3 reasons why you should consider an accounting career

By Linda

Accountants are individuals that help a business by compiling financial data, analyzing the financial information, and creating consolidated and organized financial statements. For people that are interested in accounting, pursuing an education in accounting could be a great option. There are three key reasons why you should consider learning accounting.

 

Career opportunities

The first reason why you should learn accounting is that it could provide you with many different career opportunities. Due to the complexity of the tax code and the importance of having a strong financial system established, accountants are frequently in high demand by employers. Those that complete an accounting program will always have an easy time finding a job, and the compensation provided to accountants is typically much higher than those in other professions. Accountants that further their education to get a master’s in accounting and to qualify for the CPA exam will find that they will have even more opportunities available to them. Accountants are frequently hired by accounting firms, consulting firms, and individual businesses that are looking for in-house accounting help.

 

Understand tax code

Another reason why you should learn accounting is that it could help you to understand the current tax code. If you are a small business owner, you will find that there are many different tax deductions and credits available to you. If you have studied accounting, you will have a better understanding of what these deductions and credits are. This will not only help you to take advantage of these when you are submitting your taxes, but will also help you to better plan for the future as you will know how each decision you make could impact the tax status of your business going forward. Another advantage is that you will receive education on where to study changes on the tax code, which could continue to provide you with benefits going forward as the tax code continues to change.

 

Save money on staffing

If you run a small business, there is a strong likelihood that you will need to take out a loan at some point. Almost all banks will require that you provide them with accountant-prepared financial statements on a regular basis. To do this, you will either need to outsource the accounting work to another company or hire an employee to perform this work for you. In either situation, you will end up investing a lot of money just to have your financial reports completed as accountants tend to be well-compensated employees. If you have a background or education in accounting, then you will be able to avoid most of these costs as you will be able to complete these financial reports on your own if you have the time to do so.

Linda is one of the leading Accountants in Sydney, Australia. She believes Accounting is a great option for students who are good with numbers and looking for an exciting career with strong job security. Linda writes for many leading business and finance news sites and is currently in the process of writing her first book on how to start your own business.

Taxes on Lawsuit Settlements

Lawsuit settlements are only taxable sometimes, therefore some of the time paying taxes on lawsuit settlements can be avoided. If one has successfully won a law suit settlement, there's still work to be done when it comes to taxes. Specifically, how to identify, minimize or even eliminate tax on the settlement funds which could be costly. For example, a settlement of over $1,000,000.00 in one lump some payment could be taxed as high as 35% which could be $350,000.00. That potential tax may be a good enough reason to consider and weigh the options on law suite settlements.

Lawsuit settlement annuities

If law suit settlement funds are taxable, one way to avoid and/or reduce taxes on settlements is to receive the lawsuit settlement in the form of monthly payments or annuity. (lawsuitfunding.factexpert.com) If the type of settlement claim does not fall under common law excluding tax on the annuity settlement, then taxes might still be due under an annuity settlement, however, with an annuity total income is lower than if a lump sum has been distributed. 

Since these monthly payments will reduce annual income but still allow one to receive the sum of the settlement funds, tax can be saved. For example, suppose the $1 million dollar example above were distributed as an annuity over 10 years. That would mean $100,000 in income per year, which is taxable at a lower rate than $1 million, i.e. approximately 28% or $70,000 less than if the full amount were taxable. It is important to note that even annuity distributions may be taxable under tax code and law.

Lawsuit settlement law and tax code

Distinguishing taxable from non-taxable law suit settlement income is a matter of understanding what the tax authorities consider taxable.(blog.oregonlive.com) Moreover, if income from a settlement is taxable, but is not reported, the tax authority may have the right to seek out taxes due with or without interest and other charges. To determine if a lawsuit settlement is taxable a recipient of said award might be well guided to identify the award as compensation for damage caused by physical injury or non-physical injury. 

If a lawsuit settlement arises from circumstances such as breach of contract or the settlement includes punitive action i.e. court awarded punishment to the prosecutor, then this income is more likely to be taxable under tax code and law. The extent of tax codes, rulings and laws are significant and thus it may be advantageous to consult tax attorneys and/or accountants in light of the potential tax savings and/or avoiding any potential tax code violations and punishment.

References and sources for tax guidance on lawsuit settlements

When seeking to determine whether or not a lawsuit settlement is taxable, independent research, due diligence, legal consultation and/or accountant assistance may be indispensable. For this reason, the following list of sources is provided to help inform the reader of any caveats, income exclusions, income inclusions, IRS codes, court rulings etc. regarding the payment of taxes on settlements. These sources can be consulted for additional information, clarification of terms or rules, or professional consul.

The U.S. Internal Revenue Service : A source of information for settlement related taxation

Weitz & Luxenberg P.C. : A source for legal information and advice relating to lawsuit settlements

The United States Tax Court : A court directly involved in tax disputes with the Internal Revenue Service

Summary

Lawsuit settlements can vary in size, terms/ruling and nature. The size of the settlement can influence the percent level of tax if the settlement is taxable and the terms and ruling of the settlement can determine how the settlement funds will be received. Last, the nature of the lawsuit settlement influences how tax authorities interpret the settlement. 

For example, a smaller tax settlement, paid in terms of annuity into a tax protected trust fund in compensation for physical injury is less likely to be taxed than a large settlement, paid in lump sum to the recipient directly in settlement of loss and/or damage incurred through breach of contract.

Since the potential tax savings, interest on back taxes, and punishments or late fees on unpaid taxes can be quite high, it is a good idea to consult tax attorneys, professionals or accountants for written verification of tax filing requirements. The information in this article is not intended as legal advice but rather a source of information regarding taxes on lawsuit settlements.

Sources:

1. http://lawsuitfunding.factexpert.com/1448-lawsuit-settlement-taxes.php
2. http://www.bizjournals.com/sanantonio/stories/2001/11/19/focus4.html
3. http://www.weitzlux.com/irs/freetaxeslawsuitsettlementirs_925.html
4. http://www.weitzlux.com/irs_918.html
5. http://blog.oregonlive.com/taxes/2008/10/question_from_christopher_octo.html
6. http://www.answers.com/topic/punitive-damages
7. http://www.irs.gov/businesses/page/0,id%3D7052,00.html
8. http://www.ustaxcourt.gov/

Should Volunteer Time be Tax Deductible?

Volunteer time that is tax deductible is intrinsically able to provide incentive for individuals to volunteer in addition to assisting potential increases in GDP, mental and physical health, and improve cultural and socio-economic factors important to a nation, economy and culture. In other words, tax-deductible volunteerism in the form of time spent volunteering or working as a volunteer, could facilitate a significant positive influence financially and nationally.

There are several variables to consider when weighing the benefits and disadvantages of tax deductions associated with volunteer work. Specifically, what are the costs to the government if any, how volunteer work increases GDP, why it can improve health and what benefits to culture and socio-economic standing it can have. The remainder of this article illustrates these issues and factors to demonstrate shy tax deductions to volunteer time are a good idea.

• Increases to Gross Domestic Product

Gross domestic product is the total value of all goods and services generated by a nation for a specific year. In the United States the GDP for 2009 was $14.26 Trillion according to the World Bank. An increase in volunteer work especially among the retiring baby boomer population could keep the workforce healthy and strong albeit through a transformed mechanism. It would be a waste to throw away the willingness, knowledge and ability of an experienced generation.

• Indirect boost to government revenue

A tax deduction for volunteer time would not cost the Government money because the volunteer time itself would increase Gross Domestic Product (GDP) and indirectly lower other government expenses to a greater degree than the tax deductions cost. Additionally, according to the New York State Office for the Aging, volunteer work can potentially increase government revenue.

To illustrate the above point, if GDP increases, so does the potential exports of products and services provided that the volunteer time and/or work has either a direct or indirect impact on those sectors of the economy impacting exports. The profit on those exports is taxed, so the Government would merely be shifting the tax but assisting greater wealth nationwide through improved exports. Furthermore, exports are just one area of the economy through which Government tax revenue can be obtained.

• Improvements to Mental Health

Work involving physical exercise and positive human interaction can be strongly linked to improvements in both mental and physical health on condition the work is performed within reason. That is to say, if some of the more negative consequences associated with working such as stress, don't outweigh the benefits then time spent volunteering can be beneficial to the health of a nation. . Countless studies have linked physical exercise to improved health and the more mentally and physically healthy a nation is, the less government subsidized health care costs will be thereby lowering government expenses further.

• Increases in volunteer work

The principles of capitalism mandate financial incentive yields productivity when such motive is linked to profit motives. Since retirees may have more time to volunteer and might want to maximize their retirement standard of living, such a program would also benefit this increasingly long lived portion of populations. Moreover, if there is a high deduction cap to volunteer work or none at all, this essentially makes the potential tax savings optimal. Not only does can potential tax savings assist in mobilizing a retiring and/or motivated workforce, it can also increase volunteer work statistically. Since volunteer work is known to be a good and positive thing, increases in volunteer work would also be good.

• Decline in poverty

Tax deductible volunteer time or work can also help reduce poverty, welfare programs and re-invigorate stagnant demographics of the economy to be more productive, happier and healthier. Volunteer work can do this if volunteer efforts are aimed at helping marginalized groups of people live better lives through programs such as habitat for humanity, concern America and the community service society.

In summary, all the aforementioned potential benefits of tax deductions for volunteer work comprise a net cultural enhancement in which several social, economic and medical aspects of a given demographic can benefit. In essence, tax deductible volunteer time has the potential to be a positive catalyst not just on the individual level, but also on the cultural and national levels.

Provided the incentive of tax deductibility is affective, many positive financial, and social changes can occur as a result. Should such results not occur, through low volunteerism despite a tax deduction, the government loses nothing because what isn't deducted, is paid in taxes. Consequently, a tax-deductible volunteer program really is worth considering in light of any one of the above variables.