Partners - Winter 2008 - (Page 14)

on your side pay FICA (Social Security and Medicare) taxes. Use Form 1040’s Schedule H to determine exactly how much you’ll owe. The IRS’ Household Employer’s Tax Guide at www.irs.gov/pub/irs-pdf/p926.pdf provides additional help. You sold stuff on the Internet? Don’t sweat it if you occasionally sell a few things on eBay. Uncle Sam views the incidental online auction as the Internet equivalent of an occasional garage sale. But if you had “recurring sales,” and purchased items with the intent of selling them online for a profit, the IRS considers that a business and you’re required to report the sales. Likewise, if you auctioned off appreciated assets, such as art, antiques or collectibles, you’d have a reportable capital gain if you sold for more than your cost basis. The National Taxpayer Advocate, a governmentappointed representative who reports on the public’s tax concerns to the IRS and congress, notes that 700,000 Americans rely on eBay sales as their primary or secondary income. Seeing this as a potential source of tax dollars, the Advocate recommended that congress consider requiring sellers to provide tax information on gross proceeds from online auctions. So, while no formal method exists for taxing online auction sales, the IRS could have casual sellers in their crosshairs for future tax years. For more information, search for Online Auction Sellers at www.irs.gov. YOUR TAXES: WHAT IF …You hired someone to do work around your house last year? You could be on the hook for employment taxes. The IRS doesn’t care whether you hired these people through an agency; whether they worked full or part time; or whether you paid them hourly, weekly, or by the job. If you controlled what they did and how they did it, they were your “household employee.” That includes babysitters, cleaning people, nannies, and yard workers. If you establish that you do indeed owe taxes for household help, the threshold for 2007 is $1,500 to any one employee. If you’re at or over the limit, you’ll have to You want a faster refund? If you’re expecting a refund on your federal tax return this year, you can get that refund in about three weeks, or roughly half the time of a paper return. Combine IRS “e-file” with direct deposit and shave off time. In case you’re nervous about being alone in tax cyberspace, the IRS reports that 73 million returns were filed electronically in 2006, 20 million of those from home computers. SAVE ON YOUR TAX BILL! The deadline to contribute to an IRA for the 2007 tax year is April 15, 2008. For information about a Partners IRA, call (800) 948-6677, go to PartnersFCU.org or visit any Partners branch. 14 WINTER 08 http://www.irs.gov/pub/irs-pdf/p926.pdf http://www.irs.gov http://PartnersFCU.org

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Partners - Winter 2008 Contents Member News What's Next? Motley Fool: A Tale of Two Borrowers Jean Chatzky: Extreme Jobs Investment Corner On Your Side Member Education

Partners - Winter 2008

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