Income tax

Tax

Tax Tip: Faster Refunds Through Direct Deposit

Want a faster refund? More taxpayers are choosing direct deposit as the way to get their tax refunds. The payment is more secure -- there is no check to get lost. And, it's more convenient -- no special trip to the bank to deposit a check. To request direct deposit, follow the instructions for "Refund" on your tax return.Nearly 30 million people had their tax refunds deposited directly into their bank accounts during the 2000 filing season, a 25 percent increase from the year before.
Tax

Tax Tip: Don't Be Taken In by Tax Scams

The IRS reminds taxpayers not to fall victim to a variety of tax scams. These schemes take several shapes, ranging from promises of special tax refunds to illegal ways of "untaxing" yourself. If people think something may be unscrupulous, they can report suspected tax fraud to the IRS at 1-800-829-0433.The IRS urges people to avoid these common schemes:No taxes being withheld from your wages. Illegal schemes are being promoted that instruct employers not to withhold federal income tax or employment taxes from wages paid to their employees.
Tax

Tax Tip: Toll-Free Telephone Service

Free tax help from the IRS is just a phone call away. The IRS provides various services through its toll-free telephone numbers. You can order forms, listen to prerecorded tax information, check on the status of your refund, ask questions about your tax return or inquire about a letter or notice you may have received.
Tax

Tax Tip: 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 2000, it applies if the child's total investment income for the year was more than $1,400.
Tax

Tax Tip: Child and Dependent Care Credit

If you paid someone to care for a child or a dependent so you could work, you may be able to reduce your tax by claiming the credit for child and dependent care expenses on your tax return, according to the IRS. This credit is available to people who, in order to work or to look for work, have to pay for child care services for dependents under age 13.
Tax

Tax Tip: Deductible Taxes

Did you know that you may be able to deduct certain taxes on your federal income tax return? You can if you file IRS 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.
Tax

Tax Tip: 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.
Tax

Tax Tip: Education IRAs Can Make College Costs Less Taxing

The Education IRA is an incentive to help parents and students save for higher education. Up to $500 may be contributed to a child's Education IRA each year. Earnings on contributions will be distributed tax free provided that they are used to pay the beneficiary's postsecondary education expenses. Any individual who meets adjusted gross income (AGI) requirements can make a non-deductible contribution on behalf of a child under the age of 18. The AGI requirements are $95,000 for single taxpayers and $150,000 for married taxpayers.
Tax

Tax Tip: Taxpayer Rights a Priority for IRS

The law that required the IRS to reorganize also required the tax agency to include the protection of taxpayer rights as one of its most important values. In its day-to-day operations, the IRS and its employees make taxpayer rights a top priority. This includes explaining those rights to taxpayers, keeping taxpayer information private and confidential and being professional and courteous. Besides what is expected of IRS employees, taxpayers have many other rights. They have the right to have someone represent them before the IRS and to accompany them to any meeting with IRS employees.
Tax

Tax Tip: How To Prepare Your Tax Return For Mailing

Your tax return is complete and ready to be mailed. Before sealing that envelope, take a few minutes to make certain that all information is complete and accurate. 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. Provide a daytime phone number.
Tax

Tax Tip: Gift Giving

If you give any one person gifts valued at more than $10,000 in a year, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.You make a gift when you give property, including money, or the use or income from property, without expecting to receive something of equal value in return.
Tax

Tax Tip: Tax Assistance for Individuals with Disabilities

If you are unable to complete your income tax return because of a physical disability or hearing impairment, you may get help from the IRS through its Volunteer Income Tax Assistance/Tax Counseling for the Elderly (VITA/TCE) programs, or through a special TDD phone number that is available in both English and Spanish.The Volunteer Income Tax Assistance (VITA) program has IRS-trained volunteers who provide free tax assistance at neighborhood locations such as churches, schools, libraries and community centers. VITA is aimed at those who may find it difficult to pay for tax assistance.
Tax

Tax Tip: 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.
Tax

Tax Tip: Should You Itemize?

Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing, according to the IRS.The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year.
Tax

Tax Tip: Gratuities and Taxes

Do you work at a hair salon, barber shop, casino, golf course, hotel, restaurant or drive a taxi cab? The tip income you receive as an employee from those services is taxable income, according to the IRS.As taxable income, these tips are subject to federal income tax, Social Security and Medicare taxes, and may be subject to state income tax as well.You must keep a running daily log of all your tip income.
Tax

Tax Tip: Free Help From the IRS

Sometimes when you are preparing your federal tax return, you need a little help. The IRS offers free assistance by computer, telephone, fax, and in person. The IRS can assist you with obtaining forms, publications and answers to a wide range of tax questions. If you qualify, IRS can even help you find free tax preparation.How to get help: Personal Computer - With your personal computer and Internet connection, you can access a wealth of free tax information at www.irs.gov.
Tax

Tax Tip: 1040A Users May Report Mutual Funds Distributions

Some taxpayers with capital gains may now use the shorter Form 1040A. If your only capital gains or losses are capital gains distributions from mutual funds, and you are otherwise eligible to use Form 1040A, you may report these gains on line 10 of the 1040A. If you must use Form 1040 for some other reason, but have no other capital gains or losses, you can skip Schedule D and report your capital gains distributions on line 13 of the 1040, checking the box to indicate that Schedule D was not required.
Tax

Tax Tip: What is Your Filing Status?

Your filing status on your tax return is a category that identifies you, based on your marital and family situation. It is an important factor in determining whether you must file a return, the amount of your standard deduction and your correct amount of tax. If more than one filing status applies to you, you may choose the one that will give you the lowest tax, according to the IRS.There are five possible filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child.
Tax

Tax Tip: Who Must File A Tax Return?

There are some instances where you may not be required to file a tax return. But the IRS reminds you to keep a few things in mind. First, over 70 percent of all individual filers of federal income tax returns are due a tax refund, and it may be to your advantage to file, even if you are not required to. Next, the law requires you to file a tax return if your income is above a certain level.
Tax

Tax Tip: Which Form --1040, 1040A, or 1040EZ?

If you are filing a tax return on paper, you should use the simplest form for which you qualify. The simpler the form, the less chance for an error that may cost you money or delay the processing of your return. The simplest IRS form is the Form 1040EZ. The 1040A covers several additional items not addressed by the EZ. And finally, the IRS Form 1040 should be used when itemizing deductions and reporting more complex investments and other income. Here are a few general guidelines on which form to use.

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