The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The season for filing tax returns often finds people confused and nervous. The IRS assumes the role of an enormous vengeful monster ready to gobble you up. It is very unfortunate, and very common, that a considerable number of taxpayers will postpone filing their tax returns and straightening out tax affairs until the deadline looms high; this is where the nervousness comes into play.

If you are not clear about tax laws, depreciation formulae and deductibility rules, you may find yourself in some trouble. This could also cause you to … Read the rest

The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The season for filing tax returns often finds people confused and nervous. The IRS assumes the role of an enormous vengeful monster ready to gobble you up. It is very unfortunate, and very common, that a considerable number of taxpayers will postpone filing their tax returns and straightening out tax affairs until the deadline looms high; this is where the nervousness comes into play.

If you are not clear about tax laws, depreciation formulae and deductibility rules, you may find yourself in some trouble. This could also cause you to shell out precious money that would have otherwise been spent on stuff you wanted.

Even minor errors can lead to payment of increased taxes and might possibly lead to delayed or eliminated refunds. As is true of everything else in life, being systematic and extremely careful in arranging paperwork related to tax returns all through the year will ensure a smooth filing of tax returns when the time comes. Be sure that you don’t lose or accidentally throw away any bills, receipts or vouchers related to your tax return. The next step you need to take is to educate yourself about the IRS’ rules and regulations. Do no blindly believe other people’s opinions. Look up the facts for yourself.

Making tax return errors is very common, even CEOs of companies, VPs and professors are no exceptions. Read on to know some common mistakes which should be avoided at all costs.

  1. Mistakes are often made in the context of benefits claimed for dependent children. Not being fully aware of the allowed exemptions might lead to failure in making a correct claim or cause an erroneous claim. The IRS, in an attempt to clear common confusions, specified the definition of ‘child’ in 2006, with the details available at http://www.bankrate.com/brm/itax/tips/20010208a.asp. If this does not answer your question, refer to a dependable source before proceeding with filing your tax returns.
  2. The most common types of mistakes that occur in tax return filing are calculation based ones, caused by mistakes made while entering the digits. Cross check to make sure the full stops and the commas are in the right places. Stay patient while dealing with the figures and check the total on two separate days. Requesting a family member or friend to check the total might be a good idea. Usage of tax software programs might make things easy for you. It should be noted that the IRS compulsorily checks entries against W-2, 1099 and other statements relevant to your tax. Make sure that your return does not have a discrepancy because they would spot it and that would lead to problems and delays.
  3. If you forget to sign the tax return and insert the date, the IRS will not process your tax return. Once you are done filling, run through it carefully to see that you have not missed any minute details on any page. Also, make sure that you have written your social security numbers or tax ID numbers correctly.
  4. Another common mistake is forgetting to submit all the relevant forms, for example, W-2, 1040, or 07, or 16. It is important to check the relevant schedule for each claim and to make sure that all the required and supporting forms are attached with the tax return.
  5. Taxpayers often fail to keep track of investments, interests they have paid or earned, allowed deductions etc. it is vital to maintain records of your investments, dividends you have paid, taxes deducted on maturity (if any), taxes paid previously, capital gains etc. Keeping a thorough track of taxes paid would prevent you from paying taxes on the same amount more than once. One should be very careful and systematic while making these calculations to avoid mistakes.
  6. A lot of taxpayers utilize the long form when actually the 1040Ez is more suitable for them. The 1040Ez is enough, and the long form not necessary, for people whose income, expenses and related things are simple and straightforward. Many of us are not aware of the amount it is possible for us to save in taxes. The long form has provisions for deductions from taxable income in lieu of student loan interest, contributions to charities, alimony paid etc.
  7. A lot of taxpayers fail to submit by the deadline and ask for an extension. This attracts penalties along with interest. In cases due to unavoidable circumstances, where you fail to submit your tax filing by April, you need to submit form 4868 by the April deadline in order to be allowed an extension.
  8. Many taxpayers end up using the wrong table for calculations. One needs to be very careful about two things in particular: using the appropriate tax tables and filing status. If you use the wrong tables or file under an inappropriate status, you may find yourself to be in hot soup. The error could even translate to paying extra taxes on income derived from investments. Be very careful and calculate your taxes through the use of the worksheet at the back of the booklet.
  9. Two very common mistakes taxpayers end up making while filling their tax returns are; entering the wrong details in the check and forgetting to sign the check. A lot of taxpayers also post the forms without attaching the proper postage on the return package. It is also mandatory to use the printed label and envelope that the IRS provides.

The IRS has made its tax filing systems modern and a number of the errors mentioned above can be prevented by opting for electronic tax filing. It was calculated that last year over half of the tax returns were filed using e-filing. There are many advantages of pursuing electronic filing. The forms that you would use for the purpose are on tab, the software provides you with a step by step guidance to complete the filling process, the electronic calculator minimizes the chance of errors and most importantly, the e-filing forms take a short time to be processed, the turnaround time being 14 days. For details, visit http://www.irs.gov. In case you are not sure about the process, you can request the help of an authorized tax professional.

Make sure that you file your taxes on time and accurately. This will prevent heartburn and hypertension.

Income Tax Return – Saving Money and Taking a Cruise!

Income Tax Return – Saving Money and Taking a Cruise!

Save your money and you can go for an outstanding vacation! Now is the time for your income tax!

Is there anything common between income tax return filing, saving your money, and going for a fabulous vacation? Well, money is all about how you plan it! Through proper tax planning, you can save a lot of money and then by properly doing your income tax returns, you can go on a cruise vacation.

There is one option for an earner in Canada for investing in a registered retirement … Read the rest

Income Tax Return – Saving Money and Taking a Cruise!

Save your money and you can go for an outstanding vacation! Now is the time for your income tax!

Is there anything common between income tax return filing, saving your money, and going for a fabulous vacation? Well, money is all about how you plan it! Through proper tax planning, you can save a lot of money and then by properly doing your income tax returns, you can go on a cruise vacation.

There is one option for an earner in Canada for investing in a registered retirement savings plan (RRSP). RRSP helps one to minimize the income tax for an individual. On the basis of their income and marital status, income tax is deducted from pay for many individuals. By effectively lowering the income through RRSP contribution, the net payable tax also gets lowered. Said in another way, it is as good as an income tax refund payment.

There is a limit to RRSP contribution that one can make; but depending upon the last year’s status of investments, the amount of contribution may be increased. So, with this advantage, one can even further lower the net payable income tax, thereby increasing the income tax refund.

Just contemplate about this for a moment. With the help of the advantage of RRSP premium limit that you can avail in your tax return, very easily you can go on saving money from year to year and finally get a handsome tax refund with your retirement and you can very well buy a cruise trip! How do you like it?

Similar kind of plans and programs are available in other countries as well. The idea is to maximize your tax refund so that you can spend and save at the same time.

This is true that there is a deadline fixed deadline every year for the RRSP contribution. Definitely you won’t like to miss this deadline. So, you will have to wait for next year to come for your income tax refund free vacation.

If it has really been a painstakingly hard year for you, there is an opportunity waiting for you for all the hard work you’ve done. So, decide today and start saving your money to book your dream vacation. Truly speaking, this is definitely something you deserve!

Checking the Status Online of Your Tax Refunds

Checking the Status Online of Your Tax Refunds

It might feel good to know that there is a tax refund waiting for you. Congrats! The most common question asked by every expectant taxpayer is; “Where is my refund?” Check status of your refund online.

The quickest and easiest way to check your tax refund is asking the IRS through their web site www.IRS.gov. There is a link called “Where’s My Refund?” on the home page itself. It’s fairly simple to use this service. You only need to have your tax return copy so as to be able to provide the … Read the rest

Checking the Status Online of Your Tax Refunds

It might feel good to know that there is a tax refund waiting for you. Congrats! The most common question asked by every expectant taxpayer is; “Where is my refund?” Check status of your refund online.

The quickest and easiest way to check your tax refund is asking the IRS through their web site www.IRS.gov. There is a link called “Where’s My Refund?” on the home page itself. It’s fairly simple to use this service. You only need to have your tax return copy so as to be able to provide the required data for getting the refund status. To be specific, you will need your social security number, the filing status, and the refund amount. The basic reason for asking about this information is for your personal security; the agency tries to make sure that it is dealing with a genuine taxpayer. Moreover, your return also should have all this information. Otherwise, there might be something wrong.

After inputting all this information, a results page should appear that will show certain messages like:

(i) Return received and it is under processing

(ii) It might show you the expected date for direct deposit of refund or the mailing date

(iii) Refund not issued because of some delivery problem

Sometimes, it might tell you that your return is reviewed by the IRS due to some error or doubtful entry. In situations like this, you should rush on to some expert tax professional and get your return reviewed to make it error-free.

How long should you wait before checking?

In case of electronic filing, the refund status normally becomes accessible after 48 to 72 hours from the actual time of filing your returns. As the return comes into the data base in electronic format, so the system should get very quickly updated. In case of non-electronic filing of your returns, you won’t be able to check status of your return before 3 weeks or sometimes even more. As the IRS receives a lot of returns in paper format, so it takes a plenty of time to enter all the data into the data base.

How much time does it normally take to receive your refund?

The time needed for issuing a refund depends upon the way the return is filed. In case you filed a paper return and sent through regular mail, then the refund could be expected within 6 to 8 weeks after the IRS receives your return. And in case of electronic return filing, you can expect the same within 3 to 4 weeks time. In case you gave preference for direct deposit of the refund in your bank account, then simply take off 1 week from the above calculations.

Filing Taxes Online Now Stress Free As Well As Cost Free

Filing Taxes Online Now Stress Free As Well As Cost Free

For a lot of US citizens, the 2009 tax season proves to be taxing the nerves, too expensive, and severely time-consuming.

Fortunately, many ways are available to make tax filing easier, faster, effectively cost free, as well as stress free.

This possibility has come out as a result of a system that facilitates free tax preparation. Through the web site www.TaxACT.com anybody can e-file tax returns now with little to no charge. They can also prepare and print them for free.

There are many good reasons why you … Read the rest

Filing Taxes Online Now Stress Free As Well As Cost Free

For a lot of US citizens, the 2009 tax season proves to be taxing the nerves, too expensive, and severely time-consuming.

Fortunately, many ways are available to make tax filing easier, faster, effectively cost free, as well as stress free.

This possibility has come out as a result of a system that facilitates free tax preparation. Through the web site www.TaxACT.com anybody can e-file tax returns now with little to no charge. They can also prepare and print them for free.

There are many good reasons why you should file your taxes online.

(i) e-filing is faster. It is easy to understand the software which is designed in a question-answer pattern. Intelligent questions are asked in simple English and the tax codes also get sorted out automatically.

(ii) Compared to hand preparation, this method is easier. You no longer need to erase or white out your mistakes. Smart questions are asked by the software on the basis of the previous answers. It also offers the users the possibility of saving their unfinished work and coming back again to resume their work after many days. It’s really so convenient!

(iii) The possibility of making mistake is low. Incomplete information and mistakes are flagged.

(iv) Its cheap. E-filing is cheaper than hiring an accountant. It is affordable and is even free for TaxACT Standard. E-filing your federal tax return is absolutely free at TaxACT.com and some of the taxpayers can even file returns freely at the IRS website.

(v) It makes your refunds faster. In manual approach, it takes months, whereas the e-filers enjoy an average return time of less than even two weeks.

This way of e-filing helps to eliminate costs in the process of filing and completing your tax returns. It also contains the forms, worksheets, and schedules necessary for preparing your federal tax return easily and quickly.

For making the process fast, reliable, and convenient, the TaxACT Standard Federal’s latest edition features a 7-step process that offers automatic flags for incorrect information and trustworthy reference tools. TaxACT can also collect information on its own for state returns, making state return preparations just as simple and fast.

There is also a TaxACT Deluxe edition which provides some additional forms and other supports relevant for a complicated tax scenario.

Earned Income Credit Missed by Many

Earned Income Credit Missed by Many

One of the best tax credits available today is the Earned Income Credit but many individuals don’t claim it even when they qualify. These individuals may not have qualified last year but their financial, marital, or dependent situation may have changed making them now qualified.

The tax credit maximum is $5,657 this year and depends on your income and how many dependent children you have in your household. Plus the credit is refundable, which means you can get a refund above the tax your into the treasury during the tax year. Make sure not … Read the rest

Earned Income Credit Missed by Many

One of the best tax credits available today is the Earned Income Credit but many individuals don’t claim it even when they qualify. These individuals may not have qualified last year but their financial, marital, or dependent situation may have changed making them now qualified.

The tax credit maximum is $5,657 this year and depends on your income and how many dependent children you have in your household. Plus the credit is refundable, which means you can get a refund above the tax your into the treasury during the tax year. Make sure not to file separately from your spouse as this will disqualify you automatically.

Having a valid social security number and earned income are two important first steps. And combat pay is considered earned income for qualify for the earned income tax credit. The easiest way to determine if you qualify is by using the EITC assistant at the IRS.gov website. Make sure to apply for this tax credit when you file your taxes if you determine that you are qualified.

Did You Forget To File Your Returns on April 15th with the IRS?

Did You Forget To File Your Returns on April 15th with the IRS?

Are you late filing your tax returns and has April 15th already passed? In case you could not file your tax return or request for an extension of time, here some ways to clear your past due.

The Internal Revenue Service happens to be a bit sensitive regarding filing of tax returns. Even if you are unable to pay, it prefers you to do a file your return or take a filing extension. In the worst situation, the IRS simply puts you on a payment … Read the rest

Did You Forget To File Your Returns on April 15th with the IRS?

Are you late filing your tax returns and has April 15th already passed? In case you could not file your tax return or request for an extension of time, here some ways to clear your past due.

The Internal Revenue Service happens to be a bit sensitive regarding filing of tax returns. Even if you are unable to pay, it prefers you to do a file your return or take a filing extension. In the worst situation, the IRS simply puts you on a payment plan. If you are unable to file anything, then you will definitely receive a lot of unexpected attention from the authority.

Normally, you should make a point to always pay your taxes. Otherwise, it might bring on huge penalties as well as interests. In case the IRS happens to have any doubts, you might finally end up paying interest and penalties of up to 25% of your taxes. It’s really a huge charge!

In case there is a refund due for you, then there is no worry for you regarding any penalties even if you couldn’t file your taxes. This is because they owe you money. But are you crazy? Why are you giving the government a loan that is interest-free? You couldn’t have used that money for other purposes? Just be quick to get your return filed. Very few people will let go of their refunds. Always remember that you will lose your refunds if you fail to claim within three years from the original date of filing them. Truly speaking, if you are so lazy, then you deserve to lose your money!

In case you have to pay taxes but you don’t have money, then there is an alternative for you. You can even pay taxes to the IRS through credit cards. It’s definitely not a great option, as its interest rates are higher. But you cannot be audited by the credit card companies.

That some taxpayers may be unable to pay their taxes fully is well understood by the IRS. So to be on the safer side, even if you are unable to pay, it is always good to file your return.