Tax Relief BlogI thought you might find this list of tax provisions expiring 12/31/07 helpful as you do year-end tax planning.
TAX PROVISIONS EXPIRING 12/31/07
* Deduction of up to $2,000 or $4,000 (depending on income) for college tuition.
Articles Posted in Back Taxes
IRS releases 2008 tax figures
As you prepare for the upcoming tax year, I thought you might find this brief rundown of 2008 tax changes useful.
* ADOPTION TAX CREDIT increases to $11,650 for adoption of an eligible child.
* SECTION 179 maximum deduction increases to $128,000. Phase-out threshold increases to $510,000.
Staying off the IRS Radar Screen
Nothing strikes terror in the heart of American taxpayers quite like finding a letter in the mailbox from the IRS! In an effort to help you avoid that unpleasant scenario, provided below are examples of some common pitfalls to avoid if you don’t want the IRS lining up to be your new pen pal.
It’s surprising how many people mail their returns to the IRS without a signature. Before mailing, be sure to recheck everything and don’t forget to sign your return. An even better solution is to file electronically. Returns filed electronically have safeguards and controls to eliminate common errors. Additionally, the return goes directly to the processing center and the information does not have to be keyed into a computer by an IRS employee, which could result in additional errors.
Did you remember to include all income on the return? If you received a Form 1099 from anyone, be sure this income is on the return in the right place or you will receive a notice. Even if you did not receive a 1099 for work done independently, you are required to report the income. IRS receives copies of 1099s from banks, stock brokerage firms, rental agencies, and subcontractors and these are checked against income reported.
Greetings from the IRS
You’ve just picked up your mail and … uh oh, there among the ads, bills and too numerous offerings for credit cards is that official looking letter from the Internal Revenue Service. A feeling of dread comes over you…but don’t panic or toss it, and please DO open it. It might even be good news.
Usually, mail from the IRS is a notification that they need verification of documents or substantiation of an amount you have claimed on your tax return. Read the letter thoroughly. Determine what they are looking for, and then provide the information. Some of the most commonly missed items on a return are simple things: You forgot to sign the 1040; You didn’t attach W-2’s and required statements; If you’re paying quarterly, maybe you claimed the wrong amount as estimated tax; Or, perhaps the income you listed doesn’t match the figure that was reported to the IRS on a Form 1099 by someone who paid you during the tax year.
If you have the correct information, it’s a simple matter to fix. Make copies of your documents verifying the information on your return and send the copies back to the IRS along with a copy of the letter they sent to you. If, in fact, you didn’t include an amount on your return that should have been there, sign the form agreeing to the change and send them a check for the amount of tax due by the deadline date given for compliance. Usually, penalties and interest will be added–so, the sooner you comply, the less it will cost.
Solace for the Non-filer taxpayer
Many people become non-filers each year for a number of reasons. They lose the paperwork, they couldn’t pay, or they forgot about it. Sometimes illness, family crisis or depression plays a role. The list goes on and on.
If you are a non-filer, don’t procrastinate any longer. You may be hoping the IRS has forgotten about you, but that rarely happens. In truth, the more you wait, the more costly it will be if you owe money. And if you are due a refund, the statute of limitations on that refund expires three years from the date the return should have been filed. Don’t risk losing your money.
