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Haiti Donations in Early 2010 OK For Claiming On 2009 Returns

Posted by Administrator on Feb-1-2010

The IRS announced a new tax relief for people who contributed to providing earthquake relief in Haiti. It allows contributors to get the tax advantage of the donation for their 2009 claim rather than waiting a year for the benefit.

According to the irs.gov website, only cash contributions made after January 11, 2010 and before March 1, 2010 will qualify. All cash donations made after March 1, 2010 will only be eligible to be claimed for the 2010 tax year.

To gain the benefit, you must itemize your tax deductions using Schedule A. For more information, please visit the IRS website at irs.gov.

Archive for the ‘Tips’ Category

Jan
01

A Year-long Gift from the U.S. Government

Posted by bry

As part of the tax bill signed by the President last month, quite a large number of American taxpayers will see a discount on their payroll taxes.  Social Security taxes are usually 6.2 percent of an employee’s wages, up to $106,800.  Thanks to President Obama and the bill, in 2011, employees are only liable for a 4.2 percent contribution toward Social Security, rather than the 6.2 percent.  This should be a relief on most taxpayers, at least for the short term.

For the self-employed this break will not affect the employer contribution to Social Security.  This means you will still be liable for a 6.2 percent employer contribution.  You would still qualify for the employee discount of 4.2 percent.  Your combined contribution would drop from 12.4 percent to 10.4 percent.

Turning this short-term relief into a long-term benefit is up to the taxpayer.  Think about putting that money into your mortgage principal, retirement, or to pay-down those student loans that have been haunting you.

Nov
18

When Do You Need Your Taxes Done Professionally?

Posted by Administrator

The majority of people who file taxes each year can probably figure them out without too much difficulty. It takes some organization, basic math skills and patience, but it can be done. If you have the help of some tax preparation software, it can be made even simpler. However, if you are the nervous type of person, you might be asking yourself if you need to have a tax professional (usually a CPA) take a look at what you’ve done, just to ‘make sure.’  Unless you are related to an accountant, that’s going to cost you some cash.  In order to help you determine this question, the following is a list of situations in which you should ALWAYS have a qualified tax professional either do your taxes for you, or, at the very least, go over your final return before you file.

  • If your income exceeds 60-70,000 dollars a year, it’s a good idea to have a tax professional look at it to see if they can save you some money.  If you are making less than this, your taxes are already comparatively low, and the margin of additional savings you might get is fairly low.
  • If you run your own business, you should always, always, have your taxes done professionally.  Even if your not making money in your business yet, or currently. Even if you fall below the 60-70K guideline, business owners fall into a whole bunch of additional laws and loopholes. To make matters even more complicated, every state has tons of different rules and regulations that have to be followed and authorizations that have to be gained. You want to make sure you are doing this correctly from the get go, not only can it save you money, it can save you from jail-time.
  • If you are self-employed, there are lots of tax laws and tax breaks that could apply to your individual situation.  If you are self-employed and making most of your living that way, having a professional tax preparer on board can really save you money.
  • If you are in a divorce or anticipate divorce proceedings, it is essential to have your finances and taxes spic and span.  You need to have everything documented, ESPECIALLY if the divorce is not amicable.  Even if it is a ‘friendly’ divorce, having things documented and done correctly will simplify the proceedings. Every divorce is going to cost you money, and the more money you have, the more it’s likely to cost you. Having a tax professional on board is a good idea when dealing with all of the various legalities attendant upon a divorce.
  • If a spouse or parent dies and you are dealing with legal issues of their passing, especially when substantial amounts of inherited money (usually anything in excess of $25,000) are involved.
  • If you have an expensive hobby that takes a lot of time and money, (yachting, scuba diving, mountain climbing etc) a certified tax professional can advise you in ways to make that hobby as tax-friendly as possible, ultimately saving you dollars off of your bottom line tax amount
Jan
05

Six Tax Tips for 2010

Posted by Administrator

Tax season is here and it falls upon you, the responsible citizen, to make sure you are square with Uncle Sam. For most people, it means getting a refund, but for some, it is time to pay the piper the taxes they have been setting aside for the past year.

Here are six tax tips that can help you either get your refund faster or square up and minimize what you owe:

  1. Hunt down your W-2s and 1099s. Your employer is required by law to get your W-2 form to you in a timely manner. For contract work for businesses, your client is required to give you a 1099 form showing what they paid you in the past year. You can’t even get past the first step of filing your taxes without these forms.
  2. Gather your records and receipts. Assuming you have not been very organized with your records throughout the year, get started on sorting and organizing right now. Waiting until April to start this step is just asking for trouble.
  3. Check the irs.gov website for updates. Tax laws change pretty fast and you will need to be able to stay on top of what’s new.  For instance, this year, it is OK to make charitable donations to Haiti and claim it on your 2009 return.
  4. Use electronic filing, or e-file. The days of manually filling out tax forms with a pen are long gone. Get yoiur taxes done on your computer for free or for very little. Don’t have a computer? You can borrow one from a friend or rent one at an internet cafe for the hour or so it takes to enter your tax data and send it to the IRS. This also speeds up your return immensely.
  5. Review your work. You have plenty of time. Yes, you want your refund ASAP, but if you spend a little extra time now, double-checking your work and making sure you are getting every deduction you qualify for, you can save hundreds of dollars.
  6. Be calm. There are many free resources available to help you. Even if that is not enough, you can choose to use a tax preparer, but remember, the closer it gets to April 15, the harder it is to find an available CPA.

This is definitely one aspect of American life when procrastination definitely does not pay off. Make sure you remain calm but focused and try to use a computer when filing your taxes to have a better tax reconciliation experience this year.

Dec
26

Choosing Someone to Prepare Your Taxes For You

Posted by Administrator

Nowadays, EVERYone wants to prepare your taxes for you. You see temporary kiosks in Wal-Marts, malls and just about any other large area where people shop. There are also Certified Public Accountants or CPAs that want you to hire them to organize your finances and pay your taxes for you. Websites bombard you with ads to buy or use their tax preparation software.

It helps to know what you are getting into and what to avoid. Here are some tips to help you make sure you aren’t a victim this tax season.

  • Check qualifications. Use your smart phone or wait and go home to look up the company name of the tax preparer you may be interested in. Find the small print on their website and read it. Also do searches online to see what other people are saying about them.
  • Find out what the real cost is. Sometimes fees are not mentioned at the beginning of the sale. These are known as hidden fees. Smoke them out!
  • Make sure you will be able to contact your tax preparer later on in case you have a problem, a question, or you are getting audited by the IRS. If you sign your info over to a tranger at a mall, how do you know you will be able to find that person again when their kiosk is gone in mid April?
  • Never sign a blank form. Some tax return preparers do not have your best interest in mind. Signing a blank return means that you are responsible for whatever they add to that signed form. This is just like signing something without reading it or handing a signed blank check to a stranger. Just don’t do it.
  • Make sure the tax preparer signs the form in front of you. They need to sign by law, so if they make a mistake and turn in your return without signing it themselves, your tax refund will be held up until the issue is resolved, which could take a very long time.

Aside from these tips, common sense will help you avoid pitfalls and help youget your refund faster. Remember that the info we provide to the IRS each year is very sensitive peronal information. Be sure you can trust the people you are signing this information over to.

Mar
20

Tax Rebate

Posted by Administrator

For those who haven’t already heard, this year there will be a nice tax rebate. In order to receive it, you must file a 2007 federal tax return.

People who earned over $3000 this year are eligible to receive up to $600 back. Married couples can receive up to $1200, and parents will receive an additional $300 for every child under 17 years of age.

People who are exempt from filing taxes must do so anyways in order to receive the tax rebate this year. To be qualified, you must also have a social security number.

Make sure to accurately file this year. There’s no point in not taking free money!

Jan
15

Tax Fraud

Posted by Administrator

Tax fraud is a a very serious crime that can be committed in a variety of ways. It is sometimes a simple crime, but other times very complex i.e., money laundering. Sometimes people ignorantly or purposefully commit tax fraud, and other times people are victims of tax fraud. Here is a few things to consider:

(1) According to the IRS and just about everyone else, if it sounds too good to be true, it probably is. It can be hard to pass up an appealing opportunity that sounds like it will save us money. Any such opportunity should be ignored usually, but if not, then very closely investigated. Many victims of tax fraud every year just simply could not pass up an appealing opportunity.

(2) Tax Preparers. They must be chosen very wisely. It is important to take great care and investigate thoroughly when deciding on a tax preparer. A tax preparer is in an easy position to take advantage of you so make sure he is someone you can trust. I would personally seek somebody out that a friend can recommend.

(3) Another form of tax fraud is when people simply do not file. This is illegal! It is important to always be honest in your filings. People who feel that they are an exception to this rule are a danger to the economy and are committing tax fraud.

So as can be seen, tax fraud comes in many shapes and forms. It can be easily committed and can suddenly create victims out of other people. These are just a few things to consider this tax season, however there are many other important factors that can be further researched.

Jan
15

E-File This Year!

Posted by Administrator

E-Filing is a great way to file your taxes this year. It has many benefits over filling out the paper version. Presently, more than 60% or all taxpayers use e-filing. If your adjusted gross income was below $54,000 this year, you are automatically qualified to e-file for free!

E-Filing can be done from any computer with internet access. E-Filing software can be found online or bought in stores.

The first wonderful plus to e-filing is that it dramatically decreases the time it takes to get your return. Since it arrives faster, it can be processed sooner. With the benefits of direct deposit, you can have your return in your bank account in as little as 10 days.

E-Filing also reduces the chance of making mistakes. Typed characters are usually much clearer than hand written ones so misinterpretation is also far less likely. E-file software checks for and catches most errors before submitting your taxes. This can save a lot of hassle in the future and also speeds of the process of receiving your return promptly.

By e-filing you can sign your return with a PIN number. If you owe at the end of the year, you can save time by paying with a credit card.

By choosing to e-file, you can save quite a bit of time and frustration. That’s why most people are beginning to do so.