Don’t File Your Taxes Yet If You Gave to Chile

With the recent Chile Earthquake on the minds of millions of Americans, the US House of Representatives is looking to add a Chile donation special tax deduction similar to the one in place for Haiti relief efforts. If the measure is approved, charitable donations sent to help Chile victims of the earthquake will be deductable on taxpayer’s 2009 tax returns although the donations are actually being made in 2010. Donations would need to be made before April 15th, the tax filing deadline.

The US House of Representative bill was passed without any opposition with the bill now on its way to the Senate for approval. An additional measure in the bill allows for Haitian donations to be made up until April 15th, an extension of over a month. So holding off until the bill passes will be helpful for those looking to make such donations.

If you have already filed your 2009 taxes but do not want to wait until next year to claim your charitable donations, amending your return by filing a 1040X will provide you the deduction this calendar year.

Ad: Cleanse Away Extra Pounds with ColoThin!

Related Posts:

• No Related Posts

Claiming the Child Tax Credit for 2009

The Child Tax Credit is an important and beneficial tax credit that you should file for whenever you are eligible. You can receive a tax credit for up to $1,000 for every child that qualifies. Children must be under the age of 17 in addition to other stipulations.

The qualifications for a child include age, relationship, support, dependent, citizen, and residence. The first test we have already mentioned, the child has to be younger than 17 when the tax season ends. To pass the relationship test, the child has to be your child, your step-child, your sibling, your step-sibling, adopted, a foster child or a child of one of these.

You have to claim the individual as your dependent when you file and they must be financially dependent upon you. US citizens, nationals, and resident aliens are the only groups to pass the citizenship test to claim the Child Tax Credit. And they must live with for the majority of the year.

Like many tax credits, this one phases out for income earners. The phase-out begins at $110,000 adjusted gross income when filing jointly with your spouse and $55,000 when filing separately. Other filing statuses phase out beginning at $75,000. Finally, if you are eligible for more tax credit than you have paid in, file for the Additional Child Tax Credit.

Ad: eBay Auction Selling Made Easy

Related Posts:

• Five Tax Credits You Should Claim
• Pay For College With Tax Credits

Debt Forgiveness and Mortgages

If you had all or part of a mortgage forgiven during the last three tax years, you may be able to avoid paying taxes on the forgiven mortgage debt. A law passed in 2007 called the Mortgage Forgiveness Debt Relief Act allows otherwise taxable mortgage forgiveness to be tax free up to $2 million dollars.

Now if you file separately from your spouse, you can only claim half of the limit yourself. But joint filers can take the full $2 million. Restructure of mortgage debt is one case where you might need this tax benefit in addition to debt that was eliminated through a foreclosure. One exception is debt consolidated from other sources that was originally used for other purposes unrelated to your home.

File IRS Form 982 with your tax return to claim the debt forgiveness. The debt forgiveness is for primary residences only as the Form 982 describes. To find the amounts of debt that was forgiven for the tax year, look for a 1099-C from the mortgage holder. This tax form will provide the total amount information that you need.

Ad: Search the National Sex Registry

Related Posts:

• No Related Posts

Five Tax Credits You Should Claim

If you are eligible for these five tax credits, you should claim them this year on your tax return. These credits will reduce the tax your owe directly and some can be refunded to you if you owe no taxes at all.

The Earned Income Tax Credit (EITC) is for lower income earners and considers the number of children that you have when calculating the tax credit. The tax credit is refundable and can give some low income workers up to $6,000 in refundable taxes well beyond what they have paid into the tax system for the year.

The Child and Dependent Care Tax Credit provides up to $3,000 in credit for expenses you paid for a dependent child’s care during the tax year or for a dependent disable spouses care. The credit is designed to allow the taxpayer to work while their loved one is being cared for.

The Child Tax Credit is available for each dependent child a tax payer has and reduces their taxes owed by $1,000.

The Retirement Savings Contributions Credit or the Saver’s Credit helps lower income employees save for retirement. If your income level qualifies you can receive this additional tax credit for contributions you have made to IRAs and 401Ks at work.

The Health Coverage Tax Credit helps to pay for health insurance premiums. The tax credit can pay up to 80% of your premiums. Complete IRS Form 8885 to claim this great credit.

Also take a look at the First Time Homebuyers Credit.

Related Posts:

• ARRA Provides Tax Benefits to Consumers
• Claiming the Child Tax Credit for 2009
• The Advantages and Disadvantages of Tax Preparation Software
• Selecting an appropriate Tax Return Form
• Discover the #1 Way to Reduce Your Taxes

Places to Find Free Tax Help

In addition to coming to 2008Taxes.org everyday, there are a number of government sponsored ways to get free tax help while preparing your tax return for 2009. The first place to look is IRS.gov. Not only is this the number one resource for tax information online but they also offer free tax preparation and free e-filing for tax payers in certain categories. And anyone that has filed a tax return can check the status of their return on the site.

If you prefer the telephone over visiting a website, call the IRS at 1-800-829-1040. You can ask questions, order forms, order past return information, and get instructional material. There are other numbers associated with the IRS also, for instance 1-800-829-3676 has pre-recorded instructions on many tax preparation steps. TTY/TDD access is available at 1-800-829-4059.

Finally, the IRS has established Tax Assistance Offices. Find a location near you and what their office hours are at IRS.gov.

Ad: Cleanse away extra pounds with ColoThin.

Related Posts:

• Capital Gains and What to Report to the IRS
• The Advantages and Disadvantages of Tax Preparation Software
• How to Find Your Tax Assistance?
• TaxSimple – Online Tax Preparation Software

Check the Status of your Tax Return

Once you have filed your tax return you are sure to want to know its status and when your tax refund will be arriving. The IRS provides a couple of different options for you to determine when your return has been received and when your refund will be arriving. Start today at IRS.gov.

The IRS website has a ‘Where’s my Refund?’ option which provides the information you are seeking. You need to provide three pieces of information to obtain the status of your return. Provide your Social Security Number, your Filing Status, and the dollar amount of your refund. The service is in Spanish in addition to English and is completely secure.

If you e-filed your return, the IRS will have your refund status within 3 days of you filing your return. If you mailed in a copy of your return, you will need to wait 3 or 4 weeks to begin checking the status of your return.

The online service will provide for you acknowledgement of receipt of your return, the mail date or direct deposit date, and information related to your refund being returned if the mailing address you provided was incorrect. There are also some specialized notifications based upon your individual status.

Visually impaired taxpayers will have no problem using the online service as there are a number of accessibility features. There is also a toll free number if you would rather use your phone to track your return. Call the IRS at 1-800-829-1954 or 1-800-829-447 for the TeleTax System. Refunds are often sent on Fridays which might cause variations in the amount of time needed for you to receive your return.

Start your Free Tax Return today with Turbo Tax Online.

Related Posts:

• 5 Things about Identity Theft and Tax Returns
• You Bought a House, Claim the First-Time Homebuyers Credit
• Free Federal Tax Filing from the Biggest Name in Online Preparation
• Four Errors Made Often on Tax Returns
• TaxAct is the Completely Free Federal Option

You Bought a House, Claim the First-Time Homebuyers Credit

There are a number of documentation requirements when you go to file your return for 2009 and you want to claim the First-Time Homebuyers Credit. This great credit of $8,000 helps with fixing up the new house or paying off some moving expenses. But claiming the credit requires a number of documents and filing a paper return with the IRS.

The first statement you will need to attach to your 1040 paper tax return is a HUD-1 Settlement Statement. You will get a copy of this form when you close on your new house. Make a copy of the legal sized page for your credit. Make sure that signatures are included on the Settlement Statement. If your settlement statement does not have your signature, sign the bottom of the form before you mail it in.

If you purchased a mobile home instead of a traditional home, you did not receive a Settlement Statement. Attach a Retail Sales Contract with your tax return to get the credit. And some new homes also do not close with a Settlement Statement. In this instance a Certificate of Occupancy is needed.

The other group able to claim a home buying credit are long-term purchasers. When you have lived in a house for over 5 years and purchase a new home prior to April 30th, you can claim a $6,500 credit. To claim this credit, the IRS wants you to attach five years of 1098 Mortgage Interest Statements to prove your long-term ownership.

Start your Free Tax Return today with Turbo Tax Online.

Related Posts:

• Top Five IRS Tax Tips for January 2009
• EasyTaxReturns.com Offers Free eFiling
• TaxSimple – Online Tax Preparation Software
• 5 Things about Identity Theft and Tax Returns
• File an Extension in Minutes

Capital Gains and What to Report to the IRS

Capital Gains and Losses are the result of holding capital assets for investment or for personal use. Capital Assets held for investment result in a capital gain or loss when sold compared to their basis, or what you purchase the asset for. Capital Assets held for personal use can only create a capital gain. All capital gains must be reported to the IRS.

Long term capital gains are better as their tax rate is generally lower than short term capital gains. The classification of a capital gain or loss is determined by a period of one year. Long term capital gains can be offset by long term capital losses, resulting in no taxes being owed or up to a $3,000 reduction in other outstanding tax. The tax rate for most long term capital gains is 15% with some exceptions resulting in 25% or 28%. See IRS Publication 17 for additional information.

Capital losses can be carried forward to future years to offset new capital gains when they exceed the $3,000 limit for the current year. The limit is only $1,500 if you file separately from your spouse. Finally, report capital gains and losses on Schedule D and then transfer the bottom line to your 1040 long form on line 13.

File Your Tax Return For Free!

Related Posts:

• TaxSimple – Online Tax Preparation Software
• Places to Find Free Tax Help
• You Bought a House, Claim the First-Time Homebuyers Credit
• The Advantages and Disadvantages of Tax Preparation Software
• Selecting an appropriate Tax Return Form

You Won the Lottery, Avoid Paying Taxes

The IRS has come out with a list of helpful tax tips about your lottery and gambling winnings. Although all gambling winnings are taxable, you can avoid paying taxes on your winnings if you can document gambling losses of the same amount.

Winnings from lotteries, raffles, races, and casinos including prize items are all taxable, that is the bad news. Sometimes the establishment with which you won the wager will automatically deduct taxes and provide you with a W-2G to file with your taxes. Report all your winnings for the year on line 21 of the 1040. Filing the 1040 long form is required when you have gambling winnings.

File a Schedule A also, where you itemize the losses you have also had. Keep documents from the events with which you lost money and total the amounts wagered on line 28 of the form. You can make all your winnings tax free if you have enough losses to offset them. None-the-less you can reduce the tax expense with the losses you do have.

Check the Status of Your Tax Return Now!

Related Posts:

• Ten Tips To Deducting Charitable Gifts
• EasyTaxReturns.com Offers Free eFiling

The Advantages and Disadvantages of Tax Preparation Software

It is often said that the medium is the message. This reminds us of Franklin D Roosevelt and his famous ‘fireside chats’ with the country. In an era where the television set did not exist, the radio was a great device that enabled conversation with the Americans. Through the radio, he could send his assurance to the American citizens’ homes and become one of them. A radio chat was definitely more effective and much more intimate than other mediums, like say, a grandstanding speech. It is certain that the medium, in this case, was the message itself.

In the 21^st century, we are faced with something that is as real and a mandatory part of our lives: tax preparation, or, rather, tax preparation software. It is unfortunate that this particular medium appears to be giving out mixed messages, even if vendors and software programmers would have us believe that tax preparation can be carried out fast and without errors, and that all it takes to produce a tax return which would be considered impeccable by the IRS is a single ‘click’.

If it is that simple, why does it give off mixed messages? Tax preparation software has always been criticized on the grounds of having a “one-size-fits-all” approach. The critics of tax preparation software, especially businessmen, are doubtful as to the possibility of squeezing in an overwhelming number of codes and regulations into an interview lasting half an hour. Waving aside the tall claims made by software programmers, the critics of tax software opine that tax software is capable of incorporating only the most general set of credits and deductions, consequently making the taxpayer the loser. The critics maintain firmly that the sins of omission and the unasked questions work in favor of the IRS and in extreme disfavor of the taxpayer using the tax software.

Let us take a moment to ponder over this situation. A séance is being held by a medium. The medium is striving to establish connection between you and the other side, when the other side is equally willing to connect with you. The medium is most likely to ask leading questions; she would read between the lines and make general comments which would apply to almost anybody; however, those taking part in the séance would interpret the comments as unique ones applying exclusively to themselves and their lives. An ally of the medium would vouch for the idea that the séance is sure to bring in some wonderful news from the other side, thus boosting the credibility of the séance and the medium.

The way critics look upon the working of the tax software is much the same as the way a charlatan operates in a séance. These programs are designed with all kinds of businesses in mind, though the same tax deductions questions are asked for all of them, with some amount of modifications, in each case.

Being asked to specify the nature of your business before the commencement of the interview process might make you feel you are unique. However, although the software vendors would have you believe that purchase of their top-notch programs would give you access to all credits and deductions, this is hardly the truth.

The critics firmly maintain that if you believe what the software vendors want you to, you would only believe that you are getting good news with respect to credits and deductions. However, similar to the charlatan medium and its self-fulfilling prophecy, you would obtain what you seek. You need to think differently and hire the services of a professional who is qualified to understand things clearly and prevent you from overpaying your taxes. So a critic of tax preparation software would invariably react to the software as follows: ‘Let me contact my accountant’.

Several critics of tax software believe that all software related to tax preparation is better avoided. They believe that if you depend on the tax software, you end up losing thousands of dollars. However, on the other hand, an active investor, the owner of a business and possessing a considerable portfolio of stocks, might not agree. A number of very efficient programs, internet and computer based, are available, which are capable of handling multiple entries with ease. You wouldn’t need to hire the services of an accountant to file your returns, except in the cases of exceptional situations, for example, unique tax circumstances. These investors consider the tax preparation software to be good, rather, something that has the best intentions but has some way to go before it can quite be there.

If you are one of those taxpayers who file straightforward tax returns, and probably receive dividends from W-2s from your workplace and mutual funds, you could resort to tax preparation software in order to calculate your returns fast and in an error free way. The software would calculate your returns and you would be notified of problems, if any. Capable tax software would help you e-file a federal and state return for as little a cost as less than $16. You can unhesitatingly tick the box beside a unique individual who is outside of any unique tax circumstances.

However, things need not necessarily be so smooth and nice, if the tax preparation software you are using does not provide user friendly, detailed guidance for the beginner or inexperienced taxpayer. The guidance that the tax software provides should ideally be free of jargons, and the right kind of program would come with the necessary tools and capabilities, helping the user to complete the tax return filing process accurately. Ideal tax software would have user friendly drop-down menus, coupled with a fast and easily accessible online service. The best of the tax software should be equipped with a combination of user friendly customer service and beneficial tax tips and advice.

It is unfortunate that it might prove to be a self-defeating exercise to use the free of cost unsuitable tax preparation software available in the market, as some of them are meant for people who file comparatively simpler tax returns of gross incomes of $34,000 or less. Some are slow and not so easy to use, while some again, are, including both interview-style and forms based inputs. When a user purchases tax software, it usually comes in the same package with technical support of the vendor, the vital element missing in the free software. Those who use free software are usually not very comfortable with the computer and are thus more likely to be faced with a lot of errors and problematic situations during its use. Their opinion about this medium is that its intentions are good but it has lost the plot.

So, tax preparation software has both advantages and disadvantages, giving off mixed messages. If we overlook the disadvantages, most of us would admit that it is speedy, accurate and almost error-free to file your tax returns through tax preparation software. However, the diehard critics of tax preparation software would never accept it as a medium to communicate with the IRS.

Related Posts:

• Discover the #1 Way to Reduce Your Taxes
• Selecting an appropriate Tax Return Form
• How to Find Your Tax Assistance?
• TaxSimple – Online Tax Preparation Software
• Five Tax Credits You Should Claim