Taxes

IRS Identity Theft Issue

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The IRS holds a special place in the American psyche. The concept of taxes and the taxman are widely despised by many Americans, even though the efficient collection of taxes is a key component of running a modern democracy. Even though the IRS is often cast as the bad guy, it is never cast as an inept one. In fact, far from it, the IRS is often portrayed as a powerful, all knowing, governmental entity that must never be cheated. If that is so, then why is Congress investigating widespread identity theft and tax fraud allowed by the IRS. IRS Tax Fraud via Identity Theft The legend goes a little something like this. An average American taxpayer files his income taxes. When he does so, he submits some documentation, but most of what goes on the typical tax form requires no documents actually be sent to the IRS. Rather, the taxpayer must keep those documents as proof, just in case the IRS comes asking via the dreaded tax audit. Each year, the IRS audits something around one percent of all tax returns. Of that amount, a certain number are just randomly selected for review by a computer. Others, we are …

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Tax Season Bumped Back by IRS

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The IRS announced that it was moving back the beginning of tax filing season due to the government shutdown. Apparently, workers finalizing tax forms and systems for the end of the 2013 tax year and getting them ready for the 2014 filing season were not part of the essential government workers that kept working during the recent government shutdown. As a result, the IRS is about two weeks behind on getting ready for the tax filing season. The original date when taxpayers were first allowed to file tax returns was supposed to be January 21, 2014. However, after having basically making no progress during the 16-day shutdown, that date is being moved back. Although no official date has been set for when the IRS will begin accepting 2014 returns, the agency announced a “one- to two-week delay.” That means that the earliest date would be January 28, 2014 and the latest start date would be February 4, 2014. The delay is not due to big changes to paper forms, but rather to ensuring that the electronic systems for filing, as well as the electronic tax preparer data provided to firms like TurboTax, are up to date. In addition, the IRS …

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IRS Mileage Rate 2013

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The current IRS standard mileage deduction amount is in the updated article. One of the most common tax deductions is deducting miles driven for business purposes. Even if you can’t deduct your mileage because your employer reimburses you, chances are that reimbursement rate is set to the IRS standard mileage rate. Of course, you may also deduct your actual expenses for operating a motor vehicle rather than taking the standard rate per mile. However, this requires that you keep all receipts for any expenses and properly account for a variety of complicated factors. Most small businesses and self-employed individuals use the standard rates which is simpler, and in most cases, just a generous as deducting actual expenses. Standard IRS Mileage Rate Chart There are actually three different types of IRS mileage rates for 2013. For miles driven for business, the IRS rate per mile is 56.5 cents for each mile driven. For miles driven for medical purposes, or for taxpayers deducting moving expenses, the standard IRS rate per mile is 24 cent for each mile driven. For miles driven for charitable purposes, the standard deductible mileage rate is 14 cents per mile for each mile driven. The standard deduction mileage …

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Taxes Due April 15 2013

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Don’t forget (as if you could) that your federal income taxes are due on April 15 in 2013. For the past two years, taxes were actually due on April 16th, thanks to weekends and a holiday last year in Washington D.C. No such reprieve this year, Monday April 15 is the income tax deadline for 2012 taxes being filed in 2013. If you don’t file your taxes on time, there can be some pretty stiff penalties and interest. Don’t forget, you can get an automatic six month extension to file your taxes by submitting a Form 4868 to the IRS by April 15th instead of your actual 1040 tax forms. You still have to pay your best estimate and you’ll be on the hook for any taxes due that you miss, but it is still better than not filing. If you don’t pay your taxes, they can always come after your wages and hold any future refunds. For small business owners and the self-employed, it sometimes gets lost in the shuffle of the bigger income tax deadline, but the first estimated quarterly tax payment for 2013 is also due to the IRS on April 15th. The next estimated quarterly tax payment for 2013 will …

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Do Taxes Faster with these Tax Tips

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Doing your taxes is never fun. The potential of having to pay even more money than has already come out of your paycheck looms over your every move. The thought of missed tax deductions, or unused tax tricks makes you constantly wonder if you could have done better on your taxes. Searching for receipts and other records takes time and adds to the stress. Add to that the threat of a tax audit if you mess up, and it’s no wonder people spend hours stressing out of their taxes. How To Do Your Taxes Faster There are some tax tricks you can use to speed up doing your taxes. Mostly, it comes down to knowing when and where it is worthwhile to spend your time, and where you can just keep plunging ahead and filling out those IRS forms. Remember, not everyone qualifies for everything. In fact, most people don’t qualify for a lot of the tax deductions and credits out there. Unfortunately, some personal finance publications and websites could do a better job of letting you taxpayers know when they just won’t qualify for that really great “frequently missed tax deduction.” High Tax Deduction Floors One of the ways to waste a lot …

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2012 Tax Season

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Talking about taxes is always a little tricky for the first four months of the year. During that time, people usually mean the previous year’s taxes, which they are working on filing, but savvy financial folks are always planning and minimizing taxes, so they could be talking about the current year taxes too. Using the year doesn’t always help. Although 2012 taxes mean taxes that were incurred during 2012, folks filing 2012 taxes do so during 2013. That being said, the 2012 tax season refers to the taxes we are compiling and filing now, in 2013. The IRS started officially accepting tax returns on January 31st, the signs are out in front of H&R Block, and TurboTax deals have started showing up in ad forms everywhere. 2012 Tax Forms Depending upon how old you are, or more specifically, how long you have been filing taxes, you can remember back when getting paper tax forms was not done via the internet. Once upon a time you could get Form 1040, and others at the Post Office. When they stopped doing that, you could get them at most public libraries. If you still lived at the same address you filed from the previous year, you …

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New Tax Withholdings for 2013

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The deal to avert the so-called fiscal cliff held most taxes steady for most taxpayers. This was, after all, the overlapping part of the political goals of Democrats and Republicans. Democrats wanted the Bush tax cuts extended for taxpayers making less than $250,000 per year, and Republicans wanted them extended for taxpayers at all income levels. The final deal keeps the tax cuts for more Americans than the Democrats wanted, and less than the Republicans wanted. To put a more specific point on this issue, however, is that the IRS issued guidance to businesses on December 31st to begin withholding higher amounts from worker’s paychecks. Since no deal was reached by the end of the year, the IRS had to move forward with the current law. On January 3, 2013, the IRS issued revised guidance that kept the withholding for everyone making under $400,000 (filing single), or $450,000 (married filing jointly), the same. Taxes Up for Everyone in 2013? Depending upon how you choose to view things, the fiscal cliff deal meant no tax increases for most Americans. However, most taxpayers will actually see a smaller paycheck in 2013. For part of President Obama’s stimulus plan, the amount employees pay …

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IRS Tax ID Number ITIN

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It seems that more than a few readers end up here on FinanceGourmet because they are searching for information about taxpayer identification numbers. As a result, they end up here where I discuss IRS tax id numbers for businesses, specifically, the EIN and FEIN numbers. While that article is a good discussion of business tax numbers, it leaves out an important tax identification number for individuals. ITIN Individual Taxpayer Identification Number For most people, your taxpayer id number is your Social Security number. The IRS requires to use your SSN for tax filing purposes if you have one. However, there are some people who need a tax id number to file documents or forms with the IRS, who do not have a Social Security number, and who cannot get one. For these people, the IRS offers a special Taxpayer Identification Number or ITIN. An ITIN is a faux Social Security number generated by the IRS specifically for the purposes of filing required tax documents. It is not a Social Security number and is not supposed to be used as one. Obviously, as a pseudo-SSN, it cannot be used for employment purposes or for filing for Social Security benefits. Likewise, is …

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Quarterly Estimated Tax Payments Due Soon

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Estimated tax payments are due to the IRS on June 15 for the second quarter. (If you use a fiscal year calendar, then your second quarter payments are due by the 15th day of the 6th month of your fiscal tax year.) Use the 2012 tax tables to estimate your income and determine an approximate payment. Small business owners are required to make estimated tax payments because U.S. income tax is a “pay as you go” system. You can’t just wait until next April and pay everything at once. Remember there is a sort of tax withholding safe harbor that states that if, over the course of the tax year, you pay 100 percent of the amount of taxes you owed the previous year, you will not be liable for an under-withholding penalty. However, you will still have to pay any amount you owe come April of next year.