First Time Home Buyers Credit

First Time Home Buyers Credit

There are home buyer tax credits available to first time homebuyers and long-term home owners who are moving residences. Some important facts about the credits will help you determine if you are eligible and how much you can claim.

Beginning in February of 2009 up until the end of April 2010, if you enter into a contract to purchase a home in the US the purchase could be qualified for a credit with the IRS. To be a first-time homebuyer, you could not have owned a primary residence for the past three years. This also … Read more at 2010 Tax.

First Time Home Buyers Credit

There are home buyer tax credits available to first time homebuyers and long-term home owners who are moving residences. Some important facts about the credits will help you determine if you are eligible and how much you can claim.

Beginning in February of 2009 up until the end of April 2010, if you enter into a contract to purchase a home in the US the purchase could be qualified for a credit with the IRS. To be a first-time homebuyer, you could not have owned a primary residence for the past three years. This also applies to your spouse.

Long-time homebuyers is a newer category that includes anyone that has lived in the same home for five years that is now purchasing a new primary residence. The credits are different for the two types of homebuyers, $8,000 for first time and $6,500 for long-term.

To claim the tax credit you have to file a paper return and attach the IRS Form 5405 to your return. Some additional documents will also need to be attached to provide proof of your home purchase during the required time period.

For the long-term home buyers, some proof of ownership is also needed. This could include a 1098 mortgage interest statement for the previous 5 years in which you lived in the home you sold. The credit is worth the extra paperwork, so get into contract prior to the deadline and receive a great tax credit on your 2009 tax return.

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Income That is Not Taxed!

Income That is Not Taxed!

While preparing your taxes this year you might notice that some forms of income are not taxed at all while other kinds of income are only partially taxed. You can save thousands of dollars in taxes each year by having non-taxable income compared to taxable income. The IRS has provided a list of incomes that are not taxed.

Included in the list of non-taxable income is adoption expense reimbursements, cash rebates for manufacturers, child support that you received, welfare, gifts, inheritance, compensatory damage awards, workers compensation, and meals and lodging reimbursed by your employer.

Examples … Read more at 2010 Tax.

Income That is Not Taxed!

While preparing your taxes this year you might notice that some forms of income are not taxed at all while other kinds of income are only partially taxed. You can save thousands of dollars in taxes each year by having non-taxable income compared to taxable income. The IRS has provided a list of incomes that are not taxed.

Included in the list of non-taxable income is adoption expense reimbursements, cash rebates for manufacturers, child support that you received, welfare, gifts, inheritance, compensatory damage awards, workers compensation, and meals and lodging reimbursed by your employer.

Examples of income that is partially taxed or taxed based on the circumstances are life insurance, college scholarships, college grants, and non-cash income. Non-cash items are taxable to the fair market value of the items exchanged in a barter situation. Sometimes income tax is avoided through the exchange of items instead of paying for services, but this is not a legal form of non-taxable income.

For more examples of income that is not taxable, take a look at IRS Publication 525 on the IRS website.

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What to Do With Your Taxes In Case You Can’t Pay Them?

What to Do With Your Taxes In Case You Can’t Pay Them?

The extension on filing your taxes is almost coming to an end. Is there anything you can do in case you can’t pay your taxes? It is important for you to pay whatever you can and do your return filing by the scheduled date. We discuss some additional steps here which might be helpful for you.

Credit Cards

The taxes can be charged on your MasterCard, American Express card, Discover card, or Visa card. Going in this direction, you can use one out of two sources mentioned below:… Read more at 2010 Tax.

What to Do With Your Taxes In Case You Can’t Pay Them?

The extension on filing your taxes is almost coming to an end. Is there anything you can do in case you can’t pay your taxes? It is important for you to pay whatever you can and do your return filing by the scheduled date. We discuss some additional steps here which might be helpful for you.

Credit Cards

The taxes can be charged on your MasterCard, American Express card, Discover card, or Visa card. Going in this direction, you can use one out of two sources mentioned below:

Official Payments Corporation

Pay tax by calling 1-800-2PAY-TAX (toll free: 1-800-272-9829)

Visit the web site: www.officialpayments.com

Link2Gov Corporation

Pay tax by calling 1-888-PAY-1040 (toll free: 1-888-729-1040)

Visit the web site: www.pay1040.com

In case you can’t pay using your credit card, then you can make an installment agreement, in which you can pay the balance in the form of monthly installments. There is also the option of reducing your tax amount by participating in a compromise program offered.

Form 9465 needs to be filled and attached with your return filing if you want the installment option of paying your taxes. For total taxes not exceeding $ 25,000 excluding interest and penalties and which can be paid within 5 years, the process of approval has been streamlined by the IRS. The proposed amount of monthly installment and the payment date should be specified correctly beforehand. You also must guarantee that the payments will be made.

For an installment agreement, a fee of $ 43 is charged by the IRS. On unpaid taxes, there will be an interest as well as a late payment charge. Normally 0.5 percent per month on unpaid tax is charged as late payment penalty but it is not fixed. This rate may be reduced to 0.25 percent for any month while your installment agreement is applicable and you file your returns on time taking your extensions into consideration. You may need to pay up to a maximum of 25 percent of penalty for late payment.

If you fail to file your returns by the due date after taking an extension, will result in a late payment charge being levied upon you. This charge is normally around 5 percent of the total unpaid tax per month. You may have to pay a maximum of 25 percent of penalty charges in case of failure to file your returns or pay taxes on time.

Summary

Even if you lack funds, the IRS expects you to adhere to the rules. You should file your returns on time by any means. If you’ve filed, the IRS will take care of the payment issues. You don’t worry. Remember that the majority of Americans face the same problem.

Income Tax Returns: Top 7 Reasons For Filing Them On Time

Income Tax Returns: Top 7 Reasons For Filing Them On Time

The top 7 reasons why you should not be late to file your income tax returns are discussed here.

(i) To avoid penalties for late filing

Delinquent taxes attract substantial penalties. These are in addition to the interest due for you.

(ii) To receive a better service from the accountant

The accountant will be able to begin your tax preparations sooner, if you can get all your paper work done earlier. Moreover, you can find lot of opportunities to implement strategies for saving on your taxes. But if … Read more at 2010 Tax.

Income Tax Returns: Top 7 Reasons For Filing Them On Time

The top 7 reasons why you should not be late to file your income tax returns are discussed here.

(i) To avoid penalties for late filing

Delinquent taxes attract substantial penalties. These are in addition to the interest due for you.

(ii) To receive a better service from the accountant

The accountant will be able to begin your tax preparations sooner, if you can get all your paper work done earlier. Moreover, you can find lot of opportunities to implement strategies for saving on your taxes. But if you are already late, then your accountant won’t be much help to you regarding this. Suppose there are some profits in your corporation subject to huge penalties; in such cases for late filing, the accountant might be hesitant retaining those profits.

(iii) To avoid criminal charges

In cases of not filing tax returns for many years, there may be criminal charges against you including tax evasion.

(iv) To prevent bankruptcy

In general, people who are unable to file tax returns regularly have poor business management. They are not up to date with their own accounting and bookkeeping; they just think that they know their financial position and how they’re performing. It’s the beginning of a financial calamity.

(v) To have a better relation with the tax authorities

The people who continuously file late come into the notice of the department of taxation. Disobedience might lead to audits, forcefully collecting taxes, or other legal activities. Moreover, in case you have a clean history of compliance and cooperation with the income tax department, then at times of need the tax department won’t hesitate to give extraordinary consideration to your matter and provide leniency.

(vi) To obtain finance

If you are unable to show your proper income portfolio, then it becomes difficult for you to obtain financing. The assessment notices provided by the tax department give more assurance to the banks regarding your income claims. Moreover, if you are not filing your present income tax returns, then how is it possible to know about your hidden tax liabilities? What is your own record-keeping state? Without good financial information, how are you running your business? In case you are asking for a loan, the bank might hesitate to offer it under these circumstances.

(vii) To lighten stress and worry

Most people feel guilty about filing the tax returns late. They are actually afraid of getting contacted by the tax authorities, auditing, seizing of properties, criminal prosecution, interests and penalties, etc. Whatever be the actual situation, these worries might worsen the matter. So file your income tax returns in a timely manner and save yourself some unwanted stress and worry.

The ABC of Filing Tax Returns for the Deceased

The ABC of Filing Tax Returns for the Deceased

Death is an inevitable part of a human life. When a person dies, he leaves his mortal body but taxes may also remain attached to him or her. In fact after death, one final tax return needs to be filed for the deceased person.

After death, a person’s finances are immediately converted into something which is called an estate. The estate then has the responsibility of filing a tax return after covering the finances that include income and distributions to the heirs and other beneficiaries of the deceased.

When someone passes … Read more at 2010 Tax.

The ABC of Filing Tax Returns for the Deceased

Death is an inevitable part of a human life. When a person dies, he leaves his mortal body but taxes may also remain attached to him or her. In fact after death, one final tax return needs to be filed for the deceased person.

After death, a person’s finances are immediately converted into something which is called an estate. The estate then has the responsibility of filing a tax return after covering the finances that include income and distributions to the heirs and other beneficiaries of the deceased.

When someone passes away, an executor or trustee takes charge of the estate of that person. The exact designation depends on the type of estate they are intended to plan for. The executor or trustee will sign the tax return on behalf of the deceased person and will declare him or her as deceased.

For a deceased person, the final personal tax return is filed in Form 1040. Yes, the same tax form that is used for any personal tax return will work for filing a return for a deceased person.

The day of death of the deceased person is taken as the cut-off date to ascertain how much taxes are actually due by him or her. Whatever income the person may have made in that year before the date of his or her death is covered in the personal tax return. And, the income earned after the death is to be filed as the estate tax return, which is the responsibility of the estate.

In most cases deductions are certainly going to give a joy in case of tax returns for the deceased. You can claim a full deduction and any other expenses for the year that precedes the tax payer’s death not including the date on which the person passed away. In other words, you don’t have to worry about any calculations that are based off the days that come after death. For example, if a person passes away in the month of February, you are eligible for full write-offs for the rest of the year.

When the deceased is supposed to get tax refund, the IRS will consider releasing a refund if the deceased is reported as being married prior to his or her death. If the person was married, the spouse is entitled to receive the refund. If the person was not married, you need to file a Form 1310 to be eligible for the refund. This form is basically a declaration that states – you have the right to claim the refund and absolve the IRS of any involvement in any disputes that may arise in future.

The Process of Electronic Tax Preparation and Filing

The Process of Electronic Tax Preparation and Filing

Just when you are faced with the tax season, you may come across the latest editions of popular tax preparation programs claiming to make tax filing as easy as can be for any layman. It is important to know which one is the most suitable for you and which electronic tax filing solutions are the most popular. This write-up provides you with valuable information on tax preparation options and the popularity of electronic tax filing.

What is it that you pay attention to while choosing a tax preparation solution? Beginners should opt … Read more at 2010 Tax.

The Process of Electronic Tax Preparation and Filing

Just when you are faced with the tax season, you may come across the latest editions of popular tax preparation programs claiming to make tax filing as easy as can be for any layman. It is important to know which one is the most suitable for you and which electronic tax filing solutions are the most popular. This write-up provides you with valuable information on tax preparation options and the popularity of electronic tax filing.

What is it that you pay attention to while choosing a tax preparation solution? Beginners should opt for tax software that provides step by step guidance through the digital tax preparation interview and also includes interview topics which would not be difficult too understand or answer.

What makes the tax preparation software so useful is the fact that it allows the user to try out figures and hypothetical situations. Several of these programs are equipped with importing features that provides the scope for importing data from other programs into the tax preparation software directly.

As electronic tax preparation and filing are capable of carrying out extensive calculations and associated automatic checks, it has a negligible error rate, less than 1 percent. This implies that if you use the electronic tax preparation software, you can be almost fully ensure that you will have an error-free and complete tax return.

As high speed internet connections are becoming widespread and internet security is advancing at a tremendous speed, the number of tax preparations being done online is going up. This system of filing has been agreed unanimously to be safe, easy and error-free. With an overwhelming amount of online resources readily available, there is hardly any difference between the capabilities of the taxpayer and a professional.

Whatever it is, this much is certain that electronic tax preparation is the word of the day in terms of efficiency and popularity. It is owing to this popularity and reliability that taxpayers would resort to the use of tax software to file their tax returns. What a lot of taxpayers don’t know is that they can prepare and e-file their taxes every time they access the internet. The IRS Free File program has been designed to help those taxpayers who file their returns independently and still resort to filing paper returns. However, it should be noted that electronic filing is not allowed in the case of filing taxes for previous years.

Online tax filing allows you to prepare and e-file your income tax returns. And the process is wonderfully easy, speedy, error-free and safe, not very different from net banking. It might be a good idea to try out the electronic filing this year if you are willing to give it a shot. Being able to manage and file your taxes would definitely make you feel good and self sufficient.

It is very common for people to be scared of the idea of filing your taxes and you are probably wishing it would be easier this year. It is actually possible, with a fair amount of planning, to make tax preparation much easier and not be faced with any harsh surprises.