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Entries in Taxes (142)

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

Tuesday
Mar082011

Tax Tip: Consider the Future, Not Just 2010

Ryan McVay/Photodisc(NEW YORK) -- When you're doing your taxes, it's a good idea to look at the big picture.

"Tax planning really should be a year round event," says Mary Beth Franklin of Kiplinger's Personal Finance Magazine, but it usually doesn't work out that way. "Unfortunately most of us only think about it when we're panicking to pull together our existing tax forms."

"When you...hit the send button or pop that return in the mail it's a great time to sit down and review what you've done. Do you see any patterns there, how you're spending your money?"

Tax accountant Janice Hayman advises taking a look what's being taken from your current pay check.

"During the year people should just keep track of all of their sources of income. They should keep track of their deductions as they're incurring them."

Copyright 2011 ABC News Radio

Sunday
Mar062011

Tax Tip: Tax Changes for 2011

Comstock/Thinkstock(NEW YORK) -- Back in December, President Obama and Congress agreed on a number of tax cuts for this year.

“One of the little goodies in there was this two percent payroll tax holiday, and that's a reduction of Social Security tax," said Kathy Pickering of H&R Block. “You don't have to file anything, you don't have to do anything, it's just automatically calculated in your paycheck."

That's a big saving for wage earners and the self employed.

“If you make $50,000 a year you could be getting back $1,000 across the year in your paycheck," Pickering said.

That tax deal brought other benefits, including one that involves paying for college.

"The American Opportunity Credit got extended because that was set to expire,” Pickering said of the tax deduction for tuition and fees. 

Pickering says there was another benefit for home owners in the tax deal.  “The energy credit was extended, but that's being reduced from $1,500 to $500.”

Copyright 2011 ABC News Radio

Sunday
Mar062011

Tax Tip: Tracking Your Tax Refund

Comstock Images/Thinkstock(NEW YORK) -- IRS.gov is a useful website for questions about your 2010 taxes. But did you know you can also use it to track your refund?

"As long as you have your personal information, the exact amount of the refund, you can find the status of your refund right there on the IRS website," accountant Janice Hayman said.

When does the information appear?

“If you filed electronically you need to wait about 72 hours after you receive the email acknowledgement saying we have that return,” said Jodie Reynolds of the IRS. “If you file a paper return you need to wait at least four weeks.”

Reynolds says there is a clear advantage to filing online.

“You're going to get your refund faster obviously if you e-file and that information's going to be available quicker."

For most taxpayers, refunds should come at about the same speed as they did last year.

Copyright 2011 ABC News Radio

Saturday
Mar052011

Tax Tip: How to Cut Your Risk of an Audit

Ryan McVay/Photodisc(NEW YORK) -- Anyone who’s come under tax audit will tell you – it’s not a whole lot of fun.

“The best way to avoid it is making certain that you are reporting all of your income," tax accountant Janice Hayman said. She says failing to report all of your income is probably the number one cause of audits.

“You want to keep track during the year of all of the different employers you've had and make sure you are reporting everything that they're sending to you by way of W2 or 1099s.”

Business owners and the self-employed with complicated returns may be more likely than others to get an audit. So are those who make mistakes.

“About one percent of all returns are audited every year," says Eric Smith of the IRS.

“If we do ask you a question about what's on your return – if you have good records and show that ‘Yup, that item of deduction or credit is perfectly proper,’ then we're going to say ‘Hey, no problem.’"

One of the major hassles of getting an audit? It’s time consuming.

Copyright 2011 ABC News Radio

Friday
Mar042011

Tax Tip: Check Your Return Carefully Before You Send It

Duncan Smith/Getty Images(NEW YORK) -- It's the little things that can trip you up when filling out a tax return.

"It's always best to make an early start on your tax returns," said Eric Smith of the IRS. "That's because people who wait until the last minute are much more likely to make mistakes," which can lead to delays and questions from the IRS about your return.

After filling out the forms, Smith advises that you "put the return aside for a day or two, maybe check it over with kind of a fresh perspective, and then you're in a much better position to say 'hey, you know something's missing here' or 'something's not missing, I'm ready to go.'"

Check more than just income and deductions, says Kathy Pickering of the tax firm H&R Block.

"Make sure your Social Security number is right, that your children's social security numbers are right, that your name is spelled correctly."

Doing your returns early may also be less stressful.

Copyright 2011 ABC News Radio

Thursday
Mar032011

Tax Tip: File Returns, Check Refunds on Your Smart Phone

Photo Courtesy - Getty Images(NEW YORK) -- New for people filing their taxes this year: a host of smart phone applications, including apps that allow you to submit your returns and check up on your refunds.

"If you're an iPhone user or have an Android phone, you can actually file your taxes from your phone," says Mary Beth Franklin of Kiplingers Personal Finance magazine.  She says Turbo Tax has an app called Snap Tax that can do just that.

"You take your W2 form that you receive from your employer that lists your annual earnings and your deductions; you take a picture of it with the camera on your phone; you answer a few questions and boom you file your taxes," Franklin says.

Filers interested in using Snap Tax can download it for $14.95.

But some apps are free, including one from the Internal Revenue Service called IRS2Go.  The IRS app can be found at the agency's website, IRS.gov.  It works with both iPhones and Android phones and features news from the IRS and more.

"[Users] can download this phone app and one of the features of IRS2Go app is checking on the status of your refund as well," says Jodie Reynolds of the IRS.

Some tax prep firms also have their own free apps.

Copyright 2011 ABC News Radio

Tuesday
Mar012011

Tax Tip: Deducting for Charitable Donations

Photo Courtesy - Getty Images(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
Feb282011

Tax Tip: Getting Help from the IRS?

Photo Courtesy - Getty Images(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. 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

Sunday
Feb272011

Tax Tip: Using Withholding Calculators

Photo Courtesy - Getty Images(NEW YORK) -- Did you get a refund last year? Most taxpayers did.

“Last year the average refund was almost $3,000 and about three in four taxpayers got refunds," said Eric Smith the IRS. “Many of those folks, if they use the withholding calculator, they could have less withheld from their paychecks, have more of their money during the year."

Jodie Reynolds with the IRS has this advice: ”Every year we actually encourage taxpayers who work and have an employer and are going to receive W2 wages to go in and use the IRS withholding calculator to determine how much they should have withheld from their taxes."

Many websites offer tax calculators. Kathy Pickering with H&R Block says they can be helpful for those with several employers: “If they change jobs or if they're working multiple jobs where they've got a couple different paychecks it can be a little bit more complicated to predict it there."

Copyright 2011 ABC News Radio







ABC News Radio