Wednesday, March 28, 2012

Online Tax Filing: Why Electronically File Your Taxes?

E-file with us!
1986 was a year many amazing things came into being. The movies Platoon, Short Circuit, and Aliens were created, and revolutionized film. The Cold War was ended in 1986, and Mike Tyson became the youngest Heavyweight Champion in history. Truly though, the most monumental of course being when I was born. It was also the year that electronic tax filing came about. Like most great ideas, however, it was not until 2005 that online tax filing really gathered steam, with over half of all returns being filed electronically. Some of the great benefits include less paperwork, less time, and less errors have all contributed to electronic filing gaining more popularity each year.

OTP is on your side!
In our troubled economy and with everyone trying to go green and save what's left of our planet, any way to save some paperwork is a plus for the environment. Filing electronically eliminates tons of paperwork by having all the information available to type out on a computer screen, on to the internet, and finally off to the I.R.S. Saving our oxygen-giving trees by not using a forest worth of them to file our taxes gives our future generations more to look at an enjoy amidst the concrete jungle we have built around ourselves.

No dissassemble! No Dissassemble!
Time is considered the most valuable resource. It is one thing we are not able to replenish, and once you lose that time it can never be given back or returned. Electronically filing your taxes saves that precious commodity to spend on your life, or to further your business. Doing so online allows you to automatically check for time-consuming errors that would otherwise take much longer to complete. You can also save time because instead of normally waiting two months for a refund to come to you, filing online can allow you to get your return within two weeks. Even gas can be saved with your online return, as they can directly deposit it into your bank account of choice.

If you've never filed your taxes online before, let this year be the time you try it. Electronically filing can save you not only money and the headache of double checking for errors which may or may not be there, but also the precious commodity which is the ever-ticking clock: time. As with anything else, e-filing is the wave of the future, and the future is now. Try e-filing your taxes this year with onlinetaxpros.com!

Let OTP be your e-filing champions this tax season!
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Posted by at 7:40 AM 0 comments
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Monday, March 26, 2012

What do I need before I can e-file?

I hope this isn't your stack of papers labelled, "For Taxes"

To begin this article, first make sure you are up to date on tax law changes for 2011 income taxes. You can check out these changes in detail at http://www.irs.gov/newsroom/article/0,,id=254023,00.html on The I.R.S. Website.

With tax time looming ever closer, you now have about 3 weeks to e file your income taxes. Just because the deadline is coming quickly doesn't mean that you should rush to turn in your return so hastily. Taking the time to make sure you have all your documents and records handy and organized will save you from scrambling and forgetting the more obvious stuff that most would overlook.

Here's a quick list of the MOST important things you should bring. I use this small list as a, “If your house were on fire and you can only grab 5 important documents for your tax preparation” guideline:
  1. Last year's return. If you used income tax preparation software, you should import last years electronically filed tax return.
  2. Information from your bank account
  3. Yours and your dependents' social security numbers
  4. Receipts in regards to your business
  5. Charitable deductions

Now on to the real nitty gritty. You may have more things than this but as a good rule of thumb, “If it's a receipt and it's related to your business or any other expense, bring it.”

Income information and forms:
  • Jobs: W-2 tax forms
  • Past returns
  • 1099 forms
  • Any alimony you have received
  • Business income
  • Any home business expenses
  • Social Security benefits(if any)
  • Any income from sales
  • Any income from anything else(keep those receipts!)

Income Adjustments:
  • Interest from student loans
  • Self-employed payments for health insurance
  • Alimony you have paid
  • Moving expenses you may have incurred

Other Information:
  • Any amount of your current year taxes you have paid during the year
  • Information for your direct depositing(Account and Routing numbers)

Most income tax preparation software will run error and audit checks on your return when you've completed your return. In order for these to work though,
MAKE SURE YOUR INFO AND NUMBERS ARE CORRECT!
The software can only check errors correctly if your input is correct, so double check what you're filling in before making the error checks.
Making sure you have these documents handy for when you efile your taxes will make you that much more prepared for when you decide to stop procrastinating and get those taxes filed! I mean come on, the longer you take to e file, the longer you have to wait for your refund! Unless you owe taxes, then...sorry and good luck, Sir or Madam!

And our blog: http://www.onlinetaxprofessionals.blogspot.com
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Posted by at 11:47 AM 2 comments
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Thursday, March 22, 2012

Electronic Tax Filing News Update: Cyber Criminals

Online Cyber Criminals are a very real enemy for online taxes

Taken from a previous article: http://onlinetaxprofessionals.blogspot.com/2012/01/tax-scams-and-consumer-alerts-from-irs.html

In the animal kingdom, the weak are preyed upon by the strong. Lions eat the gazelles and life goes on. Unfortunately this also applies to our own society. In our weakened economy, people are far less likely to find the owner of an envelope full of one hundred dollar bills if they found it on the ground. If the opportunity presents itself, not every human being will do the right thing.

Those people are also the reason we are plagued with scams and other forms of misrepresentation that cheat other people out of their hard-earned money and possessions. This also rings true for taxes, and the IRS has released a great deal of information to not only educate yourselves on what to watch out for, but to also alert their consumers of the growing trend of identity theft and other ways to unlawfully procure your assets.
Full article can be read here
Full list of the Dirty Dozen Tax Scams for 2012 can be read here

Cyber Criminals not only threaten online tax preparation, but bank information as well


Cyber Criminals:
Tax scams are only part of the problem. The real problem is the conductors of these scams, the "ring leaders" of cyber crime. These hackers and other less than reputable people have only begun to be discovered, and the full extent of how long they've been running these operations or how much they've taken will probably never be found out. The reason is because these criminals can easily get into sensitive records and have access to not only people who are alive, but even dead people are being harnessed for their social security numbers and bank information. Below are a few examples of cyber crime, and unfortunately this is only a small scratch on the surface compared to what is most certainly is an epidemic sweeping the internet.

"Criminals receive identifying information from a variety of sources, according to Miller’s testimony. He cited the case of an Alabama woman, sentenced to prison, who obtained information about student-loan borrowers from her former employer and then filed false tax returns. Some prisoners also file fake tax returns and claim refundable tax credits, Miller said.
“We see thefts from schools,” he said. “We see thefts from hospitals, doctor’s offices.”
Nelson has introduced legislation that would impose tougher penalties and make it harder to gain access to the Social Security numbers of people who have died.

Quoted from: "FBI warns of new banking scam"(article link)
"In a new warning, the Federal Bureau of Investigation warns account holders of a new spam email scheme that involves a type of malware called "Gameover." The scheme involves fake emails from the National Automated Clearing House Association, the Federal Reserve or the FDIC. These messages attempt to trick recipients into clicking on a link to resolve some type of issue with their accounts or a recent ACH transaction. Once you click on the link, Gameover takes over your computer, and thieves can steal usernames, passwords and your money.
The FBI also warns the thieves' hacking capabilities can navigate around common user authentication methods banks use to verify your identity, which is certainly a cause for concern. Those additional authentication steps -- often personal questions, birth dates or other pieces of private information -- are meant to provide some extra security padding.

Cnn.com released two accounts of cyber crime, done not only on our streets but even in prison!
"North Miami Beach, Florida (CNN) -- Criminals across the country are raking in billions of dollars in tax refunds through a new and brazen form of fraud that takes advantage of the IRS's fast online returns, law enforcement officials say.
Using laptops and free Wi-Fi connections, criminals are stealing identities and using the names of legitimate taxpayers to file fraudulent online tax returns. They've raked in billions, buying luxury cars, expensive jewelry and plastic surgery, police said.
"It's like the federal government is putting crack cocaine in candy machines," said Detective Craig Catlin of the North Miami Beach, Florida, Police Department. "It's that easy."
First, thieves obtain Social Security numbers and other personal information from insiders at hospitals, doctor's offices, car dealerships or anywhere the information is stored. Then, they file an online tax return using the real taxpayer's name and a fictitious income. In most cases, the criminals buy a debit card so the IRS can issue the refund on that card, although some thieves have also gotten their returns on actual Treasury checks.
The thieves know that the IRS does not verify the employer W-2s sent with the return until after the refund is issued."

From "Inmates bilk Uncle Sam for millions"(full article in link) :
"While the IRS was not aware the scam was happening at the county jail it did know it had been running in prisons across the country for decades, Ellsworth said.
The IRS declined to explain why it took so long to act in this case but says it has learned to identify fraudulent refund requests made by prisoners.
"It is not an easy process, particularly considering the fact that some inmates are entitled to tax refunds and that the prisoner population is not static," the IRS said in a statement.
More than $14 million in fraudulent refunds were issued to prisoners in 2004, according to testimony before a House subcommittee five years ago. But the IRS blocked more than $53 million in false claims from prisoners that year.
As the investigation at the Monroe County continues, at least one inmate is still allegedly filing falsified tax returns, according to jail officials, even though he knows about the investigation. And the IRS has been cutting him checks. Jail officials, however, say they have intercepted the checks.
Ellsworth says that as a taxpayer he is angry that billions of dollars may have been stolen from the American people over the years.
"I'm not optimistic unless somebody at the very top says make this stop that these losses aren't going to continue," Ellsworth said."

It's not all bad! Law Enforcement Agencies are stepping up online security

InformationWeek Security's article: "When Hackers Want Much More Than Money"(article link) gave insight on what agencies are doing about it:
"Cybercriminals shouldn't breathe easy, however, since almost every type of law enforcement agency is adding cybercrime investigation capabilities. "Most law enforcement agencies are tooling up at an amazing rate," said Novak. "Most law enforcement agencies are finding that there's a cyber piece to almost every case now. For example, people who investigate homicides, traditionally they never spoke with the cyber folks. But now they find that a cellphone in their case must be analyzed, a laptop must be analyzed." 
Unfortunately as our technology increases and we grow more dependent on it, more criminals will be enticed to take advantage of our dependency. Security does help, but it seems the technology for hackers to get in is superior to our ability to keep them out, and that is growing more exponentially every year. Be as careful as you can, as your information is there for the taking on the largely lawless west we call the internet. When you're shopping online or checking your bank account, remember that you may be being watched by banditos waiting around the stagecoach. Be sure you only share your personal information on secure sites, and if something seems too good to be true, it probably is...
 List of Sources:
Posted by at 10:54 AM 0 comments
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Tuesday, March 20, 2012

Online Tax Filing Tips: Credits and Deductions Everyone Should Use

Everyone has to pay taxes. It's part of our daily lives in almost everything we purchase. Taxes are taken out in nearly every profession, whether you pay them with each paycheck or at the time of income tax filing. Since everyone has to pay these taxes, then everyone should get a break on them, right? Below are several credits and deductions you can apply for when you file(or e file) your taxes that cater to everyday individuals who have to pay taxes. If you're wondering what is the difference between credits and deductions, here's a little blurb from a previous article I wrote to explain. We hope you find some of this info useful, and hope it helps you get a great refund! 

Click here for source


Difference Between Credits and Deductions:

Many people may have never learned the difference between tax credits and tax deductions. The actual definition of a tax credit is something that reduces your actual tax amount that you have to pay when you file your taxes. This is different from a deduction because a deduction only reduces your taxable income. This difference makes tax credits much more beneficial, and dollar for dollar the credit will be a better deal because it is directly subtracted from the tax owed. Here are a few tax credits that you may not know you qualify for.

The amount you paid for child care can be counted as a tax credit. The credit starts at thirty-five percent if your adjusted gross income is less than $15,000 and reduces to twenty percent if your adjusted gross income is more than $43,000. This goes to a maximum of $3,000 for one child and $6,000 for two or more children. The Internal Revenue Service requires you treat most home child care workers as employees of the household(one of the few exemptions to this rule are part-time babysitters under the age of 18).This credit is one of the most complicated credits to figure out, but nothing that is worthwhile is easy.

Dependents:

First, you need to know that your family is referred to as “dependents.” This may be less true in the case of a spouse, as they may even be making more money than you. If you have young children, you know that the term “dependent” is pretty accurate. To subtract from your Adjusted Gross Income, the IRS requires you to have such dependents and this is when family can help you save money on your tax returns.

Last year a new exemption allows you to benefit from a $3,650 break on your AGI for each qualifying child. They don't have to be biological, and can be a foster or step-sibling, and even grandchildren. These individuals must be 19 or under and live in your residence at least half the year. These children must not provide more than half of their own support or they do not qualify. More good news is that both you and your spouse may reap an additional $3,650 just for being parents as a personal exemption!

Children are not the only family members you can claim, but there are more strict requirements for claiming parents, grandparents or other relatives. These relatives are still worth $3,650 but have to qualify for these major stipulations. First, the person must be a full-time member of your household. Next, they must be a legal citizen of the United States and they cannot file a joint return with anyone. You must also provide the majority of their support and they must make less than $3,650 for their AGI.

You might be asking yourself, so who actually does qualify as a relative? They have to have first been a member of your household for the whole year you're claiming them, blood relative or not. If they didn't live with you the whole year, they have to be a bit closer to you. The relatives considered by blood and marriage are children, grandchildren(including steps), siblings(half and step), parents, grands and other direct ancestors. Stepparents, uncles, aunts, nieces, nephews, and immediate in-laws. Using these guidelines, your family can help you save in this troubled economy. Using a qualified tax professional like Online Tax Pros can help you file online and save the most on your refund! We look forward to seeing you save.

Here are a few other credits for your dependents, taken from http://onlinetaxprofessionals.blogspot.com/2012/01/online-tax-article-credits-and.html:

Education Tax Credits: These two credits can't be claimed by any one person, but they are good for if you have a custody agreement to give one to each parent. The first is the Lifetime Learning Credit. This credit gives you a maximum of $2,000 for tuition fees and up to $4,000 for students in disaster areas of the Midwest. You can claim this credit every year your child is enrolled in undergraduate and graduate college programs.

Next, the Hope Credit only applies to the first two years of college or technical education courses. This credit is valued at $1,800 per student for parents or college-enrolled dependents, and the value increases to $3,600 if you're in the Midwestern disaster areas as with the Lifetime Learning Credit.

Adoption Credit: You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. If you claim the adoption credit, you must file a paper tax return with required adoption-related documents.

Child Tax Credit: This $1,000 tax credit is available for each child in the cases of most single parents. However, if the household income is more than $75,000 and the filing status is single, qualifying widow(er) or head of household, the credit decreases in value. Only the parents with primary custody get to take advantage of this credit, but if there is a shared-custody agreement, it's up to the parents' discretion how they can either alternate or let one parent have it each year.

Child Care Credit: It's hard to watch your kids all the time. The Internal Revenue Service knows this, and has put forth a credit that allows you some help and not make every day “take your child to work day.” You have to include the name and tax identification number for the child care provider at the time of filing. This credit allows you to claim $3,000 on one child, and up to $6,000 for two or more children. This is completed on IRS form 2441 and attached to your 1040 tax return.

Earned Income Tax Credit: This credit was created to help families in lower income brackets. You're almost guaranteed a refund if your taxes owed are less than the Earned Income Tax Credit.
According to irs.gov, the values for 2012 are as follows:
Earned Income and adjusted gross income (AGI) must each be less than:
    $45,060 ($50,270 married filing jointly) with three or more qualifying children
    $41,952 ($47,162 married filing jointly) with two qualifying children
    $36,920 ($42,130 married filing jointly) with one qualifying child
    $13,980 ($19,190 married filing jointly) with no qualifying children
Tax Year 2012 maximum credit:
    $5,891 with three or more qualifying children
    $5,236 with two qualifying children
    $3,169 with one qualifying child
    $475 with no qualifying children
Investment income must be $3,200 or less for the year.

Claiming College Students as Dependents: When your kids go off to college, you can still continue claiming your child as a dependent as long as they are enrolled full-time. Keep in mind though that if your children are working as well as going to a University, they can't claim an exemption on themselves if you have already claimed them with this deduction.

Hopefully these credits and deductions will give you a big refund. In these hectic times you can always e-file with Online Tax Pros and get your taxes taken care of from home. This will allow you to get your refund directly deposited in your bank account for your disposal. You definitely deserve it for all the hard work you do to take care of your children.

Kay Bell listed these two excellent tips from her article 12 tempting tax tips for 2012:

Tip 2: Claim your American Opportunity: The American Opportunity Tax Credit was a centerpiece of the 2009 stimulus bill. The new education tax break expanded the existing Hope Credit, providing a credit of up to $2,500 of the cost of qualified tuition and related expenses, and up to $1,000 of the credit could come back to the taxpayer as a refund.
The American Opportunity Credit was originally supposed to end in 2010, but it was extended through 2012. However, this could be the credit's last year. Congress is looking for ways to cut the federal deficit, and allowing tax breaks to expire is an easy way to save some dollars. If you have eligible education expenses, be sure to claim the American Opportunity Credit while you can.

Tip 10: Give gifts:Giving to charity can help reduce an annual tax bill, but if you have a large estate, gifts also are important estate tax tools. Thanks to the resurrection of the estate tax in 2011, the unified gift tax also returned. This means you can give away $5 million during your lifetime without having to pay the 35 percent gift tax.
There's also an annual amount to note in giving away your estate's assets while you're still around to get thanks. In 2012, you can give up to $13,000 each to as many individuals as you wish without any tax costs to you or your gift recipients.

Kay has two very informative, well-known and respected tax blogs that you should subscribe to! Here are links to her Bankrate Blog and Don't Mess With Taxes.

Please give her some tax nerd love! She's a very inspirational blogger and helped me share lots of great info on my Twitter page when I started out. Leave a comment on her blogs or my own if she's helped you with your taxes. She's definitely a pro and worth reading!


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