Posts Tagged tax
How to Prepare for an Audit
Posted by Oksana Grebenjuk in Budget on Май 13th, 2010
It’s the last thing most people want to see at this tax-paying time of the year: A plain brown envelope marked «Official Government Business» with the return address of the Internal Revenue Service. But don’t panic. The news might not be as bad as you think.
While a full-blown tax audit might be your first thought, that notice might be the extent of your contact with the IRS. The agency might be telling you that you’ve made a math error on your return that must be fixed. Or maybe something on your W-2 doesn’t agree with your tax return. In such correspondence-audit situations, you usually can clear up the discrepancy with a couple of exchanges of information via the mail.
Then again, the worst could happen and that envelope could be a notice that one of your past tax returns is being audited in full. In this case, what do you do?
Sharon Tabor Warren, an enrolled agent and author from Amherst County, Va., says, «If I have prepared the client’s tax return for the year under audit, I ask them for an IRS power of attorney, Form 2848, and to forward their audit notice to me. Then, I tell them to sit back and relax — I’ll handle it from there.»
This makes a good case for having a professional prepare your tax returns! Read the rest of this entry »
What If Your Tax Refund is Wrong?
Posted by Oksana Grebenjuk in Budget, Favourites on Май 12th, 2010
Most of us get refund checks at tax time. And most of the time, those refunds are just what we had been eagerly awaiting. But occasionally, the amount on an IRS check is not what we expected. In some cases, it’s less than we figured on our 1040s. Every now and then, it’s more.
Regardless of whether the refund discrepancy goes against you or favors you, some steps can be taken to resolve the matter. That way, even if you and the tax collector aren’t necessarily satisfied with the eventual amount, you’ll at least understand the mathematical misinterpretation.
Explanation en route
First, don’t panic. There’s usually a logical explanation for why you and the Internal Revenue Service came up with different numbers.
The IRS will send you a written explanation for the unexpected amount. The only problem is that the explanation doesn’t always accompany the check. Such coordination of cash and comment is particularly difficult with directly deposited refunds, which are likely to show up unexplained in your account first.
Why your refund might be an unexpected amount: Read the rest of this entry »
Energy Efficient Home Improvement
Posted by Oksana Grebenjuk in Budget on Май 4th, 2010
Tax breaks for energy efficient home improvement purchases are set to expire in 2010, leaving taxpayers with just enough time to take advantage and save money.
This year is a good time to make green home improvements. This is because — unless Congress extends the tax breaks again — the advantages offered by green home improvements will be disappearing. 2010 is the year they expire, so if you want to get an advantage for upgrading your home with green improvements, now is the time to do it.
Available Tax Breaks Related to Home Improvement
You can get a tax credit for 30% of the cost of making small upgrades to your home, up to $1,500. This is a credit that will reduce the amount of money you owe on your 2010 tax return (to be filed in 2011), kind of like a gift card. These small upgrades include the following:
High efficiency heating and cooling systems.
Better insulation.
Energy efficient windows.
Energy efficient doors.
New water heater.
Duct seals. Read the rest of this entry »
Where’s My Refund
Posted by Oksana Grebenjuk in Budget on Май 3rd, 2010
Still waiting for a 2009 tax refund? Millions of people filed their tax return on April 15. With so many returns to process, the IRS has many refunds queued up waiting to be sent out to taxpayers.
Now that April 15 — Tax Day — has come and gone, millions of people are waiting to receive a tax refund from the IRS. It’s an anxious time for many taxpayers who could use the help of a government tax refund to pay their bills. How can you find out when your refund will arrive?
Tax Refund Status
You can check the status of your refund online. In order to this, use the refund status tool provided by the IRS. You must provide the following:
Your Social Security Number (or Individual Taxpayer Identification Number)
Your Filing status (Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er))
The exact whole dollar amount of your refund
If you are unable to check your status online and you believe there may have been a problem with your tax return or your tax refund, then call the customer service line at the IRS. Automated information is available 24 hours a day. Read the rest of this entry »
Five Lessons From Your ’09 Tax Return
Posted by Oksana Grebenjuk in Budget, Favourites on Апрель 15th, 2010
Your 2009 taxes are done. Congratulations! But you’re not done yet. (Sorry.) While you have all your 2009 tax forms and documents handy, this is the perfect time to analyze last year’s finances and use those insights to lower your taxes in 2010 and beyond.
The sooner you get started, the more you can save. So, take a big breath and then take these five steps:
1. Avoid a Big Tax Refund
You think you love getting a tax refund. What’s not to like about found money? But a refund is really just the return of a year-long, interest-free loan that you extended to your spendthrift Uncle Sam.
You can do much smarter things with that money, like putting it into a retirement plan or a college savings fund. So if you will be receiving a 2009 refund of more than a few thousand dollars and you’re an employee, adjust your withholding at work. If you’re self-employed, lower your quarterly estimated tax paymentsaccordingly.
If your 2010 income will be less than $75,000 ($150,000 if you’re married and will file jointly), be sure your tax withholding has been properly adjusted for the new Making Work Pay Tax Credityou’re entitled to receive this year. This credit (up to $400 for singles and $800 for couples) should be reflected in the amount of taxes taken out of your paycheck. But you may need to submit a revised W-4, especially if you’re holding down multiple jobs or you’re married, since your employer wouldn’t know about your extra work or your spouse’s income. Read the rest of this entry »
Tax Extension
Posted by Oksana Grebenjuk in Budget, Favourites on Апрель 9th, 2010
File a tax extension online no later than April 15. The IRS will give you an extra six months to file your tax return.
An IRS tax extension allows you to put off tax day until October 15. The IRS will gladly give you extra time to file even for those who owe taxes. As long as you file your extension on or before April 15 and then file your return before October 15, you will not be penalized.
Filing an extension online is not a free pass to ignore your taxes. Rather, it’s an agreement with the IRS that you will certainly file your taxes after April 15. Once you file the extension, we suggest you take the proper steps to file an actual return. Once October 15 rolls around, there is absolutely no delaying your taxes any further.
Here are some tips to filing your tax return after April 15:
1. File your extension online. It’s fast, easy, and approval is virtually instant. Then, e-file your return to speed up the process and to ensure a quick refund. If you use the e-file option your tax return is going to be received and processed quickly. Read the rest of this entry »
Housing: Time to Pull the Plug on Government Support
Posted by Oksana Grebenjuk in Budget, Favourites on Март 22nd, 2010
America’s housing market implosion was the epicenter of the Great Recession. It’s hardly surprising that the federal government directed enormous resources at the market. Besides bailing out vulnerable banks, the federal government nationalized mortgage behemoths Fannie Mae and Freddie Mac, opened the lending spigot at the Federal Housing Administration (FHA), passed a first-time home buyers’ tax credit, and established a mortgage modification program for troubled homeowners. The Federal Reserve embarked on a $1.25 trillion purchase of mortgage-backed securities in an effort to engineer lower mortgage rates.
The Herculean efforts may be understandable. But they were a mistake in the early months of the downturn—and now stand as a public policy blunder in the early months of a recovery. That’s a harsh judgment, but it’s way past the time for ending taxpayer support of the housing market.
These policies are geared toward propping up home prices, the definition of a perverse public policy. Artificially holding prices at above-market levels harms new potential buyers, from young adults starting their own households to immigrants putting down stakes in the American Dream. The subsidies wrongly delay the inevitable home market price adjustment to excess supply in many markets across the country. Read the rest of this entry »
Finding Something to Like About April 15
Posted by Oksana Grebenjuk in Business on Март 18th, 2010
We’re smack dab in the middle of tax season, and I am done. I spent a couple of Saturdays gathering all of my bank statements and other documents, making post-closing general journal entries, and printing out financial statements to deliver to my C.P.A. for both our corporate and personal income tax returns. As my Canadian father would say, my books are now tickety-boo (translation: in perfect working order).
While I certainly don’t enjoy writing checks to the I.R.S., I have to admit that tax season offers an opportunity to take care of tasks that I’ve been putting off for the last 12 months. I keep my books fairly current throughout the year by downloading statements directly from my bank accounts into QuickBooks, but I always uncover some odd, creeping errors that need to be fixed at the end of the year.
I also seem to learn something new with each passing tax season. Our firm is structured as an L.L.C., and my husband and I are the only two members. As such, owners’ health insurance and medical expenses are not deductible business expenses. I swore at the beginning of 2009 that I was going to switch our high-deductible health insurance plan to one that qualified for a Health Savings Account. Like so many other administrative tasks, that one sat on the back burner and never got done.
As luck would have it, 2009 happened to be the year that my husband needed surgery to repair his eardrum. Poof! There went more than $3,000 in out-of-pocket medical expenses that could have been paid using pretax dollars set aside in an H.S.A. Ugh! At least our new plan is set up and in effect for 2010, so I won’t be making that mistake again. Read the rest of this entry »
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