taxguy

(This is an edited repost from September 15^th.)

 

            Well here we are, January and it is time to start getting your tax information ready. But what do you need? Twelve months have passed. With the economy the way it is many have already been thinking about their taxes, some haven’t.

 

            Getting things ready to take in to your tax preparer is sometimes a grueling event. Be it for a return filed on time, or for the extension you might still be working on. Now mater when you do this, most everybody is going to need to bring the same things.

 

 

ü  Be sure to include any changes in address, dependents, filing status, or any other substantive changes from the prior year which would have impact on this years return.

ü  W-2s from all jobs.

ü  Forms 1099 from all investments and bank accounts (be sure they are all accounted for as the IRS has a complete –sometimes- list).

ü  Brokerage statements, interest, dividends, etc.

ü  Student loan interest, child care expenses, tuition, and any other miscellaneous deductions/income.

ü  Summary of property taxes with copies of all individual items over $1,000.

ü  Summary of All valorem Taxes (property tax on cars) with copies of all individual items over $1,000.

ü  Form 1098 reporting home mortgage interest.

ü  Documentation of mortgage insurance

ü  Form K-1s from any estate(s), partnership(s), or S corporation(s) from which you’ve received an inheritance. Call and check if you are missing any, as these often do not arrive until March or April.

ü  Summary of all medical expenses with copies of all individual items/receipts over $1,000. Along with mileage, and any insurance reimbursements.

ü  Records of gambling profits and losses. To offset reportable profits, you must have an accurate log of expenses and losses including amounts, dates, and locations.

ü  Itemized record of charitable donations, including cash, checks and donated property.  Keep all receipts.  If value of donated property exceeds $500, an itemized list is necessary.

§  Example list: “12 shirts, 3 suits, and2 jackets” with fair market values, as opposed to a “bag of clothes,” will allow a true value for the items. (You can find my researched FMV guide at Fair Market Value Guide for Used Items (2008). Updated for this year –filing for 2008 returns)

§  Charitable gifts over $500 must include a receipt from the charity.

ü  A copy of last year’s tax return. (last three years if you  are a new client to your preparer)

ü  A list of financial goals and the last three years of returns, if seeking counsel.

 

Some additional items you may need to give:

ü  Alimony paid or received, including Social Security Number of recipient (save cancelled checks)

ü  Records of purchase and sale of a personal residence, including the settlement statement from closing (Keep records of all home improvements.)

ü  Schedule of estimated federal, state and local taxes paid during the year

ü  Child care expenses and provider information.  The tax identification number of the provider is required.

ü  Information on IRA contributions made or to be made for the tax year

ü  Summary of moving expenses, if eligible for the moving expense deduction

ü  Summary of casualty losses from fire, theft or natural disaster

ü  Receipts and records for all business-related income and expenses

ü  Job-related expenses, such as union or professional association dues, work clothing, tools, supplies, job-hunting and job-related education.

ü  Log book for business use of a vehicle.

ü  Other records relating to vehicles purchased or leased during the year for which you are claiming business expense deductions

ü  Records of all income from and expenses paid for rental real estate you own

Quicken Rental Property Manager - Save 10% + Free Shipping

If You Can Answer Yes to the Following Questions, You Should Give All Related Documents to Your Tax Preparer.

ü  Did you pay interest on higher education loans?

ü  Were there any births, deaths, adoptions, divorces or marriages in your household?

ü  Did you convert a traditional IRA to a Roth, or re-characterize a Roth back to a traditional IRA?

ü  Did you receive tip income?

ü  Did you receive a notice from the IRS, state or local taxing agency regarding a prior year tax return?

ü  Did you receive installment payments on property sales?

ü  Did your children under 14 years of age receive investment income?

ü  Did you support anyone other an your own children?

ü  Did you make gifts to any individual other than your spouse of more than $12,000?

ü  Do you have a foreign bank account?

ü  Did you refinance your mortgage during the year?

ü  Did you pay points to purchase a home or refinance a mortgage during the year?

ü  Did you receive non-taxable sick pay?

ü  Did you have household employees?

ü  If you did not receive a W-2 from a former employer, do you have the final pay stub from that employer?

ü  Did you receive money from a lawsuit?

ü  Did you receive money from any other source not previously mentioned in this checklist?

As you can tell by the last question, this is not all inclusive. It is for this reason I regularly encourage taxpayers to have enough trust in their prepares to be able to tell them everything.

I mention in my post Choosing a tax preparer. . ., “If the tax professional you are talking to (or the tax practitioner you currently use) can’t do what you want honestly, don’t give him/her your business.”

In to all the above also make sure to have Notice CP 1378. This is the IRS notice that informed you of the Economic Stimulus Payment you may have gotten.

Quicken Online - One Place, One Password. Manage all your accounts on one place.

      For more, check out Bankrate.coms peace by Kay Bell. Getting organized for the tax year.

 

 

TurboTax Giveaway

 

Tags: Deductions, irs, money, status, Taxes, taxpayers

If you really do owe unpaid taxes, there’s generally not much you can do about the taxes or interest - you’ll have to pay up. However, you can likely get some, if not all, of the penalty and interest decreased. IRS penalties often do not apply when you acted in good faith, based on a reasonable cause for your actions. Penalties apply only if you deliberately attempted to cheat, deceive or mis-lead the IRS.

Immediately pay the tax and interest you owe and fill out IRS Form 843. Above the word “Claim” on this form, enter in “Demand for Abatement of Penalties under Code Section 6404(a).” When you return Form 843, include a detailed explanation of why your penalty should be canceled.

Your letter should lay out the facts so the IRS will evaluate that you acted in good faith and based on reasonable cause for your actions. You should spell out in black and white that you never deliberately set out to break the law.

This form is used a lot these days since a growing number of tax preparers are emerging with limited training—and these folks can and do make mistakes when calculating tax returns. Luckily, as long as you acted in good faith and didn’t deliberately try to violate the IRS’ rules, the penalties should get waived.

Sometimes the most crushing aspect of a tax bill can be the added interest charge. If you could earn that kind of return on your investments you’d never have to work again! If any of us charged those kinds of rates, we might end up behind bars!

A Straight Tip

• When the interest is due to an error made by the IRS;
• When the interest is due to delay caused exclusively by the IRS; or
• When the interest is demanded on money which the IRS sent in error.

To cancel interest, write a letter that states, “Interest should be canceled because” and list which condition the cancellation of interest meets. Be specific and demand cancellation. Mail your letter to the Service Center which issued the bill.

A Smart Money Move: Send all correspondence with the IRS, including your tax return, via certified mail, with return receipt requested. This way you have tangible proof that your letter or return was both mailed by you and received by the IRS.

Here are two common penalty triggers - and some advice on how to avoid paying any penalties:

1. Underpayment of Your Estimated Taxes. When you are self-employed, or your employer does not withhold your taxes (and send them to the IRS for you), you must pay estimated taxes each quarter. How much tax should you pay? Either 90% of what you think you owe, or 100% of what you paid last year. If you get to the end of the year (or, more likely, April 15th of the following year) and realize you didn’t pay enough, the IRS slaps you with a penalty!

A Smart Money Move: You can avoid penalties if your income came in unevenly during the year (use Form 2210), or if underpayment was due to some disaster, casualty or other unusual circumstance.

2. Late Filing. Your tax return is due by April 15. And if you file late (without an approved extension), the IRS will hit you with a 5% penalty for every month you are late, up to a maximum of 25%. The penalty for paying your taxes late is 0.5% per month, also capped at 25%. During any month in which you incur both penalties, you only get charged 5% per month.

You can avoid these penalties altogether, with one of these reasons:

1. You filed by April 15th, but sent your return to the wrong IRS office.
2. You got your return to the post office in time (by midnight on the 15th) and have a certified mail receipt to prove it.
3. You filed late because of serous illness or a death in the family.
4. You filed late because you were out of the country unavoidably.
5. You went to an IRS office for help (before April 15), but no one could meet with you.
6. Your professional tax advisor incorrectly advised you.
7. Your records were destroyed by flood or fire in your home or in your office.
8. For reasons beyond your control, you were unable to obtain the necessary records to determine how much you owed.
9. You applied for necessary IRS forms in advance, but did not receive them in time.

   10.  You relied on wrong information provided by an IRS worker or in an IRS publication. 

 

 

 

 

Ready for some good news? File your simple return for FREE with TurboTax® Federal Free Edition. Start now - It’s easy!

 

 

TurboTax Giveaway

 

Tags: abatement, irs, irs form 843, irs penalties, mistake, Taxes, unpaid taxes, Withholdings

Like worldwide financial institutions, the IRS is moving toward a paperless environment. IRS electronic services are easy to access, easy to use, faster, more convenient, and more secure - with additional enhancements under development.

 

The Internal Revenue Service will implement the first version of a personalized taxpayer Web site this year. “My IRS Account” will initially let taxpayers look at three years’ worth of their tax data history.

 

The IRS’ goal is to have an online, secure set of self-service applications for taxpayers to deal with IRS similar to functions consumers enjoy with online banking. Taxpayers will be able to get transcripts of their previous filings, past 3 years, and in the future they will be able to handle transactions, such as filing for an extension.

 

This year’s filing season statistics underscore the extent to which e-file has increased. Individuals filed 85.5 million tax returns electronically - 62 percent of the total - and a 12 percent increase over last year. Of those returns, 59.4 million were transmitted by electronic return originators. In addition, there was a more than 100 percent increase in businesses using modernized e-file. And visits to IRS.gov increased by 30 percent to 218 million.

 

The IRS’ Website rates high on customer service surveys, such as the American Customer Satisfaction Index, but the agency knows it needs to continuously improve. Customers’ satisfaction is formed by their interactions with the IRS in various parts of its Web space. Taxpayer expectations are going to keep going up, and the government needs to be ready to meet those expectations.  This is their step towards that.

 

A few more enhancements are to hopefully include:

·         Strengthening website functionality by improving its search function,

·         taking additional measures to protect taxpayer data, and

·         moving 1040 files from legacy systems to modernized equipment in August 2009, which will provide for year-round access to e-file, faster acknowledgements, and the ability to attach forms and amend prior year’s forms.

·         The addition of a direct link inside e-services for customer feedback in July 2008.

 

The IRS has already introduced several new features to the interactive Online Payment Agreement Application. The new features make it easier for taxpayers and their authorized representatives to make changes to existing agreements.

Now, the system will:

·         Allow individuals to revise their payment due dates and/or amounts on existing agreements

·         Allow you to revise existing extensions to regular installment agreements and direct debit installment agreements.

·         Allow you to revise regular installment agreement to a payroll or direct debit installment agreement.

 

More than 75% of those eligible for an installment agreement can establish one using the online application.

 

 

       Happy New Year everyone, let it be a great year for us all.  

 

Free Quicken Online - Quicken Online can send you a text message with your account balances.

 

TurboTax Giveaway

Tags: electronic services, irs, irs gov, irs website, season statistics, Taxes, taxpayers

Yes Rhiannon, there  is a Santa Clause. 

 

 

I hope yours is a great one and I wish you all a

Very Merry Christmas.

 

 

I will be taking the next week off to spend with my family so, I will not post again until 01/02/2009.

Have a great time.

 

If you missed it, please be sure to catch my guest post over at Living Almost Large.

And don’t forget later this week I’ll also have a guest post over at $aving to Invest.

 

 

  

 

Special Offer, Save 20% + Free Shipping on Bestseller QuickBooks Pro Mac, CD & Downloadable Versions