Each year there are millions of Americans who prepare their own federal and state tax returns and even more individuals have their taxes professionally prepared. Whatever choice a taxpayer makes there are a number of important tax tips that everyone should know.

A W-2 or 1099MISC is needed to accurately prepare a federal or state income tax return. There is always a chance that a taxpayer may misplace these forms or for one reason or another the forms may not have reached them. For federal tax returns and most state tax returns a W-2 or a 1099MISC is required. Individuals who do not attach these items are likely to prevent their tax returns from being processed or cause a refund delay. The Internal Revenue Service (IRS) states that all taxpayer should receive their W-2 or 1099MISC forms before February 15th. Individuals who did not receive these items are encourage to contact their employer to determine why the forms have not arrived. Taxpayers who misplaced their W-2 or 1099MISC forms are encouraged to contact their employer right away to receive a copy. Taxpayers must do so because even if a wage or income form is missing a tax return is due on the traditional April 15th deadline or else late fees and penalties may be assessed.

Another one of the popular tax tips that taxpayers should know about is tax deductions. It is estimated that each year the American public loses millions of dollars from tax deductions that they were entitled to, but failed to claim. A professional tax preparer and a tax software program may prompt an individual to claim tax deductions that they qualify for. Individuals preparing their own paper taxes are more likely to miss tax deductions that they may claim. To prevent this from happening taxpayers are encouraged to research the most frequently overlooked tax deductions to determine which deductions they may qualify for.

Another one of the most common tax tips that taxpayers need to be aware of is what to do if they can’t pay the amount of taxes owed on federal or state tax returns. The biggest mistake that taxpayers make when realizing that they cannot pay the amount due on their taxes is to not file a tax return. Some people think that not filing a return will prevent a refund from being owed on time when in reality it can make the situation a lot worse. Taxpayers can file an extension deadline; however, the estimated amount of taxes owed is still due on the traditional tax deadline. The Internal Revenue Service (IRS) will impose a number of late fees and penalties on tax payments that were not received in time. Just ignoring the Internal Revenue Service (IRS) may increase the number of or the amount of penalties.

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One of the most important tax tips that a taxpayer needs to keep in mind is that the Internal Revenue Service (IRS) and many state governments change or update their tax laws each year. For this is reason taxpayers are encouraged to check out the website of the Internal Revenue Service (IRS) or the website of their state tax department to determine if any of the tax law changes need to be applied to their federal or state tax returns.

These helpful tax tips are just a few of the many tax tips that can help tax preparation flow more smoothly. The above mentioned tax tips will also help to reduce the amount of money that an individual owes on federal or state taxes or even potentially increase the amount of their refund. Why pay late fees or lose money on tax deductions that you deserve? Let these and other helpful tax tips assist you this tax season.

Tax savings through cost segregation is no longer out of reach for investors in small and medium size properties. With appraiser expertise, fees for analysis are often one-third to one-half lower than those charged by traditional preparers.

Several years ago a definitive court case ruled that tangible personal property included in an acquisition or in overall costs should be depreciated as personal property for asset recovery, using the old Investment Tax Credit principles to classify personal property.

This meant that owners of improved properties could distinguish between real property and personal property to depreciate component costs over varying useful lives. Basically, instead of depreciating an entire commercial property over 39 years, or residential roperty (single-family rentals or multifamily) over 27.5 years, certain components are correctly identified as depreciating in much less time. For about 135 items, useful life periods can be 5, 7 or 15 years. This is known as cost segregation.

The result of increasing depreciation is lower taxable income (which would have been taxed at 35%) and more income taxed at the capital gains rate (15%) when the property is sold. Furthermore, it works for any type of improved property.

Until recently, primarily large accounting firms or engineering firms implemented cost segregation studies, addressing large and newly built properties and sometimes outsourcing the analysis.

Prices for those analytical reports, usually in the $10,000 to $40,000 range, were out of reach for owners of small properties, especially those holding less-than-new assets. Unfortunately, those owners representing the largest segment of real estate investors in the country were mostly overlooked by previous providers of cost segregation services.

Now a revolutionary paradigm shift is opening the door to very significant savings for owners of small properties. Much of the change is based upon introducing the efficiencies of highly knowledgeable real estate appraisers who often apply industry-accepted cost estimation techniques before determining remaining asset life. By not “over-engineering” the staffing or production process, professional fees are lower. Yet, results can usually meet or exceed those of far more expensive reports. This approach has been successfully field-tested by IRS auditors.

Changes that appraisers are introducing to cost segregation analysis and reporting are addressing: 1) the size of the property being analyzed, 2) the age of the property, and 3) an affordable price point. O’Connor & Associates, a nationwide real estate service firm, is taking advantage of such techniques to effect these beneficial changes:

1. Owners of property with an improvement basis as low as $500,000 can benefit from cost segregation. This compares to the limited properties worth $5 to $10 million and above that previously benefited.

 

2. Existing properties built or purchased after 1986 offer significant savings in year-one of cost segregation, even without producing original cost documents. Capturing non-segregated depreciation from prior years is perfectly allowable by the IRS. This compares to firms previously applying the methodology only to new construction.

 

3. Fees are no longer prohibitive. To prepare an analysis and report for many small properties, prices are low enough to generate at least 3 times the report cost in the first year. This compares to the traditional fees ranging from $10,000 to $20,000 and up for comparable size properties.

   It is wise to keep the owner’s CPA or tax preparer abreast throughout the process. For older properties, the CPA may need to complete a Form 3115 to submit with the tax return so the owner can realize savings on items not previously depreciated - without filing an amended return.

 

Income producing properties worth as little as $500,000 can achieve a 3:1 payback ratio of tax savings over the modest price of a cost segregation report. If owned for 3 or more years, the typical payback ratio is 10:1.

In late 2005, O’Connor’s pipeline of cost segregation work was up more than 100%. As owners are preparing for 2005 federal tax filings, many are tapping into this opportunity to lower their federal taxes. Even general partners who are not paying federal income taxes should use this depreciation method since K-1s will reflect lower taxable income to benefit their limited partners.

The season is upon us, the time to pay our federal income tax is upon us. The government both state and federal has made it much easier to file our taxes on line. In the article below you be informed about the different methods of filing online.

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First, you can approach a professional tax agency to file your taxes on line. The down side to this is that it can end up costing you a great deal of money, that is not necessary for you to spend. It can cost you well over $200 dollars.

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Next, you can file your taxes yourself. You can choose from a wide variety of tax preparation software to help you file your taxes. Using the software almost guarantees that you will not make any mistakes. Turbo Tax is among the most popular tax preparation programs. Anyone belonging to any tax group can use this prograam. There also programs designed for the self-employed.

In addition, to these methods you can avail yourself of one of the many tax-filing websites that are out there. These websites are both authentic and reliable. The sight run by the IRS is among the most popular. It gives you all the tools you need, even providing you with a calculator. The Turbo Tax website is also a very popular one. It permits users to purchase programs that require to file federal taxes online. Tax ACT is another popular website.

Lastly, there is no need to worry about filing your federal income tax online. I am here to tell you it is safe to file federal taxes on line with the help of tax preparation software. So don’t worry and start saving money.