1040 Tax Form Reviews & Tips
February 5, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
The 1040 tax form should be your starting point for your personal IRS income tax returns. It’s designed to help you calculate the amount of tax you need to pay based on the amount of income you’ve declared.
By using this form regularly as your income changes, you’ll be more aware of whether you need to take steps to reduce your potential tax penalty or you might actually calculate that you’ll receive a return.
This is the ‘long form’ or the more complete version and should be used if you have complicated tax issues to calculate. Things like investment income or loss, capital gain or loss or multiple itemized deductions should be entered individually on your 1040 tax form to help you get a clearer idea of the amount of tax you should be paid or withholding.
Although the form could be only 2 main pages, they have 11 different attachments or schedules that follow with it. Each different schedule covers a specific aspect of your tax return, so that you may not need all.
1040A Tax Form
The 1040A Tax Form is the form that helps you to estimate tax return for the fiscal year. If you do not have complex tax toting up for the year as capital gains or deductions on individual itemized, then the short form will be ideal for you.
1040EZ Tax Form
The 1040EZ tax form is a more simplified version of the longer form of 1040 and is still able to help you determine what your tax bill could be the end of the year very quickly. Again, this is ideal for those with no tax issues not complicated to explain.
1040NR Tax Form
The 1040NR tax form designed to facilitate non-resident aliens to calculate the total of IRS tax return. For non-resident alien who has been in the United States for less than five years and has an income on which tax must be paid has to use this form.
This form shows the IRS the original figures you submitted and then highlights what those figures should have been according to your calculations. In some cases the irs help can help you to increase the amount of tax refund you were due or it might even reduce a pending tax penalty you might incur.
Related posts
Overlooking Simple Deductions can cost Taxpayers
January 29, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
Most taxpayers are honest
The vast majority of American taxpayers are honest when it comes to filing and paying their taxes. The million dollar tax cheats are very rare. Instead of taking advantage, the opposite is in fact the case – most US taxpayers don’t take advantage of deductions and overpay. The IRS reports that taxpayers tend to make the same mistakes each year. The number one mistake on returns every year is forgetting to include a social security number on the return. Luckily, this will only cost the taxpayer time and not money.
Convenience can be costly
Approximately 85 million taxpayers choose to take standard deductions as opposed to itemizing their tax returns. Only 46 million people itemize their returns. The smaller group of taxpayers actually claims twice the amount of deductions as the larger group. Itemized deductions account for a trillion dollars of deductions while standard deductions account for a cheeky half trillion. Only legitimate deductions are included in the figures from the IRS, so itemizers aren’t cheating. Most people admit to filing only the standard form out of convenience and lack of documentation. This convenience and lack of proper record keeping could be costing some taxpayers to pay four times their rightful tax obligation.
State sales tax most overlooked
Everyone is entitled to claim state sales tax they paid during the course of a tax year. The IRS has tables that show how much can be deducted, depending on the state you live in and your income. The biggest advantage is for those people living in states that do not have a state income tax, but everyone can benefit from this deduction. Also, there are items that can give a taxpayer a bigger deduction that what tables will show you. For example, if a boat, car, or airplane was purchased, that sales tax can be added to the amount shown in the table. State sales tax on home building supplies are also deductible.
Giving could get you a deduction
Most tax payers already take the appropriate deductions for contributing to charitable organizations in the form of money. Taxpayers deduct money they contributed to religious groups, homeless shelters, etc. That said, most taxpayers don’t capitalize on the out of pocket deductions for doing good things. For instance, a cake baked for a church fundraiser is a charitable contribution, and thus the cost of ingredients is deductible. The taxpayer can also claim 14 cents per mile for delivering the item.
Children benefit from Mom and Dad’s help
Interest paid is a common deduction. Most people know to deduct interest paid on mortgages and student loans. College students and graduates, that aren’t claimed as dependents, can benefit from help from the parentals. The IRS treats interest paid on a student loan by a parent as money given to the student who then paid the debt. As long as the child isn’t claimed as a dependent, the child deduct the interest on their return.
Related posts
8 Things to Double Check Before Sending Your ‘08 Tax Return
October 15, 2009 by taxman
Filed under IRS News Items
The deadline to file your 2008 tax return without penalty is Thursday, October 15th. Here’s eight things you should double-check before signing your 2008 return.
1. Check if you’re eligible for the recovery rebate credit. This is a one-time-only tax credit available for people who did not receive their economic stimulus payment in mid-2008. Most tax software programs have a worksheet for you to fill out to see if you’re eligible for the recovery rebate. To use these worksheets, you’ll first need to know how much of the stimulus payment you received. The IRS mailed out reminder notices earlier this year. You can also check on the IRS Web site at How Much Was My 2008 Stimulus Payment?
2. Review your standard deduction or itemized deductions. For 2008 (and 2009) homeowners can take an extra standard deduction for property taxes. If your itemized deductions are only slightly more than your standard deduction, it might make sense to take the standard deduction with the additional amount for property tax, and this in turn can make your state tax refund into non-taxable income for 2009.
3. Review your estimated tax payments and extension payments. If you don’t have canceled checks or payment confirmation receipts, you might want to call the IRS at 1-800-829-1040 to ask them to verify the payments that were posted towards your 2008 taxes.
4. Be sure you have all your tax documents, such as W-2s, 1099s, 1098 mortgage statements, and so forth. If you are missing copies of any documents, ask your employer, bank or broker to send you a copy. Or better yet, many financial institutions provide these documents through their Web sites. If you are still missing some documents, call or visit the IRS and ask them for a printout.
5. Self-employed persons should review whether funding a SEP-IRA retroactively for 2008 will yield any tax savings.
6. Investors should review their capital losses carried over from 2007 and make a note of capital losses to be carried over to 2009.
7. Homeowner who are paying mortgage insurance premiums may be able to deduct those premiums as an itemized deduction. These premiums are listed on Form 1098 from your lender.
8. People who have bought a house in 2009 should review whether it will be more beneficial to claim the first-time homebuyer tax credit on their 2008 return or wait to claim it on their 2009 return.
Related posts
Standard or Itemized Deductions
April 22, 2009 by Taxcut Editor
Filed under IRS News Items
03-11-2009
Standard or Itemized Deductions
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, charitable 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.
The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year. For 2008, they are:
Single $5,450
Married Filing Jointly $10,900
Head of Household $8,000
Married Filing Separately $5,450
Some taxpayers have different standard deductions. The standard deduction amount depends on your filing status, whether you are 65 or older or blind, whether an exemption can be claimed for you by another taxpayer, whether you plan to claim the additional standard deduction for state and local real estate taxes, and whether you have a net disaster loss from a federally declared disaster. If any of these apply, you must use the Standard Deduction Worksheet in the Form 1040EZ, 1040A or 1040 instructions.
Limited itemized deductions. Your itemized deductions may be limited if your adjusted gross income is more than $159,950 ($79,975 if you are married filing separately). This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, investment interest and certain qualified cash contributions for relief efforts in a Midwestern disaster area.
Married Filing Separately. When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and should itemize their deductions.
Some taxpayers are not eligible for the standard deduction. They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months.
Forms to use. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.
Related posts
How to Boost Your Income Tax Refund
April 22, 2009 by Taxcut Editor
Filed under Tax Resolution
Mortgage Interest. This is a big one! For most families owning a house, this will be the most important deduction to include in your “Itemized Deductions”.
Heloc Interest. Very similar to mortgage interest. Heloc (Home equity line of credit) interest is also to be included in “Itemized Deductions”.
Child Credit. If you have children, make sure to take advantage of the Child Credit established by the IRS.
Property Taxes. You can deduct your property taxes (taxes paid to the county when you own a house) under “Itemized Deductions”.
Car Taxes. You can deduct the License Fee portion of the DMV’s Vehicle Registration fees under “Itemized Deductions”.
Donations. Instead of throwing away things you no longer want (but that are still in good shape) in the trash, bring them to a local charitable organization, such as Goodwill. Upon request, they will give you a receipt. Use it to claim a tax deduction under “Gifts to Charities” in Schedule A of Income Tax Form 1040. Make a detailed list of what you are giving away, and keep it in a safe place. It is wise to take pictures of the items, before bringing them to the charitable organization, just in case the IRS decides to audit.
Pay on Time. Pay your amount due to the IRS on time. This will prevent you from having to pay unnecessary penalty fees AND interests.
TaxCut and TurboTax Softwares. TaxCut or TurboTax make it much easier to file your income tax return, and costs less than hiring an accountant. First, it calculates everything, so you do not have to do any math. Second, it saves time. Third, and most important, it makes it more difficult to overlook deductions, credits and tax breaks. Finally, it includes free eFile for your federal tax return.
Income Tax Refund Anticipation Check or Loan. Beware of Income Tax Refund Anticipation Checks or Loans. Convenience comes with a price. For example, the fine print of H and “Fees and additional terms and conditions apply.”
Earned Income Credit. According to the IRS, the earned income credit (EIC) is a tax credit for certain people who work and have earned income under $41,646. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EIC may also give you a refund.
About the Author
Better Business Award GOLD Star to New Century Tax Consultants, our team of Expert Attorneys, CPA's, and Tax Practitioners.
The Taxcut Editor recently visited the Green Festival in Denver, see what he had to say.
