tax return Archives - Page 2 of 2

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

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.

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 JD Hancock

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Do I Need To File An Income Tax Return?

By // by Khaleef Crumbley

By this time, most people should have received all of the necessary tax forms in order to prepare their income tax return. Many people have questions about various deductions, credits, and exemptions. However, there are a large number of people who never get that far, because they have one major question: Do I need to file an income tax return?

Well, the IRS has provided a couple of resources to help you understand if you need to prepare a tax return.

What Determines If I Need To File An Income Tax Return?

According to the IRS, “you must file a federal income tax return if your income is above a certain level”. How do you know what that “certain” level is? Well, that varies depending on a few factors:

Your Filing Status
Your Age at the End of the Tax Year
The Type of Income You Receive

Is There An Easy Way To Determine If I Need To File An Income Tax Return?

There are two main methods that the IRS lists that you can use to figure out if you must prepare a return:

Check the Individuals section of the IRS website or consult the instructions for Form 1040 (opens PDF), 1040A (opens PDF), or 1040EZ (opens PDF) for specific details that may help you determine if you need to file a tax return with the IRS this year.

Use the Interactive Tax Assistant available on the IRS website to determine if you need to file. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

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. Also, keep in mind that there are many benefits when you file a tax return, even when you are not required to do so.

photo by JD Hancock

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Why The IRS Is Forcing Many Taxpayers To Wait Before Filing

By // 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!

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.

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)!

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tax return

Why You Should File A Tax Return:

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

What Determines If I Need To File An Income Tax Return?

Is There An Easy Way To Determine If I Need To File An Income Tax Return?

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

The Reason For The Income Tax Filing Delay

Who Will Be Affected By The Income Tax Filing Delay?

Options For Those Subject To The Income Tax Filing Delay

***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:

This post was featured in the following blog carnivals:

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)!