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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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!

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Tax Haikus!

Image courtesy of http://alexmageesons.com/Stamford-famous-haiku/

Taken from http://en.wikipedia.org/wiki/Haiku:

This article is about the Japanese poetic form. For haiku poetry written in English, see Haiku in English.

For other uses, see Haiku (disambiguation).

Haiku (俳句 haikai verse^?)  listen (help·info) (no separate plural form), is a very short form of Japanese poetry typically characterised by three qualities:

• The essence of haiku is "cutting" (kiru).[1] This is often represented by the juxtaposition of two images or ideas[2] and a kireji ("cutting word") between them, a kind of verbal punctuation mark which signals the moment of separation and colours the manner in which the juxtaposed elements are related.[3]
• Traditional haiku consist of 17 on (also known as morae), in three phrases of 5, 7 and 5 on respectively.[4] Any one of the three phrases may end with the kireji.[5] Although haiku are often stated to have 17 syllables,[6] this is incorrect as syllables and on are not the same.
• A kigo (seasonal reference), usually drawn from a saijiki, an extensive but defined list of such words. The majority of kigo, but not all, are drawn from the natural world. This, combined with the origins of haiku in pre-industrial Japan, has led to the inaccurate impression that haiku are necessarily nature poems.

Modern Japanese gendai (現代) haiku are increasingly unlikely to follow the tradition of 17 on or to take nature as their subject, but the use of juxtaposition continues to be honoured in both traditional haiku and gendai.[1] There is a common, although relatively recent, perception that the images juxtaposed must be directly observed everyday objects or occurrences.[7]
In Japanese, haiku are traditionally printed in a single vertical line while haiku in English often appear in three lines to parallel the three phrases of Japanese haiku.[8]
Previously called hokku, haiku was given its current name by the Japanese writer Masaoka Shiki at the end of the 19th century.

Today, Kelly Phillips Erb(http://blogs.forbes.com/kellyphillipserb/) Issued a contest for writing a tax haiku. I've always enjoyed poetry and haikus are a fun and interesting challenge to create. Here are the ones I could come up with, and try it out, you may be a poet and didn't...I'm gonna save myself the embarrassment. Her post about the contest is http://www.forbes.com/sites/kellyphillipserb/2012/02/22/fun-with-taxes-tax-haiku/

Taxes must be paid

Living in America

Pay them until you die

Give me liberty

Uncle Sam will give you it

Must pay taxes though

The IRS loves

Seeing you pay your taxes

when not, audit time!

Don't know how to file?

Want to file wrong on purpose?

Deduct ALL THE THINGS!

Deductions are great

Only in moderation

Too late, audit's HEEYA!

The Audit Fairy

May be checking your taxes

Better have receipts!

New technology

Tax refunds on debit cards

Never again please!

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Where's your tax refund? The IRS can't say...

Image courtesy of http://www.flickr.com/photos/heatsink/110859301/sizes/m/in/photostream/

The refund-tracking tool on the agency's website is not reflecting the status of returns that have been filed. The problem is with the website tool, and refunds have not been delayed.

Last week we wrote about an IRS tool that allows taxpayers to check on the status of their refunds.

Except that now it isn't working.

Do not panic if you go to check on your refund and the IRS appears to have no record of your return. Those who file are still receiving their refunds within 10 to 21 days.

The problem is not with your refund, but merely with the IRS computer setup that gives you the status of your refund.

The IRS emphasizes that if you filed electronically and you received an acknowledgement of your filing, the agency has NOT lost your refund and you should not call to check on it.

We are aware that some taxpayers who have filed electronically and received an acknowledgement from the IRS are concerned when they visit "Where's My Refund" and are told that we have no information regarding their return. This is a temporary situation, and we expect to resolve the matter in a few days. At that time, taxpayers will be able to get an expected refund date when they visit "Where's My Refund."

If a taxpayer received an acknowledgment message that their e-filed tax return has been received, they can be assured that the IRS has the tax return even though "Where's My Refund" does not reflect that. Taxpayers should not call the IRS unless specifically directed by "Where's My Refund," as there is no new information to give them.

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Checklist Before You E-file Or Mail Your Tax Return

To start off here is a bit of information you should know about what has changed for your 2011 taxes!
Taken from http://www.irs.gov/newsroom/article/0,,id=254023,00.html
on The I.R.S. Website

IRS Tax Tip 2012-27, February 9, 2012

Before you file your 2011 federal income tax return in 2012, you should be aware of a few important tax changes that took effect in 2011. Check www.IRS.gov before you file for updates on any new legislation that may affect your tax return.

Due date of return. File your federal tax return by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.

New forms. In most cases, you must report your capital gains and losses on the new Form 8949, Sales and Other Dispositions of Capital Assets. Then, you report certain totals from that form on Schedule D (Form 1040). If you had foreign financial assets in 2011, you may have to file the new Form 8938, Statement of Foreign Financial Assets, with your return.

Standard mileage rates. The 2011 rates for mileage are different for January 1 through June 30 than for July 1 through December 31. For business use of your car, you can deduct 51 cents a mile for miles driven the first half of the year and 55 ½ cents for the second half. Medical and moving mileage are both 19 cents per mile for the early half of the year and 23 ½ cents in the latter half.

Standard deduction and exemptions increased.

• The standard deduction increased for some taxpayers who do not itemize deductions on IRS Schedule A (Form 1040). The amount depends on your filing status.
• The amount you can deduct for each exemption has increased $50 to $3,700 for 2011.

Self-employed health insurance deduction. This deduction is no longer allowed on Schedule SE (Form 1040), but you can still take it on Form 1040, line 29.
Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $48,450 ($74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately).

Health savings accounts (HSAs) and Archer MSAs. The additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses increased to 20 percent. Beginning in 2011, only prescribed drugs or insulin are qualified medical expenses.

Roth IRAs. If you converted or rolled over an amount from a traditional IRA to a Roth IRA or designated Roth in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.

Alternative motor vehicle credit. You can claim the alternative motor vehicle credit for a 2011 purchase only if the vehicle is a new fuel cell motor vehicle.

First-time homebuyer credit. The credit expired for most taxpayers for 2011. Some military personnel and members of the intelligence community can still claim the credit in 2011 for qualified purchases.

Health coverage tax credit. Recent legislation changed the amount of this credit, which pays qualified health insurance premiums for eligible individuals and their families. Participants who received the 65 percent tax credit in any month from March to December 2011 may claim an additional 7.5 percent retroactive credit when they file their 2011 tax return.

Mailing a return. The IRS changed the filing location for several areas. If you're mailing a paper return, see the Form 1040 instructions for the correct address.

Detailed information on these changes can be found on the IRS website – www.irs.gov.

Links:

• Fact Sheet 2012-01 2011 Changes Offer Tax Benefits to Almost Everyone
• Form 1040 instructions (PDF 941K)
• 1040 Central
• Form 8949, Sales and Other Dispositions of Capital Assets

Intro & Ways To Keep Track Of Your Refund

With all that said lets talk about what you should check before you file your taxes! The easiest thing would be for me to say EVERYTHING, but I want you guys to get some useful information out of this thing!

Over 99,123 taxpaying Americans have filed their returns but didn't follow up when the refund didn't come. I don't know what kind of happy-go-lucky life they have where they don't need that money! If you're one of those individuals and you want to enlighten me on your secret to financial freedom, by all means I'll ignore my tax return as well! In case you were wondering, all those lost tax returns equals over 153 MILLION dollars!

Now, if there isn't some big conspiracy that involves vast wealth from turning down other wealth, and you're one of those unlucky individuals that actually wants their return, the money is there, and you can visit the Internal Revenue Service's online refund tracker Where's My Refund? This nifty tool will post the status of your refund and sometimes it can give you the reason the delivery failed.

Some not-so-tech-savvy people can still reach The IRS through their automated refund tracking toll-free number(bet you're itching to hear that machine voice tell you to press buttons for selections already!) The number is (800)-829-1954.

For the uber-tech-savvy people who are glued to their smart phones, the IRS has an app for that! IRS2Go is the premiere app that allows you to check the status of your refund in real time!

As with any of these methods for retrieving your refund you'll need your Social Security Number, filing status and expected refund amount to use this app.

The app has several other features as well, such as signing up for IRS tax updates and for following the IRS on the popular social network Twitter. The final fold-out option of this smart phone Swiss army knife is the IRS2Go's “contacts” sections, which has numbers and hours of operation for all the IRS's tax assistance lines.

The IRS2Go app is free and availiable at both the Apple App Store and the Android Market.

Image from http://www.storypeeps.com/public/49-lessons-learned/233-biggest-mistake-ever

Common Mistakes People Have Made
First off, always make sure you double-check all of your return before you send it. Make a mental checklist in your head of these following things:

Is my address correct?

• Are my line entries on my 1040 correct?
• Is my Social Security Number correct?
• Is my handwriting legible?
• Are all my entries filled out to the best of my ability?
• Did I sign everywhere I should?
• Is the address on the envelope correct?
• Do I have proper decimal positions and correct punctuation?
• Is this the address I will be at by the time my refund arrives?
• Do I have the proper filing status?(Married if married, single if single)
• Do I have all the correct dependents listed? 

Remember to Double Check These Things Before Sending In Your Return

• Both spouses must sign a joint return
• All proper forms are together
• If you owe money, make your checks payable to the U.S. Treasury, not the IRS.
• Make a hard copy for your records
• Use plenty of postage! 

 
The IRS Wants You To E-file
These tips may only take a few minutes but can save you weeks of stress by making sure you are filed correctly the first time! This is in regards to both paper mail and electronic tax filing. E-filing your taxes can save you from many common problems because of software like Online Tax Pros which will double check for many errors automatically. Qualified tax preparers are standing by to answer your tax questions and they keep current on tax law changes. We can not only save you time, but money from your return by filing with us this tax season! We hope you have a stress-free tax season with a huge refund this year!

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Nava Lubelski: Art Made From Taxes

1999 Tax file - Close up Detail

Being an artist, I always love seeing people breathing new life into old or discarded things that would otherwise be cast aside or thrown away. This artist I'm posting about today is very innovative in that I've never heard of anyone using old tax returns for art! Her organic sculptures are very cellular and abstract, but powerful in their message of using old paper to create a new amalgamation of an almost living, growing entity. These images inspire a me to think of how we're all putting our money into taxes which builds this creation of otherwise wasted cellulose.

Read more about Nava Lubelski or just scroll down to the bottom to see what all the hub-bub is about, and if you like these you should check out her other works on her website, http://www.navalubelski.com/.

Taken from http://en.wikipedia.org/wiki/Nava_Lubelski:

Background:
Nava Lubelski was born and grew up in the SoHo section of New York City. She graduated from Hunter College High School in Manhattan in 1986 and earned a BA in Russian Literature and History from Wesleyan University in Middletown, CT in 1990. She spent a year abroad as a student in Moscow, Russia.
Lubelski authored The Starving Artist's Way[2][3] and is a 2008 grantee of The Pollock Krasner Foundation.[4]

Nava Lubelski is an artist who was born in 1968 who creates these cellular sculptures using tightly rolled paper scrolls comprised of tax returns, rejection letters, and other collected waste paper.

ARTIST STATEMENT

My work explores the contradictions between the impulse to destroy and the compulsion to mend. I juxtapose rapid acts of destruction, such as spilling and cutting, with painstaking, restorative labor. Embroideries are hand-stitched over stains and rips, contrasting the accidental with the meticulous, constructing narrative from randomness and mistake. The initial marks are found on linens or are created by cutting and staining canvas. The work scrambles expressions of aggression with masochistic patience and sublimation and plays with the feminine through the graphic form of the "stain" and the adding of peek-a-boo, lace inlays to repair cut holes that expose the hidden space behind the canvas. Shadows on the wall add a sculptural dimension and some pieces are hung off the wall to reveal the secret and unintended marks of the verso.
Shredded paper sculptures, such as the Tax Files, reconfigure a mass of paper that has been grouped and saved due to written content, into slabs reminiscent of tree cross-sections where the climate of a given year, and the tree's overall age are visible in a single slice. Historical information is revealed in the colors of deposit slips, pay stubs, receipts and tax forms. The cellular coils spiral outward, mimicking biological growth, as they are glued together into flat rounds, which suggest lichen, doilies or disease. The re-use of paper, as well as the attempted "repair" of the long-lost original tree, is an examination of feelings of despair about waste and unsustainability while simultaneously responding to the shadow impulse to hoard and keep what is no longer needed. The exercise of translating numbers back into a comprehensible, physical manifestation is also an attempt to develop a tool for managing overwhelmingly large tallies, such as those we encounter regularly in reports on war or climate change.
Other sculptural works, such as [a cast of my left hand in the shape of a] Glove, use thread to cast the form of my left hand through the efforts of the free hand. The pieces play with the obstacle of sewing with literally, "one hand tied" and allow improvisational stitching and the results of awkwardness and inconvenience to cast the body part. The finished pieces are struggling and imperfect versions of traditionally hyper-perfect Victorian lace gloves. The pieces maintain the delicate, yet clumsy shapes of ghost hands, at once appearing as flawed and decaying relics, while in fact being molded from the physical hand, a method normally used to create a more substantial and permanent copy than the original flesh.

© 2004-2011 Nava Lubelski, All Rights Reserved.

1997 Tax File, 1/4" x 20" x 19", shredded paper and glue, 2007

1998 Tax File, 1/4" x 19" x 19", shredded paper and glue, 2007

1999 Tax File, 1/4" x 22" x 22", shredded paper and glue, 2007

Rejection Letters , 1" x 20" x 20", cut and shredded rejection letters, glue, 2008

© 2004-2011 Nava Lubelski, All Rights Reserved.

 Thank you guys for taking the time to look at this gifted artist's creations! We hope it inspires you to make something or do something no one else has before! You never know what you're capable of doing until you do it!

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Online Taxes: Why is E-file so Important to the IRS?

Why is E-file so important to the IRS? Returns filed electronically are more accurate and enable faster refunds, thus improving service for taxpayers.:

Facts:
a) About half of all taxpayers use paid tax preparers to file their tax returns.

b) Approximately 97% of all returns can now be e-filed.

c) Electronic returns go through an “error check” process. A valuable result of this increased precision is fewer IRS notices resulting from input errors.

d) The IRS acknowledges e-filed returns and extensions with an electronic receipt.

Based on their goal and the facts, IRS has partnered with a list of companies to offer the E-file service for free. There is a growing number of companies that are offering e-file services for free, however, each have certain criteria that has to be met. For example, if the adjusted gross income (AGI) is lower than $57,000, then your e-file is free but you will incur a charge if it is higher. Or some services make the resident state or age part of the criteria as to whether the free file is allowed. These are a few of the differences in the criteria used by the various free-file service providers.

Online Tax Pros is a participant in such a program and E-file is offered as a free service for federal income tax returns if the client follows the link directly from the IRS free e-file page. However an additional fee is charged for state preparation.

Online Tax Pros has created a system that will ensure that your tax return is filed on time and as accurate as possible and with the best security that is available to protect your personal information.