Tuesday, May 29, 2012

What the IRS wants you to do with your tax paperwork


Keeping tax records longer than 3 years can get crazy...
Now that you've filed your taxes, whether by electronic tax filing or by mailing your income tax return, what are you supposed to do with all your receipts and legal papers?


The Internal Revenue Service wants to to keep all documentation and copies of your returns for no less than 3 years, in the event of an audit or lien.


This includes wages, bills paid, receipts from credit cards and charitable gifts, checks that have been voided, invoices, records of mileage and any other records that helped you get a deduction or credit. Pretty much anything that helped you claim taxable or non-taxable income on your tax return should be kept.


There are documents you should keep longer as well. Anything regarding your real estate or home, transactions made on the stock market, accounts for retirement and any business property(rental or otherwise) should be held for capitol gains and losses which may be accrued later than 3 years.


In the event of an audit the IRS will want to review statements and receipts of income and expenditures, so keeping those handy in their own section of your tax records will be important. These documents will be seized in the event of a fraud investigation, so keeping your records easy to decipher and find will give you the best opportunity at leniency.


People who have to pay penalties, back taxes, and/or interest from a fraudulent return, tax evasion or simple tax return delinquency are subject to intense scrutiny beyond the 3 year limit that applies to average taxpaying citizens.


Be sure to burn or shred any tax documents you do throw away to avoid identity theft risks. Also remember to look at the document twice before you throw it away, so as not to accidentally get rid of pertinent tax records.


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Thursday, May 24, 2012

Bad Deductions You Shouldn't File Electronically or Ever!

All of my articles that have been about deductions and credits have been beneficial ones that will save you money and give you a great return. This time I have decided to list some deductions people have filed on their taxes that they shouldn't have. Included are reports of arson, drug trafficking, and a few others that should definitely show you that the Internal Revenue Service is serious about what you put down on your taxes, and they are looking.
Source for image
Hiring a person to burn your failing business down for the insurance money happens more often than you might think. To make it worse the greedy sneak not only collected his insurance money, but he pulled a stunt that most people wouldn't dream of trying. The man tried to deduct the money he hired the arsonist with on his taxes! This not only made him an accessory and a felon, but if he was audited he couldn't even present the hired hand's employment form. Do not try this unless you want to get caught.
Making sure your family has the best air quality possible is a noble effort, however futile it is with all the pollution we fill our atmosphere with every day. A man took this ideal and ran with it, so much so that he listed a deduction as “pure bubble.” The IRS agent who audited and inquired further about the man's efforts to make his home have the purest air possible was laughing so hard at this guy trying to deduct his purified air he waived all penalties, but not enough to put his deduction though, as it was still denied.
Being a drug lord is hard, but you're probably looking into the wrong line of work if you think the tax system of our Government is going to look highly on you claiming your drugs on your taxes. One entrepreneur listed a crop of marijuana as a deductible expense, and his honesty was not the best policy in this situation. His tax dollars were safe, but his cash crop and his property went “up in smoke” for lack of a better term.
It's common knowledge that the wedding industry is enormous, and extravagant. Being a 60 billion dollar industry means it's also very expensive. One cheap father had the brilliant idea to invite a few of his business clients to the wedding, which he attempted to use as leverage to write off his daughter's entire wedding as an entertainment expense for his business! This, to no one's surprise, was flagged by the IRS and he was forced to not only foot the bill for the wedding, but pay some hefty fines as well. Sometimes if you know they will say no, don't try it.
Your animals are special to you. They are even considered family by most. The Internal Revenue Service, however, does not consider your animals dependents. To some who have no children and only animals it may seem unjust, but having them under your care doesn't save you more on your taxes. It may suck you can't deduct that overpriced toy you bought them that they don't even give a second look to, but they're still your friends forever.
You may think a professional doing a procedure on your body for modification purposes may sound like something you can claim on your taxes, tattoos are an elective procedure. This prohibits you from using them as a deduction, and the IRS will not look too kindly on your personal forms of self expression. Yet another reason to think twice before you lay down under the knife or the needle.
In order to prevent these kinds of deductions going on your record and your tax filings, let Online Tax Pros make sure you qualify for everything you can claim, and step in to tell you what you can't claim. We are ready to get the most out of your return so your taxes don't have to be a scary situation like these peoples'. E file with us this tax season!


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Wednesday, May 16, 2012

The Difference Between Credits and Deductions

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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. 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.

In order for students to recover costs associated with getting an education, there are two different credits that they can take advantage of: The Lifetime Learning Credit and the American Opportunity Credit. Only one may be used a year, so choose carefully. First, the Lifetime Learning Credit allows up to $2,000 for educational expenses enrolled in eligible educational institutions. A pursuit in a degree is not required to qualify for this credit. The American Opportunity Credit is a maximum credit of up to $2,500 per student, and is available for four years of eduction to those pursuing a degree. Anyone whose adjusted gross income is $80,000 or less or $160,000 or less for married couples filing jointly is not qualified for this credit.

These credits are great ways to reduce your tax that is due, and you definitely get the most bang for your buck if you take the time to find the right ways to save. Keep doing your homework and you'll continue to save, you can only see if you're qualified if you ask, so try this tax season to qualify for all the credits you can, because no one else will do it for you (for free at least!) and happy savings, Everyone!
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Thursday, May 10, 2012

Beneficial Tax Credits For Filing Taxes

someecards.com - I love you, my little tax credit. And I'll love you every tax season for the next 17 years.
Receiving a tax credit is almost as good, if not better than receiving money. Obtaining a credit can increase your refund or in some cases decrease your tax liability. There are a lot of tax credits out there, and here are a few of the more common ones you could take advantage of. Rest assured if you qualify for any of these credits, you can and should take advantage of them. Every little bit helps in this day and age, and they can be very beneficial to your return and your taxes in general.

First of all, the Earned Income Tax Credit is a credit that is refundable for the lower to middle class families and individuals who are working. The process will figure the number of children you have to claim, your earned income value, and how much you'll receive in credits if you do qualify for this refundable credit. Next, The Retirement Savings Contribution Credit may be able to be claimed not only if you're paying on a 401k or any kind of similar accounts used for retirement regardless of if you received matching contributions from your employer. Up to half of your contribution can be claimed if you qualify for the highest achievable level of the tax credit. Finally, the Credit for the Elderly or Disabled should not be overlooked or passed up. It's available to individuals sixty-five or older, or those retired and on disability that have taxable disability income from social security or any other type of government help. Using any of these credits can open doors for you, and allow you to save more than you thought you could. This all works towards getting more money in your pocket, as there are many bills, but so few dollars to spend on getting them paid.

Taking the time to search for deductions and tax credits can be very beneficial. They will allow you to not only save money, but also to help with the burdens of everyday expenditures. There are many deductions out there, and many credits as well that can give you a greater return or decrease your tax liability. Not everyone qualifies for these specific credits, but there are several out there. Everyone has a credit or deduction they can qualify for, you just have to search and ask and you can feel the accomplishment and relief of saving some money. Let Online Tax Pros help you find all that you can qualify for, giving you the best return you are allowed, and getting it you fast.

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