By admin, on April 9th, 2010
A recent list of last minute tips from the IRS includes the following -
- The world has changed. Avoid using paper tax forms. File electronically for free on IRS.gov using their Free File Fillable Forms or Traditional Free File.
- Check social security numbers (SSN) CAREFULLY. Make certain ANY documents you include with the official IRS tax forms have a heading that includes the social security number of the primary tax payer AND the tax year. If you have a balance due and are sending a check to the IRS as payment, include your SSN, the particular tax form you are using (1040, 1040A, 1040EZ, etc.), and the tax year for which you are sending payment on the check. The IRS also recommends putting a day-time phone number somewhere on the check. I am old-fashion; I put the tax information in the upper left corner of the check above my name (and address if appropriate). I would put a day-time phone number in the lower left memo section!
- Check all your calculations. An old accounting trick is to check totals by adding numbers from the bottom up rather than from the top down. Change the order or sequence in the way you read or add numbers to make certain you eyes aren’t playing tricks on you.
- Reconfirm which line AND column of tax tables or IRS charts you are using when you determine some value from published information. Read the “At Least” AND the “But Less Than” columns carefully!
- If you mail your return to the government, confirm that the address is correct in the “Where Do You File?” section on IRS.gov or in your tax instruction booklet. The address you use to mail a tax return with a balance due (you owe money to the government) is DIFFERENT from the address you use if you expect or are claiming a tax refund.
- If you are mailing a payment for a tax balance due the government, write the check out to the “United States Treasury”. Send the payment with IRS Form 1040-V, Payment Voucher.
- Consider electronic payments where you authorize electronic funds withdrawals or use a credit card. Use the search feature on IRS.gov to learn more information about electronic payment options.
- Consider filing IRS Form 4868, Application for Extension of Time to File US Individual Income Tax Return or IRS Form 9465, Installment Agreement Request. Make certain you read the documentation carefully.
By admin, on January 20th, 2010
You can obtain past tax return transcripts from the IRS. If you need copies there are two ways to obtain free copies – tax return transcripts and tax account transcripts. There is no charge for transcripts which are available for the current and past three years. A tax return transcript shows most of the line items from your tax return as they were originally filed BUT they will not look the same; they are not printed on the familiar looking 1040/1040A/1040EZ forms. Also note that it does not show any changes you, your tax preparer, or the IRS may have made since the original filing. A return transcript will in most cases satisfy requirements of lending institutions involved in mortgages or student loans.
A tax account transcript shows adjustments or changes either you, your tax preparer, or the IRS has made after the tax return was originally filed. The transcript will also show basic tax information such as your filing status, type of return filed, adjusted gross income, and taxable income. It is usually just a printout; it is not printed on any familiar forms you use when you file your original tax return.
To request a transcript by telephone, call 1-800-829-1040. Follow the instructions given to you in the recorded message. To request a tax return transcript through the mail, individual filers must complete IRS Form 4506T-EZ, the Short Form Request for Individual Tax Return Transcript. This form is for individual filers who use the IRS Form 1040 series. Partnerships, Corporations, and Estates use a different series of forms for filing taxes.
You should expect to receive your requested tax return transcript in approximately 10 business days from the time the IRS receives your request. Allow up to 30 calendar days for delivery of a tax account transcript.
By admin, on August 29th, 2009
A tax deduction lowers the amount of reported income a taxpayer reports on page 1 of the (long) IRS Form 1040 BEFORE any tax liability is calculated. In comparison, a tax credit directly reduces the tax liability dollar-for-dollar. A tax credit is much better than a tax deduction. Most tax credits lower your tax liability to zero. Two tax credits listed below, the Earned Income Credit and the additional Child Tax Credit, however, are more valuable; they are refundable. This means you receive whatever remains (the balance) of the credit after all tax liabilities are paid. You can request that a paper version of an IRS publication be mailed to you by contacting the IRS by phone 800-TAX-FORMS (1-800-829-3676) or ordering the publications online at the IRS website, irs.gov An easy way to directly access ANY IRS publication (in PDF format) for viewing or download is to use the following subdirectory address: /pub/irs-pdf/pXXX.pdf. Replace the XXX with the publication number for a direct hyperlink to the publication.
Child and Dependent Care Credit compensates the taxpayer for the cost of providing care for a qualified child under 13 years of age or for a disabled spouse or dependent while the taxpayer works or seeks new employment. This credit can cover up to 35% of expenses. Furthermore, if you receive any Dependent Care Benefits (DCB) from your employer during the year, you may be able to exclude all or a portion from your income. IRS Publication 503, Child and Dependent Care Expenses, provides rules and detailed information. Replace the XXX above with 503.
Retirement Savings Contributions Credit (also known as the Saver’s Credit) targets low-and moderate-income taxpayers who contribute to an IRA or retirement program such as a 401(k) plan. This Saver’s Credit is applied in addition to other available tax credits. IRS Publication 590, Individual Retirement Arrangements (IRAs) provides detailed information. Replace the XXX above with 590.
Health Coverage Tax Credit (HCTC) is a tax credit that can be used to pay up to 80% of health insurance premium costs. It pertains exclusively to individuals receiving Trade Adjustment Assistance or Pension Benefit Guaranty Corporation (PBGC) benefits. You must be at least 55 years of age and have received or currently receive benefits from PBGC. The IRS rather than PBGC administers the program. Additional information is available at the PBGC website, pbgc.gov.
Earned Income Tax Credit (EIC) is a refundable tax credit that supports low-income individuals and families. This credit is based on income. For example, a single taxpayer without children between the ages of 25 and 64 who has lived in the US more than six months must have adjusted gross income (AGI) in 2009 less than $13,440 to receive EIC. IRS Publication 596, Earned Income Credit, provides seven rules and details how the income earned, investment income, and the number of dependents the taxpayer supports during the year affects the amount of credit received. Replace the XXX above with 596.
Child Tax Credit is specifically for taxpayers who have a qualified child under the age of 17 at the end of the tax year. This credit is applied against any existing tax liability. Any balance of the tax credit, called the Additional Child Tax Credit (IRS Form 8812), that remains is refunded to the taxpayer. Each qualifying child receives up to $1,000. The earned income floor for the refundable portion of this credit in 2009 is $12,550. This credit is offered in addition to the Child and Dependent Care Credit listed above. IRS Publication 972, Child Tax Credit, provides detailed information. Replace the XXX above with 972.
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