Thursday, January 29, 2009

Tax Tips

Things to do to get your tax process started

The earlier you can start working on your taxes, the quicker it will be for you and your tax preparer to file and avoid the last-minute rush, when most filing mistakes are made. And the sooner the tax agency gets your return, the sooner it can process it and get your refund on its way to you.

So, here are some quick ways to get a jump on your taxes long before the April 15 deadline rolls around:
(1) Track down SSN, W-2s, and receipts
(2) Call your tax preparer and get your forms started
(3) Don't panic!

Keep the following items in mind:

Track down your rebate data. Did you get an economic stimulus payment last year? That amount really was an advance credit against your 2008 return. The amount you received in 2008 could affect your 2009 credit claim. If you got less than the maximum amount, which for most employed taxpayers was $600 per single filer ($1,200 for married couples filing jointly), you might be able to claim the rest of it this filing season. All versions of the individual tax return (Forms 1040, 1040A and 1040EZ) have a new line to claim the Recover Rebate Credit. You'll need the statement you got from the IRS in connection with your payment. That's the amount you'll use to determine if you can claim more on your 2008 return. So find that rebate statement now.

Get ready for the arrival of records. When your W-2s, investment statements and other tax-related documents start coming in, create a collection point and put them there. It could be as simple as a large envelope. You might have received a few documents in December, but most will arrive throughout January. Just make sure that whenever the material shows up you put it all together in an accessible place, so when you are ready to fill our your return you have all the data you need. Remember, the IRS gets a copy of most of these, too, so figures on those statements are critical to ensuring your return sails through the system.

Track down Social Security numbers. Before the IRS will process any return, the agency must have your correct Social Security number , as well as your spouse's, if you file jointly, and those of any dependents you claim. These numbers are crucial because so many transactions -- income statements, savings account interest, retirement plan contributions -- are keyed to them. The IRS also checks the identification numbers against any tax breaks you apply for, such as the Child Tax and Additional Child Tax credits, credits for educational expenses and the dependent care tax credit. So make sure everyone in your tax family has a valid Social Security number and that you have them written down correctly. It wouldn't hurt to put this information in that envelope where you're stashing your incoming tax statements.

Find your forms. The great thing about using a tax preparer is that all necessary forms will be provided for you and required schedules will be filled out accordingly. The other half who filed the old-fashioned way will get a tax packet in January, but it never hurts to have backup forms in case you make a mistake. Plus, your tax situation may have changed, meaning you need material other than what's in the IRS package, since it's based on your past filing history. A few of the most common forms are available at post offices and libraries. Most of the rest can be downloaded from the Internet.

Decide how you want to do your taxes. Gathering the appropriate tax forms goes hand in hand with how you plan to complete your return. Which preparation method fits your tax style? Are you a do-it-yourselfer or should you hire a pro? Do you prefer pen and paper or a computer? Now's the time to decide. By starting early, you have plenty of time to gather filing paperwork yourself, pick the perfect tax preparer or find the tax preparation software that fits your needs.
Consider electronic filing. If you decide to use your computer to calculate your taxes, consider taking the next step and file the forms electronically. Regardless of whether you file electronically or the old-fashioned paper way, this year have your refund check directly deposited into your bank account.

Don't panic. Tax filing makes everyone a little nervous, but when you start early, you've got time to get the answers and make sure you're taking full advantage of every tax break for which you're eligible. If you have a specific question, ask our tax expert . You also can visit the IRS Web site or call its TeleTax service at (800) 829-4477 to get recorded information on more than 140 tax topics.

Gifts to Charity New Rules...

Don't forget...

New rules require more diligent recordkeeping; Keeping the receipts from your charitable contributions just became more of a priority. Starting January 2007, you will not be allowed to deduct charitable contributions of any amount unless you have the proof. What does this mean for you? Starting in 2007, each cash contribution you make must be substantiated with a bank record, receipt, letter, or other written communication from the donee organization that states the name of the donee, the date the contribution was made, and the amount of the contribution. Without this substantiation, you will not be allowed to deduct the contribution on your tax return.

Cleaning Out Your Closets? Items you donate may not qualify for a deduction under new rules. It used to be that you could take all your unused clothing and household items to the local Goodwill, Salvation Army, or thrift store and reap a nice charitable contribution deduction. All you needed was a receipt stating the fair market value and the deduction was allowed. The rules have changed for any donation of non-cash items to charitable organizations after August 17, 2006. A charitable contribution deduction of clothing or household items will only be allowed if the item is in "good" used condition, or better, and you have a receipt. The IRS is to issue guideline defining "good condition." A good rule of thumb may be to write "good condition" next to every donated item on your list. The IRS can deny a deduction for any item that has little monetary value. There is an exception for single items that have a value of more than $500 and for which you have a qualified appraisal.

Get your tax return preparation process started now!!!

The first typical tax service for a new client is tax preparation of the previous year's federal and state tax returns, but our services do not stop there.

RTS also offers calculated projections of tax withholding and estimated taxes, to ensure our clients are paying the proper amount of taxes to the IRS throughout the year to avoid penalties and interest for underpayment, but also to ensure our clients are not paying in too much and giving the IRS an interest free loan over the course of the tax year.