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Tax Day, April 15, 2013, is coming up fast -- maybe too fast, if you’re a tax procrastinator. Even though people have had months to work on their returns, past behavior indicates that many will wait until just before the deadline to file. In 2012, by March 30, the Internal Revenue Service had received just more than 91 million returns since the beginning of the year. By the end of April, the agency received another 42.4 million returns, including those mailed on April 16 (April 15 fell on a Sunday) that year, making April filers about 33 percent of the…
The IRS conducts audits that are both random and targeted. Learn about red flags on tax returns that may result in the IRS performing an audit with help from a lifelong educator who truly believes that knowledge is power in this free video clip.
A company's accounting profit may differ significantly from its taxable income because of timing issues or differences in accounting methods. A deferred tax asset or liability account is used to track these differences on the general ledger. Some of these differences will reverse in the next tax year so there is no permanent discrepancy between the company's books and its tax return. Other differences are permanent and must be carried on the general ledger each year.
S corporation and C corporation income tax returns are due by the 15th day of the third month after the end of the company's tax year. A limited liability company tax return is due by the 15th day of the fourth month of the company's tax year. A corporation or LLC can file Form 7004 to get a five-month extension of time to file. Form 7004 extends the filing deadline but the IRS will charge monthly interest on the unpaid tax amount until it is paid, and may assess a late filing penalty. If the return remains unfiled after the…
Missing a deduction is bad enough -- without that break to reduce your taxable income, you could end up with a smaller refund or a bigger bill. Missing a credit is worse: Credits reduce your tax bill dollar for dollar. Plus some are refundable, which means you could actually earn a refund instead of just reducing your bill to zero. On the plus side, it can be easy to make the most of credits and maximize the amount of your refund.
Understanding complicated tax topics is always easier with a few examples. Get examples of items that can impact the progressive tax rate with help from a professional public speaker and radio personality in this free video clip.
If your tax bill seems particularly taxing in a given year, the alternative minimum tax, or AMT, may be to blame. The idea behind the AMT dates to 1969, when it came to the attention of Congress that some high-income taxpayers were able to take enough deductions and credits to avoid paying any federal income tax. The result was the so-called minimum tax, which imposed an extra tax for those with higher incomes in an attempt to level the playing field. In 1982, it changed from an additional tax to the current alternative tax, in which you pay the greater…
If there is something to look forward to with taxes, it's figuring out your tax credits. Tax credits can reduce the amount of taxes you owe, and in some cases, can help you get a refund. Sounds great, right? But some people don't know to ask for tax credits, said Trish Brazil, a certified public accountant based in Sault Ste. Marie, Michigan. "Most people that qualify for various tax credits are low-income individuals who are either not required to file tax returns or do not have knowledge of the benefits available," she said. "They simply do not understand the tax…
With its simplicity and speed, filing taxes on a smartphone will seem brilliant to some. To others, it will seem puzzling, considering that the computer is still a mainstay for many computing chores, at least when it comes to meeting the needs of most tax filers. Younger filers especially may find themselves naturally suited to smartphone tax prep applications, as this group tends to have simple tax situations and are quite comfortable with smartphones. Other filers, like those with more complex tax situations or people who aren't comfortable with smartphones, may find themselves stumped by the process. Here's a guide…
Not too long ago, most Americans filled out their tax forms on paper and mailed them in. But with the advent of online tax-prep software and new regulations that require more tax preparers to e-file for their clients, that's all changing. Here's a look at how we file our taxes today.
Smartphones are all about convenience. You can make dinner reservations, check box scores, order presents and ask for directions from wherever you can safely tap the keys. That convenience also extends to tasks that are a little less fun to do but necessary parts of life, including your taxes. If you fit certain criteria -- mainly by having a very simple tax return -- you don’t need a pen, paper or even a calculator to fulfill your obligation to the Internal Revenue Service. The 12 percent of Americans who qualify to file Form 1040EZ generally meet those criteria. Two major…
S-corporations have some very important tax write-offs in regards to losses that can really help in the long run. Find out about s-corporation tax write-offs for losses with help from a CPA and partner at Safe Harbor, LLP in this free video clip.
If you're the owner occupying a duplex, there are a few key tax incentives that you're not going to want to forget about. Find out what you can write off in taxes when you're the owner and are occupying a duplex with help from a managing broker with Windermere Real Estate in this free video clip.
Gifts from an employer may be considered taxable income if they meet a few specific qualities. Find out if a gift from an employer is taxable income with help from a certified financial planner TM professional with over a decade of experience in wealth management in this free video clip.
Reducing taxable income requires you to adopt an effective strategy sooner rather than later. Get tips on an effective strategy for reducing taxable income with help from a certified financial planner TM professional with over a decade of experience in wealth management in this free video clip.
If the owner holds the deed to a mortgage, one particular person in the equation can get a tax write-off. Find out who gets a tax write-off if the owner holds the deed to a house with help from a business consultant in this free video clip.
The IRS can withhold refunds to pay judgements in a few different ways. Learn about how the IRS can withhold refunds to pay judgements with help from a taxpayer representative in this free video clip.
Gambling winnings and gambling losses are two things that get audited by the IRS. Learn how often gambling winnings get audited by the IRS when compared to gambling losses with help from a taxpayer representative in this free video clip.
A tax credit and a tax deduction are not the same thing and should not be treated as such. Learn about the differences between a tax credit and a tax deduction with help from a certified public accountant in this free video clip.
Taking a tax deduction and/or credit for your grandchildren is something you can do in a few specific circumstances. Find out about tax credits for grandchildren with help from a certified public accountant and financial planner in this free video clip.
Certain types of expenses can fall neatly into the category of unemployment write-offs on your taxes. Learn about unemployment tax write-offs with help from a certified public accountant and financial planner in this free video clip.
Tax filing becomes a whole lot more complicated if you get deployed by the United States armed services. Learn about tax filing and deployment with help from a certified public accountant and financial planner in this free video clip.
If you're selling a house as a primary residence, you need to claim rental income on your taxes in a very specific way. Find out how to claim rental income on your taxes if you're planning on selling the house as a primary residence with help from a certified public accountant and financial planner in this free video clip.
Even if you legally do not have to file a return, you may want to take a close look at the possible benefits of filing one. You may be eligible for a tax credit or a tax refund, and the only way to get the money is by filing a tax return. It is also the only way to take advantage of an investment loss.
The IRS lists several types of income, among them employee compensation, self-employment income, passive activity income, hobby income, taxable income, non-taxable income and the mysterious "other income." As far as the Form 1040 is concerned, "other income" is anything that you list on Line 21 -- in other words, anything that isn't listed elsewhere on the return or an attached schedule. While most income is taxable and should be reported somewhere on the tax return, some items are not taxed and can be left off the 1040.
Preparing and filing taxes has gotten easier each year, even as the tax code has gotten more and more complex. Do-it-yourself tax software enables many taxpayers to prepare their own taxes, rather than obtaining the services of a tax professional. Depending on the software, you may have the option to file your taxes on paper or electronically.
For most taxpayers, the choice between the "married filing separately" and "head of household" filing statuses is not an issue; one is typically for married taxpayers while the other is for single taxpayers. In some instances, however, a person may qualify for both married filing separately and head of household status. Generally, head of household is the more advantageous status, since many credits and deductions are not available to taxpayers who are married and filing separately.
The "married filing jointly" tax status typically results in the lowest tax liability for married couples. Sometimes, however, it pays to consider filing separately. Joint filers are, both together and individually, liable for any tax due, as well as any interest and penalties that accrue. The IRS can demand payment for the entire amount from one spouse, even if the couple is divorced by that time, and even if the divorce decree says the other spouse will be responsible for any amounts due on past jointly filed tax returns. Before filing that joint return, be sure you've considered the potential…
The federal government gives married couples the choice to file their income taxes jointly or separately. Except in very narrow cases, filing jointly provides a greater advantage in reducing taxes owed. However, there can be important non-financial reasons for separate filings, like a limitation on liabilities.
Married couples have the option to file their tax returns jointly or separately. You are considered married if you were legally married on the last day of the year. A wedding on December 31 qualifies you as married for that entire year; a divorce initiated in November but not finalized until January 2 also qualifies you as married for the year in which you began divorce proceedings. In most cases, a joint return results in the lowest tax liability. Several credits and deductions, including the earned income credit, dependent care credit and student loan interest deduction, are available to joint…
U.S. citizens are taxed on worldwide income regardless of where they are living. They file the same tax returns when living abroad as if they resided in the United States. Some income earned from working abroad is exempt from the calculation of tax. Another exclusion from income or a tax deduction is permitted for amounts of income paid for foreign housing costs.
Confusion often surrounds the question of what income is taxable, and what is not. Some think that every penny of income you receive is taxed, while others think that if you don't receive a 1099 or W-2 for the income, it's not taxable. Neither thought is entirely correct. Getting it wrong on a tax return, however, can make a big difference in your tax due and could lead to accuracy-related penalties.
State and local taxes form a category of itemized deductions on federal income tax returns. Using either the standard deduction or itemized deductions reduces the amount of income on which you are taxed. You have the option of itemizing deductions or using the standard deduction. Itemizing is better if the total deductions exceed the standard amount. You may not write off itemized deductions in addition to the standard deduction. Tax-deductible state and local taxes comprise five categories.
Married taxpayers typically file a joint tax return, but couples have the option to file separate returns. In most cases, a joint return yields the best results, but filing separately can be beneficial in some circumstances. The IRS advises married couples to prepare both joint and separate returns, and to file the return that provides the greatest net tax benefit.
Most married couples don't consider filing separate returns, and in most cases joint returns provide the biggest refunds or lowest tax due. Separate returns can provide some benefits, especially if you expect a refund and your spouse owes tax debt or back child support. If you are thinking about filing a separate return from your spouse, be sure to evaluate the benefits and the disadvantages before you make your decision.
The purpose of a tax return includes completing the forms and schedules, required by the Internal Revenue Service, to figure and report your tax liability. Your tax liability is the amount you owe for federal tax withholding, estimated tax payments and any shortfall you must pay when filing your tax return. In certain instances, your tax liability will equal zero, and you may even receive a tax refund. Options for preparing your tax return include Free File options on the official IRS website, e-file commercial tax software or paper forms that you must mail to the IRS.
Whether you can use interest expense as a tax deduction depends upon several factors, such as why the money was borrowed, how it was used and whether you itemize your deductions. Additionally, to write off interest expenses you must legally be responsible for the debt.
Restitution and tax write offs are directly related in a few key ways. Learn about restitution and tax write offs with help from an attorney in this free video clip.
Divorced parents are entitled to some pretty specific tax write offs come April. Learn about tax write offs for divorced parents with help from an attorney in this free video clip.
The "head of household" filing status for the Internal Revenue Service is defined in a very specific way. Learn what defines "head of household" for a single woman when filing her income tax return with help from a practiced attorney in this free video clip.
As a widower you have a few very specific tax deductions that you are entitled to take. Learn what you can write off on your taxes as a widower with help from a practiced attorney in this free video clip.
If you're a successor trustee and the trustee of a living will has passed away, you will need to file some very specific income tax returns. Find out what kind of income tax returns you need to file if you're a successor trustee with help from an attorney in this free video clip.
If someone falsely declared you as a dependent for tax purposes you have to complete a few specific things. Learn what to do if someone falsely declared you as a dependent for tax purposes with help from an attorney in this free video clip.
In finance, the term "regressive" refers to the reduction of taxation rates in proportion to the increase in income levels. This means that low and middle income earners are subjected to high taxation rates whereas high income earners are subjected to lower taxation rates. This is in contrast to progressive taxation that increases the rate of taxation relative to the increase in income. A regressive budget, therefore, is based on the principle of raising budget income through the imposition of taxation rates that decrease with increase in income.
Civil judgements are the award you get after a lawsuit. Learn about civil judgement on income tax with help from a licensed attorney who specializes in financial information in this free video clip.
The two types of IRS 1099 forms for which you can claim losses on are the 1099 A — Acquisition or Abandonment of Secured Property and 1099 B — Proceeds from Brokers and Barter Exchange. To claim a loss on a 1099 A, the property must not be one that you own exclusively for personal use such as a primary residence.
Payroll tax withholding on a weekly income is calculated in a very specific way. Learn about payroll tax withholding on a weekly income with help from a versatile business and financial consultant in this free video clip.
If you're adjuncting, its important to know what tax write-offs you have available to you. Learn about adjuncting and tax write-offs with help from an accomplished consultant, financier, and marketing expert in this free video clip.
Master Limited Partnerships or MLPs are tax-advantaged business structures that were legally sanctioned as a result of the passage of the Revenue Act of 1987 and the Tax Reform Act of 1986, according to Investing Daily. These limited partnerships are required to generate 90 percent of their income from a qualified source, usually a natural resource, to qualify for their tax advantages.
As a self-employed individual or business owner, it is your responsibility to report all business earnings and pay annual taxes to the Internal Revenue Service. Instead of trying to pick through a jumbled mess of receipts when your taxes become due, initiate and maintain systematic record keeping of your business expenses throughout the year. Being prepared will help reduce stress and ensure a greater level of accuracy than trying to calculate your taxes just before the deadline or when they're past due, which could result in the IRS imposing fines or other penalties.
