Imagine this scenario: Its tax time and you are getting really anxious to get your tax return out the door and claim that tax refund that is waiting for you. But lo and behold you still havent received your W2 from your employer. You probably have a refund coming to you and without your W2 you can’t start preparing your tax return ?
There are several reasons for the delay in getting your W2 - postal delays, you moved recently and did not update your mailing address with your employer, company went out of business etc. etc.
- Employers are required to mail out the W2s for their employees by Jan 31st.
- Here are a few tips you can use if you did not receive your W2 after the second week in February :
- First call the employer and ask them to send you a replacement W2. If the employer does not respond, or if the employer has shut down you can contact the IRS.
- Call the IRS at 1-800-829-1040. The IRS will contact the employer on your behalf and request the missing form.
- IRS will also send you a Form 4852 (PDF), Substitute for Form W-2 or Form 1099-R.
- You can also estimate your W2 based on paychecks and you can report this as ‘income not reported on a W2′. Usually the last paycheck of the year has Year to date (YTD) information eg. YTD Gross, YTD Federal tax etc.
Get a Preview of Your Tax Refund Use an Online Tax Refund Calculator
W2 Not received
For 2013, several new payroll tax changes go into place. It is likely that most middle class people will see a slight decrease in their paychecks. Hence, it is more important that you review and adjust your W4 exemptions for 2013. If you have tax money refunded to you by the IRS or if you owe large sums to the IRS you may want to change your W4 exemptions for next year (2013).
When you increase your W4 exemptions, less taxes are withheld from your paycheck and you get more on your net pay. Similarly, if you decrease your W4 exemptions, more taxes are witheld from your paycheck and your net pay is reduced.
So lets say you are married, you are claiming 2 exemptions, one for yourself and another one for your spouse. Now lets say, you had a large mortgage and you pay a lot in interest, you may want to increase your exemptions to more than 2. This will increase your take home pay so that will lessen the burden of paying the mortgage every month.
Per the W4 Publication : ”Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Consider completing a new Form W-4 each year and when your personal or financial situation changes”
How can you calculate your exemptions ?
There are online W4 calculators available that you can use to calculate the exemptions, this takes some of the pain away from using paper forms. Once you figure out the number of exemptions ideal for your situation, you should submit the exemptions to your employer. Contact the payroll or HR department at your place of work on where to submit the W4.
Here is an excellent W4 Exemption Calculator from Turbotax.
Does changing the exemption reduce or increase your overall taxes ?
NO. Changing the exemptions only impacts your take home pay. Your net taxes are not impacted. You will owe the same amount in taxes to the IRS whether or not you increase or decrease your exemptions. Only your net take home pay is impacted.
Is there a negative impact to changing your exemptions ?
If you increase your exemptions ( without corresponding deductions on your tax return), you could end up owing taxes to the IRS. This is not good. Uncle Sam likes refunding money to you, they usually do not like being owed money. Its a one way street folks. The best way is to calculate w4 exemptions that is ideally suited for you.
How do you change the exemptions for next year ?
You can ask your employer for the W4 form or you can download one from the IRS website. Then you can fill in the number of exemptions you calculated from the previous step. Also, the W4 form has a worksheet attached with it, which you can use to manually calculate the exemptions. can use to determine the exemptions.
When you are getting ready to prepare and file your return, its a good idea to get organized. Otherwise you will be making frequent trips to your tax preparer. Even if you are doing the taxes yourself using online tax software, it helps a great deal to do your homework.
Here’s a checklist to help in tax preparation. Pick those categories that apply to you and get the information available organized to save time when preparing your income tax return. Print a report of your financial transactions for the tax year if you maintain your data in a personal finance software program. TIP: If you don’t have a personal finance software, you can use a free online finance manager like Mint.com. This will help as you gather all the information needed.
Your Personal Information
- Your personal information like social security numbers - yours, your spouse’s and dependents.
- Copy of the IRS notice announcing the amount of your advance child tax credit payment and amount you received.
- Child care costs with checks, invoices, provider name and provider’s tax ID and SSN
- Education Costs: tuition receipts for post high school education, Form 1098-T.
- Any adoption costs including legal fees, transportation and any other costs. Also SSN or ID number of adopted child/children.
Your Income Tax Information
Income from jobs :Forms W-2 for all employers for whom you and your spouse worked during the year . If you worked in multiple states, you might get additional W2 copies containing the state tax witheld.
- Investment income : Form 1099-INT, Form 1099-DIV, Form 1099-B, confirmation slips or brokers’ statements for all stocks, etc., that you sold in the tax year, Schedule(s) K-1 (Form 1065), Schedule(s) K-1 (Form 1120S), income from foreign investments, Income from stock option exercises and sales with Form 1099-B for proceeds from stock sales
- Local and state tax refunds, Form 1099-G.
- Statements for alimony received.
- Business or Farming Income : Books/accounting records for your business, or Invoices, Bank statements, Cancelled checks for expenses, Payroll records along with Invoices for purchases of machinery, equipment, furniture, Logs or records listing vehicle mileage and Inventory records if any.
- For home business : Square footage of home office area and home, rent paid if rented, Form 1098 for Mortgage interest, property tax payments, Home owners insurance payments, invoices for repairs and maintenance on house.
- Form 1099-R for payments from IRAs or retirement plans, Deposit receipts and contribution records to IRAs, the most-recently filed Form 8606.
- Rental property income : Form 1099-MISC or other records for rental income, Form 1098, Property tax payments, prior years record of suspended rental losses, any other expenses.
- Form 1099-G or unemployment check stubs and deposit records
- Form SSA-1099
- Income from sales of property. Bill of sale, escrow statement, closing statement or other records. Invoices receipts etc to show cost of the sold property. Invoices etc for improvements made to the property
- Miscellaneous incomes like jury duty pay records, Form(s) W-2G, receipts for all gambling purchases, Form 1099-MISC, Form 1099-MSA, Scholarship records, director’s fees receipts for money received for serving on a corporate board of directors.
Your Itemized Tax Deductions
- Form 1098, or your mortgage statement.
- Form 1098 if you purchased a home in previous tax year, and prior tax return if you refinanced in prior year and are deducting points on that loan over its life,
- Investment interest expense: Brokers’ statements showing any margin interest paid and loan statements for loans taken out to purchase investments
- Losses due to theft etc. with description of property and insurance reports showing reimbursement or any cancelled checks showing value of property.
- Charitable donations: bills receipts or cancelled checks for cash donations, mileage records for charitable purposes, receipts from charitable agency with estimated value in the case of property donations, prior years’ tax returns for any unused charitable contributions.
- All work related expenses : Reimbursement check stubs or reports from employer, union dues, receipts bills or invoices for supplies, gifts to clients, any uniforms or special clothing, seminars attended, professional publications and books. Travel information including invoices receipts etc for transportation, lodging, restaurants, parking etc. Any job search expenses and job related educational expenses.
- Misc. deductions like Tax preparation fees, cost of income tax return preparation software and books, Safe deposit box rental fees from bank. IRA custodial fees, investment advice costs.
- Last year’s state income tax return, Forms W-2 and any cancelled checks for state estimates you’ve paid.
- Medical and dental expenses including Form SSA-1099, year-end pay stub for premiums paid through your after tax wages Mileage records for trips to the doctor, clinics, etc.
- Real estate tax collector bills or cancelled checks and Form 1098 or closing statement if you bought, sold, or refinanced property in the tax year.
- Any tax bills or cancelled checks for personal property tax like automobiles etc.
- Employee SSN and wages paid during tax year to any household employees.
- Records showing any estimated tax payments or overpayments for prior years.
- If you want your refund to be deposited into your bank account you need the Routing number and Bank account number.
- Any foreign bank account information with name, location account number and account value.
TIP: If you use an online tax preparation software like Turbo Tax’s Deduction finder can find most of the deductions you are eligible for.
- Invoices etc. for moving expenses if any. Also include paycheck stub for any moving expense reimbursed.
- Insurance premium bills, or cancelled checks for self-employed health insurance.
- Year-end account summary, or cancelled checks for, SEP, SIMPLE, Keogh and Other Self-employed Pension Plans
- Cancelled checks for alimony paid.
- Cancelled checks for classroom supplies etc if you’re an educator.
- End of year account summary or bank statements for IRA contributions
- Form 1098-E showing interest paid, or Loan statements for Student Loans.
- Account statements for medical savings account contributions.
TIP: You can estimate your taxes before you go through the details of preparing your tax return by using a tax refund preview tool like this Online Tax Refund Calculator.
Lots of people take advantage of FREE preparation and efiling of their Federal taxes. The irs website is a popular choice but some people also like to use Turbotax or HRBlock which also offer Free federal filing. This is great. Because you get to use a state of the art website for preparing your Federal tax return for free. Given the in depth help files and walkthroughs available at these commercial sites, its a little wonder that people love this.
Although these commercial sites do not charge for a simple Federal Return, they will charge for preparing your state tax return.
If you live in a state where you need to file a state tax return, first check here if the state revenue website offers free filing. Some of them do, but most of them do not. If your state does not offer free filing, the next logical step is to find somewhere else where you can do it for relatively cheap.
Here is one of the best websites for doing only you state tax return relatively cheap
Filing Your Prior Year Taxes
- If you are late on filing your taxes, or haven’t filed your prior year taxes, you are not alone.
- Thousands of people neglect to file tax returns in time. If you have not filed for the past few years ie. 2007, 2008 or 2009 taxes, you will still be able to file your prior year returns this year.
- The IRS allows you to file your prior year taxes providing your taxes are current through 2010.
- For example- If you didn’t file your tax return for income earned in 2008. The original deadline for that was April 15th, 2009. To be eligible for a refund you must file your 2008 tax return by April 15th, 2011.
To file a prior year tax return you would need to find the prior years tax forms. Unfortunately this is not very easy to find, even on the irs site. However there is some relief. A few tax websites are now offering preparation of prior year taxes online!
Preparing Your Prior Year Taxes Online
- Filing your prior year taxes online is easy. You do not need to locate prior year tax forms or go to a tax preparer and pay hundreds of dollars.
- Secondly, when you file your prior year taxes online, you get an immediate confirmation from the IRS.
- You can file your back taxes from past years with minimal effort using online tax sites. In fact there are only a couple of tax websites which can do your prior year taxes online.
Its tax time. Some states allow free filing on their websites. Following is a link to each of the states Revenue websites.
- Alabama - Department of Revenue
- Alaska - Department of Revenue
- Arizona - Department of Revenue
- Arkansas - Department of Finance and Admin
- California - Franchise Tax Board
- Colorado - Department of Revenue
- Connecticut - Department of Revenue Services
- Delaware - Division of Revenue
- Florida - Department of Revenue
- Georgia - Department of Revenue
- Hawaii - Department of Taxation
- Idaho - State Tax Commision
- Illinois - Revenue
- Indiana - Department of Revenue
- Iowa - Department of Revenue
- Kansas - Department of Revenue
- Kentucky - Department of Revenue
- Louisiana - Department of Revenue
- Maine - Revenue Services
- Maryland - Comptroller
- Massachusetts - Department of Revenue
- Michigan -Department of Treasury
- Minnesota - Revenue
- Mississippi - State Tax Commission
- Missouri - Department of Revenue
- Montana - Department of Revenue
- Nebraska - Department of Revenue
- Nevada - Department of Taxation
- New Hampshire - Department of Revenue Administration
- New Jersey - Division of Taxation
- New Mexico - Taxation and Revenue
- New York - Department of Taxation & Finance
- North Carolina - Department of Revenue
- North Dakota - Department of Revenue
- Ohio - Department of Taxation
- Oklahoma - Tax Commission
- Oregon - Department of Revenue
- Pennsylvania - Department of Revenue
- Puerto Rico - Departmento De Hacienda (spanish)
- Rhode Island - Division of Taxation
- South Carolina - Department of Revenue
- South Dakota - Department of Revenue and Regulation
- Tennessee - Department of Revenue
- Texas - Comptroller of Public Acccounts
- Utah - State Tax Commission
- Vermont - Department of Taxes
- Virginia - Department of Taxation
- Washington - Department of Revenue
- Washington, D.C. - Office of the CFO
- West Virginia - Department of Revenue
- Wisconsin - Department of Revenue
- Wyoming - Department of Revenue
If you are claiming the first time homebuyers credit on your 2009 tax return, IRS wants you to print and mail your tax return. You should not e-file your return.
If you are using any of the tax software make sure you complete your return and then remember to print and mail the tax return.
Most people assume that car donation and charity giving are tools the rich alone are able to use to ease their tax burden. This couldn’t be further from the truth! Anyone can file a tax return with itemized deductions if they bother taking the time and effort to do so. Though you are responsible for gathering receipts that back up your deduction claims, car donation for charity is now set up in such a way to make claiming the correct amount in deduction easier than ever.
In the case of car donation, charity organizations have been reliant upon donated items for a long time, though hardly as a large part of their overall donation dollars. In fact, a report issued by the General Accounting Office (GAO) in 2003, when levels of charitable giving was at its highest in terms of car donation, charity coffers were still little affected by the input of donated vehicles. As little as six percent of the ?typical? charity was represented by car donation.
The self-employed are in an especially good position to take itemized deductions of monies turned back into the business as well as legitimate car donations. A charity that is sanctioned by the IRS and has a legitimate non-profit tax ID number should be more than able to provide you with the forms you need to make your deduction with the same confidence as any other type of deduction you save a receipt for.
Of course, individual returns are far more likely to claim the standardized deduction, making car donation to charity impossible to claim. However, filing itemized deductions can actually benefit most taxpayers providing they take the extra time to write them all down. Indeed, it is common for someone who had previously taken a standardized deduction to find their tax burden to be somewhat to significantly decreased as a result of this extra effort ? as much as 30 or 40% in some cases.
With the extra money available for donation that can come from car donation, charity giving can be very useful for bringing one’s income down below the level where they might put you into a higher tax bracket. Near the end of the year there is often an increase in auto donation by those who are nearing a higher bracket they wish to avoid. This can save you quite a bit when done correctly.
Generally it is a good idea to not count on your car netting the sort of value at sale that you might imagine it would, given the Kelly Blue Book value listed. According to current IRS guidelines, car donation to charity that nets over $250 must be accompanied by a receipt that clearly outlines how much value the car actually was able to get (usually when sold on the wholesale or scrap markets) for the charitable organization in question.
Another potentially lucrative use of car donation to charity is using the donation amount as a deduction compared with the expense of fixing up the car yourself for sale later. Though this can actually save some people more money, one is liable for the capital gains of a vehicle that has appreciated since you took ownership at least one year previously. In the case of collectible cars that have already been fixed up, this can represent a real hit. Knowing what cars to donate and which ones to keep a hold of for investment purposes is highly volatile and subject to the other income specifics of such a donor.
It is always a good idea to talk to a CPA, especially if you already have the services of one retained for your regular tax preparation advice. If you own a business, this is especially true. Even the same car donation to charity can vary greatly in its value to an individual’s return.
While American People can be divided on lots of different issues;there’s one thing most people in this country can agree on.We all hate paying taxes.
Even, our founding fathers hated taxes. That’s why the tax code requires us to pay what we owe but makes it clear that we have the right to take any legal measure available to us to reduce what that amount is and that has been upheld in the highest court in the land.
The key part of this is “legal measures”. However, there are lots of scams out there that if you participate in could land you in jail, even if you didn’t know they were illegal. So it’s important to be able to spot a scam when you see it. It’s also a good idea to have your own tax advisor give whatever idea you’re planning the once-over just to be on the safe side.
The best way to tell if looking at a legitimate tax reducing measure or a scam is to ask yourself, “What does the government get out of this?” You see the IRS, is never going to simply give a tax break that takes money out of their coffers, or reduces the amount coming in, to the benefit of individual taxpayers without some gain being made for the government.
For example, there are all kinds of deductions for real estate, both for homeowners and for investors. Why, because the government benefits, it means they don’t have to provide those homes. There are also many deductions for business. Why, again, because the government benefits from the jobs those businesses provide.
Sometimes the government benefit is a little less obvious and you really have to think about it, for example, the Traditional & Roth IRA, you get to save money that is either tax deferred or tax free. Plus with the Roth you can take the money out without any penalty or income tax after 5 years and you can take your own contributions out any time. Now why is that, what’s the benefit?
If you have money saving up without being taxed, it grows faster and you have more money to retire on, meaning you are less dependent on the government to support you. Plus, in a tax deferred situation, when you start drawing the money out to live on, you then pay income tax on it just like you did when you were working, so the IRS gets tax money coming from you for an extended period of time. Definite benefit, definitely.
The Roth IRA, and my preference if you can qualify, does not require you to pay income tax when you withdraw the money because the tax is not deferred. You paid the taxes when you originally received the money and before you deposited it. So the government still gets the benefit of you being less reliant on them, plus they get their money up front. The reason that you can withdraw it without penalty is to encourage you to take it out and use it.Why, because even though you don’t pay income tax, when you spend it you’ll have to pay sales and other taxes. Again benefit.
Here are some tax reductions techniques I’ve seen, that are definite scams. Social Security Refunds: Get a refund on the money you’ve been forced to pay social security. Just pay the fee and an upfront percentage of the refund to have the claim processed. Not only is there no government benefit here, it would bankrupt an already shaky system.
Slave Reparations: If you are a descent of slaves, you can pay a fee to have a reparations claim prepared for you. Filing this claim just gets you into trouble with the IRS because there’s no authority for it anywhere. While you may or may not consider it just that the US make amends to the descents of slaves through reparations, there is no benefit to the government to make that happen.
Layered Trusts this is a scheme this is promoted based on it being used by the rich and famous. People who are really rich and have held their wealth for generations, hire highly skilled legal and financial advisors to analysis the tax codes and the business and estate laws to shape the best plans for their circumstances. Unless you’re in that position setting up layered trusts to avoid taxes will probably spell disaster for you.
This doesn’t mean you should avoid all trusts. The use of a Living Trust to avoid probate and make it easier to transfer assets and land trusts for both protection and privacy when dealing with your property holdings are both highly recommended and very useful tools for managing your affairs. However, neither of these are tax reduction tools.
Opt Out of Taxpayer Status: There are still books, articles and websites that claim that paying taxes are voluntary because Congress does not have the authority under the Constitution to collect taxes. Meaning paying income taxes is just voluntary. So to stop paying taxes, you can, for a fee, just opt out. Following this method is a definite “Go to jail, Go directly to jail. Do not pass go and do not collect $200″ kind of move.
Avoid Employment Tax Withholding: If you work a regular job and your boss does not collect federal and state withholding & employment taxes, you should either pay them yourself through estimated withholding (like you were self-employed), or find another job. If you are the boss, this is another “Go Directly to Jail” move. You’re messing with one of the benefits the government receives by giving businesses all those tax deductions.
Here what all of these scams have in common, no benefit to the government, either directly or indirectly. If you are being told about a tax shelter or deduction, that provides no benefits to the government, chances are it’s not real. For help with finding out how to get all the legitimate tax deductions you’re entitled to and pay the absolute minimum.
When you rent your property, the income that you get from it is subject to taxation, just like any other income. However, you don’t have to worry about paying high taxes on rental income because you can reduce your taxes in so many different ways. Let’s take a look at how to do this.
Expenses Incurred In Seeking Tenants
The money spent in putting out advertisements to rent your property or hiring an agent can all be put down as expenses on renting property for which you can get tax deductions.
Expenses Incurred When Traveling
All travel expenses for purposes of seeing your tenant, getting tenants, finding agents for help in renting, for looking into property maintenance, getting repairs done and so on are subject to tax deductions. These are all expenses that you have incurred for getting rental income from your property, property upkeep and letting out property and you can use them for cutting down tax expenses.
Expenses on Loan Repayments
When you take a loan to buy property, you would be spending a considerable amount of money in repaying the loan. You would be paying a monthly installment payment for the loan and an interest amount. You might also be incurring expenses in the form of mortgage insurance premiums. Such expenses can be used for tax deductions.
Expenses on Maintaining Rental Property
You have to spend money in property maintenance and you can use the same to get deductions. Let’s take a look at what kind of maintenance expenses you can incur in maintaining your property.
In time with wear and tear, you would have to do repairs to fix problems in your various home areas, such as the kitchen or bathroom and so on. All expenses incurred in the year of paying taxes can be used for deductions. However, you can take this option provided your tenant did not pay for it.
In addition to repairs you would also be spending money on matters such as having property cleaned, whitewashing, exterior improvement, property management fee, garden and landscaping and so on. These can also be specified for deductions.
Property is subject to depreciation every year, but you can use this for tax deduction. In such situations you must specify the deprecated amount when filing your tax papers. Deprecation is one factor on which you are not spending any money in the form of an expense to get deductions.
Any enhancements that you have made to your property are also subject to depreciation and hence can be used for tax deductions as well.
Turn Losses into Gains
You can enjoy tax benefit even on losses that you incur on your property. As a result, your losses can be converted into gains. For example, in case your property is damaged by flood, fire, or any other natural calamity or even theft, you can specify such losses for tax deductions.
As you can see there are so many different ways in which you can reduce tax expenses on rental properties. Make yourself aware of them so that you can reduce your tax payments considerably.
Look into Avondale Homes. You can also consider Buckeye Properties