When you do your taxes, the words “tax deduction”, “tax exemption” and “taxable income” will often come up. What are the meanings of these words? When you look in the dictionary, they’re definitions are even more confusion. The thing is that these words should be understood together, not in isolation. In this blog post, these words will be explained in a way that’s easy to understand and I’ll show you how they’re all linked together.
Depreciation recapture happens when you sell something and the gain or a portion of the gain is classified as ‘ordinary income’ (instead of capital gain which has more favorable tax rates).
It in this post, I’ll put in a table, the types of depreciation methods that are acceptable to the IRS in calculating depreciation. Depreciation is the reduction in the value of something you purchase and keep for use. For example, if you purchase a car for $25,000, normally you can’t
MACRS is a depreciation system that’s used to calculate depreciation for most property that was placed in service in from 1987 onwards. Placed in service essentially means put in use.
An Instalment Activity Statement is a form that businesses use to report to the ATO on PAYG tax withheld, PAYG instalments and Fringe Benefits tax.
If your business is in the UK, depending on your registration, your business may need to a VAT return.
To prepare a VAT Return in Xero, follow the steps below:
If you're based in the US and use contractors, it's likely that you'll need to report the income you pay to them using a Form 1099. Fortunately, Xero makes it easy to prepare one of these forms.
If your business is in New Zealand, depending on your registration, your business may need to report to the Inland Revenue for their GST via the GST Revenue and Provisional Tax Return.
The current Australian tax free threshold (2015-16 Financial Year) for Australian individual residents is $18,200. This means that if you taxable income (usually how much money you’ve made) is $18,200 or less, the tax rate is 0%. So you don’t have to pay any tax on any amounts up
The difference between a Type 1 fringe benefit and Type 2 fringe benefit is whether the amount is entitled to a GST credit. Type 1 fringe benefits are a GST taxable supply with an entitlement to a GST credit whereas with Type 2 fringe benefits, the provider of the benefit is