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Tax benefits for education

Whether you are paying for a college education or a teacher buying items for your classroom, education credits and deductions can help lower your tax bill. The American Opportunity Credit, Lifetime Learning Credit or the Tuition and Fees Deduction may help offset the cost of higher education for you, your spouse and your dependents. The amount of these credits and deductions are based on the qualified education expenses, such as college or vocational school tuition and enrollment fees, that you paid during the year and may be limited by your modified adjusted gross income.  Room and board, insurance or personal living expenses are not considered qualified education expenses. The American Opportunity Tax Credit, which expanded and renamed the already-existing Hope credit, can be claimed for tuition and certain fees you pay for higher education in 2009 and 2010. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 extends the AOTC for two additional years until Dec. 31, 2012.. The Lifetime Learning Credit, which is up to a $2,000 tax credit per tax return, applies to undergraduate, graduate and professional degree courses and there is no limit to the number of years you can take this credit. The Tuition and Fees Deduction, which is up to a $4,000 deduction from your income, applies to undergraduate, graduate and professional degree courses.  This deduction may be beneficial as the modified adjusted gross income limits are higher than the thresholds for the Hope and Lifetime Learning Credits. Are you paying Student Loan interest?  You may be able to deduct up to $2,500 from your income per tax return.  Student Loan interest may be deducted even while your student is in school if you are paying theinterest immediately rather than deferring the payments. You cannot claim the American Opportunity Tax Credit, Lifetime Learning Credit and the Tuition and Fees Deduction for the same student in the same year.  You will want to choose the credit or deduction that provides the greatest benefit. However, you can claim the Student Interest Loan deduction and one of these other benefits simultaneously. Students and parents of students are not the only ones who can claim a Back-to-School tax benefit. As summer comes to an end, many teachers and other eligible educators are preparing for the start of the new school year. That preparation could include purchasing items for the classroom from personal funds. Be sure to keep your receipts. These out-of-pocket classroom expenses can be deductible. As an educator, you may be able to deduct up to $250 for expenses paid for the purchase of books, computer equipment and classroom supplies. If you and your spouse are filing a joint return and both are eligible educators, the maximum deduction is $500. To find out more about the deduction for educator expenses, including who qualifies for this deduction, check out the IRS Web site at IRS.gov. In the search field, type in the key words “educator expenses.” Additional information on the American Opportunity and Lifetime Learning Credits, Tuition and Fees Deduction and Student Loan Interest Deduction is available in Publication 970: Tax Benefits for Education.
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WHAT REAL ESTATE TAXES CAN I CLAIM
You can deduct taxes you paid on real estate if the following qualifications are met:
  1. The real estate you own was not used for business.
  2. These taxes are based on the assessed value of your property.
  3. The assessment of the value of the real estate was made uniformly on property throughout the community.
  4. The proceeds from paying these taxes must be used for general community or governmental purposes.
If your mortgage payments include your real estate taxes, you can only deduct the amount the mortgage company paid to the taxing authority during the tax year. Refunds and Rebates:  If you received a refund or rebate during the tax year, you must reduce your deduction by the amount of that refund or rebate.  Only reduce your deduction by the amount of the refund or rebate that was from taxes paid during the tax year.  If you received a rebate or refund from real estate taxes you paid in a prior year, you do not need to reduce your deduction.  For example, in August of 2010 Tom received a rebate for real estate taxes he had previously paid.  This rebate was for real estate taxes he paid during 2009.  Since he actually paid the taxes in a previous year (he didn't pay them during 2010, the year for which he is filing histaxes and plans to take the deduction), he does not need to reduce his deduction.  If he had instead received a rebate during 2010 for taxes he had paid earlier in 2010, he would have to reduce his deduction on his 2010 return for real estate taxes paid. DO NOT INCLUDE:  Itemized charges for services to specific property.  For example, if you pay association dues or if you pay for trash collection, water, or property maintenance, you cannot deduct these payments.
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WISCONSIN REJECTS CODES

WISCONSIN REJECT CODES

FOR MORE INFORMATION, PLEASE CONTACT THE WISCONSIN DEPARTMENT OF REVENUE:  (608) 266-2772 Code  Form   Field   Rejection Description 001    All   300-1  Duplicate return - already a current year return on file 002    All               Invalid Byte count or field size/type. 005    1     300-1   Form Code must be a ‘1’ 007    All   050-1   Invalid EFIN - Not numeric or all zeroes 008    All   050-1   Invalid ETIN - Not numeric or all zeroes 010    All   060-1   Taxpayer Last Name is blank 015    All   070-1   Taxpayer First Name is blank 020    All   000-5   Taxpayer SSN must equal the Federal Primary SSN 025    All   075      Address is blank 030    All   085      City is blank 035    All   095      Invalid State Abbreviation 040    All   100      Zip Code not numeric 045    All   300-5  Taxpayer Campaign Fund not equal to ‘ ‘ or ‘X’ 047    All   300-6  Spouse Campaign Fund not equal to ‘ ‘ or ‘X’ 050    1     300-2   City, Village, or Township code must equal ‘C’, or ‘V’, or ‘T’ 055    1     300-3   Municipality is blank 060    1     105      County is blank 065    1     300-4   School Code must be numeric 070    1     415      When Rent Credit is claimed then Rent Paid (405) or (410) must be greater than zero 075  1       425      When Property Tax Credit is claimed then Taxes Paid (420) must be greater than zero 080  1       545     When a Refund Amount is claimed then Amount Owed (550) must be zero 085  1       550     When an Amount Owed is claimed then Estimated Tax Offset (555) must be zero 104                       Filing status is Married Filing Joint so Spouse Last Name cannot be blank 105  All   070-2    Filing as Married - Spouse First Name missing 106  All   055       Filing as Married - Spouse SSN missing 111  All   300-7    Filing Status must be ‘1’, or ‘2’ or ‘3’ or ‘4’ 160  1     535       When Farmland Tax Relief Credit is claimed then Taxes Paid (530) must be greater than zero 195  All                Invalid Entry 205  1     300-7    When Married Couple Credit is claimed Filing Status must be a ‘2’ 210  1, 1A   450   Married Couple Credit must be equal to what is computed on the schedule 220  1, 1A            Math error on the Married Couple Credit Schedule 225  All   1800      Married Couple Credit is greater than $480 655  1   400          WI Itemized Deduction Credit must equal WI Sch 3 Credit (1680) 656                       Moved out of WI before end of Tax Year - Must include Legal Residence (Domicile) Questionnaire 657                       Income of only wages, interest, & dividends is allowed on Form 1NPR 658                       Residence status is missing for one or both of the filers on a joint Form 1NPR return 659                       Residence status is missing for the filers on a single Form 1NPR 660                       Dates filer lived in WI are missing on a return where one or both filers are part year residents on Form 1NPR 661                       The state code is missing on a non-resident return on Form 1 NPR 662                       The date format is incorrect on Form 1 NPR 663                       The state code is mising when Net Tax Paid to Another State credit is claimed on Form 1 664                       Schedule OS is missing the state code 665                       Veteran's Credit is claimed on a Form 1 along with another type of property tax credit such as school property tax credit, Homestead credit, farmland preservation credit, or farmland tax relief credit. Only one is allowed 666                       The underpayment interes (UPI) box is filled with an incorrect value.  Only the numbers 2 through 9 or blank are acceptable 667                       The bank account number is missing on a return that has selected electronic payment or deposit

950                       Schedule I (Adjustment to Convert 2009 FAGI and Itemized deductions to Amounts Allowable for Wisconsin is required to report uneployment compensation.

951                       FAGI reported on Wisconsin return must be adjusted to add back umemployment compensation not taxed on the federal return. 956                      When Federal Adjusted Gross Income (Form 1040 or 1040A, Field 750) does not equal Form 1, Field 565, there must be a Schedule I. Schedule I, line 1 (Field 200) does not equal Federal Adjusted Gross Income (Form 1040 or 1040A, Field 750). 960  1   665          Field 665 must equal the sum of fields 785, 790, 795, 800 and 805 961  1   785etc     When any of fields 785, 790, 795, 800 or 805 is greater than zero, the corresponding code filed must be filled in 962  1NPR 320-8   Full-year resident or part-year resident can not e-file 1NPR NEW 963  1NPR 320-9   Only non-residents from reciprocal states (IL, IN, KY, MI, and MN) may e-file 1NPR 964  1NPR   900   Wisconsin wages, salaries, tips, etc (line 1) must not be greater than 965  1NPR   495   Wisconsin withholding must be equal to the requested refund 966  1NPR   690   Refund must be equal to the Wisconsin withholding 967  1                    Development Zones Credits (line 30c) being claimed, no Schedule DC filed 968  1                    Historic Rehabilitation Credits (line 23) being claimed, no Schedule HR filed 969  1                    Technology Zone Credit (line 30d) being claimed, no Schedule TC filed 970                        Net Tax Paid to Another State Credit (line 30h) claimed, no Schedule OS-E 971                        The state box (line 30h) does not agree with thte number of columns filled in on Schedule OS-E 976  H   125          Age is less than 18, claimant does not qualify. 977  H   130          Answer is no, claimant does not qualify. 978  H   135          Answer is yes, and claimant is less than 62, claimant does no qualify. 979  H                   Claimant does not qualify; age is less than 62, and claimed as dependent on tax return 980  H   140/145  Both questions are answered yes, claimant does not qualify. 981  H                  Household income greater than 24,499. No credit available. 982  1, H              A Sch FC and H cannot both be filed 983  H   460         Twelve months is entered, Schedule 3 should not be completed. 984  H                  When more than one tax bill exists, the number of acres, assessed value of land, and net taxes must be provided for each tax bill. 985  H                  The year, owner(s), owner type, property address, assessed land and improvement value and acres (when more than one) must be provided. If entries are from a personal property tax bill with no assessed land value, the land value may be zero but Homestead Note #14 must be checked. 986  1, 1A            Sch H is present, but no credit shown on homestead credit line of Form 1 or 1A. 987  H                  Sale of home is indicated and information is missing. Necessary information includes date home was sold, name and type of seller(s), property address, selling price, expense of sale (if any), adjusted basis of home, and sold home date of occupancy. 988  H                  Owner type is self and/or spouse and other, ownership percent missing. 989  H                  Seller owner type is self and/or spouse and other, ownership percent missing. 990  All                A State only return filed without a complete federal record. 991  1, 1A            Homestead credit being claimed, no Schedule H filed. 992  1, 1A            Schedule H filed, but missing a Rent Certificate or Property Tax Bill. 993  1                  Return was filed “married filing separate”. Spouse Name and SSN missing. 995  All                Direct Debit routing transit number is invalid. 996  All                Direct Debit payment date is blank. 997  All                Direct Debit payment date is invalid. Must be no later than April 15th for timely returns and no later than submission date for late and extensions rturns. 998  All               Test return 999  All                EFIN failed suitability testing.   The state also gives the following reasons why an electronically filed return will be rejected: 1) Duplicate returns 2) Test returns 3) Returns sent by preparers who are not authorized as a Wisconsin ERO 4) Record could not be processed or formatted 5) State-Only return filed without federal information in the unformatted record Federal/State Electronic Filing of Individual Income Tax Returns 9 6) Taxpayer Last Name is blank 7) Taxpayer First Name is blank 8) Taxpayer SSN is not equal to the Federal Primary SSN 9) Address is blank 10) City is blank 11) Filing as Married – Spouse First Name missing 12) Filing as Married – Spouse SSN missing 13) Form 1, field 665 must equal the sum of fields 785, 790, 795, 800 and 805 14) Form 1, when any of the fields 785, 790, 795, 800, or 805 is greater than zero, the corresponding code filed must be filled in 15) Form 1NPR, full-year resident or part-year resident can not e-filed 16) Form 1NPR, only non-residents from reciprocal states (IL, IN, KY, MI, and MN) may e-file 1NPR. 17) Form 1NPR, Wisconsin wages, salaries, tips, etc (line 1) must not be greater than zero. 18) Form 1NPR, Wisconsin withholding must be equal to the requested refund. 19) Form 1NPR, refund must be equal to the Wisconsin withholding. 20) Form 1, development zone credit (line 30c) being claimed, no Schedule DC filed. 21) Form 1, historic rehabilitation credit (line 23) being claimed, no Schedule HR filed. 22) Form 1 technology zone credit (line 30d) being claimed, no Schedule TC filed. 23) Schedule H, a Schedule H and Schedule FC cannot both be filed 24) Schedule H, Schedule 3 should not be completed if number of months on line 5 is twelve. 25) Schedule H, when more than one tax bill exists, number of acres and assessed value of land must be provided for each tax bill 26) Schedule H, not all of the needed property tax bill information is provided 27) Schedule H, homestead credit amount is not claimed on Form 1 or Form 1A 28) Schedule H, missing seller’s closing statement information, dates of occupancy, and/or selling price, expense of sale and adjusted basis of home sold 29) Schedule H, ownership percentage missing when ownership type is self and/or spouse and other 30) Schedule H, ownership percentage missing when seller ownership type is and/or spouse and other 31) Homestead Credit is claimed, and no Schedule H is attached 32) Schedule H is filed, and a rent certificate or property tax bill is missing 33) Schedule H line 1a, age is less than 18, claimant does not qualify 34) Schedule H, line 2, answer is no, claimant does not qualify 35) Schedule H, line 3, answer is yes, and claimant is less than 62, claimant does not qualify 36) Schedule H, age is less than 62, and claimed as dependent on tax return, claimant does not qualify Publication 115 10 37) Schedule H, line 4a and 4b, both questions are answered yes, claimant does not qualify 38) Schedule H, household income greater than 24,499 - No credit available 39) Filing status is married filing separately, and spouse name and/or SSN is missing 40) Direct Debit routing transit number is invalid 41) Direct Debit payment date is blank 42) Direct Debit payment date is invalid. Must be no later than April 16th for timely returns and no later than submission date for later and extension returns.
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CAN I FILE A PAST RETURN AT TAXSUX.

Can I use TAXSUX  to prepare a prior year return?

Yes, you can prepare certain prior year returns using TAXSUX.  Go to www.taxsux.net  and log in to your account.  Available prior year programs will have "Start a New Tax Return" next to the Tax Year.  To access the prior year program, you will select the "Start a New Tax Return" link next to the Tax Year you would like to prepare.  You will then select "Edit Return" to access the Prior Year Program.  From the Main Menu of the prior year program you can choose to enter the information through the navigation tabs or start the interview wizard.
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WHO CAN WIN THE MILLION DOLLARS
Any member of taxsux.net is automatically entered into the million dollar draw  as well as the opportunity to win other prizes along the way
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wheres my refund
Once the IRS accepts your return, they do not provide us further information regarding when the refunds are mailed or direct deposited. You can check the status of your federal refund at the IRS website. When to Check Your Refund Status If you e-file, you can get refund information 72 hours after the IRS acknowledges receipt of your return. If you file a paper return, refund information will generally be available three to four weeks after mailing your return. Refund checks are normally sent out weekly on Fridays. If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. What You Need to Check Refund Status When checking your refund status, have your federal tax return handy. To get your personalized refund information, you must enter:
  • Your Social Security Number or Individual Taxpayer Identification Number
  • Your filing status
  • Exact whole dollar refund amount shown on your tax return
  What the Online Tool Will Tell You
  • Acknowledgment that your return was received and is being processed.
  • The mailing date or direct deposit date of your refund.
  • Notice that the IRS could not deliver your refund due to an incorrect address. In this case, you may be able to change or correct your address online.
  Toll-free Number You can also check the status of your refund in English or Spanish by calling the IRS Refund Hotline at 800-829-1954 or the IRS TeleTax System at 800-829-4477.
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facts about injured spouse relief
You may qualify for injured spouse relief if you file a joint return and all or part of your refund is applied against your spouse's past-due federal tax, state income tax, child or spousal support, or federal non tax debt, such as a student loan. Some important facts about claiming injured spouse relief:
  1. To be considered an injured spouse, you must have made and reported tax payments, such as federal income tax withheld from wages or estimated tax payments, or claimed a refundable tax credit on the joint return, and you must not be legally obligated to pay the past-due amount.
  2. If you live in a community property state, see IRS Pub 555, Community Property, for special rules.
  3. If you filed a joint return and you're not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation.
  4. You may file form 8379 along with your original tax return or your may file it by itself after you are notified of a refund offset.
  5. You can e-file Form 8379. If you file a paper tax return you can include Form 8379 with your return, write "INJURED SPOUSE" at the top left corner of your return, and the IRS will process your allocation request before an offset occurs.
  6. If you are filing Form 8379 by itself, it must show both spouses' Social Security Numbers in the same order as they appeared on your income tax return. You, the "injured" spouse, must also sign the form.
  7. Do not use Form 8379 if you are claiming innocent spouse relief. Instead, file Form 8857, Request for Innocent Spouse Relief.  This relief from a joint liability applies only in limited circumstances. IRS Pub 971, Innocent Spouse Relief, explains who may qualify, and how to request this relief.
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withholding taxes
There are two methods for paying taxes:
  • Withholding
    • If you are an employee, your employer probably withholds income tax from your paycheck.
    • Income received from pensions, bonuses, commissions, gambling winnings, and other sources may also have income tax withheld from the amount you receive.
    • The amounts withheld are paid to the IRS on your behalf.
  • Estimated Tax Payments
    • If you do not pay taxes through withholding, or do not pay enough tax through withholding, you may need to make estimated tax payments to make up the deficit.
    • Generally, people who are in business for themselves pay their taxes through estimated payments.
    • Tax on income received from dividends, interest, rents, royalties, and capital gains is generally paid through estimated payments.
If you do not have enough taxes withheld, or you do not pay enough in estimated taxes, you may be subject to a penalty for underpaying your taxes. The Making Work Pay Credit, available only for 2009 and 2010 tax years, will automatically reduce withholding for most wage-earners. If, when you prepare your return, you do not qualify for as much credit as you received through reduced withholding, your refund could be smaller or you may even owe tax. This might especially affect those with two jobs, including families where both spouses work. For this reason, you may want to adjust your withholding by filing a new Form W-4 to account for the difference. The IRS Withholding Calculator can help you determine if your withholding is appropriate for your income, dependents and other tax information. If your income is low enough that you will not have to pay income tax, you may be exempt from income tax withholding. You may still be subject to Social Security and Medicare tax withholdings. You can claim an exemption from income tax withholding only if:
  • For the prior tax year you received a refund, or were entitled to a refund, of all federal income tax withheld because you had no tax liability.
  • For the current tax year you expect to receive a refund of all federal income tax withheld because you expect to have no tax liability.
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definition of etin ein itin ptin

ETIN EIN ITIN PTIN

Electronic Filing Identification Number (EFIN) A 6-digit identification number assigned by the IRS to accepted applicants for participation in IRS e-file. NOTE: Used in conjunction with an 8-digit password in TaxACT. Electronic Return Originator (ERO) An Authorized IRS e-file Provider that originates the electronic submission of returns to the IRS. Electronic Transmitter Identification Number (ETIN) A 5-digit identification number assigned by the IRS to a participant in IRS e-file that performs activity of transmission and/or software development. NOTE: TaxACT has an ETIN. If a customer will not transmit their own returns directly to the IRS, they will not use their ETIN. Employer Identification Number (EIN) The EIN is a 9-digit number that the IRS issues. It is used to identify the tax accounts of employers and certain others who have no employees. Individual Taxpayer Identification Number (ITIN) A 9-digit tax processing number that became available on July 1, 1996, for certain nonresident and resident aliens, their spouses, and dependents. The ITIN is only available from IRS for those individuals who cannot obtain a Social Security Number (SSN). To obtain an ITIN, complete IRS Form W-7 Application for IRS Individual Identification Number. Preparer Tax Identification Number (PTIN) An 8-digit identification number which must also contain either a P or a S at the beginning. These are used if a paid preparer does not want to disclose their Social Security Number (SSN) on the returns they prepare. If they use a PTIN, they will meet the requirement under IRC section 6109(a)(4) of furnishing their identifying number on returns they prepare. The PTIN cannot be used in place of the Employer Identification Number (EIN) of the tax preparation firm.
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CHILDREN OF DIVORCED or SEPARATED PARENTS

Topic:  Child(ren) of Divorced or Separated Parents

IF the noncustodial parent qualifies they can claim:
  • the exemption for the child (claim them as a dependent)
  • the child tax credit for the child (up to $1,000)
ONLY the custodial parent can claim:
  • head of household filing status due to that child
  • earned income credit due to that child
  • the credit for child and dependent care expenses
  • the exclusion for dependent care benefits (i.e. from the W-2 form)
Per IRS Publication 17 Your Federal Income Tax, page 28: Special Rule for Qualifying Child of More Than One Person Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Although the child meets the conditions to be a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child. To meet this special test, you must be the person who can treat the child as a qualifying child. Only that person can treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). 1. The exemption for the child. 2. The child tax credit. 3. Head of household filing status. 4. The credit for child and dependent care expenses. 5. The exclusion from income for dependent care benefits. 6. The earned income credit. The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you. The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Tiebreaker rules. To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tie-breaker rules apply.
  • If only one of the persons is the child’s parent, the child is treated as the qualifying child of the parent.
  • If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
  • If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
  • If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person’s AGI is higher than the highest AGI of any of the child’s parents who can claim the child. If the child’s parents file a joint return with each other, this rule can be applied by dividing the parents’ combined AGI equally between the parents.
Applying this special test to divorced or separated parents or parents who live apart. If child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or separated parents or parents who live apart, only the noncustodial parent can claim an exemption and the child tax credit for the child. However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules will determine which person can treat the child as a qualifying child. Within this section of IRS Publication 17 there are multiple examples provided. Additionally, you can refer to IRS Publication 504 Divorced or Separated Individuals for more information about children of divorced or separated parents (or parents who live apart).
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DEPENDENT INCOME -FILING REQUIREMENTS

 Dependent Income - Filing Requirements

If your parent (or someone else) can claim you as dependent, use the information below to determine if you must file a tax return. Keep in mind that if either federal or state taxes were withheld from your paychecks, only by filing a return can you receive a refund for any amounts due back to you. Refer to the IRS Form 1040 Instructions and IRS Publication 501 for additional information.  
  • Federal Form 1040 Instructions
  • IRS Publication 501 - Exemptions, Standard Deductions and Filing Requirements  Earned income includes wages, tips, and taxable scholarship and fellowship grants. Unearned income includes taxable interest, ordinary dividends, and capital gains distributions. Gross income is the total of your earned and unearned income.   If your gross income was $3,650 or more, you usually cannot be claimed as a dependent unless you were under age 19 or a student and under age 24. For details, see IRS Publication 501.  Single Dependents Were you either age 65 or older or blind? If not, then you must file a return if any of the following apply:
    1. Your unearned income was over $950.
    2. Your earned income was over $5,700.
    3. Your gross income was more than the larger of
      1. $950, or
      2. Your earned income (up to $5,400) plus $300
      If you were blind or age 65 or over, you must file a return if any of the following apply:
    1. Your unearned income was over $2,350 ($3,750 if 65 or older and blind)
    2. Your earned income was over $7,100 ($8,500 if 65 or older and blind)
    3. Your gross income was more than the larger of
      1. Your earned income (up to $5,400) plus $1,700 ($3100 if 65 or older and blind)
      2. $2,350 ($3,750 if 65 or older and blind)
      Married Dependents  Were you either age 65 or older or blind? If not, then you must file a return if any of the following apply:
    1. Your unearned income was over $950.
    2. Your earned income was over $5,700.
    3. Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
    4. Your gross income was more than the larger of
      1. $950, or
      2. Your earned income (up to $5,400), plus $300.
      If you were blind or age 65 or older then you must file a return if any of the following apply:
    1. Your unearned income was over $2,050 ($3,150 if 65 or older and blind).
    2. Your earned income was over $6,800 ($7,900 if 65 or older and blind).
    3. Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
    4. Your gross income was more than the larger of
      1. $2,050 ($3150 if 65 or older and blind) or
      2. your earned income (up to $5,400) plus $1,400 ($2,500 if 65 or older and blind).
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Dependents – Form 1040 Line 6

Topic:  Dependents - Form 1040 Line 6c

Line 6c of IRS Form 1040 asks for three different types of dependents.
  • Number of children on 6c who: Lived with you
  • Number of children on 6c who: Did not live with you due to divorce or separation
  • Dependents on 6c not entered above
If the relationship is entered as any of the following, and neither of the boxes "Check if dependent child did not live with you due to divorce or separation" or "Check if dependent was a resident of Canada/Mexico" are checked, and there are months entered as "Months dependent lived with you", then the dependent will be counted in the first line Number of children on 6c who: lived with you:
  • Son
  • Daughter
  • Grandchild
  • Stepchild
  • Fosterchild
  • Niece
  • Nephew
Please note that as the IRS only allows certain text for describing relationships for electronic filing, that is also the text that will print on line 6c of Form 1040 (i.e. sister is used for both sister and stepsister) and is correctly done per the IRS instructions.
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DEPENDANTS GENERAL
You can claim an exemption for yourself, your spouse, and each of your dependents. You can generally deduct $3,700 from your adjusted gross income for each exemption you claim in 2011, which will lower your taxable income. The total number of exemptions is reported on Line 6d of Form 1040, and the total dollar amount of exemptions is reported on Line 42 of Form 1040. To claim the exemption for a dependent, five dependency tests must be met: relationship or member of household, gross income, support, citizenship or resident, and joint return tests. If you claim an exemption for a dependent (such as your child), then that dependent cannot claim a personal exemption on his or her own tax return. Refer to IRS Publication 501 for additional information about exemptions and whom you may claim as a dependent.
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FILING STATUS
If you are considered married for the whole year, you and your spouse can file a joint return or you can file separate returns. You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.
  1. You are married and living together as husband and wife.
  2. You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.
  3. You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.
  4. You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.
See IRS Publication 17 Your Federal Income Tax (For Individuals) for more information.
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Dependents – Resident of Mexico or Canad

To indicate if a dependent is not a U.S. citizen and is a resident of Mexico or Canada:
  1. From within your Taxsux return (Online or Desktop) click on the Federal Q&A tab
  2. Click Basic Information to expand the category, then click Dependents - Not U.S. Citizens or Resident Aliens
  3. Click Review for each dependent that needs to indicate they are resident of Mexico or Canada
  4. Click on the check box to make the indication
Note that the dependent information must already have been entered in the program in order to access this screen.
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CREDITS

Credits

A tax credit reduces the amount of tax for which you are liable. Unlike a deduction, which reduces the amount of income subject to tax, a tax credit directly reduces your tax liability. A tax credit is usually more valuable than a tax deduction of the same dollar amount. There are two categories of tax credits, refundable and nonrefundable.

Nonrefundable Tax Credits

Most, but not all, tax credits are referred to as nonrefundable credits. A nonrefundable credit can reduce your tax liability to zero (0), but not below. You must have tax liability on line 46 of Form 1040, line 18 of Form 1040A, or line 43 of Form 1040NR to claim a nonrefundable tax credit. Nonrefundable tax credits include:

Refundable Tax Credits

A refundable tax credit is a tax credit that can reduce your tax liability below zero (0). Because it is possible to receive a refund from this type of credit, they're referred to as refundable. Refundable tax credits include:
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Earned Income Credit

Earned Income Credit

Related The Earned Income Tax Credit (EIC) is a refundable tax credit that reduces or eliminates the tax paid by low-income workers.

Amount of Credit

Tax year 2010 maximum credit:
  • $5,666 with three or more qualifying children
  • $5,036 with two qualifying children
  • $3,050 with one qualifying child
  • $457 with no qualifying children

Requirements to Claim Credit

  • You must have a valid Social Security Number (SSN).
    • An Individual Taxpayer Identification Number (ITIN) is not sufficient.
    • Your SSN card must not have "Not valid for employment" on it.
  • Your filing status must be single, head of household, qualifying widow(er), or married filing jointly.
  • You must be a U.S. citizen living in the U.S. more than half the year, or a resident alien for the entire year.
  • You cannot have foreign earned income.
  • Your investment income must be less than $3,100.
  • Your adjusted gross income fall within certain levels, which vary by filing status and the number of qualifying children:
    • Single, head of household, qualifying widow(er) filers:
      • Three or more qualifying children: the credit begins to phase out when earned income reaches $16,450 and is eliminated when it reaches $43,352.
      • Two qualifying children: the credit begins to phase out when earned income reaches $16,450 and is eliminated when it reaches $40,363.
      • One qualifying child: the credit begins to phase out when earned income reaches $16,450 and is eliminated when it reaches $35,535.
      • No qualifying children: the credit begins to phase out when earned income reaches $7,480 and is eliminated when it reaches $13,460.
    • Married filing jointly filers:
      • Three or more qualifying children: the credit begins to phase out when earned income reaches $21,460 and is eliminated when it reaches $48,362.
      • Two qualifying children: the credit begins to phase out when earned income reaches $21,460 and is eliminated when it reaches $45,373.
      • One qualifying child: the credit begins to phase out when earned income reaches $21,460 and is eliminated when it reaches $40,545.
      • No qualifying children: the credit begins to phase out when earned income reaches $12,490 and is eliminated when it reaches $18,470.
  • You must have earned income.
  • You must not be the qualifying child of another person.
  • You must not be the dependent of another person.
  • You must be at least age 25, but under age 65.

Additional Requirements if You Have a Qualifying Child

  • The child must have a valid Social Security Number (SSN).
  • The child must be younger than you, unless the child is disabled.
  • The child must not have filed a joint return except to claim a refund.
  • The child's relationship to you must be any of the following:
    • Son or daughter
    • Stepchild
    • Eligible foster child
    • Sibling, half-sibling, or step-sibling
    • A descendant of any of the above, e.g, your grandchild
  • The child must be one of the following:
    • Under 19 at the end of the current tax year
    • Under 24 at the end of the current tax year and a student
    • Permanently and totally disabled at anytime during the year, regardless of age
  • The child must have lived with you in the United States for more than half of the current tax year. A child is considered to have lived with you if the child was born or died in the current tax year and lived with you the entire time he or she was alive. Temporary absences, including school, vacation, medical care, military service, or detention in a juvenile facility, count as time lived with you.
  • The child cannot be used by anyone else to claim EIC.
  • It is possible that one child might be claimed by two or more persons in one calendar year. In this event, the child will be the qualifying child of the parents first, and then the taxpayer with the highest adjusted gross income (AGI). If both of the child's parents claim the credit, the parent with whom the child resides the longest may claim the credit. If the child resides with both parents an equal amount of time, the parent with the highest AGI will claim the child for EIC.

Earned Income

  • Wages
  • Salaries
  • Tips
  • Other taxable employee compensation
  • Net earnings from self-employment
  • Disability pay reported as wages
  • Parsonage allowances
  • Meals and lodging furnished for the convenience of the employer
  • Voluntary salary deferrals
  • Military pay earned in a combat zone
  • Strike pay paid by a union
  • Statutory employee wages

Advance EIC Payments

Beginning with the 2011 tax year, advance earned income credit payments are no longer available. If you received advance payments for 2010, they will be reported in box 9 of Form W-2.  If you receive advance payments, you must file a tax return for the year in which you received the payments.

Disallowance of EIC

Disallowance of EIC is usually due to math or clerical errors, reckless or intentional disregard of EIC rules, and fraud. If you have been disallowed for any reason other than a math or clerical error, you must file Form 8862 before claiming EIC again. If you have been disallowed due to math or clerical errors for any year after 1996, it is not necessary to file Form 8862 with your tax return. If you have been disallowed due to reckless or intentional disregard of EIC rules, you cannot claim EIC for two years after disallowance. If your EIC has not been reduced or disallowed again for any reason other than math or clerical errors, and you have previously filed Form 8862 since disallowance, you do not need to file Form 8862 again. If you have been disallowed due to fraud, you cannot claim EIC for 10 years after final determination that your EIC claim was due to fraud. For more assistance determining whether you are eligible for the Earned Income Tax Credit, use the IRS EITC Home Page. For more information see IRS Publication 596.
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Residential Energy Credits

Residential Energy Credits

Related The nonrefundable Residential Energy Credits are available for individuals who make energy-conscious improvements in 2011 to the energy efficiency of their home. There are two credits:
  • The Nonbusiness Energy Property Credit, claimed on Part 1 of Form 5695, is for physical improvements to the home building itself. This covers energy-efficient insulation, doors, windows, heaters, air conditioners and the like.
  • The Residential Energy-Efficient Property Credit, claimed on Part 2 of Form 5695, is for investments in alternative energy, such as solar, wind, geothermal and fuel cells.

Part I - Nonbusiness Energy Property Credit

Updated for 2011 returns: The Nonbusiness Energy Property Credit has been reduced and limited for 2011. The credit now has a lifetime limit of $500, of which only $200 can be for windows. Also, now only 10% of eligible energy-saving home improvements installed in 2011 qualify for the credit, but are still subject to other stated maximums. There are also other limits for certain devices, listed below. Finally, the $500 credit limit is reduced by amounts you received for the credit in 2006-2010.

Requirements to Claim Credit

  • Windows and doors must now meet Energy Star specifications.
  • Woodstoves must have a thermal efficiency of at least 75%.
  • Natural gas, propane or oil furnaces or hot water boilers must have an annual fuel utilization efficiency of at least 95.
  • Each item must be installed in your primary home. A primary home is the home where you live most of the time, including a house, houseboat, mobile home, condominium, manufactured home, or cooperative apartment.
  • The expenses must be paid or incurred in the current tax year.
  • Purchases made with subsidized energy financing are no longer elgible for the credit.

Qualifying Items / Expenses

  • Insulation material or systems to reduce heat loss or gain
  • Exterior windows, including skylights ($200 maximum credit)
  • Exterior doors
  • Roofing designed to reduce heat gain
  • Residential energy property, including labor costs for the on-site preparation, assembly or original installation of the property
    • Natural gas, propane or oil furnaces - $150 maximum credit
    • Hot-water boilers - $150 maximum credit
    • Main air circulating fans used in natural gas, propane or oil furnaces - $50 maximum credit
    • Electric heat pump water heaters - $300 maximum credit
    • Natural gas, propane or oil water heaters - $300 maximum credit
    • Electric heat pumps - $300 maximum credit
    • Geothermal heat pumps - $300 maximum credit
    • Central air conditioners - $300 maximum credit

Part II - Residential Energy-Efficient Property Credit

A credit is also available for investments in alternative energy for your home. The Residential Energy-Efficient Property Credit also equals 30% of qualifying improvement costs, with no dollar limit except for fuel cells. Installation is usually included.

Requirements to Claim Credit

Property and installation costs must be for use in your home located in the United States. Except for fuel cells, the home does not have to be your main home.

Qualifying Items

  • Solar panels
  • Solar water-heaters
  • Wind turbines
  • Geothermal heat pumps
  • Fuel cells, with restrictions:
    • The fuel cell must be installed on your main home in the U.S.
    • The fuel cell must have a capacity of at least .5 kilowatt.
    • The credit cannot exceed $500 for each .5 kilowatt generated.
To claim the credit, complete Form 5695 and attach the form to your Form 1040 or Form 1040A. For more information, see Energy Incentives in the Recovery Act.
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Adoption Credit

Adoption Credit

The Adoption Credit is available for the amount of out-of pocket qualified adoption expenses, or to exclude employer-provided adoption benefits from income. The maximum credit for 2010 is $13,170. For adoptions finalized in 2010 or 2011, the credit is refundable, as is unused credit carried forward from prior years, even though the credit was nonrefundable in prior years.

Requirements to Claim Credit

  • The qualifying child must be under age 18, or is physically or mentally incapable of self-care.
  • You can claim the credit for any filing status, but if married filing separately, the following must be true:
    • You lived apart from your spouse during the last 6 months of the year.
    • The eligible child lived in your home for more than half of the current tax year.
    • You paid over half the cost of keeping your home.
    • You meet all other requirements.
  • Your 2010 modified adjusted gross income (MAGI) must be less than $222,180. The same income limit applies to single and joint filers. See below for additional phase-out amounts.
  • You are able to report the eligible child's name, year of birth and identifying number.
  • You meet at least one of these conditions:
    • The adoption expenses were paid in the prior tax year, but the adoption was not final that year.
    • The adoption expenses were paid in the current tax year and the adoption was final in or before the current tax year.
    • The adoption of a special needs child was final in the current tax year.
    • The adoption expenses were paid after 1996 and the child is a foreign eligible child whose adoption became final in the current tax year.
    • You carried unused Adoption Credit forward from a prior year. Note that credit carried forward is treated as refundable, even though the credit was nonrefundable in prior years.
  • You must provide documents substantiating the adoption. Depending on the type of adoption, acceptable documents include an adoption order or decree, an adoption certificate, or the child's visa for entering the United States (for a foreign adoption). For domestic adoptions that are not final, or for adoptions of a special-needs child, different documents apply. See IRS Notice 2010-66 for more information.

Qualifying Expenses

Qualified adoption expenses include expenses that are reasonable and necessary in order to adopt the eligible child:
  • Adoption fees
  • Court costs
  • Attorney fees
  • Travel expenses while away from home
  • Re-adoption expenses related to adoption of a foreign child
For the adoption of a special-needs child, the maximum credit is available, regardless of actual qualifying expenses.

Timing of Expenses and Credit

Most taxpayers claim the credit in the year their adoption is final. There are some allowable exceptions and requirements:
  • For a domestic adoption, you may claim the credit for in a tax year before the adoption is final, but must wait to claim the credit until the next tax year.
  • You may not claim the credit for a foreign adoptions until the year the adoption is final. Expenses from previous years are treated as paid or incurred in the year the adoption is final.
  • For both domestic and foreign adoptions, you can claim the credit against expenses incurred in years after the adoption is final. The credit is allowable for the tax year you incurred or paid the qualifying expenses.
  • Expenses for an unsuccessful domestic adoption may be included with expenses for a successful later adoption, possibly increasing the credit.

Non-Qualifying Expenses

  • Expenses in connection with surrogate parenting
  • Expenses incurred to adopt the child of the taxpayer's spouse
  • Expenses reimbursed by your employer or other organization
  • Expenses violating federal or state law

Eligible Child

  • Any child under age 18. If the child turned 18 during the year, the child is considered eligible for the part of year they were under age 18.
  • Any physically or mentally disabled person unable to self-care.

Employer Provided Benefits

If your employer provides an adoption assistance program you may be able to exclude from income the expenses paid on your behalf. The expenses must be paid directly to you or a third party for qualified adoption expenses. Employer-provided adoption benefits may reduce your salary and are generally reported in Box 12 of your W2.

Income Limitations

The amount of the Adoption Credit begins to phase out when your 2010 modified adjusted gross income (MAGI) reaches $182,520, and is eliminated at $222,520. The same limits apply to all filers.

Credit Limitations

  • The maximum amount of credit is $13,170.
  • The credit may be carried forward for up to 5 years or until all of the credit has been used, whichever comes first.
  • Carryforward credits are not subject to MAGI limitations.
To take the credit or exclusion, complete Form 8839 and attach the form to your Form 1040 or Form 1040A.
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Elderly or Disabled Credit

Elderly or Disabled Credit

  The Credit for the Elderly or Disabled is a nonrefundable tax credit that is available to qualifying individuals who are over the age 65 or who are disabled.

Requirements to Claim Credit

  • You must be a U.S. citizen or resident alien.
  • You were age 65 or older at the end of the current tax year, or
  • You were under age 65 at the end of the current tax year, and
    • You retired on permanent and total disability.
    • You received taxable disability income for the current tax year.
    • You had not reached mandatory retirement age on January 1 of the current tax year.
    • You have a physicians statement certifying that you were permanently and totally disabled at the time of retirement.

Qualifying Disability Income

  • The income is paid under your employer's accident, health, or pension plan.
  • The income is included in your income as wages, or instead of wages, during the time you are absent from work due to permanent and total disability.

Non-Qualifying Disability Income

  • Payments received from a plan that does not provide disability retirement.
  • Lump-sum payments for accrued annual leave that you received when retiring on disability.
  • Amounts that are received after reaching your employer's mandatory retirement age, at which you would have retired if you had not become disabled.

Income Limitations

Income limitations are based on your filing status and whether both spouses qualify for the credit if married filing jointly.
  • If your filing status is single, head of household, or qualifying widow(er) with dependent child, you must have adjusted gross income (AGI) of $17,499 or less and cannot have more than $4,999 in nontaxable Social Security and other nontaxable pension(s) combined.
  • Married filing jointly filing status with both spouses qualifying for the credit must have AGI of $24,999 or less and cannot have more than $7,499 in nontaxable Social Security and other nontaxable pension(s) combined.
  • Married filing jointly filing status with only one spouse qualifying for the credit must have AGI of $19,999 or less and cannot have more than $4,999 in nontaxable Social Security and other nontaxable pension(s) combined.
  • Married filing separately filing status and did not live with spouse the entire year must have AGI of $12,499 or less and cannot have more than $3,749 in in nontaxable Social Security and other nontaxable pension(s) combined.
For more information see IRS Publication 524.
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REFUNDS;

Refunds

 

Overwithholding and Your W-4

If you find yourself expecting a large refund, you may be withholding too much on your Form W-4. Remember that a refund of taxes means you are getting back money that you could have used, deposited or put into your 401(k) for the entire year. It's poor money management if you consistently receive large refunds year after year. If your large refund is a result of overwitholding on your W-4, learn more about your W-4 allowance and how it affects your tax refund.

Direct Deposit

Gone are the days when taxpayers eagerly checked their mailboxes for their income tax refunds. Direct deposit lets you receive your tax refund quickly and safely. Direct deposit is available whether you file electronically or with paper forms. You can direct deposit to any United States financial institution, so long as you provide a valid routing number and account number. Some financial institutions do not allow joint refunds to be deposited into individual accounts. Check with your financial institution to ensure that your direct deposit will be accepted. If you wish to direct deposit into only one account or financial institution, use the appropriate line on your Form 1040.

Split-Refund Program

Beginning in 2007, the IRS began a split-refund program to allow taxpayers to select up to three different accounts or financial institutions to receive the direct deposit. Use Form 8888, Direct Deposit of Refund to More Than One Account, to divide your refund. For more information, see Frequently Asked Questions about Splitting Federal Income Tax Refunds.

Paper Check

It is still possible to receive your income tax refund by paper check. It is the slowest way to receive your refund, and is less secure than direct deposit.

Checking on Your Refund

The IRS lets you check on your refund two ways:
  • Use the IRS E-file Refund Cycle Chart to determine when direct deposit was sent or paper check was mailed.
  • Track the progress of your refund with the Where's My Refund? tool. You must know your SSN, filing status and the exact amount of the refund.
For more information see IRS Publication 17.
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IRS Tax Calendar

IRS Tax Calendar

Federal Legal Holidays
January 1 New Year's Day
January 17 Birthday of Martin Luther King, Jr.
February 21 Washington's Birthday
April 15 District of Columbia Emancipation Day
May 30 Memorial Day
July 4 Independence Day
September 5 Labor Day
October 10 Columbus Day
November 11 Veterans' Day
November 24 Thanksgiving Day
December 26 Christmas Day

E-File
January 14 First day to electronically file
January 17 First IRS acknowledgements of e-filed returns
April 18 Last day to e-file timely returns
April 18 Last day to e-file timely extension requests
April 22 Last day to retransmit rejected timely filed returns and extensions
June 15 Last day to e-file timely extension request for overseas taxpayers
October 17 Last day to e-file returns that received 6-month extension
October 20 Last day to retransmit rejected late or extension returns

Individuals
January 10 Report tips of $20 or more to employer
January 18 Make last 2009 estimated tax payment
February 10 Report tips of $20 or more to employer
March 10 Report tips of $20 or more to employer
April 11 Report tips of $20 or more to employer
April 18 Due date to file calendar year 2010tax returns or request an automatic 6-month extension of time to file. Pay any tax that is due, even if you file a 6-month extension of time to file.
April 18 First 2010 estimated tax payment due
May 10 Report tips of $20 or more to employer
June 10 Report tips of $20 or more to employer
June 15 Second 2010 estimated tax payment due
July 11 Report tips of $20 or more to employer
August 10 Report tips of $20 or more to employer
September 12 Report tips of $20 or more to employer
September 15 Third 2010 estimated taxpayment due
October 11 Report tips of $20 or more to employer
October 17 Final due date to file calendar year 2010 tax returns for taxpayers who received a 6-month extension
November 10 Report tips of $20 or more to employer
December 12 Report tips of $20 or more to employer
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Facts about Injured Spouse Relief
7 Facts about Injured Spouse Relief
You may qualify for injured spouse relief if you file a joint return and all or part of your refund is applied against your spouse's past-due federal tax, state income tax, child or spousal support, or federal nontax debt, such as a student loan. Some important facts about claiming injured spouse relief:
  1. To be considered an injured spouse, you must have made and reported tax payments, such as federal income tax withheld from wages or estimated tax payments, or claimed a refundable tax credit on the joint return, and you must not be legally obligated to pay the past-due amount.
  2. If you live in a community property state, see IRS Pub 555, Community Property, for special rules.
  3. If you filed a joint return and you're not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation.
  4. You may file form 8379 along with your original tax return or your may file it by itself after you are notified of a refund offset.
  5. You can e-file Form 8379. If you file a paper tax return you can include Form 8379 with your return, write "INJURED SPOUSE" at the top left corner of your return, and the IRS will process your allocation request before an offset occurs.
  6. If you are filing Form 8379 by itself, it must show both spouses' Social Security Numbers in the same order as they appeared on your income tax return. You, the "injured" spouse, must also sign the form.
  7. Do not use Form 8379 if you are claiming innocent spouse relief. Instead, file Form 8857, Request for Innocent Spouse Relief.  This relief from a joint liability applies only in limited circumstances. IRS Pub 971, Innocent Spouse Relief, explains who may qualify, and how to request this relief.
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tips about the First-Time Homebuyer Credit
Eight tips about the First-Time Homebuyer Credit
If you purchased a home in 2010, you may be able to claim the First-Time Homebuyer Credit, whether you are a first-time homebuyer or a long-time resident purchasing a new home. Here are eight tips about claiming the credit:
  1. You must have bought - or entered into a binding contract to buy - a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.
  2. To be considered a first-time homebuyer, you and your spouse must not have jointly or separately owned another principal residence for three years before the date of purchase.
  3. To be considered a long-time resident homebuyer, you and your spouse must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date of purchase.
  4. The maximum credit for a first-time homebuyer is $8,000 ($4,000 if married filing separately). The maximum credit for a long-time resident homebuyer is $6,500 ($3,250 if married filing separately).
  5. You must file a paper return and attach Form 5405 (Form, Instructions) with additional documents to verify the purchase. Therefore, if you claim the credit you will not be able to e-file.
  6. New homebuyers must attach a copy of a properly executed settlement statement for the purchased home. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the dated certificate of occupancy. Mobile home purchasers who are unable to get a settlement statement must attach a copy of the retail sales contract.
  7. If you are a long-time resident claiming the credit, the IRS recommends that you also attach any documentation covering the five-consecutive-year period, including Form 1098 or substitute mortgage interest statements, property tax records or homeowner's insurance records.
  8. Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.
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Things you need to know about tax refunds
Things you need to know about tax refunds
Are you expecting a refund from the IRS this year? Here are the top 10 things you should know about your refund:
  1. Refund options - You have two options for receiving your federal refund: a paper check or a direct deposit.
  2. Separate accounts - You may use Form 8888, Direct Deposit of Refund to More Than One Account, to have your refund split among up to three separate accounts, such as checking or savings or retirement accounts.
  3. Paper return processing time - If your return is complete and accurate, your refund will usually be issued within six weeks from the date the IRS receives it.
  4. E-filed returns - If you file electronically, your refund will normally be issued within three weeks after the acknowledgment date.
  5. Check status online - The fastest and easiest way to find out about your refund is to go to IRS.gov and click on the "Where's My Refund?" link on the home page. You will need your Social Security number, filing status and the exact amount of your refund.
  6. Check status by phone - Call the IRS Refund Hotline at 800-829-1954. You will need to your Social Security number, your filing status and the exact amount of your refund.
  7. Delayed refund - For things that may delay the processing of your return.
  8. Larger than expected refund - Do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.
  9. Smaller than expected refund - If this happens you may cash the check. If the IRS determines that you should have received more, it will later send the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks and then call 800-829-1040.
  10. Missing refund - The IRS will send you a replacement check for a refund check that is lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check. For more information, visit IRS.gov or call 800-829-1040.
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Claiming charitable contributions
Claiming charitable contributions
If you want to claim a charitable deduction, be sure the charity or philanthropic organization you select is a tax-qualified organization under IRS rules. Use GuideStar for Donors to research nonprofits' tax-exempt status. Charitable purchases are only deductible in the amount exceeding the worth of the item purchased. For example, if you attend a fancy $500 a plate dinner for children's hospital, the deductible amount is equal to $500 minus the fair market value of the dinner. Make sure you obtain a receipt for any and all of your charitable cash contributions
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Common tax return errors
common tax return errors
Errors on tax returns delay the processing of your return and often, your refund. Avoid these common errors:
  1. Incorrect Recovery Rebate Credit - The Recovery Rebate Credit is for people who did not receive a stimulus payment in 2008 or who did not receive all they were due. To avoid delays in refunds, taxpayers must know whether they received a payment in 2008 and the correct amount of that stimulus payment.
  2. Incorrect or missing Social Security number - Enter exactly as it is on the Social Security card.
  3. Incorrect or misspelling of dependent's last name - Enter exactly as it appears on the Social Security card.
  4. Filing status errors - Make sure you choose the correct filing status for your situation.
  5. Math errors - Make sure all addition and subtraction is correct. Remember, when you file electronically, the software takes care of the math for you.
  6. Computation errors - Take your time. Many taxpayers make mistakes when figuring taxable income, withholding and estimated tax payments, Earned Income Credit, Standard Deduction for age 65 or over or blind, the taxable amount of Social Security benefits, and child and dependent care credit.
  7. Incorrect bank account numbers for Direct Deposit - Double-check any bank account numbers you provide.
  8. Forgetting to sign and date the return - An unsigned tax return is like an unsigned check - it's invalid.
  9. Incorrect Adjusted Gross Income information - If you e-file this year, and you also e-filed last year, you'll need to verify your identity to the IRS by providing your 2007 AGI or PIN.
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Need more time to file?
Need more time to file?
If you can't meet the April 15 deadline to file your return, you can get an automatic six-month extension of time to file from the IRS. Here is what you need to know about filing an extension:
  • An extension will give you extra time to get your return to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by April 15, plus a late payment penalty if you have not paid at least 90 percent of your tax by then.
  • If your return is completed but you are unable to pay the full amount of tax due, don't request an extension. File on time and pay as much as you can. The IRS will send you a bill or notice for the balance due.
  • Request an extension to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, with the IRS by April 15, or make an extension-related electronic credit card payment. For more information about extension-related credit card payments, see Form 4868.
  • To obtain a copy of Form 4868 or other forms and publications, use e-file tax preparation software, download them from IRS.gov or visit your local IRS office. Forms and publications can be ordered by calling 800-TAX-Form (800-829-3676). However, telephone requests normally take 10 days to fill and may not arrive before the tax deadline of April 15.
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facts about filing status
 facts about filing status
If your marriage status changes during the year, it can confuse the issue of which filing status to use on your return. Here are eight facts about the five filing status options to help you choose the best option for your situation.
  1. Your marital status on the last day of the year determines your marital status for the entire year.
  2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
  3. Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
  4. A married couple may file a joint return together. The couple's filing status would be Married Filing Jointly.
  5. If your spouse died during the year and you did not remarry during 2010, usually you may still file a joint return with that spouse for the year of death.
  6. A married couple may elect to file their returns separately. Each person's filing status would generally be Married Filing Separately.
  7. Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
  8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2008 or 2009, you have a dependent child and you meet certain other conditions. There's much more information about determining your filing statu
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tips about tip income
 tips about tip income
If you make your living at least partly by tips, be aware of these tips about tip income:
  1. Tips are taxable. Tips are subject to federal income, Social Security and Medicare taxes. The value of non-cash tips, such as tickets, passes or other items of value, is also income and subject to tax.
  2. Include tips on your tax return. You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.
  3. Report tips to your employer. If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
  4. Keep a running daily log of your tip income
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What to do if you’re missing a W-2
What to do if you're missing a W-2
If you haven't received a Form W-2 from your employer by January 31, you should take these steps:
  1. Ask your employer if and when the W-2 was mailed. If it was mailed, it may have been returned because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for the W-2 to be resent.
  2. If you do not receive your W-2 by February 14, call the IRS at 800-829-1040 for help. When you call, you'll need to provide personal information to identify yourself, as well an estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. This should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
  3. You still must file your tax return or request an extension to file by April 18, 2011, even if you do not receive your Form W-2. If you have not received your Form W-2 by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. Any refund may be delayed while the information is verified.
  4. You may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return (Form, Instructions)
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Tips for preparing your return
Tips for preparing your return
  1. File electronically instead of using paper tax forms. If you file electronically and choose direct deposit, you can receive your refund in as few as 10 days.
  2. Check the identification numbers. Carefully check the identification numbers - usually Social Security numbers - for each person on the return. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.
  3. Double-check your figures. If you are filing a paper return, you should double-check that you have correctly figured the refund or balance due.
  4. Check the tax tables. If you are filing a paper return you should double-check that you have used the right figure from the tax table.
  5. Sign your return. Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.
  6. Mail to the correct address. Use the coded envelope included with your tax package to mail your return. If you did not receive an envelope, check the section called "Where Do You File?" in the tax instruction booklet.
  7. Mail a payment correctly. Make any check out to "United States Treasury" and enclose it with, but don't attach it to, your return or Form 1040-V, Payment Voucher. Include your Social Security number, daytime phone number, the tax year and the type of form filed.
  8. Consider an electronic payment. Electronic payments are a convenient, safe and secure way to pay taxes. You can authorize an electronic funds withdrawal, or use a credit card or a debit card. For more information on electronic payment options, visit IRS.gov.
  9. Get an extension for your return. By April 15, you should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.
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How to report forgiven mortgage debt
How to report forgiven mortgage debt
Debt forgiveness usually is considered taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence in 2007-2012 ($1 million for married filing separate). You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been for buying, building or substantially improving your principal residence, and the debt must have been secured by that residence. Refinanced debt used for other purposes, such as to pay off credit card debt, does not qualify for the exclusion. If your debt is reduced or forgiven you will receive a year-end statement, Form 1099-C, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed. The IRS urges borrowers to examine the Form 1099-C carefully. Notify the lender immediately of any mistakes, especially on the amount of debt forgiven (Box 2) and the value listed for your home (Box 7). If you qualify, you claim the exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to your federal tax return for the year.
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The most common errors on filing
The most common errors are: Incorrect or missing Social Security numbers Always make sure that when you enter a SSN (for yourself or a dependent) that you enter it exactly as it is shown on the Social Security card. Failure to do so can cause the IRS to reject your return resulting in a delay. Incorrect spelling of the dependent’s last name When you enter a name for yourself or a dependent make sure that this also matches the information exactly as it is shown on the Social Security card. This information must match in order for the return to be accepted. Filing status mistakes The IRS lists five possible filing statuses for your return. These possibilities are: Single, Married Filing Joint, Married Filing Separate, Head of Household, and Qualifying Widow(er) with dependent Child. Failure to select the applicable status for your unique filing status can cause undue delays. Make sure to review IRS publication 501 if you have questions. Math errors Many people face the possibility of errors when filing a paper return. The great thing about Taxsux.net  is we handle all of the calculations for you so there is no need to worry. Computation errors Much like math errors, many people flub the calculations for important designators such as AGI and EIC. Once again, you are in luck, Taxsux.net handles all of these calculations for you and they are guaranteed to be correct. Misstated direct deposit information Make sure that you double check your direct deposit information on the bottom of a check or with your financial institution. Errors in this regard can cause delays in refund processing and can even cause your refund to go into someone else’s account. Forgetting to sign and date the return Once again, by electronic filing with Taxsux.net  you avoid the possibility of this error. By e-signing your return you ensure no delays because of failure to sign and date your return. Incorrect adjusted gross income In order to e-sign your return you must provide the AGI from your prior year return. For returning customers, we pull this information automatically but new customers need to make sure that they verify the AGI from the ORIGINAL return filed with the IRS the previous year.
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