itemized deduction Archives

Which Of The Free Tax Forms Should I Use To File?

Many people are confused by the different free tax forms available to use. Of course, if you come to KNS Financial for tax preparation, then you won’t have to worry about finding free tax forms!

Choose The Simplest Free Tax Forms For Your Situation

In order to file a tax return, you will have to determine which form to use (unless you decide to e-file). Since the IRS is no longer mailing out paper tax packages to taxpayers, the choice will become that much more difficult!

Because of this, the IRS has released the following guidelines to follow in order to determine which option is best for your tax situation when looking at the free tax forms:

What To Look For When Choosing Your Free Tax Forms

Use the 1040EZ if:

Your taxable income is below $100,000

Your filing status is Single or Married Filing Jointly

You and your spouse – if married — are under age 65 and not blind

You are not claiming any dependents

Your interest income is $1,500 or less

Use the 1040A if:

Your taxable income is below $100,000

You have capital gain distributions

You claim certain tax credits

You claim adjustments to income for IRA contributions and student loan interest

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. Among the reasons you must use the 1040 are:

Your taxable income is $100,000 or more

You claim itemized deductions

You are reporting self-employment income

You are reporting income from sale of property

Now that you know what to look for, here is a link to get the Internal Revenue Service Tax Forms that you need. If you don’t want to deal with the headache of checking these figures, then be sure to contact us for tax preparation!

If you are brave enough to prepare your own income tax return, then I would recommend using TurboTax – this software will actually choose the correct paperwork for you!

Be sure you are aware of the tax filing delay, as well as the fact that the tax filing deadline has been extended this year. Also, you should know the IRA Contribution Limits, 401k Contribution Limits, and the Income Tax Rates for 2011!

photo by Arvind Balaraman

Tax Filing Delay Means Valentine Gift For 50 Million Taxpayers!

By Khaleef Crumbley

Earlier on this site, we made the following announcement, “According to an IRS bulletin, about 50 million taxpayers will face an income tax filing delay this year. If you itemize your tax deductions, then you will have to wait until mid to late February in order to file your tax return.”

Now the IRS has released another news bulletin giving us the exact date when the tax filing delay will end.

When Will The Tax Filing Delay End?

According to the announcement:

The Internal Revenue Service plans a Feb. 14 start date for processing tax returns delayed by last month’s tax law changes. The IRS reminded taxpayers affected by the delay they can begin preparing their tax returns immediately because many software providers are ready now to accept these returns.

Who is Affected By The Tax Filing Delay?

Those who need to wait to file include:

Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late Congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.

Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.

Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

So if you itemize your taxes using Schedule A, or claim any of the credits listed above, then you are subject to the tax filing delay.

I’m Subject To The Tax Filing Delay, What Are My Options?

If you are one of the 50 million taxpayers who have to wait until February 14 in order to file your 2010 return, you do have a few options. According to the IRS:

People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms.

Taxpayers using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.

I included this information regarding TurboTax when I first wrote about the income tax filing delay, but it bears repeating:

For instance, TurboTax announced in a recent blog post, that they will allow you to file your returns beginning on January 6th:

Even if you are claiming one of these deductions, don’t wait to start your return. TurboTax products are already up-to-date with all the latest forms and schedules. You can prepare your return with TurboTax and electronically file it beginning on Jan. 6.

TurboTax will securely hold your return until the IRS begins accepting returns impacted by the processing delays. TurboTax will send you an email confirmation that your return has been e-filed and accepted by the IRS.

The bad news is that even if you are able to file early, the IRS will not begin accepting returns until all of their systems are updated!

I have used TurboTax and other Intuit products in the past, and I have no problem recommending them. Of course, if you are looking for professional tax preparation, then contact us to schedule an appointment.

Also, if you are typically a procrastinator when it comes to filing taxes, then you’ll be happy to know that the tax filing deadline has been extended this year.

Since it’s never good to do financial planning at the last minute, take a look at the IRA contribution limits, 401k contribution limits, and the income tax rates for 2011.

photo by klynslis

This article was featured in the following carnivals:

Carnival of Wealth #25 – Valentines Edition

Tax Carnival #81: We ♥ Heart ♥ Taxes

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Why The IRS Is Forcing Many Taxpayers To Wait Before Filing

By Khaleef Crumbley

According to an IRS bulletin, about 50 million taxpayers will face an income tax filing delay this year. If you itemize your tax deductions, then you will have to wait until mid to late February in order to file your tax return.

The Reason For The Income Tax Filing Delay

The reason for the income tax filing delay is that since Congress waited until the last possible minute to make decisions regarding the tax code. The tax bill wasn’t signed into law until December 17, 2010! This means that the IRS now is forced to scramble to reprogram their systems with all of the details of the new tax law.

Who Will Be Affected By The Income Tax Filing Delay?

According to the IRS:

Some taxpayers – including those who itemize deductions on Form 1040 Schedule A – will need to wait to file. This includes taxpayers impacted by any of three tax provisions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act Of 2010 enacted Dec. 17. Those who need to wait to file include:

Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late Congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.

Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.

Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

Most of my clients itemize deductions (filing Form 1040 Schedule A) and thus will be affected by this income tax filing delay.

Options For Those Subject To The Income Tax Filing Delay

There is some good news and bad news here. The good news…many tax preparation software vendors have already updated their programs with the latest updates and extensions of the tax code. This means that you should be able to file your return now.

For instance, TurboTax announced in a recent blog post, that they will allow you to file your returns beginning on January 6th:

Even if you are claiming one of these deductions, don’t wait to start your return. TurboTax products are already up-to-date with all the latest forms and schedules. You can prepare your return with TurboTax and electronically file it beginning on Jan. 6.

TurboTax will securely hold your return until the IRS begins accepting returns impacted by the processing delays. TurboTax will send you an email confirmation that your return has been e-filed and accepted by the IRS.

The bad news is that even if you are able to file early, the IRS will not begin accepting returns until all of their systems are updated!

Update: The IRS has announced when the income tax filing delay will be over, and when they will begin accepting returns (read here to get the details)!

To Keep Up To Date With The Latest Tax News And Regulations, Sign Up For Our Email Updates:

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This post was featured in the following blog carnivals:

The Wealth Builder Carnival #24