| Tax Tip 2005-45 |
March 4, 2005 |
| Earned Income Tax Credit Available for Certain Workers |
| Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund. |
| Tax Tip 2005-44 |
March 3, 2005 |
| Are You Eligible for Any of These Tax Credits? |
| Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns, advises the IRS. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable – taxes could be reduced to the point that a taxpayer would receive a refund rather than owing any taxes. Below are some of the credits taxpayers could be eligible to claim: |
| Tax Tip 2005-43 |
March 2, 2005 |
| Volunteer Tax Preparation Assistance |
| Are you puzzled by the tax law and which credits and deductions you can take? If so, then why not look into the free, IRS-sponsored, volunteer tax return preparation services? In addition to tax preparation, many also offer free electronic filing of tax returns. |
| Tax Tip 2005-42 |
March 1, 2005 |
| Free Help from the IRS |
| Sometimes you just need a little help preparing your federal tax return. The IRS offers free assistance by computer, telephone, fax and in person. The IRS can assist you with obtaining forms, publications and answers to a wide range of tax questions. If you qualify, IRS can even help you find free tax preparation. |
| Tax Tip 2005-41 |
Feb. 28, 2005 |
| Free Tax Help Archives for Members of the Military |
| If you, or your spouse, are a member of the military, you may be eligible to receive free assistance with the preparation and filing of your federal tax return. The U.S. Armed Forces participate in the IRS-sponsored Volunteer Income Tax Assistance Program. The Armed Forces Tax Council oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. The AFTC consists of tax program coordinators for the Marine Corps, Air Force, Army, Navy and Coast Guard. |
| Tax Tip 2005-40 |
Feb. 25, 2005 |
| Reservists, Enlistees May Get Deferral of Back Taxes |
| Reservists called to active duty and enlistees in the armed forces may qualify for a deferral of taxes owed if they can show that their ability to pay taxes was affected by their military service, according to the Internal Revenue Service. The Servicemembers Civil Relief Act provides this benefit. |
| Tax Tip 2005-39 |
Feb. 24, 2005 |
| Gift Giving |
| If you gave any one person gifts valued at more than $11,000, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift. |
| Tax Tip 2005-38 |
Feb. 23, 2005 |
| Tax On Child’s Investment Income |
| Part or all of a child's investment income may be taxed at the parent's rate rather than the child's rate, according to the IRS. Because a parent's taxable income is usually higher than a child's income, the parent's top tax rate will often be higher as well. This special method of figuring the federal income tax only applies to children who are under the age of 14. For 2004, it applies if the child's total investment income for the year was more than $1,600. Investment income includes interest, dividends, capital gains and other unearned income. |
| Tax Tip 2005-37 |
Feb. 22, 2005 |
| Foreign Income |
| With more and more United States citizens earning money from foreign sources, the IRS reminds people that they must report all such income on their tax return, unless it is exempt under federal law. U.S. citizens are taxed on their worldwide income. |
| Tax Tip 2005-36 |
Feb. 21, 2005 |
| Early Distributions from Retirement Plans |
| An early distribution from an Individual Retirement Arrangement (IRA) or a qualified retirement plan need not be a “taxing’ experience, according to the IRS. |
| Tax Tip 2005-35 |
Feb. 18, 2005 |
| Capital Gains and Losses |
| Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. The IRS says when you sell a capital asset, such as stocks, the difference between the amount you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. While you must report all capital gains, you may deduct only your capital losses on investment property, not personal property. |
| Tax Tip 2005-34 |
Feb. 17, 2005 |
| Gambling Income & Expenses |
| Hit a big one in 2004? With more and more gambling establishments, the IRS reminds people that they must report all gambling winnings as income on their tax return. |
| Tax Tip 2005-33 |
Feb. 16, 2005 |
| Tips and Taxes |
| Do you work at a hair salon, barber shop, casino, golf course, hotel or restaurant or drive a taxicab? The tip income you receive as an employee from those services is taxable income, advises the IRS. |
| Tax Tip 2005-32 |
Feb. 15, 2005 |
| Alimony Payments Have Tax Implications |
| When the end of matrimony leads to the start of alimony, how does it affect your taxes? Alimony payments you receive are taxable to you in the year received, according to the Internal Revenue Service. |
| Tax Tip 2005-31 |
Feb. 14, 2005 |
| Taxability of Social Security Benefits |
| The IRS says that whether your Social Security benefits are taxable depends on your total income and marital status. Form SSA-1099, which Social Security recipients should receive by January 31, shows your total benefits, but determining your taxable benefits requires putting pencil to paper. |
| Tax Tip 2005-30 |
Feb. 11, 2005 |
| Taxable or Nontaxable? |
| Generally, most income you receive is taxable, according to the IRS. But there are some areas where certain types of income are partially taxed or not taxed at all. A complete list is available in IRS Publication 525, Taxable and Nontaxable Income. |
| Tax Tip 2005-29 |
Feb. 10, 2005 |
| You Can Deduct State and Local Sales Tax |
| If you itemize your taxes, you may choose to deduct state and local sales taxes instead of state and local income taxes. The American Jobs Creation Act of 2004 gives taxpayers this option for 2004 and 2005 tax returns. |
| Tax Tip 2005-28 |
Feb. 9, 2005 |
| Is Your Business Now Eligible to Use Schedule C-EZ? |
| Your business may have become eligible to use the abbreviated Schedule C-EZ instead of the longer Schedule C when reporting business profit and loss on your tax year 2004 federal income tax return, according to the IRS. That´s because the deductible business expense threshold for filing Schedule C-EZ of the Form 1040 has doubled to $5,000 from $2,500. This change allows an additional 500,000 small businesses to file the C-EZ rather than Schedule C. |
| Tax Tip 2005-27 |
Feb. 8, 2005 |
| Tax Law Changes for Individuals |
| Taxpayers should make sure that they are aware of important changes to the tax law before they complete their 2004 federal income tax forms, advises the IRS. Here are the major changes that affect tax years beginning in 2004. |
| Tax Tip 2005-26 |
Feb. 7, 2005 |
| Roth IRA Contributions |
| Confused about whether you can contribute to a Roth IRA? The IRS suggests checking the following simple rules. |
| Tax Tip 2005-25 |
Feb. 4, 2005 |
| Don't Be Taken In By Tax Scams |
| The IRS reminds taxpayers not to fall victim to a variety of tax scams. These schemes take numerous shapes, ranging from promises of special tax refunds to illegal ways of “untaxing’ yourself. Frequently, taxpayers are charged money for the incorrect advice by those promoting the scheme. If people think something may be unscrupulous, they can report suspected tax fraud to the IRS at 1-800-829-0433. |
| Tax Tip 2005-24 |
Feb. 3, 2005 |
| What to Do if You Haven’t Received a Form 1099 |
| If you received certain types of income, you may receive a Form 1099 for use with your federal tax return. You should receive these forms from the payer by January 31, 2005, according to the IRS. If you have not received an expected 1099 by a few days after that, contact the payer. If you still do not get the form by February 15, call the IRS for help at 1-800-829-1040. |
| Tax Tip 2005-23 |
Feb. 2, 2005 |
| What to Do If You Haven’t Received a Form W-2 |
| You should receive a Form W-2, “Wage and Tax Statement,’ from each employer you worked for to use in preparing your federal tax return. According to the IRS, employers must furnish this record of 2004 earnings and withheld taxes no later than Jan. 31, 2005 (if mailed, allow a few days for delivery). |
| Tax Tip 2005-22 |
Feb. 1, 2005 |
| EFTPS: Pay Your Taxes Electronically and Securely |
| If you are going to owe taxes when you file your federal tax return, consider paying through the Electronic Federal Tax Payment System (EFTPS). EFTPS is a fast, easy, convenient and secure service provided free by the Department of the Treasury. |
| Tax Tip 2005-21 |
Jan. 31, 2005 |
| Free Filing in 2005 |
| If you have access to a computer and the Internet you may be eligible to prepare and file your 2004 federal tax return electronically — for free. |
| Tax Tip 2005-20 |
Jan. 28, 2005 |
| Faster Refunds through Direct Deposit |
| Want a faster refund? More and more taxpayers are choosing direct deposit as the way to get their federal tax refunds. The payment is more secure — there is no check to get lost. And, it´s more convenient — no special trip to the bank to deposit a check. To request direct deposit, follow the instructions for “Refund’ on your tax return. |
| Tax Tip 2005-19 |
Jan. 27, 2005 |
| E-file Helps Refunds, Payments |
| Are you one of the many taxpayers who will receive a refund when you file your federal tax return? The Internal Revenue Service says that requesting direct deposit and filing your tax return electronically will put that money in your pocket faster and easier. |
| Tax Tip 2005-18 |
Jan. 26, 2005 |
| Haven’t Filed Last Year’s Tax Return? Here’s What to Do |
| The IRS hears many reasons from taxpayers for not filing a tax return. You may not have known whether you were required to file. Whatever the reason, it´s best to file your return as soon as you can. If you need help, even with a late return, the IRS is ready to assist you. |
| Tax Tip 2005-17 |
Jan. 25, 2005 |
| Marriage or Divorce -- Check Your Social Security Number |
| Newlyweds and the recently divorced should make sure that names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill or reduce the size of any refund. |
| Tax Tip 2005-16 |
Jan. 24, 2005 |
| Changing Your Address? Notify the IRS |
| Have you changed your home or business address? If so, you may want to notify the IRS to ensure that you receive any refunds or correspondence. The IRS uses the Postal Service’s change of address files to update taxpayer addresses, but you may want to notify the IRS directly. |
| Tax Tip 2005-15 |
Jan. 21, 2005 |
| Toll-Free Telephone Service |
| Free tax help from the IRS is just a phone call away. The IRS provides various services through its toll-free telephone numbers. You can order forms and publications, listen to prerecorded tax information, check on the status of your refund, or ask questions about your tax return. Some of these services are available 24 hours a day, seven days a week. |
| Tax Tip 2005-14 |
Jan. 20, 2005 |
| Forms and Publications -- How to Order |
| The Internal Revenue Service has many forms and free publications on a wide variety of topics to help you understand and meet tax filing requirements. These forms and publications are available on the internet, on CD-ROM, through fax on demand, over the telephone, through the mail, at local IRS offices, at some banks, post offices and libraries, and even at some grocery stores, copy centers and office supply stores. |
| Tax Tip 2005-13 |
Jan. 19, 2005 |
| Need a Copy of Your Tax Return Information? |
| Taxpayers have two easy and convenient options for getting copies of their federal tax return information — tax return transcripts and tax account transcripts — by phone or by mail. |
| Tax Tip 2005-12 |
Jan. 18, 2005 |
| Tax Materials and Assistance in Spanish -- Ayuda en Español |
| If you need federal tax information, the IRS provides free Spanish language products and services. Pages on the IRS.gov, pre-recorded tax topics, refund information, tax publications and toll-free telephone assistance are all available in the Spanish-language. |
| Tax Tip 2005-11 |
Jan. 17, 2005 |
| Publication 17 -- One Stop for Tax Help |
| Facing a lot of different tax questions this year? IRS experts have pulled together an overview of common tax issues in one convenient place — Publication 17, Your Federal Income Tax. This updated publication contains a vast array of helpful information in one guide. |
| Tax Tip 2005-10 |
Jan. 14, 2005 |
| IRS Has Free Publications on Every Topic You Need |
| From aardvark to zyzzyva, the IRS has a publication that covers it — free for the asking. The IRS has numerous publications on a variety of tax-related topics available by phone, fax, or the Internet. |
| Tax Tip 2005-09 |
Jan. 13, 2005 |
| 1040 Central -- Point & Click Your Way to a Trouble-Free Tax Season |
| Don´t wait in line, go on-line. The IRS has a tax tool called 1040 Central to help you get your taxes done more quickly and easily. The 1040 Central page is the place to visit at IRS.gov, to get your tax info organized and ready to go. No matter which form you use, 1040 Central has the links you´ll need to file your tax year 2004 federal income tax return. |
| Tax Tip 2005-08 |
Jan. 12, 2005 |
| Recordkeeping |
| You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year, the IRS advises. Good recordkeeping will help you remember the various transactions you made during the year, which may help you out on your taxes. |
| Tax Tip 2005-07 |
Jan. 11, 2005 |
| Choosing a Tax Return Preparer |
| Most tax return preparers are professional, honest and provide excellent service to their clients. But if you pay someone to prepare your tax return, choose that preparer wisely, advises the IRS. Taxpayers are legally responsible for what´s on their returns—even if prepared by someone else. |
| Tax Tip 2005-06 |
Jan. 10, 2005 |
| Should You Itemize? |
| Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. According to the IRS, money paid for medical care, mortgage interest, taxes, contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing. |
| Tax Tip 2005-05 |
Jan. 7, 2005 |
| Which Form -- 1040EZ, 1040A or 1040? |
| If you are filing a federal income tax return on paper, use the simplest form you can, the IRS advises. The simpler the form, the less chance of an error that may cost you money or delay the processing of your return. The simplest is Form 1040EZ. Form 1040A covers several additional items not addressed by the EZ. Form 1040 should be used when itemizing deductions and reporting more complex investments and other income. Beginning in 2004, the income limit for using Forms 1040EZ and 1040A has increased to taxable income of less than $100,000, up from previous years´ limit of less than $50,000. |
| Tax Tip 2005-04 |
Jan. 6, 2005 |
| What Is Your Filing Status? |
| Your filing status on your federal tax return is a category that identifies you based on your marital and family situation, according to the IRS. It is an important factor in determining whether you must file a return, the amount of your standard deduction and your correct amount of tax. If more than one filing status applies to you, you may choose the one that gives you the lowest tax obligation. |
| Tax Tip 2005-03 |
Jan. 5, 2005 |
| Who Must File a Tax Return |
| There are some instances when you may not be required to file a federal income tax return. But keep this in mind — more than 70 percent of those who file are due a refund, so it may be to your advantage to file even if you are not required to. |
| Tax Tip 2005-02 |
Jan. 4, 2005 |
| Taxpayer Rights a Priority for IRS |
| The law requires the IRS to protect taxpayer rights, and in its day-to-day operations, the IRS and its employees make taxpayer rights a top priority. This includes explaining those rights to taxpayers, keeping taxpayer information private and confidential and being professional and courteous. |
| Tax Tip 2005-01 |
Jan. 3, 2005 |
| Avoid Headaches, Prepare Tax Return Early |
| Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund. |
