Taxes

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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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.

Tax Due Date 2012

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Taxes for 2011 are almost due. As always, the IRS tax filing deadline for 2012 is April 15th, only it isn’t. April 15th is a Sunday and taxes are not due on weekends, especially Sundays. You don’t expect government bureaucrats to work on the weekend, do you? Not to mention, you can’t get a postmark on Sunday because the Post Office is closed. So, your taxes should be due on April 16th, but they aren’t due then either. Just like last year, the Monday your taxes would normally be due on is a holiday. It isn’t a Federal holiday, but it is a holiday in Washington D.C. and when it comes to the Internal Revenue Service, the holiday schedule includes those D.C. holidays. After all of that, it comes down to for 2012 taxes are due on Tuesday April 17th. Technically, of course, that means that your taxes must be postmarked by midnight April 17th. As always, there will be certain post offices open late, some until midnight, where you can mail your taxes right up to the deadline and still get that all important postmark. If you don’t file your taxes on time, you’ll owe penalties and interest. If …

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Payroll Tax Cut Extended

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Yea! Just got news that Congress decided not to kill off the fragile economic recovery in the U.S., well, not yet at least. Congress has passed legislation that extends the payroll tax cut through the entire year. The tax cut was a 2 percent reduction in the amount of Social Security tax paid by workers. The employer part of the social security tax (and therefore a significant part of the self-employment tax) was not cut. However, this tax cut put additional money in the pockets of households across America. Letting it expire and seeing what happens when people suddenly realize their paycheck is smaller than they are used to would have been a big problem. Virtually every respected economist in the world warned that failure to extend this particular tax cut would have a big impact on the U.S. economy, perhaps causing the tepid growth to teeter, or plunge all the way back into recession. I’ll be back later with more details once I have a chance to comb through the actually bill on its way to President Obama’s desk.

IRS Audit Odds

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As tax season approaches, America’s thoughts turn to the required filing of income taxes. Theoretically, America’s tax system is a voluntary reporting system, however, that voluntary part is backed up by a pretty big stick, IRS audits. Odds of Being Audited According to IRS statistics, the chances of being audited by the IRS is about one in 100, or one percent. A deeper look, however, reveals the the IRS audits certain tax returns much more often than other returns. IRS audit statistics suggest that high-income taxpayers and those who own small businesses are more likely to be audited that middle and low income taxpayers who earn the majority of their income from wages and salary or brokerage-style investments. The reasons certain groups get audited more than others are two-fold. First, and foremost, there is more money to be gained by auditing higher income taxpayers. For example, consider a middle income wage earner, who is married filing jointly, bringing down a salary of $70,000 with no other income. Taking the standard deduction for 2011, of $11,600 for married couples filing joint, that leaves $58,400 of taxable income. Do the math and that taxpayer isn’t going to pay any more than around …

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Best Time to File Bankruptcy

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While there is never a good time to file bankruptcy, there are some things that make filing bankruptcy at a certain time more or less advantageous for the filer. Making sure you understand the various bankruptcy rules and timing a bankruptcy filing correctly can save you some time and money. Good Time to File Bankruptcy One of the things that trips many bankruptcy filers up, even after speaking with a bankruptcy attorney, is that the bankruptcy court will take 40 percent of your unpaid earnings. If you get paid once per month, this can be a very big deal. For example, if you get paid on the 30th of each month and you file your bankruptcy petition with the court on the 28th, you will have to pay almost half the amount of your pay check to the bankruptcy trustee. In a case like this, you would be much better off waiting the following month to file for bankruptcy. However, there is a catch. You don’t want to file too soon after being paid because the other thing that the bankruptcy court is entitled to is almost all of the cash in your bank accounts on the day you file. For example, …

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Jobless Claims Continue to Fall

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New unemployment claims fell to a nine month low in October. This trend has been struggling to get going for several months now. However, the possibility of an improving job market is a good sign for the U.S. economy. Update: Consumer sentiment also rose. That is a little bit more good news for the economy. Unfortunately, the news isn’t anywhere good enough to declare an economic recovery. The “good news” about the labor market we have been getting for the last several months means more about the job market bottoming out than it does about it getting better. Essentially, if you were drawing a graph of the U.S. labor market, these last couple of months of good economic news and indicators means you can stop drawing your line down. It does not mean, however, that you can start drawing that line back up. There are two major stumbling blocks now to an economic recovery. The first is the very unstable situation in Europe. What once looked like a problem for a couple of the continent’s weakest economies now looks like a full-fledged crisis for the entire European Union. Any collapse, or loss of faith, there and the U.S. economy will …

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Reporting Short Sales for Income Taxes

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Reporting most investment income is pretty straightforward. Calculate the gain or loss and enter it on Schedule D. The only trick is whether to report as a long-term or short-term capital gains or capital losses. With short sales, however, there are a couple of tax tricks to know about how they get reported. Long-Term or Short-Term Short Sales The most important thing to understand about short sales, is that they are almost always considered short-term capital gains or losses. Unlike a traditional investment where you buy and hold the property, with a short sell, you do not own the property at all. You borrow the shares from your brokerage who gives you the proceeds of the sale. You close the sale by buying back the same shares you sold. It may seem like you determine whether a short sale is long or short-term by the amount of time that passes in between when the short sale is initiated and when it is closed. However, this is not the case. In order to be a long-term capital gain, you have to OWN the property in question for more than one year. With a short sale, you never own the property. Or, …

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