Benefits of e-Filing Your Return

Benefits of e-Filing Your Return

Last year nearly 67% of federal tax returns were submitted to the IRS by electronic transfer, or e-file. The IRS likes tax returns to come in electronic format as it is easier for them to process and recently provided a list of benefits for you to consider.

The speed with which your return can be sent, processed, and a refund sent to you is much better when you file your federal return electronically. The IRS is also able to correct your information if there happens to be a missed calculation on the return. Ten days … Read the rest

Benefits of e-Filing Your Return

Last year nearly 67% of federal tax returns were submitted to the IRS by electronic transfer, or e-file. The IRS likes tax returns to come in electronic format as it is easier for them to process and recently provided a list of benefits for you to consider.

The speed with which your return can be sent, processed, and a refund sent to you is much better when you file your federal return electronically. The IRS is also able to correct your information if there happens to be a missed calculation on the return. Ten days is a standard turn-around if you file this way and request direct deposit into a checking account.

The IRS maintains strict security on their transferred communications and feels your information is entirely safe filing electronically. And once your return is received by the IRS your tax preparer or tax preparation software, like TurboTax or TaxAct, will let you know it was received. Then you can monitor its progress to know when your refund will be coming.

Finally, if you do happen to owe taxes, you can e-file immediately when your return is complete and wait until the end of the tax season to send the IRS the amount due. And state returns are often able to be transmitted with the same benefits you will enjoy from your federal tax electronic filing.

Selecting a Good Tax Preparer

Selecting a Good Tax Preparer

Maybe you have completed your tax return at home with one of the available tax preparation packages like TurboTax but you want a tax professional to personally review your return. The IRS wants to make sure you have the information you need to select the best tax preparer and has provided these tips to avoid issues with the quality of your filed return.

Availability. Make sure the preparer will be available for questions even after the return is filed. You want someone to assist you in the case of an IRS audit.

Background Check. Like … Read the rest

Selecting a Good Tax Preparer

Maybe you have completed your tax return at home with one of the available tax preparation packages like TurboTax but you want a tax professional to personally review your return. The IRS wants to make sure you have the information you need to select the best tax preparer and has provided these tips to avoid issues with the quality of your filed return.

Availability. Make sure the preparer will be available for questions even after the return is filed. You want someone to assist you in the case of an IRS audit.

Background Check. Like hiring anyone, background checks are useful. Check the Better Business Bureau, the state’s board of accountancy, or the state’s bar association depending on the perspective preparer’s license.

Check Qualifications. Many preparers are CPAs or Enrolled Agents and need to meet certain criteria to maintain the designation. Check for these and similar affiliations that require continuing education and ethical practices.

Fee Based Services. If the preparation fees are based on the amount of your return, the return could be prepared incorrectly to increase the fee. Avoid preparers that charge for income tax returns in this manner.

Records Request. If your preparer fails to request all the forms needed to complete your return or doesn’t ask the necessary questions to determine your tax situation, you should consider a different tax professional.

Signatures. Always wait until your return is ready to be mailed to sign it. Review all parts of the return before taking this final step. And make sure your preparer also signs the return in the appropriate location.

Use the Tax Form that fits You

Use the Tax Form that fits You

Filing your Federal Tax Return requires you to select at least one form, a 1040 form. But there are a number of 1040 forms available depending on the complexity of your return. Here are the criteria to consider when selecting a 1040 form.

The 1040EZ is used when your taxable income is less than $100,000, your are married filing joint or single, you are under the age of 65, not blind, you have no dependents, your income from interest earning accounts produced less that $1,500 during the year, and you do not … Read the rest

Use the Tax Form that fits You

Filing your Federal Tax Return requires you to select at least one form, a 1040 form. But there are a number of 1040 forms available depending on the complexity of your return. Here are the criteria to consider when selecting a 1040 form.

The 1040EZ is used when your taxable income is less than $100,000, your are married filing joint or single, you are under the age of 65, not blind, you have no dependents, your income from interest earning accounts produced less that $1,500 during the year, and you do not plan to take certain deductions.

The 1040A can be used when your taxable income is less than $100,000, you do have some capital gains, you do have tax credits, and you plan to claim an IRA deduction, a student load deduction, an education expense, or a higher education expense.

When you cannot use the 1040EZ or the 1040A, you need to file the 1040 (sometimes called the long form). This happens when your income is greater than $100,000, you want to itemize on Schedule A, you have Self-Employment income, and you have capital gains from the sale of a home. The 1040 long form isn’t as impossible to complete as you might think and tax preparation software like TurboTax will use the form if your situation requires it.

Exemptions and Dependents 101

Exemptions and Dependents 101

When preparing your federal 2009 tax return for filing, make sure to know the basic rules about exemptions and dependents. Understand what happens when someone claims you as a dependent or how exemptions affect your return. Your refund will be affected by all these conditions.

To begin with, when someone claims you as a dependent you may still need to file a return. Depending on your income, your filing status, special tax situations, or Advanced Earned Income you will need to file a return to the IRS. Check Publication 501 for exact details about … Read the rest

Exemptions and Dependents 101

When preparing your federal 2009 tax return for filing, make sure to know the basic rules about exemptions and dependents. Understand what happens when someone claims you as a dependent or how exemptions affect your return. Your refund will be affected by all these conditions.

To begin with, when someone claims you as a dependent you may still need to file a return. Depending on your income, your filing status, special tax situations, or Advanced Earned Income you will need to file a return to the IRS. Check Publication 501 for exact details about when you must file.

Exemptions are yourself and your dependents and they reduce your tax bill. The standard exemption is $3,650 but can be phased out when your income reaches certain levels. Now if you are being claimed as a dependent by someone else and you discover that you need to file a return, you cannot take the personal exemption.

Your spouse’s exemption will be claimed on your joint filing and could be claimed on your Married Filing Separate return. If your spouse did not earn any income during the tax year and is not claimed as a dependent by their parents, you can claim them on your separate return.

Other groups that cannot be claimed on your return include non US citizens, resident aliens, and residents of Mexico and Canada. The only exception is for an adopted child where you should consult your tax professional to see if they qualify.

Getting your Filing Status Correct

Getting your Filing Status Correct

Selecting the right filling status makes a great difference in your refund ultimately and is quite important. Your standard deduction and the amount of tax your owe varies based on whether you are single, married, or head of household. The IRS wants you to make the right selection and therefore is providing some useful tips.

If you have gotten married or gotten a divorce during the tax year, your filing status is your status on the last day of the year. And maybe more than one status applies to you. For instance, you are both … Read the rest

Getting your Filing Status Correct

Selecting the right filling status makes a great difference in your refund ultimately and is quite important. Your standard deduction and the amount of tax your owe varies based on whether you are single, married, or head of household. The IRS wants you to make the right selection and therefore is providing some useful tips.

If you have gotten married or gotten a divorce during the tax year, your filing status is your status on the last day of the year. And maybe more than one status applies to you. For instance, you are both single and Head of Household. Select Head of Household as the tax your owe will be less.

Married couples have the unique ability to file jointly or separately. Often this selection is made based on the overall tax consequences of the filing status. State taxes can be reduced be filing separately in states like Ohio, make this selection attractive.

If your spouse passed away during 2009, you can file jointly for this one year only with your deceased spouse. And if your spouse died during either 2007 or 2008 and you have a dependent child, filing Widow(er) with Dependent Child can improve your tax return if you meet certain conditions. (Check Publication 501)

Head of Household implies that you are single, have paid more that 50% of the cost of your home, and have a qualified dependent in the home. This status was often claimed incorrectly but has recently been looked at closely but IRS auditors for misapplication.