Income tax

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.
Tax

Tax Tip: What To Do If You Haven't Received a Form 1099

If you received certain types of income, you may receive a Form 1099 for use with your tax return. You should receive these forms from the payer by early February, according to the IRS. Payers have until Jan. 31 to mail these forms to you. If you have not received an expected 1099 by a few days after that, contact the payer. If you still do not get the form by February 15, call the IRS for help at 1-800-829-1040.In some cases, you may obtain the information that would be on the 1099 from other sources.
Tax

Tax Tip: What To Do If You Haven't Received a W-2 Form

Employers must provide employees with a Form W-2 by January 31, 2001 for use in preparing tax returns, according to the IRS. You should receive a separate W-2 for each employer you worked for. Since employers can mail the W-2s as late as January 31, you should allow a few days into February for a mailed form to arrive.If do not receive your Form W-2, you should first contact your employer and find out if or when the W-2 was mailed. You may not have received your W-2 because of an incorrect or incomplete address, so be sure to verify your address.
Tax

Tax Tip: Dependents

So your daughter is off to college and you're wondering if you can still claim her as a dependent? Well, a person who would be claimed as your dependent must meet five tests:Member of Household/Relationship Test -- the person must be a relative or live in your household all year Joint Return Test -- the person can't file a joint tax return with someone else unless it is only to claim a refund of tax withheld Citizenship Test -- the person must be: a U.S.
Tax

Tax Tip: 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 non-cash prizes.Generally, if you receive $600 or more in gambling winnings, the payer is required to issue you a Form W-2G.
Tax

Tax Tip: Record Keeping

You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good record keeping will help you remember the various transactions you made during the year, which may help you out on your taxes.Records help you document the deductions you've claimed on your return. You'll need this documentation should the IRS select your return for examination.
Tax

Tax Tip: Taxable or Nontaxable?

Generally, most income you receive is taxable. But there are some areas where certain types of income are partially taxed or not taxed at all.
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Tax Tip: 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. It is not on the label.
Tax

Tax Tip: Appeal Rights

Are you in the middle of a disagreement with the IRS? One of the guaranteed rights for all taxpayers is the right to appeal. If you disagree with the IRS about the amount of your tax liability or about proposed collection actions, you have the right to ask the IRS Appeals Office to review your case.IRS Publication 1, "Your Rights as a Taxpayer," explains some of your most important taxpayer rights.

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