What is financial transaction tax?Financial Transaction Tax is a tax levied on certain kinds of monetary transactions for a specific reason. This type of tax is generally placed on certain transactions that take place with financial institutions. If an institution does not make these types of transactions, they would not have to pay transaction tax, and if they only made one taxable transaction, they would have to pay tax only on that single transaction. Listed below are questions about transaction tax that have been answered by the Experts.
I have a full time job and file taxes annually. But I also work as a freelancer and usually complete a W-4 to claim payment. However, I have also been receiving small payments in cash for a certain client that are no higher than $3000 annually. I have not reported this before. Since there could be an increase in work from this client, should I start reporting this income for now on?In most cases, there are no limits on earnings that need to be reported to the government. That is why it is important to keep a record of all income earned and expenses incurred. With regard to this case, you would need to file the amount that you make from self employment under self-employment income on your tax return. This can be reported on Schedule C. Alternatively, based on whether you qualify, it could be reported on Schedule C-EZ. Once you take away all qualified business expenses and calculate your net business income, this will need to be stated on Form 1040 line 12 In case your net business income is over $400, you would need to file Schedule SE and calculate self-employment taxes - which in turn would need to be stated on Form 1040 line 56. Finally, if your payments exceed $600, the IRS would need you to submit Form 1099-misc to help them track payments.
An individual sold stock options and his W-2 now shows a taxable compensation amount in Box 12-B with a code V. He also has a 1099-B form that shows a gross amount without the deduction of federal taxes, along with a fee. What is the best way for him to report the W-2 and 1099-B?In most cases, when there is an amount in Box 12-B on the W-2 form with a code V, this means that the amount was already stated as the person’s taxable income in Box 1 and all the withholdings have been reported. Therefore, the amount mentioned in Box 12-B, along with the fee, should be added to the basis—which, in other words, is the total amount paid by the person. In case the broker decided to deduct the fee from the amount mentioned on the 1099-B, the fee needn’t be added to the basis. If there were no other expenses paid out of the person’s pocket on this transaction, the W-2 would need to be reported as usual and the stock option as a short-term transaction on Schedule D. With regard to 1099-B, the amount listed on it would need to be reported as the selling price on Schedule D to determine the basis.
I helped my daughter with a down payment for her house and as a result have my name on the title. Since I have not lived in the house or paid the mortgage, can I transfer the title back to her without a cash transaction but still incur transaction tax?Typically, you would not owe any transaction tax on this type of transaction. The only tax that would be due would be owed if your daughter decides to sell the property. And, if this happens, as long as she uses the home as her personal residence, she would be able to claim an exclusion of $250,000 before paying taxes on the profit made from selling the property. Currently, you would need to file a Quit Claim Deed to transfer the house to her name and make sure that it is recorded with the county in which the house is built.
In the State of Arizona, is there any transaction tax or sales tax exemption for a person who is leasing a vehicle to travel interstate?In the State of Arizona, there is generally no sales tax. The state, however, does have a transaction privilege tax that makes the vendor responsible for the tax. The vendor may then make up the price of the taxes that they have to pay by charging the consumer more. There are many exemptions that Arizona residents can get and more information on them can be found here: http://www.azdor.gov/ResearchStats/proc/tpp00-3.htm.
There are several kinds of Transaction Tax that are applicable. And when a person is dealing with transaction tax, they may have questions that pertain to when they have to pay the tax, where they have to pay the tax, what kinds of transactions attract transaction tax and so on. At these times, put your questions to Tax Professionals for insights and information to help with your case.