your home, rather employ mass appraisal systems and rely on public record information to assess your homes value.

Why are we entrusting our local taxing authority to tell us our homes value? According to the Tax Foundation over 60% of homes in America are over assessed. More than half of us are paying too much property tax. All areas do allow taxpayers to dispute their annual assessment while less than 5% take corrective action. Maybe the IRS should take note of our local taxing authorities and make certain assumptions about everyone’s annual income, I would imagine a few more than 5% would disagree with the figure they propose.

The bottom line is we need to take notice of our own property taxes just as closely as we do our federal income tax filings. In this current housing market where a 10% reduction in home value could equal $500 in tax savings it is up to each taxpayer to assess their own assessment.

The website http://www.LowTaxRate.com is a free resource for taxpayers to better understand their property tax, tax assessments and offers help to dispute inflated tax assessments. It is important that we all make certain we are paying our fair share of tax.

Ryan Richmond

LowTaxRate.com

Wages are garnished for a multitude of reasons. For people in debt, this is a serious matter because creditors take settlement direct from paychecks.

When a verdict is made, salary can then be garnished or taken directly from a person’s paycheck or other sources of income. For the following reasons, wage can be garnished:

• Child support is required.
• Taxes are in default.
• Unpaid court fines.
• Student loans in arrears.
• Credit card debt.
• Other debts.

Rules governing garnishment vary from state to state, but federal law maintains the amount at twenty-five percent of the defendant’s current income. There’s a fixed heirarchy if income is not enough to allow for all garnishments. First, federal tax garnishments are taken, then state, and lastly, credit cards. Salary garnishment isn’t allowed in states like Texas, Pennsylvania, and South and North Carolina. Few states have a lower maximum amount they allow for garnishment.

Here’s the process that the IRS follows when garnishing wage:

• The first thing served is a Notice and Demand for Payment.
• A Final Notice is served at least 30 days before the garnishment will take effect. (Note: The Final Notice is not needed to be served in person, so plenty of people don’t receive it. They may not be aware of the garnishment of their wage.)
• Unless other deals are decided for payment or dues are paid off, wage will be garnished. Garnishment of wage cannot be refused by defendants.

Companies that hire private contractors or freelancers have to file a 1099 form to the IRS to report income. Taxes are computed by the 1099 contractors themselves.

The employer has no choice but to take settlement out of the paycheck if an employee’s wages are garnished. If the employee resigns and becomes a private contractor or a 1099 freelancer, then the employer is definitely released from that obligation. The contractor’s accounts receivable can be levied by the credit, instead of garnishing wage. This means that when an independent contractor receives a check from a company for work, the bank account can be levied.

When a bank account is levied, it’s frozen, and all or some of the money in the account is taken. The IRS practices it, as well as other creditors. Creditors can levy bank accounts until the dues are paid.

Bank levies or garnishment of salary are tough matters. Seek IRS assistance from an experienced tax lawyer such as Darrin T. Mish before debt is out of control.

Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel’s Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He teaches attorneys, CPAs and Enrolled Agents in the finer aspects of IRS representation all around the United States. He can be reached at his website at http://www.getIRShelp.com

With the coming federal tax increase I am sure you have already made a decision to take some steps to reduce your taxes for next year. You are taking the right step in starting a tax mistakes based business but now you need to choose the right one that will reduce your taxes without taxing your budget.

Here are a few things you want to look for:
1.Make sure that the company you choose sells a product or actual service. If this is taxes the case the company will not last.
2.Make sure the product or service is a good value.
3.Make sure there are not start-up or monthly maintenance fees for becoming a member of the MLM company.
4.Make sure the compensation plan includes commissions on each sale that you make and your bonus plan is easy to quality for.
5.Look for spill from your up-lines efforts. This spill will multiply your efforts.

These things seem like common sense to me but most multi-level marketing companies have so many fees and such a difficult bonus plan it is almost impossible to make any money though the tax write-off is fantastic.

My rule of thumb is unless you have a reasonable chance of getting a return on your efforts the tax write off isn’t worth it.

In my investigation of many MLM companies the vast majority fall short in meeting all of these criteria. I have found one that fits all of these and is on the verge of exploding tax your are interested in finding out more about this particular company send me an email and I will send you a link where you can find more information and position yourself in the path of the explosion.

In this article I will explain why these five things are so important:
Item one: Too many MLM companies do not have a product and the service is getting others to join. This just is not a long term plan and is probably illegal. The first thing you want to look for is a good quality product that is consumed and will continue to sell in the future.

Item two: the quality and price of the product is very important because even though many people will buy just to get their bonus there is still competition in the market and at some point these people will quit purchasing. A company that sets its prices and quality competitively will be more likely to stay in business over a long period of time.

What is the point of spending time, effort and money to build a business just to have the company go out of business in just a few years.

The third item: is start-up and monthly maintenance fees. Too often MLM companies charge these fees and return little to its customers. When your customers or down-line fail to see enough value in these fees they will cancel and you will loose their business. I feel that maintenance fees are the number one reason that people loose interest in MLM companies. I suggest that you find a company that doesn’t charge them.

The third item: Some companies make you jump through hoops just to get your retail sales commissions then more hoops to earn your down-line bonuses. I will only work for companies that pay you on the first sale and have an easy plan for qualifying for your bonus. I especially like a plan that will pay a bonus on your second customer or sale.

The fifth item: Down-line spill is perhaps the most important in building your MLM. Most of us are able to find two or three customers for a product and after that it is hard to find enough people to keep our interest. When we investigate any MLM about 10% do a fantastic job of building their business, but most of us have a hard time recruiting.

This down-line spill allows those of us that are not good at recruiting to benefit from the recruiting talents of our up-line’s. This feature can make us rich even if we are not talented. Our position under builders becomes more important that how well we can find people.

It also gives a good sales pitch to those that you want to join you. They do not have to do as much to quality for bonus either.

In the end you are more likely to recruit others into a good thing, you are more likely to make money in the MLM and the people you recruit will see earnings faster so they are more likely to be locked into the company.

Most of us that join MLM’s join because we see a lot of potential but after several months of paying out money and not seeing any income we quit. But when we see a check our first month in a business it gets us excited and then we see a little more the next month we are more likely to put a little more effort into the business.

As this excitement grows our business grows.

The combination of Good products, fare pricing, no fees and a good compensation plan that includes down-line spill is the formula for success in a home based business or MLM.

Of course non of this can happen unless we join a good company and put forth the effort to make our business grow.

I am sure you can use this criteria to find your own company now but if you don’t want to investigate the thousands of companies out there send me an email and I will steer you to a good one that meets all of these criteria.

Marvin Crowther is the founder of MCCrowther Tax Services and he has written a series of articles to help the public, his clients and subscribers save money on their taxes. The web site for MCCrowther Tax Service is http://www.mccrowtherassoc.com you can email for further information or to subscribe to the newsletter at listings@mccrowtherassoc.com