tax credits Archives - KNS Financial

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

Why You Should File A Tax Return Even If You Are Not Required!

By Khaleef Crumbley

In a previous article, we discussed the fact that many people are not required to file an income tax return. However, there are some instances when you may want to file a tax return even though you are not required to do so.

Why You Should File A Tax Return:

Recently, the IRS gave seven reasons for doing so:

Federal Income Tax Withheld – You should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.

Making Work Pay Credit – You may be able to take this credit if you had earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.

Earned Income Tax Credit – You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.

Additional Child Tax Credit – This refundable credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.

American Opportunity Credit – The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.

First-Time Homebuyer Credit – The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. To qualify for the credit, taxpayers must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010. If you bought a home as your principle residence in 2010, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.

Health Coverage Tax Credit – Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2010 tax return.

Well, there you have it…seven reasons why you should file a tax return even if you don’t have to do so.

If you have determined that you have to prepare a return, then be sure to contact us to set up an appointment for tax preparation. If you decide to file your own taxes, we recommend using TurboTax to do so.

photo by JD Hancock

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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