Guide For Doing Taxes
Tax Season 2009: Guide for Young Adults on Doing Taxes
Filing a return! The filing status on the last day of the year is which determines personal exemption and standard deductions that apply and ultimately the amount owed or refunded. The first step to completing the tax return is gathering the filing information such as social security numbers, taxable income, interests, dividends, refunds, alimony, proceeds from royalties, rental real estate, IRA distribution, pensions and annuities, social security benefits, unemployment and any other income, mileage logs, other records to support deductions or credits to be claimed. There are adjustments to income such as interest paid on student loans, tuition and fees paid, moving expenses, self employment taxes, health savings accounts, etc. Good recordkeeping throughout the year saves you time and effort at tax time. During tax season 2009 you will be filing events for 2008. Complete first the federal return and afterwards complete the state tax return. Do a little research. 1040 Central is the one-stop shop for preparing and filing a return. Publication 17 is a comprehensive collection of tax information with a glossary. Referenced as Pub17, it serves as the ultimate desktop reference book to find out credits and deductions a taxpayer is eligible. D I Y, visit official government website for IRS and Franchise State Board to download forms & instructions, publications, tips, tax law changes and FAQs. Consider e-file. "Filing electronically with direct deposit can get refunds to taxpayers in as few as 10 days and allows taxpayers to file federal and most state returns at the same time. Free File offers 20 different software options that allow taxpayers with Adjusted Gross Income (AGI) of $56,000 or less to e-file for free. Taxpayers may use IRS e-file through tax preparers. The IRS does not charge taxpayers to e-file their completed returns, but some tax preparers and software manufacturers may charge a fee. However, this year a number of large software companies are waiving this additional fee. If you will be paying someone to prepare your return discuss the service fees before the return is prepared. Avoid preparers who charge fees based on a percentage of the amount of your refund or who claim they can obtain larger refunds than other preparers. Only use a tax professional that signs your tax return and provides you copy for your records. Avoid tax preparers that offer loans taxes refund that ask you to sign a blank tax form. Choose a tax preparer that will be around to answer questions after the return has been filed. Check the history with the Better Business Bureau, the state's board of accountancy for CPAs or the state's bar association for attorneys that requires continuing education and holds them accountable to a code of ethics. Some states have licensing requirements. Find out if the preparer can represent taxpayers before the IRS - including audits, collections, and appeals.
TIPS: Individuals filing a return and can be claimed as dependent by another taxpayer, does not check mark "Yourself" on the Exemption Section. A dependent must have a valid social security number, be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year; a rule exception for certain adopted children. Your spouse is never considered your dependent. Generally, you may not claim as dependent a married person who filed a joint return.
The tax laws provide some special benefits for active members of the U.S. Armed Forces officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force, Coast Guard.
Credits Save Taxpayers Money: Usually, credits lower a tax liability to zero. Credits such as EITC, child tax credit, Recovery Rebate Credit and first-time homebuyer credit are refundable. Credits with income restrictions are EITC, Recovery Rebate Credit, saver's credit AKA retirement savings contributions, first-time homebuyer credit, Hope and Lifetime education credits and child tax credit. Other Credits: Alternative motor vehicle-including hybrids.
Individuals that missed 2007 Economic Stimulus Payment may be eligible to receive the 2008 Recovery Rebate Credit. Forms 1040, 1040A and 1040EZ include a worksheet to calculate the credit. Use the Recovery Rebate Credit Calculator on IRS.gov. Factors that affect eligibility for the Recovery Rebate Credit are income change, addition of a child, social security and veterans' benefits recipients, no longer a dependent, not having a valid social security number.
Before identity theft happens, safeguard your information. The IRS does not initiate communication with taxpayers through e-mail. Beware of Web sites that end in .com, .NET or other extensions.
A quote by Laurence J Peter, author: "Few of us ever test our powers of deduction, except when filling out an income tax form.'' Remember, you are ultimately legally responsible for what's on your tax returns even if they are prepared by someone else.
Carmen L Camacho, location Puerto Rico USA. Carmen's Desk, Virtual Business Assistant, Environmentalist, Artisan http://homeoffice-ccamacho.blogspot.com