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Some Tax Tips You Should Know Before Filing Your Taxes

Posted by admin On January - 21 - 2010

Paying taxes accurately to the IRS before the deadline is something every taxpayer has to do. There are basically two ways of paying taxes; either you choose paper filing option or you e-file your tax return on your own using free tax software programs. Whether you hire a professional tax preparer or do it for yourself, your tax return needs to be accurate, authentic, and error-free. If the IRS discovers fraudulent return, then you may have to pay some additional taxes as well as interest and may be civil penalties are applied. And for that reason, here are some of the tax tips from the IRS you should take into consideration:
1. Keep Your Tax Documents at Hand
While filing taxes online, you’ll need certain tax documents like receipts, forms, cancelled checks etc. that are supportive of your income. Get hold of all these documents at hand so that you can use them quickly when required.
2. Keep an Eye on W-2s and 1099s
You should go through the forms like W-2s and 1099s that you may require while filing your taxes.
3. Choosing e-filing Option
There are certain benefits involved with e-filing option. The tax software will take care of all math calculations. Moreover, if you e-file your return, you’ll get the confirmation note from the IRS within 48 hours as your return reaches there. If you choose Direct Deposit option for receiving your refund, then you’ll get your refund directly deposited into your bank within as few as 10 days.
4. Check out “Free File” Program
You should check out the “Free File” program provided by the IRS in collaboration with 20 tax software companies. You’re eligible for this Free File tax program if your adjusted gross income (AGI) is less than $57,000. This Free File is best for the cost conscious taxpayers who wish to have reliable question-and-answer software to prepare their return.
5. Online Tax Preparation and e-filing Services
There are several IRS approved online tax preparation and e-filing services you can think of if you do not meet the requirements for using Free File set by the IRS. You can do taxes on your own using free tax software programs available online or simply get professional tax preparer to do taxes for you. You can visit IRS.gov to learn more about tax preparation services.
6. Choosing Direct Deposit Option to Receive Your Refund
With direct deposit feature, you can get your refund directly deposited into your bank account which is faster than receiving your refund via paper check. Moreover, as your refund gets deposited into your account, so there’s no fear of getting your refund lost or stolen.
7. Keep Yourself Updated with Latest Tax news
The IRS is the great portal to learn about tax tips, tax preparation, e-filing facilities, and much more. You can learn about some basic things for taxes from the frequently asked questions, and can keep yourself updated with the tax news and the latest updates on tax law changes, if any..

What to do if You Receive an IRS Notice

Posted by admin On April - 15 - 2009

It’s a moment many taxpayers dread. A letter arrives from the IRS — and it’s not a refund check. Don’t panic; many of these letters can be dealt with simply and painlessly. Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.

* Agree? If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
* Disagree? If you do not agree with the correction the IRS made, it is important that you respond as requested.

Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response. Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry. Be sure to keep copies of any correspondence with your records.

Source: www.irs.gov.

Know About Tax Refunds

Posted by admin On April - 10 - 2009

Are you expecting a refund from the IRS this year? Here are the top ten things you should know about your refund.

  1. Refund Options You have two options for receiving your individual federal income tax refund: a paper check or a direct deposit.
  2. Separate Accounts You may use Form 8888, Direct Deposit of Refund to More Than One Account, to request that your refund be allocated by direct deposit among up to three separate accounts, such as checking or savings or retirement accounts.
  3. Paper Return Processing Time If you file a complete and accurate paper tax return, your refund will usually be issued within six weeks from the received date.
  4. Returns Filed Electronically If you filed electronically, your refund will normally be issued within three weeks after the acknowledgment date.
  5. Check the Status Online The fastest and easiest way to find out about your current year refund is to go to the IRS.gov Web site and click on the “Where’s My Refund?” link available from the home page. You will need your Social Security number, filing status and the exact whole dollar amount of your refund to check the status online.
  6. Check the Status By Phone Call the IRS Refund Hotline at 800-829–1954. When you call, you will need to provide your Social Security number, your filing status, and the exact whole dollar amount of the refund shown on your return.
  7. Delayed Refund There are several reasons for delayed refunds. For things that may delay the processing of your return, refer to Tax Topic 303 on IRS.gov, which includes a Checklist of Common Errors When Preparing Your Tax Return.
  8. Larger than Expected Refund If you receive a refund to which you are not entitled, or one for an amount that is more than you expected, do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.
  9. Smaller than Expected Refund If you receive a refund for a smaller amount than you expected, you may cash the check, and, if it is determined that you should have received more, you will later receive a check for the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks after receiving the refund, then call 800–829–1040.
  10. Missing Refund The IRS will assist you in obtaining a replacement check for a refund check that is verified as lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check. For more information, visit IRS.gov or call 800-829-1040.

Source: www.irs.gov.

Last Minute Filing Tips

Posted by admin On April - 8 - 2009

With the tax filing deadline close at hand, the IRS offers ten tips for those still working on their tax returns:

  1. File Electronically – Consider filing electronically instead of using paper tax forms. If you file electronically and choose direct deposit, you can receive your refund in as few as 10 days.
  2. Check the Identification Numbers – When filing a paper return carefully check the identification numbers — usually Social Security numbers — for each person listed. This includes you, your spouse, dependents and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.
  3. Double-Check Your Figures – If you are filing a paper return, you should double-check that you have correctly figured the refund or balance due.
  4. Check the Tax Tables – If you are filing using the Free File Fillable Forms or a paper return you should double-check that you have used the right figure from the tax table.
  5. Sign your form – Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.
  6. Mailing Your Return – Use the coded envelope included with your tax package to mail your return. If you did not receive an envelope, check the section called “Where Do You File?” in the tax instruction booklet.
  7. Mailing a Payment – People sending a payment should make the check out to “United States Treasury” and should enclose it with, but not attach it to the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the taxpayer’s Social Security number, daytime phone number, the tax year and the type of form filed.
  8. Electronic Payments – Electronic payment options are convenient, safe and secure methods for paying taxes. You can authorize an electronic funds withdrawal, or use a credit card or a debit card. For more information on electronic payment options, visit IRS.gov.
  9. Extension to File – By the April due date, taxpayers should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.
  10. IRS.gov – Forms and publications and helpful information on a variety of tax subjects are available around the clock on the IRS Web site at IRS.gov.

Source: www.irs.gov.

Reasons to Try e-file

Posted by admin On April - 6 - 2009

If you’ve never filed your tax return electronically, you should definitely consider trying it in 2009. Join the millions of taxpayers who are saving time and money to file their tax returns without the many headaches often associated with filing a paper return.

Here are the top eight reasons close to 90 million people filed their tax returns electronically in 2008:

1. It’s easy. You can usually file a state tax return at the same time you electronically file your federal tax return.

2. It’s accurate. No more human errors because e-file checks for math errors and necessary information. This not only increases the accuracy of your return, but it also reduces the need for correspondence with the IRS to clarify errors or omissions.

3. No more second-guessing yourself. When you file electronically, the computer software or online program guides you through the process step-by-step.

4. You’ll get your refund faster. When you use e-file, you can get your refund in as little as ten days.

5. There are more payment options. With e-file, you can file your return early, but wait to pay any balance due by the April deadline. You can also pay electronically using a credit card, electronic funds withdrawal or in some cases the Electronic Federal Tax Payment System.

6. It’s fast. You don’t have to make a trip to the post office. In fact, you won’t even need to walk to the mailbox to send your return. Just click Send.

7. You’ll know the IRS received your return. The IRS will send you an electronic notification acknowledging receipt of your return.

8. You’ll have peace of mind. After clicking send and receiving your notification from the IRS that they received your return…kick back and relax – you’re done!

Source: www.irs.gov.

Top Ten Tax Time Tips

Posted by admin On April - 4 - 2009

1. Gather your records…now! It’s never too early to start getting together any documents or forms you’ll need when filing your taxes: receipts, canceled checks, and other documents that support an item of income or a deduction you’re taking on your return. Also, be on the lookout for W-2s and 1099s, coming soon from your employer.

2. Find your forms. Whether you file a 1040 or 1040-EZ, you can download all IRS forms and publications on our Web site, IRS.gov.

3. Do a little research. Check out Publication 17 on IRS.gov. It’s a comprehensive collection of information for taxpayers highlighting everything you’ll need to know when filing your return. Review Pub 17 to ensure you’re taking all credits and deductions for which you’re eligible.

4. Think ahead to how you’ll file. Will you prepare your return yourself or go to a preparer? Do you qualify to file at no cost using Free File on IRS.gov? Are you eligible for free help at an IRS office or volunteer site? Will you purchase tax preparation software or file online? There are many things to consider. So, give yourself time to weigh them all and find the option that best suits your needs.

5. Take your time. Rushing to get your return filed increases the chance you will make a mistake and not catch it.

6. Double-check your return. Mistakes will slow down the processing of your return. In particular, make sure all the Social Security Numbers and math calculations are correct as these are the most common errors made by taxpayers.

7. Consider e-file. When you file electronically, the computer will handle the math calculations for you, and you will get your refund in about half the time it takes when you file a paper return.

8. Think about Direct Deposit. If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than waiting for a check by mail.

9. Visit IRS.gov often. The official IRS Web site is a great place to find everything you’ll need to file your tax return: forms, tips, FAQs and updates on tax law changes.

10. Relax. There’s no need to panic. If you run into a problem, remember the IRS is here to help. Try IRS.gov or call our customer service number at 800-829-1040.

Source: www.irs.gov.

Filing Status

Posted by admin On April - 3 - 2009

Everyone who files a federal tax return must determine which filing status applies to them. It’s important you choose your correct filing status as it determines your standard deduction, the amount of tax you owe and ultimately, any refund owed to you.

There are two things to consider when determining your filing status:
First, your marital status on the last day of the year determines your filing status for the entire year. Secondly, if more than one filing status applies to you, choose the one that gives you the lowest tax obligation.

Here are the five filing status options:
1. Single. This will generally apply to anyone who is unmarried, divorced or legally separated according to your state law.

2. Married Filing Jointly. A married couple may file a joint return together. If your spouse died during the year, you may still file a joint return with that spouse for the year of death.

3. Married Filing Separately. A married couple may elect to file their returns separately.

4. Head of Household. This generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.

5. Qualifying Widow(er) with Dependent Child. You may be able to choose this filing status if your spouse died during 2006 or 2007, you have a dependent child and you meet certain other conditions.

Source: www.irs.gov.

Common Errors Made on Tax Returns

Posted by admin On April - 3 - 2009

Errors made on tax returns may delay the processing of your return and the arrival of your refund. Avoiding the common errors below will help ensure your refund arrives on time:

  1. Recovery Rebate Credit – Many returns filed in 2009 have errors involving the Recovery Rebate Credit, a credit for people who did not receive a stimulus payment in 2008 or who did not receive the maximum amount. To avoid delays in tax refunds, it is critical that taxpayers know whether they received a payment in 2008 and the correct amount of that stimulus payment. For people using a paper tax return, the stimulus payment amount will be required when completing the related worksheet. For people using tax software, the stimulus payment amount will be needed as part of the return preparation process.
  2. Incorrect or missing social security numbers – When entering SSNs for anyone listed on your tax return, be sure they are entered exactly as they appear on the social security cards. Incorrect or transposed numbers will cause delays in the processing of your return.
  3. Incorrect or misspelling of dependent’s last name – When entering dependent’s last name on your tax return, ensure they are entered exactly as they appear on the social security cards. Incorrect or misspelling of dependent’s last name will cause delays in processing of your return.
  4. Filing status errors – Make sure you choose the correct filing status for your situation.
  5. Math errors – When preparing paper returns you should review all addition and subtraction to ensure it is correct. Remember, when you file electronically, the software takes care of the math for you!
  6. Computation errors – Take your time. Many taxpayers are making mistakes when figuring the taxable income, withholding and estimated tax payments, Earned Income Credit, Standard Deduction for age 65 or over or blind, the taxable amount of social security benefits, and child and dependent care credit.
  7. Incorrect bank account numbers for Direct Deposit – If you are due a refund and requested direct deposit did you check your financial institution routing and account numbers?
  8. Forgetting to sign and date the return – An unsigned tax return is like an unsigned check – it is invalid.
  9. Incorrect Adjusted Gross Income information – Taxpayers filing electronically must sign the return electronically using a personal identification number. To verify their identity taxpayers will be prompted to enter their AGI from their originally filed 2007 federal income tax return or their prior year PIN if they used one to file electronically last year. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math error correction made by IRS.

Source: www.irs.gov.


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