Income tax

Tax

Amended Returns

Oops! You’ve discovered an error after your tax return has been filed. What to do? You may need to amend your return, according to the IRS.The IRS usually corrects math errors or requests forms (such as W-2s) or schedules left out. In these instances, do not amend your return. However, do file an amended return if any of the following were reported incorrectly:– Your filing status– Your total income– Your deductions or creditsUse Form 1040X, “Amended U.S.
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Haven't Filed Last Year's Tax Return? Here's What to do

The IRS says it hears many reasons from taxpayers for not filing a tax return. You may not have known whether you were required to file. Whatever the reason, it’s best to file your return as soon as you can. If you need help, even with a late return, the IRS is ready to assist you.The failure to file a return can be costly — whether you end up owing more or miss out on a refund. If you owe taxes, a delay in filing may result in a "failure to file" penalty and interest charges.
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Common Errors to Avoid

The IRS recommends reviewing your entire tax return to be sure it is accurate and complete. Even a simple mistake can cause problems with your tax return, which might lead to delays in processing your return and receiving your refund.Want to avoid frequent trouble spots? Check these areas, which can reduce problems:Use the peel-off label. You may line through and make necessary corrections right on the label. Be sure to fill in your Social Security number in the box provided on the return.
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What to do if You Can't Pay Your Taxes

If this year’s tax filing deadline will be a “pay” day for you and you cannot pay the full amount that you owe, you should still file your return by the due date and pay as much as you can. The IRS may allow you to pay any remaining balance over time in monthly installments through an Installment Agreement or possibly even settle for less than the full amount owed through its Offer in Compromise program.If you find that you cannot pay the full amount by the filing deadline, you should file your return and pay as much as you can by the due date.
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Ensuring Proper Credit of Payments

When the bottom line of your tax return says, "Amount You Owe," the IRS reminds you to be sure to make your check or money order payable to the "United States Treasury." Do not mail cash with your tax return.Whether you are filing your current year’s return, a prior year’s return or an amended return, always provide your correct name, address, Social Security number, daytime telephone number, tax year, and form number on the front of your check or money order.
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Options For Paying Your Taxes

If you do not pay your taxes when due, you may have to pay a failure-to-pay penalty. To avoid this penalty, the IRS suggests several ways to pay your taxes.
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Extensions of Time to File Your Tax Return

If you can't meet the April 15 deadline to file your tax return, you can get a four-month extension of time from the IRS. The extension will give you extra time to get the paperwork in to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amounts not paid by the April deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date.You must make an accurate estimate of any tax due when you request an extension.
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Need Last -Minute Tax Help? Don't Panic

If you’re trying to beat the tax deadline, the IRS says there are several options for last-minute help. If you need a form or publication, the IRS Web site at www.irs.gov has copies available. If you discover you need more time to finish your return, get a four-month extension with Form 4868. And if you have trouble paying your tax bill, the IRS has several payment options available.To get the automatic extension, file Form 4868, “Application for Extension of Time to File U.S.
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Where to File Your Return

Once you complete your 2001 federal tax return, you can either file it electronically or mail it to the IRS. If you choose to mail your return, use the enclosed mailing label. If you didn't receive one, be sure to read your tax instruction booklet carefully to find the address of the IRS center for your area.For this year, the IRS has changed some of its filing locations. This is part of a redistribution of work among the 10 IRS centers that will be completed in 2002.
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How to Prepare Your Tax Return For Mailing

Your tax return is complete and ready to be mailed. Now what? The IRS recommends that you take a few minutes to make certain that all information is complete and accurate before sealing that envelope. This simple precaution could help you avoid mistakes that may delay your refund or result in correspondence with the IRS.Here are just a few items to complete prior to mailing your tax return: Sign your return. Your federal tax return is not considered a valid return unless it is signed. If you are filing a joint return, your spouse must also sign.
Tax

Ten Ways to Avoid Problems at Tax Time

Looking for ways to avoid the last-minute rush for doing your taxes? The IRS offers these tips: ORGANIZE YOUR TAX RECORDS. Tax preparation time can be significantly reduced if you develop a system for organizing your records and receipts. Start with the income, deduction or tax credit items that were on last year's return.DON'T PROCRASTINATE. Resist the temptation to put off your taxes until the last minute.
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Foreign Income

With more and more U.S. citizens earning money from foreign sources, the IRS reminds people that they must report all such income on their tax return, unless it is exempt under federal law.This applies whether a person lives inside or outside the United States.
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Tax Changes For Business Owners

At tax time, many business owners want to make sure they are aware of the latest changes that could affect their taxes. If you are one of these owners, a good source of information is IRS Publication 334, "Tax Guide for Small Business." Publication 334 includes a listing of some tax changes for 2001 returns, plus explanations of the changes. It also includes some of the changes for 2002. In addition, the recently-passed Job Creation and Worker Assistance Act contains many provisions that affect businesses.
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Find Deductibility Limits on Contributions to Charitable Organizations

The IRS publishes an online version of Publication 78, Cumulative List of Organizations, which is intended to assist you in learning if an organization is exempt from federal taxation and, if so, determining how much of your contributions to that organization are tax deductible.
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Taxable or NonTaxable Income?

Generally, most income you receive is taxable, according to the IRS. But there are some areas where certain types of income are partially taxed or not taxed at all.
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Early Distributions From Retirement Plans

An early distribution from an Individual Retirement Account (IRA) or a qualified retirement plan need not be a "taxing" experience, according to the IRS.Any payment that you receive from your IRA or qualified retirement plan before you reach age 59½ is normally called an "early" or "premature" distribution. As such, these funds are subject to an additional 10 percent tax. But there are a number of exceptions to the age 59½ rule that you should investigate if you make such a withdrawal. Some of these exceptions apply only to IRAs, some only to qualified retirement plans, and some to both.
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Gambling Income and Expenses

Hit a big one lately? With more and more gambling establishments, the IRS reminds people that they must report all gambling winnings as income on their tax return.Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.Generally, if you receive $600 or more in gambling winnings, the payer is required to issue you a Form W-2G.
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Tax on Child's Investment Income

Part or all of a child's investment income may be taxed at the parent's rate rather than the child's rate, according to the IRS. Because a parent's taxable income is usually higher than a child's income, the parent's top tax rate will often be higher as well. This special method of figuring the federal income tax only applies to children who are under the age of 14. For 2001, it applies if the child's total investment income for the year was more than $1,500.
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Deductible Taxes

Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can if you file Form 1040 and itemize deductions on Schedule A. There are three types of deductible non-business taxes:State, local and foreign income taxes; Real estate taxes; and Personal property taxes. You can deduct any estimated taxes paid to state or local governments and any prior year's state or local income tax as long as they were paid during the tax year.
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Charitable Contributions

The Internal Revenue Services advises that when preparing to file your 2001 federal tax return, don't forget your contributions to charitable organizations. Your donations can add up to a nice tax deduction if you itemize on IRS Form 1040, Schedule A.Here are a few tips to help make sure your contributions pay off on your tax return. To be deductible, contributions must be made to qualified organizations. Organizations can tell you if they are qualified and if donations to them are deductible.

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