About.com Tax Planning: U.S.

Reviewing AMT Calculations

Sun, 07 Feb 2010 22:55:20 +0000

Most tax software programs will skip over the calculations for the alternative minimum tax if this does not apply to you. While this is fine for preparing your tax return, you might want to take a look at the calculations to help you plan ahead for 2010. That's because the AMT exemption amounts are scheduled to drop significantly in 2010, thus causing additional amounts of tax owed for more people. You can force your software to print out Form 6251, and what you are looking for is Line 30. Replace the 2009 figures there with the expected 2010 figures, do the rest of the math on Line 31 to 36, and you'll have an approximation of your 2010 AMT.

Reviewing AMT Calculations originally appeared on About.com Tax Planning: U.S. on Sunday, February 7th, 2010 at 22:55:20.

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Comparing the Standard Deduction to Itemized Deductions

Wed, 03 Feb 2010 13:10:47 +0000

For 2009 tax returns, people can take a standard deduction plus additional deductions for property taxes, sales tax on purchasing a new car, or additional amounts if the person is elderly or blind.

This new "expanded" standard deduction can add new ways to optimize your tax return, especially if your itemized deductions are only slightly more than your standard deduction. Download the new Schedule L to see if it might work better for you than the longer Schedule A.

When it comes to optimizing between the "expanded" standard deduction and itemized deductions, you will want to look at two different calculations. Read more...

Comparing the Standard Deduction to Itemized Deductions originally appeared on About.com Tax Planning: U.S. on Wednesday, February 3rd, 2010 at 13:10:47.

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New York No Longer Sending Out Form 1099-G

Mon, 25 Jan 2010 15:36:58 +0000

The state of New York is no longer mailing out Form 1099-G to report how much of a state income tax refund a person received. Not mailing out this document will save the state "approximately $700,000," according to an email notification sent by the Department of Taxation and Finance.

Form 1099-G reports how much of a refund a person received last year from their state government. State income tax refunds are usually taxable income for people who itemized their deductions in the previous year. Taxpayers and accountants alike often rely on these 1099-G forms.

New York does provide the ability for taxpayers to view their 1099-G information online or to call a toll-free hotline at (866) 698-2946. Taxpayers calling from outside the state of NY will need to use the non-toll-free number of (518) 485-0799.

Related New York resources:

New York No Longer Sending Out Form 1099-G originally appeared on About.com Tax Planning: U.S. on Monday, January 25th, 2010 at 15:36:58.

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Congress Approves Retroactive Charity Deduction for Haitian Earthquake Relief

Thu, 21 Jan 2010 19:56:09 +0000

Individuals and businesses will be allowed to take a deduction for donations given to charities providing relief to the victims of the earthquake in Haiti, if President Obama signs into law HR 4462, Haiti Charitable Deduction Bill. The House passed the bill on January 20, 2010; the Senate approved the bill on January 21. The bill now goes to Obama for signature. Obama signed the bill into law on January 22, 2010. You can read the full text of the actual bill (don't worry it's only two pages long).

Taxpayers are able to deduct on their 2009 tax returns donations given to charities providing relief efforts in Haiti. Donations of money or property given between January 12 and February 28, 2010, qualify for this retroactive deduction. Thus taxpayers will have the option to deduct these charitable contributions on either their 2009 returns or on their 2010 returns.

As with all charitable donations, people should keep receipts for their donations, including any canceled checks or receipts. Blogger Kay Bell reminds taxpayers to obtain a receipt for any donations made through texting.

Related news from other tax bloggers:

U.S. Senate approves rapid tax deduction for Haiti relief contributions (AccountingWeb)
Congress OKs accelerated tax deductions for donations to Haiti (Don't Mess With Taxes)
Don't Give Special Tax Breaks for Haiti Relief (TaxVox)
Haiti Earthquake Relief (CCH Tax Briefing)

Congress Approves Retroactive Charity Deduction for Haitian Earthquake Relief originally appeared on About.com Tax Planning: U.S. on Thursday, January 21st, 2010 at 19:56:09.

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IRS Commissioner Admits the Tax Codes are "Complex"

Wed, 20 Jan 2010 20:41:20 +0000

An interesting remark from the Commissioner of the Internal Revenue Service. In an interview with C-SPAN, Douglas Shulman admitted that he does not prepare his own tax return and instead hires a tax professional. When asked why, "Shulman smiled and said, 'Uh, I've used one for years. I find it convenient and I find the tax code complex, so I use a preparer'" (as reported by the Wall Street Journal).

You can watch the full video of the Commissioner's interview on C-SPAN. This particular remark is found in the 10-minute mark.

IRS Commissioner Admits the Tax Codes are "Complex" originally appeared on About.com Tax Planning: U.S. on Wednesday, January 20th, 2010 at 20:41:20.

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Give Wisely for Haiti Relief Charities

Sat, 16 Jan 2010 19:41:27 +0000

People who want to help the earthquake victims in Haiti may be able to get a tax deduction for any cash or goods donated to an approved public charity. The thing to be careful about: the tax deduction for charity is available for donations to US-based non-profit organizations. Here's some tips for:

Providing Earthquake Relief to Haiti

Give Wisely for Haiti Relief Charities originally appeared on About.com Tax Planning: U.S. on Saturday, January 16th, 2010 at 19:41:27.

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Estimated Tax Payments for 2009

Thu, 14 Jan 2010 16:12:45 +0000

The deadline for submitting any estimated tax payments for the year 2009 is Friday, January 15, 2010. The actual mechanics of sending in estimated payments are pretty easy. Either mail in a check to the Internal Revenue Service, or submit an online payment using the Electronic Federal Tax Payments Web site. Actually figuring out how much to send in can be a bit more complex. For most people, the simplest answer is to pay in at least 100% of their 2008 taxes, minus any withholding or other estimated payments. This will ensure that the IRS does not charge you an interest penalty for underpaying. Any additional balance due can then be paid by April 15th, 2010, using the extension voucher.

If you are mailing in your payment, make sure to enclose a 1040-ES payment voucher. This has all the information the IRS will need to process your payment correctly. On your check, in the memo field write in your Social Security Number, the tax year (2009), and "Form 1040-ES". Make your check payable to the "United States Treasury." Do not abbreviate ("US Treasury") or write in "IRS" or "Internal Revenue Service"). And, finally, make sure you mail it to the right address. As long as the payment is postmarked by January 15th, you'll be fine. Make a copy of your check before mailing it off, or keep a copy of the canceled check (if your bank still provides you with this) along with your other records for 2009.

If you are making a payment through EFTPS, here's a couple of tips. First, make sure your EFTPS account is set up for the checking account you want to use. In my case, I needed to change the bank account information. This required setting up a new EFTPS login with its own PIN and Password. This will take you an extra 15 to 20 minutes or so. Next, make sure your indicate the correct tax year for the payment. This will be for tax year 2009. I made the mistake of typing in 2008 (mostly because I still think 2008 is "last year"). Review all the details in the confirmation page before submitting your payment. Print out the confirmation receipt and keep it with your other tax records for 2009.

Estimated Tax Payments for 2009 originally appeared on About.com Tax Planning: U.S. on Thursday, January 14th, 2010 at 16:12:45.

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Questions to Ask Your Accountant in 2010

Tue, 12 Jan 2010 06:37:01 +0000

As you start to gather and organize all your tax documents, it might also be a good time to set an appointment with your tax advisor. (It helps to call before the busy season.) If you are looking for a new accountant or seeking professional help for the first time, here's a list of questions to ask before hiring a tax accountant.

Apart from common-sense questions about the accountant's licensing, experience, and fees, it's also a good opportunity to ask about areas of your tax situation that you feel unsure about. A competent accountant should be able to address your concerns about how unemployment, retirement plan withdrawals, buying or selling or losing a house, or investment losses impact your tax situation.

If you feel you cannot afford to hire a professional, you should check out many of the free tax services:

Volunteer Income Tax Assistance Program (VITA) offers free tax prep service to individuals earning $40,000 or less. To find the nearest VITA location, call the IRS at 1-800-829-1040.

The Armed Forces Tax Council provides free tax assistance to military personnel and their families at locations around the world.

Tax Aide offers free tax preparation services for individuals age 60 and over. The program is managed by AARP, and you can find a Tax Aide location on the AARP Web site.

From the IRS Web site: Free Tax Return Preparation For You by Volunteers.

Questions to Ask Your Accountant in 2010 originally appeared on About.com Tax Planning: U.S. on Tuesday, January 12th, 2010 at 06:37:01.

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Should Banks Pay a Transaction Tax?

Tue, 12 Jan 2010 06:16:46 +0000

The federal government apparently is starting to think about imposing a new kind of tax on banks and other financial institutions. Although it's making national headlines (NYT, Washington Post), there's not enough details for me to make an informed decision. Here's the clearest explanation I've read (from the New York Times), "The general idea is to devise a levy that would help reduce the budget deficit, which is now at a level not seen since World War II, and would also discourage the kinds of excessive risk-taking among financial institutions...."

The idea of a transaction tax is not new. Retired economics professor Edgar Feige has proposed a transaction tax as a replacement for our current system of taxes levied on income and payroll. When he last performed his mathematical calculations in 2005 for the tax reform panel, Feige estimated that all federal and state taxes could be done away with if the government imposes a levy of 0.57% on the value of each and every single financial transaction. That would certainly make all our lives much simpler, as a transaction tax would function much like an ATM fee, being subtracted from all our financial dealings by the banks and remitted directly to the government. Not to mention how much time and energy we would save not having to fill out a tax return.

So for me I'm much more interested in asking if a transaction tax (whether levied on banks or investors or individual taxpayers) would make sense? What to you think? Share your thoughts in the comments.

Should Banks Pay a Transaction Tax? originally appeared on About.com Tax Planning: U.S. on Tuesday, January 12th, 2010 at 06:16:46.

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When to Expect Your W-2 and Other Tax Documents

Tue, 12 Jan 2010 05:58:50 +0000

You should be receiving any W-2 Forms reporting your wages and tax withholding in January through mid-February. Employers are supposed to mail out or deliver the Form W-2 by January 31st. Allow a few extra days for delivery in the mail. If you haven't received your W-2 by mid-February, call your employer and ask for a duplicate.

Other tax documents are also send out by the end of January, including documents that report bank interest, student loan interest, mortgage interest, dividends, and other types of income or deductions. Form 1099-B, however, reporting proceeds from stocks, bonds or mutual funds that you sold isn't mailed out until February 16th. If this year is going to be anything similar to the last two years, brokers might send you two Forms 1099-B, the first to meet the IRS-imposed deadline, and a corrected 1099-B about a month later.

Related information: Calendar of important tax deadlines.

When to Expect Your W-2 and Other Tax Documents originally appeared on About.com Tax Planning: U.S. on Tuesday, January 12th, 2010 at 05:58:50.

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