For the enforcement and proper collection of the numerous federal taxes administered by the Internal Revenue Service, the Code contains provisions for the addition of interest on amounts of tax not paid on or before the date due; for “additions” to such amounts in the nature of fines, and for civil and criminal fines and penalties, including prison sentences for specified infractions. The various taxes, singly or in kindred groups, are imposed by separate chapters and sub-chapters of the Code.

Usually, provisions for interest, fines, and penalties applicable to a specific tax are separately set forth in the chapter or sub-chapter which imposes it. In some instances the interest and penal provisions appearing in another chapter or sub-chapter are made applicable by reference. There are also general penal provisions which are duplicated in some chapters and sub-chapters . Actually with the same or similar provisions applicable to a specific tax or are made inapplicable to a specific tax. Don’t let this happen to you. Consult with the tax attorneys of the Thomas Hogan Law Office Modesto.

For a consultation with our expert Modesto tax lawyers, give us a phone call (209) 492-9335.

Modesto Tax: Tax Deductions

Deductions may be appropriate either to the determination of adjusted gross income or to the determination of net income. The application of any specific deduction depends upon its relation to the taxpayer’s business or income-producing property. For instance, if he borrowed money and purchased with it a house which he rents, he deducts the interest on the loan and local taxes on the house from the rents received, and includes the profit in adjusted gross income. If, however, he has borrowed money to pay for the home which he occupies, he deducts interest on the loan and local taxes on the home from his adjusted gross income when he computes his net income. Speak to our specialist tax attorneys in Modesto to know which deductions apply to you.

Modesto Tax Deduction: Depreciation

You can claim a deduction on depreciation. The deduction on account of depreciation relates exclusively to business and income-producing property. It is applicable to buildings but not to land. The annual deduction is an amount equal to the cost divided by the number of years during which the property will probably be serviceable. Thus, a taxpayer who purchases a truck for use in his business at a cost of $2,500 and who has found from experience that trucks are not serviceable for more than five years is entitled to an annual depreciation deduction. Our Modesto tax attorneys can assist you navigate the complex maze of tax rules applicable to depreciation.

Tax Filing

Although most individuals report their income on the basis of cash receipts and disbursements for the calendar year. The taxpayer may report on the basis of any twelve-month period and compute income by an accrual method of accounting. The return prepared for a calendar year must be filed not later than April 15 of the following year; that for a fiscal year, two and a half months after the year’s close. Nearly all taxpayers mail their returns to the IRS office of their district. Also, they enclose a check for the amount of tax shown payable. A few bring it personally to the office of the cashier. Receipts are given if requested. Our Modesto office tax attorneys can assist you file your tax returns in time.

Foreign Income Credit

In order to avoid the hardship of both a foreign income tax and a United States income tax on income derived from foreign sources, the Code allows a proportionate credit against the United States tax for foreign tax paid. This credit is limited to the amount of the United States tax on the foreign income as computed under United States source rules. The final step in computing the income tax payable by an individual is to subtract the foreign income tax credit computed on Form 1116 from the income tax otherwise due. But if the taxpayer elects to take standard deduction, he isn’t entitled to claim credit for foreign income taxes. If you have received income from foreign sources, consult the tax attorneys in our Modesto location.

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