Federal Tax Returns
Every year you must file federal tax returns to report your income to the government and to pay any taxes you may owe. If you have paid too much in, you will get your money refunded after you file your returns. No matter what your views may be on paying taxes, you had better make sure you file your federal tax returns, and make sure you claim all of the income you have made. Doing anything less will get you in a lot of trouble that you don’t need.
You can find federal tax returns in your post office. You can also find forms for your local and state taxes there as well. These forms should come with an informational booklet to help you fill out the forms if you are going to do it yourself. If you are going to have someone else file your federal tax returns for you, you won’t have to worry about picking up the forms. They will have them for you. Today, you don’t even need the forms because they can be filed online.
If you don’t feel like going to the post office for your federal tax returns, you can get them online, for the most part. You have to find them on the Internet, download them, and then print them out. They should also come with the instructions if you are going to file them on your own. You can also find guidelines, and help with some of the simpler changes in tax law if you look at independent sites that offer free help with filling out federal tax returns.
Not only can you file your federal tax returns online through your tax preparer, you can also check online to find out the status of your refund if you are getting one. You will have to remember certain things in order to get the information, so make sure you keep a paper record of your taxes on hand. In some cases, you will have to enter the amount you are getting back in order to get the information. If you can’t remember that amount, you will just have to wait for the return to come.
Also remember that no matter how you decide to file your federal tax returns, that you should keep them for at least seven years. In the case of an audit, you will want this information. If you don’t save them, you may be able to get a copy of them, but this is going to be a big pain. Your best bet is to save all of your financial information for at least seven years so you can back up any claims and amounts that you have claimed or stated in the past.
Monday, March 31, 2008
Federal Income Tax Return
Federal Income Tax Return
Every year you have to turn in your federal income tax return before April 15th. Though this is something that everyone has to do, there are many people who either forget to do it, or are perpetually late in doing so. This is something that many people dread, it is something that is best gotten out of the way before it becomes bigger than what it is. If you stress out about your taxes, you’re better off asking someone else to do them for you. Though this will cost you some money, it is well worth it if the stress is taken from your shoulders.
I gave up doing my own federal income tax return a long time ago. It used to be very simple for my husband and me to file our taxes. Now that I work from home, there are many other considerations that I have when filing our federal income tax return. I have expenses that I can write off on my taxes, and we also have a child now. Both of these things make our taxes more complicated. I would rather pay someone else $100 to take care of it than to run the risk of doing them wrong.
If the government doesn’t like what they see on your federal income tax return, they may audit you. This means that the government is going to stick their nose in your personal financial issues. If you cannot produce proof for your claimed expenses, or show proof of all your sources of income, you may be in some sort of trouble. That is why when filing your federal income tax return it is important for you to include all of your income. You may think that you are being paid under the table, but if that person paying you is audited, they may turn you in and you will also be in trouble.
After you have filed your federal income tax return, remember to put a copy of it away for later. If you have receipts and other paperwork that was needed when filing your taxes, make sure you put this information away as well. You will want to know where all of these things are in the case that you are audited. Remember that if you are audited, the person or company who helped you file your federal income tax return should be able to help you. Perhaps when looking for someone to do your taxes for you, you should ask them if they offer audit support for you or not.
Every year you have to turn in your federal income tax return before April 15th. Though this is something that everyone has to do, there are many people who either forget to do it, or are perpetually late in doing so. This is something that many people dread, it is something that is best gotten out of the way before it becomes bigger than what it is. If you stress out about your taxes, you’re better off asking someone else to do them for you. Though this will cost you some money, it is well worth it if the stress is taken from your shoulders.
I gave up doing my own federal income tax return a long time ago. It used to be very simple for my husband and me to file our taxes. Now that I work from home, there are many other considerations that I have when filing our federal income tax return. I have expenses that I can write off on my taxes, and we also have a child now. Both of these things make our taxes more complicated. I would rather pay someone else $100 to take care of it than to run the risk of doing them wrong.
If the government doesn’t like what they see on your federal income tax return, they may audit you. This means that the government is going to stick their nose in your personal financial issues. If you cannot produce proof for your claimed expenses, or show proof of all your sources of income, you may be in some sort of trouble. That is why when filing your federal income tax return it is important for you to include all of your income. You may think that you are being paid under the table, but if that person paying you is audited, they may turn you in and you will also be in trouble.
After you have filed your federal income tax return, remember to put a copy of it away for later. If you have receipts and other paperwork that was needed when filing your taxes, make sure you put this information away as well. You will want to know where all of these things are in the case that you are audited. Remember that if you are audited, the person or company who helped you file your federal income tax return should be able to help you. Perhaps when looking for someone to do your taxes for you, you should ask them if they offer audit support for you or not.
Friday, March 14, 2008
Overview Of Individual Tax Inheritance
Inheritance tax is imposed on individuals who receive property from someone who has died. The amount of tax is determined by the appraised value of the property and the recipient's relationship to the deceased.
In actuality, inheritance tax isn't charged on the decedent's assets, but rather for the right to assume ownership of the property. Inheritance tax is not imposed on property which is passed to the surviving spouse. However, it is imposed when property is passed to children, other family members, or friends. Tax rates and allowable deductions are based on the lineage. For instance, children are taxed at a lesser rate than a distant cousin.
Inheritance taxes are regulated by each individual state. Currently, 10 of the 50 states within the U.S. impose inheritance tax. These include: Indiana, Iowa, Kansas, Kentucky, Maryland, Nebraska, New Jersey, Oregon, Pennsylvania and Tennessee.
For those who reside in a state that charges inheritance tax, the Estate Executor is required to file an inheritance tax return. All of the estate property must be gathered and appraised to determine its value. A detailed list of outstanding debts owed by the deceased must be documented. This information is then used to determine the gross value of the estate.
Outstanding debts and taxes must be paid from the estate before distribution is made to beneficiaries. Funeral expenses and estate administration fees are allowable deductions. After expenses are paid, tax is imposed on the net value of the estate.
As a general rule, inheritance tax returns are filed with the county Probate court where the deceased person resided. The return must be filed within nine months after the date of death. Inheritance taxes must be paid in full at the time the return is filed. If the estate executor is unable to pay the tax in full, an extension request can be filed. However, the balance due will be subject to interest fees and late penalties.
Inheritance laws are complex and confusing; particularly with larger estates. Many factors are involved so it's best to consult with an attorney experienced in Inheritance Law.
In actuality, inheritance tax isn't charged on the decedent's assets, but rather for the right to assume ownership of the property. Inheritance tax is not imposed on property which is passed to the surviving spouse. However, it is imposed when property is passed to children, other family members, or friends. Tax rates and allowable deductions are based on the lineage. For instance, children are taxed at a lesser rate than a distant cousin.
Inheritance taxes are regulated by each individual state. Currently, 10 of the 50 states within the U.S. impose inheritance tax. These include: Indiana, Iowa, Kansas, Kentucky, Maryland, Nebraska, New Jersey, Oregon, Pennsylvania and Tennessee.
For those who reside in a state that charges inheritance tax, the Estate Executor is required to file an inheritance tax return. All of the estate property must be gathered and appraised to determine its value. A detailed list of outstanding debts owed by the deceased must be documented. This information is then used to determine the gross value of the estate.
Outstanding debts and taxes must be paid from the estate before distribution is made to beneficiaries. Funeral expenses and estate administration fees are allowable deductions. After expenses are paid, tax is imposed on the net value of the estate.
As a general rule, inheritance tax returns are filed with the county Probate court where the deceased person resided. The return must be filed within nine months after the date of death. Inheritance taxes must be paid in full at the time the return is filed. If the estate executor is unable to pay the tax in full, an extension request can be filed. However, the balance due will be subject to interest fees and late penalties.
Inheritance laws are complex and confusing; particularly with larger estates. Many factors are involved so it's best to consult with an attorney experienced in Inheritance Law.
Tax Returns To Avoid Short Term Incoming Cash
If your inability to pay the taxes you owe is simply a short-term incoming cash problem, and you'll have the funds to make the payment in a few weeks or months, the solution is very simple. Pay as much as you can afford when you file your tax return. That payments will help reduce the penalties and interest you'll be charged.
In about 45 days, the IRS will send you a bill for the remaining balance due. If you can pay it then, great... do it. If you can't, then send as much as possible (again, reducing penalties and interest) and hang on. In another 45 days you'll get another bill from Uncle Sam. Hopefully you can then pay the balance due.
You'll likely be able to go through two or three of these billing cycles before the IRS bugs you for some type of formal payment method. But, if you can clear up the matter using bigger chunks of payments over two or three IRS billing cycles, you'll pay some interest and penalties, but you'll save some time by not being required to complete any additional IRS paperwork. But be advised: That decision will cost you interest on the unpaid balance plus a late payment penalty of 0.5% monthly.
Borrow
As I discussed above, try to put the bite on your friends or family. Seriously. If you can pay the entire amount with funds that you've borrowed from friends or relatives, you'll reduce the penalties and interest you'll owe Uncle Sam, and without any high interest rates. I'm sure you'll find making payments to friends or family a much more pleasant experience than making payments to the folks at the IRS.
If the friends or family solution doesn't work out, consider a bank loan. Again, paying your banker is generally preferable to making payments to the IRS over a period of time.
Pay By Credit Card
Remember that you can always go the credit card route. As an alternative to paying by check, the IRS (and many states) will gladly accept payment by credit card. We generally don't recommend credit card payments, because the fees and interest rates associated with this type of payment are pretty high, but paying your taxes out of your own pocket could hurt you or your business in the long run. Sometimes you have to do what is best for you family or your business regardless of the interest rates. You can use any type of credit card expect Visa to make these payments.
Installment Agreement
If you're still reading it's possible that none of the above solutions will work for you. If that's the case you still have several option left. You should consider a formal installment agreement with the IRS. But now you're talking about dealing with the IRS directly, and possibly completing some additional forms and paperwork.
Generally, the IRS will accept an installment agreement if the tax owed is less than $25,000 and the balance due will be paid within five years. You'll be required to pay a "user fee" (currently about $43) to obtain the installment agreement, and you'll still get hit with late payment penalties of 0.25% monthly. But an installment agreement is still better than ignoring your obligation to Uncle Sammy.
If you think an installment agreement is for you then make your request on IRS Form 9465 (Installment Agreement Request). The form is available on the IRS website. You can file this form separately or you can simply attach it to your tax return (that you'll want to file by the normal mid-April deadline). The form is only one page long and requires a minimal amount of information, although the IRS could request more information from you down the road.
Extension to Pay
If all else fails you can request a six month extension of time to pay your taxes. But this extension will only be granted if the payment will cause undue hardship on you or your family. Don't confuse the term "undue hardship" with "inconvenience." You will have to prove that you can't sell assets or borrow to pay your taxes except under terms that would cause severe loss and undue hardship.
As with the installment agreement, you'll be required to file additional documents. You'll have to provide statements of assets, liabilities, income, and expenses for three months preceding the filing due date. You can use IRS Form 1127 (also available at the IRS website) should you find that you might qualify for an extension of time to pay your taxes.
In about 45 days, the IRS will send you a bill for the remaining balance due. If you can pay it then, great... do it. If you can't, then send as much as possible (again, reducing penalties and interest) and hang on. In another 45 days you'll get another bill from Uncle Sam. Hopefully you can then pay the balance due.
You'll likely be able to go through two or three of these billing cycles before the IRS bugs you for some type of formal payment method. But, if you can clear up the matter using bigger chunks of payments over two or three IRS billing cycles, you'll pay some interest and penalties, but you'll save some time by not being required to complete any additional IRS paperwork. But be advised: That decision will cost you interest on the unpaid balance plus a late payment penalty of 0.5% monthly.
Borrow
As I discussed above, try to put the bite on your friends or family. Seriously. If you can pay the entire amount with funds that you've borrowed from friends or relatives, you'll reduce the penalties and interest you'll owe Uncle Sam, and without any high interest rates. I'm sure you'll find making payments to friends or family a much more pleasant experience than making payments to the folks at the IRS.
If the friends or family solution doesn't work out, consider a bank loan. Again, paying your banker is generally preferable to making payments to the IRS over a period of time.
Pay By Credit Card
Remember that you can always go the credit card route. As an alternative to paying by check, the IRS (and many states) will gladly accept payment by credit card. We generally don't recommend credit card payments, because the fees and interest rates associated with this type of payment are pretty high, but paying your taxes out of your own pocket could hurt you or your business in the long run. Sometimes you have to do what is best for you family or your business regardless of the interest rates. You can use any type of credit card expect Visa to make these payments.
Installment Agreement
If you're still reading it's possible that none of the above solutions will work for you. If that's the case you still have several option left. You should consider a formal installment agreement with the IRS. But now you're talking about dealing with the IRS directly, and possibly completing some additional forms and paperwork.
Generally, the IRS will accept an installment agreement if the tax owed is less than $25,000 and the balance due will be paid within five years. You'll be required to pay a "user fee" (currently about $43) to obtain the installment agreement, and you'll still get hit with late payment penalties of 0.25% monthly. But an installment agreement is still better than ignoring your obligation to Uncle Sammy.
If you think an installment agreement is for you then make your request on IRS Form 9465 (Installment Agreement Request). The form is available on the IRS website. You can file this form separately or you can simply attach it to your tax return (that you'll want to file by the normal mid-April deadline). The form is only one page long and requires a minimal amount of information, although the IRS could request more information from you down the road.
Extension to Pay
If all else fails you can request a six month extension of time to pay your taxes. But this extension will only be granted if the payment will cause undue hardship on you or your family. Don't confuse the term "undue hardship" with "inconvenience." You will have to prove that you can't sell assets or borrow to pay your taxes except under terms that would cause severe loss and undue hardship.
As with the installment agreement, you'll be required to file additional documents. You'll have to provide statements of assets, liabilities, income, and expenses for three months preceding the filing due date. You can use IRS Form 1127 (also available at the IRS website) should you find that you might qualify for an extension of time to pay your taxes.
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