Unofficial Tax Guide

April 15th is the final deadline for filing taxes; however, many Americans are unable to have their taxes filed by the deadline. Whether the reason is procrastination, hectic schedules, or lost documents there are some taxpayers who simply cannot meet the ever-so-important tax deadline. For these individuals there is a way to receive at least a four month extension by requesting one from the IRS.

It is important to remember that filing an extension does not give a tax payer additional time to pay their taxes. This is a common mistake that many individuals make. Many still think that they can request an extension from the IRS to hold off on making their payment until they have the money. The truth of the matter is that a taxpayer who owes money to the IRS is still required to make an on-time payment, with or without an extension.

Individuals who request a tax deadline extension and owe money to the IRS are required to pay interest on the amount owed if it is not received by April 15th. According to the website of the IRS an additional late fee can be charged if ninety percent of the amount due is not paid by the deadline. Individuals who request an extension, but do not owe money will not be charged a penalty for filing their taxes past the April 15th deadline.

There are a number of ways for a taxpayer to receive an extension on their taxes. For individuals who are filing their own taxes on paper they are required to fill out an Application for Extension which is listed by the IRS as being form number 4868. This extension form must be received by the traditional tax deadline of April 15th to completely be processed.

With the availability of professional tax software programs for home use it is now possible for individuals to file a tax extension with the forms provided with their most recent tax software program. Many of these programs are linked with the IRS’s e-file program; therefore, the extension forms can be submitted electronically. Tax extensions that are filed electronically will be provided with a receipt. This receipt is used to acknowledge that the appropriate tax extension forms were received and processed by the April 15th deadline. All confirmation numbers or receipts should be kept incase they are needed later on for verification purposes.

Individuals who are unfamiliar with filing their own tax forms or do not have access to tax software or a computer may wish to have a tax professional prepare and submit an extension form for them. Depending on the tax professional, a small fee may be charged for having this service completed.

Taxpayers who cannot pay their balance due by the tax deadline do not need to request an extension. The same interest rates and penalties will apply with the balance due if is not paid to the IRS on time, regardless of whether a tax extension was filed.

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A large number of taxpayers file their own tax returns or have a tax professional prepare them. Whether tax returns are prepared using a tax software program or a paper form there is still some chance that a mistake can be made. Once a tax return is prepared many taxpayers are unaware that an error has occurred; however, others may notice it. If it is known that an error was recorded on a federal tax return there is a way to amend it.

The most common mistakes that many taxpayers make when preparing their own paper taxes involve math. A professional tax software program does not guarantee that mathematical mistakes will be caught; however, the majority of programs do check and verify accuracy. If the only mistake made on a federal or state tax return is a simple mathematical equation chances are the mistake will be caught and altered by the IRS.

Another common error that many taxpayers make when filing their tax returns includes providing the incorrect social security number or other important personal information. In this case it may be impossible for a tax return to be processed. If this problem arises and it goes unnoticed by the taxpayer it is likely that the IRS will send the tax payer a notice requiring that the correct information be obtained.

Individuals who receive a notice that they forgot to report a portion of their income or may have forgotten to declare a tax deduction can amend their tax return. An Amended Individual Income Tax Return form can be acquired from a number of locations. This form can generally be obtained wherever traditional tax forms are available, which many include financial institutions, a library, or the post office. The form can also be accessed through TaxEngine.com or by visiting www.irs.gov. The Amended U.S. Individual Income Tax Return is listed as Form 1040X. If any additional paperwork, such as an additional W-2, is required it will be listed in the instructions for the 1040X form.

An amended return will be processed once the IRS receives the paperwork; however, it is important to remember that this is likely to cause a delay in a taxpayer receiving a refund. If a payment is due to the IRS after a tax return was amended, the amount due is still required to be paid in full by the traditional April 15th tax deadline. Purposely causing an error in a tax return to cause a delay in having to make a payment to the IRS is illegal. Late fees and penalties may apply if a payment is not processed on time.

Almost all tax return mistakes or errors can be prevented. Carefully taking the time to prepare and review a completed tax form is the best way to catch a mistake before the form is processed and sent out to the IRS. It is likely that if a mistake was made on a federal tax return that a similar mistake may have been made on state tax forms. Examining tax returns will not only prevent any late fees or penalties, but it will also allow a taxpayer to receive their refund faster.

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The majority of working Americans are required to file federal and state tax returns. On the other hand, there are a number of individuals who are not legally obligated to file a tax return.

According to the IRS single individuals with an income less that $7,950 are not required to file a tax return. A single individual is classified as an individual who may live on their own or cannot be claimed as a dependant by another taxpayer. A head of household is an individual who provides the main source of income for an unmarried family or household. An individual who can be defined as the head of the household and makes less than $10,250 a year is not required to file a tax return.

Individuals who are married have the option of filing their tax returns jointly or separately. For married couples who have a combined income less than $15,900 they are not required by the IRS to file a tax return. Married couples who wish to file their tax returns separately are required to make more than $3,100 to legally have to file a tax return. With many individuals and parents working from home or running their own business there are additional rules and restrictions that may apply. It is standard procedure that a self-employed individual does not have to file a tax return if their income is less than $600 a year.

For individuals who do not meet the above mentioned requirements provided by the IRS, filing a tax return is completely optional. According to federal and state laws a tax return is may not be required; however, there are some individuals who may benefit by filing their taxes. These benefits include receiving a tax refund. For an easy and quick way for taxpayers to determine whether they should file a tax return a tax estimate should be completed. Tax estimates can be completed by filling out a rough draft of a federal or state tax form, using a free online tax estimating program such as the one found on TaxEngine’s website, or by using an estimation calculator found on many tax software programs.

When using a program or free service to estimate a potential tax return be sure to consider any potential tax credits or deductions. The Earned Income Tax Credit allows parents to claim their children and they receive a tax credit for it. The IRS lists the standard tax credit as $4,300 for two children or more and $2,604 for one child. Individuals who are not required to file a tax return are still eligible to receive the tax credit; however, the proper tax forms must be filed by the April 15th tax deadline.

Individuals may also determine if they are required to file a federal or state tax return by reading the instruction booklet that comes with most tax forms. Many of these tax booklets have a section that gives important information pertaining to laws or guidelines that may or may not require them to file a tax return.

As previously stated, an individual who does not meet the state and federal requirements for filing a federal or state tax return is not legally obligated to do so. There are a number of benefits to taking the time to estimate a potential tax return refund. Everyone loves receiving money and they should take the appropriate steps to get it if they are entitled to it.

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Each tax season there are a number of taxpayers who are subject to an audit by the IRS. There are some individuals who are randomly audited by the IRS; however, the majority of audits are requested due to a specific reason. Having your personal finances or businesses audited by the IRS is a process that many individuals try to avoid and there are a number of fairly easy precautions that should be taken to avoid a potential audit.

It has recently been estimated that the number of random audits performed by the IRS is on the decline; however, requested audits are actually on the rise for many individuals. There are several reasons why the IRS can request an audit. An audit request is often made when a tax return contains information that raises a red flag to the officials at the IRS.

Self-employed individuals or business owners are often the largest category of taxpayers who are audited by the IRS. You may have seen the constant media attention that has been given to corporate companies who have hidden their profits from the IRS. The truth is just about any individual or business owner can inflate or deflate their profits and even list nonexistent tax deductions. Since untruthful information can easily be reported and commonly is, the IRS uses tax audits to reduce the number of individuals or business owners who are reporting inaccurate information on their taxes for their own benefit.

For self-employed individuals or business owners there are a few important steps that should be taken to reduce the likelihood of being audited by the IRS. A home office is a deduction that is allowed on taxes; however, it is common for an audit to be requested on an individual who claims to have a home office. Self-employed individuals or small business owners need to make sure that each and every item that they are claiming as home office equipment is actually used for the business and only the business.

For traditional independent tax filers, business owners, or self-employed individuals there are a number of steps that everyone can take to prevent a potential audit from occurring. Another reason why an audit may be requested by the IRS is because an extraordinarily large number of tax deductions were reported on their taxes. All individuals or business owners should keep detailed records and the proper documentation of each tax deduction that is being claimed. It is possible for an individual to claim a large number of legitimate tax deductions; however, taxpayers should be prepared to account for them all should an audit occur.

It is also possible for the IRS to request an audit on a tax payer for making an honest mistake. Most mathematical errors are caught and fixed by the tax processing system; however, a large mathematical error may make it look like a taxpayer was trying to avoid paying their taxes. Providing the wrong personal information, including social security numbers and contact information, could likely cause the IRS to look more closely at a tax return. The best way to prevent an audit that may result from a simple and honest mistake is to double check and recalculate all of the important information that is required on a tax form.

The most important step that should be taken to prevent an audit is for a taxpayer to report their full income earned. Although it may seem simple enough there are a large number of individuals who falsely record the amount of income they have received for the year. Whether it is on purpose or by accident there are number of red flags that the IRS notices when reviewing an individual or business tax return. Providing the correct information on a tax return will not only reduce the likelihood of an audit, but it will prevent a tax payer for being fined or facing the possibility of jail if their taxes are audited.

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The majority of audits performed by the IRS can be prevented in one way or another; however, it is possible to be the victim of a random tax audit. Whether the request for a tax audit is random or with due because there are number of ways to prepare for an audit and make the experience is as pleasurable as it can be.

Everyone has heard horror stories concerning the IRS and tax audits. As terrible as those stories may sound the average taxpayer should have nothing to fear as long as they provided accurate information to the IRS. Individuals who feel that they are randomly being audited by the IRS or know that they provided accurate information on their tax returns are able to represent themselves during a tax audit. Some Tax filers who are unsure on how a tax audit works or may have knowingly provided inaccurate information may wish to receive assistance from outside help. The services of a certificated tax preparer, an attorney, or a certified public accountant are often obtained during a tax audit.

There are number of ways to prepare for an audit and make sure that the process moves along smoothly. It is important that all necessary documents and receipts be present and organized in a way that is manageable to sort out and view. This is the one and only way that most taxpayers can prove that their income is exactly as they reported or that their deductions are all legitimate.

An audit is scheduled by the IRS ahead of time; therefore, taxpayers who are being audited have more than enough time to get all of their financial records in order. Preparing important documents and receipts ahead of time will be beneficial in more ways than one. An individual can review their information and familiarize themselves with what will be discussed with the tax auditor. It also gives an individual time to find any important documents that may have been lost or misplaced.

During a tax audit the auditor is there for one reason and one reason only, to make sure that all of the tax information reported to the IRS is correct. Just like every other working American these individuals have a job to do. As intimidating and painful as a tax audit may seem there is no reason to be rude or argumentative during the auditing process. Being kind to a tax auditor is not only professional, but it will help the auditing process go a lot more smoothly.

Ensuring that the information provided on a tax return is correct will likely reduce the likelihood of a taxpayer being audited; however, if audit does occur everyone involved will survive. Despite the common misconception an audit is really not the end of the world. As long as the person being audited is prepared and was honest in their tax return, they can survive this stressful situation.

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Each day a number of individuals make the decision to work from home or start their own business. As exciting as this time and process may be there are some individuals are unsure what to do when tax season rolls around. A common question that many small business owners or work-at-home individuals ask is whether they should file business tax return or a personal tax return. The answer that these individuals are looking for can vary due to a number of varying factors.

Individuals who operate their own business are often required to report their business to their local or state government before they can begin operating. This is sign that a small business owner should be submitting a business tax return. A common form that many small business owners submit to the IRS is a Schedule C. A Schedule C is also commonly referred to as Form 1040 or the Profit or Loss from Business form.

There are two main types of individuals who work from home. An individual can be working from home and still be the employee of a traditional company or an individual who occasionally does freelance work. An individual who is a full or part-time employee of a traditional company that allows them to work from home can still file a traditional personal tax return. Although employees are working from inside their home many businesses treat their work-at-home employees as if they were still working inside the same building.

Freelance workers may include, but are not limited to, writers, photographers, graphic designers, or website designers. Freelance workers who occasionally complete projects, but do not officially operate a business, are able to file a personal tax return. Freelance or self-employed workers are not required to file a tax return if they made less than $600 for the year. Freelance workers who have completed a large assignment are required to fill out a W-9 Form. This form allows businesses to have the personal information of a freelance worker on hand to send them a W-2 form as proof of payment. As with a traditional personal tax return, all W-2 forms must be attached to a tax return that is being filed on paper.

It is possible for a small business owner or a work-at-home individual to file and prepare their own taxes; however, some of the paperwork may be a little bit difficult for the average individual to fill out on their own. When in doubt seek the help of an experienced tax professional. Supplying incorrect business information may cause a delay in a potential tax refund or may even result in a business or individual being audited.

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It is estimated that each year thousands of individuals make a mistake when preparing and filing their taxes. This occurrence is something that is not uncommon and the majority of mistakes will not cause trouble for a taxpayer; however, a mistake can pose a risk of delaying the arrival of a tax refund or you could pay more taxes then you actually owe.

There are three main ways to have taxes prepared. An individual can prepare their own paper taxes, use tax software program, or have a tax professional prepare them. Each and every one of the previously mentioned tax preparation ways have the change of errors being recorded. Even with a large amount of training and experience it is not uncommon for a professional tax preparer to make an error when filing a tax return for a customer. Tax software programs are available for purchase online or at most major retail stores. A tax software program is likely to verify all mathematical equations; however, this verification will not help if the wrong information was accidentally entered into begin with. Even though mistakes are still able to be made with a professional preparer or a software program, individuals filling their own paper tax returns have the highest chance of making a mistake.

Although making a mistake on a tax return may be an accident, it can cause a tax refund to be delayed a significant amount of time. There are many common mistakes that taxpayers make when filing their taxes; however, many of these mistakes can be corrected with little time or effort.

The IRS generally provides tax payers with a pre-filled pull off label. These labels will contain the name and address of a taxpayer. Using the provided label allows most tax returns to be processed at a quicker rate of speed. If a taxpayer has not been provided with a label or cannot use theirs, it is alright if the information is handwritten. It is important to remember that all handwritten information must be legible and easy to read. If a tax return cannot be read then it cannot be processed.

When a paper tax return is filed the W-2 form or forms are required. If these forms are not attached as requested a tax return can be delayed or even denied. Ensuring that all of the necessary attachments, including W-2‘s, are attached will save time and allow a potential tax refund to be processed at quicker rate of speed.

Another common mistake that is often made when filing taxes includes providing the wrong information for the direct deposit of a refund. When a tax payer wishes to have their tax refund deposited into their checking or savings account they must provide their bank routing number and account number. Providing the wrong numbers can prevent a refund from being directly deposited or the money may accidentally end up in another individual’s account.

Before mailing in a paper tax return it is important to verify that the forms are all properly signed and dated. Although signing a tax return may sound simple enough it is something that a large number of taxpayers forget to do. The best way to avoid making a mistake when filling a tax return is to double check all personal information and mathematical calculations.

If you choose to file your taxes online with TaxEngine.com, we will double-check your figures for you and make sure you’re not making any of the most common tax filing mistakes.

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Tax credits are items that are often counted as a payment that has already been received on taxes due even though a taxpayer has not officially made a payment to the IRS. There are a lot of tax credits that an individual may be able to claim on their federal or state returns; however, many taxpayers are not even aware that they may be entitled to a tax credit.

One of the most common tax credits that a taxpayer is entitled to receive is a child tax credit. The child tax credit is for working parents who have a child, or children, that they may claim as a dependent. The majority of American parents will qualify for the child tax credit; however, if a parents makes too much money they may no longer be eligible to receive the child tax credit. According to the IRS married individuals who are filing together cannot make over $110,000, married individuals filing separately cannot make over $55,000, and a head of household cannot make more than $75,000 to claim the child tax credit.

The child and dependent care credit is a popular tax credit that many parents are actually unaware of or unfamiliar with. With the high cost of quality child care the child and dependant care credit is a source of relief for many parents. According to the IRS both parents must work and report an income for the child and dependent care credit to be received. It is also required that the child care is being claimed is for a child under the age of thirteen. The child and dependant care credit may also be applicable for any dependants, such as an older child or a spouse. This credit covers those who are physically or mentally unable to care for themselves. Taxpayers should have proper receipts or proof of payment for each time a payment was made to a child care or adult care worker.

The credit for the elderly or disabled is another tax credit that many elderly or disabled individuals may receive. According to the IRS an individual must be over the age of sixty-five or must be under the age of sixty-five and be permanently disabled to receive the credit for the elderly or disabled. Certain restrictions and requirements may apply for individuals who are seeking to receive the credit for the elderly or disabled.

Taxpayers with or without children may also be eligible to receive an education credit. Education credits are designed for individuals who have paid for themselves, their children, or their married partners to receive an education. The amount of credit will depend on a number of factors including tuition costs, admission fees, books, and school supplies.

In addition to the earned income tax credit, child and dependent care credit, education credit, and the credit for the elderly or disabled there are a number of other tax credits that some taxpayers may claim under certain circumstances. Learning about and fully understanding each tax credit may allow a taxpayer to receive additional money that can be used to reduce their amount of taxes owed or even increase the refund that they may be receiving.

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A large number of taxpayers choose to estimate their income taxes before filing the real thing. There are many reasons why a taxpayer may choose to estimate their taxes and there are number of benefits to doing it.

Estimating income taxes allows many taxpayers to get an idea whether they will be receiving a refund or if they will be required to pay money to the state or federal government. Many individuals or families who are suffering from a financial strain may be interested in learning about how much money they will be getting back in a tax refund. For taxpayers who may end up owing money on their taxes an income tax estimate allows them to prepare and possibly start saving money to pay the IRS. Since the majority of employers provide their employees with the required W-2 forms in January, most tax payers have all the information they need and more than enough time to estimate their income taxes.

The IRS has specific guidelines pertaining to who is required to file taxes. Individuals, heads of households, or couples who make less than the required amount of yearly income are not required to file a tax return; however, that does not necessarily mean that they shouldn’t. It is possible for an individual who is not required by law to file a tax return to receive a tax refund. Individuals who many not legally be required to file a tax return, but want to know if they may be eligible for a tax refund, should perform an income tax estimate. This estimate gives an individual insight to whether or not they should file a tax return.

There are a number of ways for an income tax estimate to be completed. As tax season nears many individuals choose to purchase a tax software program. These programs are often used to prepare and electronically file tax returns. The majority of tax software programs will have a section that allows tax payers to estimate their potential income taxes.

There is the old fashion way of estimating income taxes by filling out a rough draft on a tax form. This is a great way for individuals to know ahead of time if they will be getting a tax refund. A refund will often prompt most taxpayers to file their tax return right away.

Taxengine.com allows site visitors to estimate their income taxes online by answering a few simple questions regarding the previous tax year. An income tax estimate is free and allows you to determine the size of your tax return before you file your taxes online.

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Kindness is one of the most common personal traits that many Americans share. This feature is evident in the way that Americans help out the rest of the country or world through donations. Charitable contributions are most commonly given in the form of money; however, items such as clothing, food, and vehicles are also a thoughtful donation. In addition to being thoughtful and kind, making a charitable contribution is a way for many tax payers to receive a tax deduction for each donation made.

When in a time of need many Americans do not always consider whether or not their donation can be used as a tax deduction. Just because a taxpayer has donated clothing or money to a good cause does not necessarily mean that their charitable contribution will be tax deductible. Before a charitable contribution can be listed as a deducible on a tax return there are number of requirements that must first be met.

The IRS provides a list of charities whose donations are tax deducible. It is possible to still donate to a charitable organization that is not on the list provided by the IRS; however, tax benefits will not be received from it. A detailed list can be obtained at the federal or state levels. A few examples of common tax deductible charities include a church or religious group, a volunteer emergency response team, nonprofit cemeteries or and organization involving war veterans.

All charitable contributions need to be individually listed and itemized on a tax return. There is a specific form that needs to be filed for charitable contributions that do not include money. Clothing, vehicles, toys, and other important goods require this additional tax form. This tax form is known as Form 8283, Non-Cash Charitable Contributions, and it should be attached to the main tax form, the 1040 tax form.

Since all charitable contributions have to be itemized it is a good idea to make sure that receipts and or proof of donations are acquired when a donation is made. In some cases it’s required to have a receipt for their contributions. Some charities will not provide a receipt or proof of donation unless asked, so be sure to ask.

The amount of money that a tax payer will get back from making a charitable contribution depends on your income tax rate. There are certain restrictions limiting how much money or the materials donated can be claimed as a deduction on taxes. The limit is generally a percentage of your yearly adjusted gross income.

The number one reason why an individual makes a charitable contribution is to help out their neighbor, fellow American, or a family all the way around the world. By making charitable contributions tax deductible the American government makes it even easier for citizens to open up their wallets out of the kindness of their heart, and to enjoy the tax benefits of charitable donations.

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