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Entries in Tax Return (9)

Wednesday
Apr062011

Tax Tip: Deducting for Charitable Donations

Brand X Pictures/Thinkstock(NEW YORK) -- Giving money to your favorite charity qualifies as a tax deduction, but "the key is if you make a charitable contribution, get a receipt or make sure your bank account shows who you've made a charitable contribution to," says Eric Smith with the IRS.

The money must go to a registered nonprofit group, religious organization or charity.

Have you donated clothing to organizations like Goodwill or the Salvation Army?

"If you can keep a list of -- 'Okay, there were four pair of pants and two shirts and the pants are valued at $3 and the shirts are at $2.'  That would be really good documentation to be able to provide."

Expenses involved in charitable work may also be deductible.

Copyright 2011 ABC News Radio

Monday
Apr042011

Tax Tip: Getting Help from the IRS?

Comstock Images/Thinkstock(NEW YORK) -- Is the IRS more user friendly than it used to be?

Tax accountant Janice Hayman thinks so. “They really are trying to encourage people to be open with them," she says. "Contact them. Communicate with them. Let them know if you're having a problem paying them."

The worst thing you can do about your taxes, Hayman says, would be to ignore them.  “Just don't run and hide. Do something," she says.  "Call them. Lay it on the line, tell them your story and they will try to work with you."

Jodie Reynolds with the IRS says there is a toll-free number you can call: “Anybody can call the 1-800-829-1040 line with tax law questions – account questions, if you have a balance due."

But Hayman says IRS.gov is quicker and often more reliable than calling the IRS.  “I think going to the IRS website should be first choice," she says.

Copyright 2011 ABC News Radio

Wednesday
Mar092011

Tax Tip: Before All Else, Prepare the Necessary Paperwork

Ryan McVay/Thinkstock(NEW YORK) -- When it comes to filing your taxes, follow the Boy Scout motto and be prepared.  As you begin to get your paperwork together for your 2010 taxes, it may help to first look at your 2009 tax return.

"Seeing what your sources of income were and what type of deductions you had," can give you a ballpark of what to expect this year, accountant Janice Hayman said.

Another tip?  Make sure you have the right documents for both sides of the ledger.

"You say, 'Here's how much I've earned' and then you say 'Here are the deductions that I can take to reduce my taxable income,'" said H&R Block's Kathy Pickering.

Obtain your W-2 forms from all of your employers, your bank and investment statements, and any paperwork to support your deductions.

Note that it's possible not everything will come in the mail, according to Kiplinger's Mary Beth Franklin.

"As more and more of us are receiving documents electronically, certain things will no longer be in the mail. So make sure you're reading your e-mail inbox as well for those important documents."

Copyright 2011 ABC News Radio

Friday
Feb182011

Tax Tip: Electronically Filing Your Taxes for Free

Photo Courtesy - Getty Images(NEW YORK) -- The IRS is not mailing out tax forms this year, since millions of tax filers pay $20 or $30 for a software program to do their taxes for them. But many of those people could do it for free.

“The majority of Americans, about 70 percent, qualify for free e-filing through IRS.gov,” said Mary Beth Franklin with Kiplinger’s Personal Finance magazine, who notes that you have to make less than $58,000 a year to qualify.

“They have a partnership with about 20 different software vendors and you can prepare and file your income taxes for free,” she said.

No need to worry about keeping up with the latest tax law changes.

“It is absolutely up to date reflecting all the changes and there are many for the 2010 tax filing season,” Franklin said.

Even if you don't qualify for free filing, you can still use the Free File Fillable Forms. Just put in the numbers, and they will often do the math for you.

Copyright 2011 ABC News Radio

Monday
Feb142011

Tax Tip: Some Help for the Self-Employed

Photo Courtesy - Getty Images(NEW YORK) -- In this economy, many people who haven't been able to find jobs have started working for themselves.  And in the eyes of the IRS, it's a whole different ballgame.

For the first time, you might be facing estimated quarterly payments, the 1040 Schedule SE and a whole lot of organizing. “A person should be keeping an excel spreadsheet or using some software to keep track of everything,” said accountant Janice Hayman, who says there's a new tax break for the self-employed this year.

“Their health insurance premiums will now be, for 2010 only, deductible against their self-employment tax.”

And for next year's taxes?

“The self-employed also get a benefit of the employees’ reduction in FICA tax,” Hayman said. “There's a two percent reduction from 6.2 percent down to 4.2 percent.”

It's like getting a 2 percent raise in 2011.

Hayman warns again to keep your records, because the self-employed are more likely to face an audit.

Copyright 2011 ABC News Radio

Sunday
Feb132011

Tax Tip: Using the Right Forms

Photo Courtesy - Getty Images(NEW YORK) -- There are literally hundreds of IRS tax forms. Fortunately, there are only a dozen or so that apply to most people. When it comes to choosing which 1040 to use, Mary Beth Franklin from Kiplinger's Personal Finance says “pick the simplest tax form for you.”

“If you simply have wage income W-2, you can go with the 1040EZ,” Franklin said. That one won't allow you to make anything but the standard deduction, and it might be the wrong move, according to accountant Janice Hayman.

“A lot of people file the short form mistakenly when they truly do have enough to use the long form and itemize their deductions," Hayman said. "What is commonly overlooked are the state and local income taxes that are right there on their W-2 form. They are part of the itemized deductions.”

You have to use the full form -- a 1040 -- if you want to itemize your deductions, make more than $100,000, or have self-employment income.

Copyright 2011 ABC News Radio

Saturday
Feb122011

Tax Tip: Taking Classes? Inquire About Tax Credits

Photo Courtesy - Getty Images(NEW YORK) -- The government wants you and your children to go to college and offers up a few tax savings to help you foot the bill.

The first is the American Opportunity Credit, which offers a maximum $2,500 credit.

“To qualify for the maximum credit, you only need to spend as little as $4,000, and with the cost of tuition, fees and books what they are today, it doesn't make much to get to that level,” said Eric Smith of the IRS.

“They need to be part of a degree program of some kind,” Smith said. “You need to be at least a half-time student.”

Say you want to take a class – maybe just an evening course to help update your job skills – there’s a tax credit for you, as well.

“The Lifetime Learning Credit may be something they could take advantage of if they're not able to go to school full time,” said H&R Block’s Kathy Pickering.

Check out Publication 970 at IRS.gov to see if you qualify.

Copyright 2011 ABC News Radio

Friday
Feb112011

Tax Tip: Save the Stress, Hire a Tax Preparer

Photo Courtesy - Getty Images(NEW YORK) -- Choosing the right tax preparer could save you time and money.

Six in 10 Americans use the help of a preparer come tax season, according to the IRS, but Kiplinger’s Mary Beth Franklin says that most people can do it themselves if they have a straightforward return.

H&R Block’s Kathy Pickering says it often comes down to time.

“Even if they feel like they can do their taxes, they just don’t want to take the time, they don’t want to be bothered with the hassle factor,” Pickering said.

When choosing a tax preparer, make sure they have an IRS tax identification number. Jodie Reynolds of the Internal Revenue Service also suggests having the preparer sign your tax returns with that number.

“You’ll want to find out what their service fees are because if you go to a preparer that’s going to base their fee on a percentage of your refund, that should be a red flag,” Reynolds said.

Copyright 2011 ABC News Radio

Friday
Jan212011

IRS to Begin Processing Delayed Tax Returns

Photo Courtesy - Getty Images(WASHINGTON) -- The IRS has announced it will begin processing delayed tax returns on Feb. 14.

The start date applies to tax returns that were delayed by tax law changes that took place on Dec. 17, 2010.  The IRS said it will process "both paper and e-filed returns claiming itemized deductions on Schedule A, the higher education tuition and fees deduction on Form 8917 and the educator expenses deduction."

People unaffected by the delay can start filing their returns immediately, including those who will claim the Earned Income Tax Credit and education and child tax credits.

The delay was a result of the enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended several expiring provisions.

Copyright 2011 ABC News Radio







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