Practical Tax Return Tips Every Individual Needs to Know
Don’t know how to file or what to do with your tax returns? Timmer Accounting & Tax Service, LLC in Holland, MI can help. We provided the following tips for your reference:
Five Tips for Early Preparation
- Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don’t forget to save a copy for your files.
- Get the right forms. They’re available round the clock on the IRS website, under the Forms and Publications section.
- Take your time. Rushing can cause you to make a mistake, and that can be expensive!
- Double-check your math and Social Security number. These are some of the most common tax return errors. Protecting this information reduces your chances of hearing from the IRS.
- Get the fastest refund. When you file early, you get your refund faster. Using electronic filing with direct deposit gets you a refund faster than paper filing.
Filing an Extension
If you can’t meet the April 15 deadline to file your tax return, you can get an automatic six-month extension to file from the IRS. The extension will give you extra time to get the paperwork into 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 the deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date. You must make an accurate estimate of any tax due when you request an extension.
About Plug-In Electric Vehicles (PEVs)
The Alternative Motor Vehicle Credit, originally enacted under the Energy Policy Act of 2005, allowed a tax credit for selected popular hybrid vehicles. However, this tax credit expired at the end of 2010. Although the former credit for many hybrid vehicles is no longer available for 2012 and future tax years, a tax credit of up to $7,500 is still available for vehicles classified as PEVs.
Credit for the Elderly or Disabled
According to the IRS, you take the Credit for the Elderly or the Disabled if you were age 65 or older at the end of last year or if you are retired on permanent and total disability. Like any other tax credit, it’s a dollar-for-dollar reduction of your tax bill. This maximum credit is constantly changing.
Selling Your Home
If you sold your home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return. This exclusion is allowed each time that you sell your house but generally no more frequently than once every two years.
Filing Deadline and Payment Options
If you think you need more time to finish your return, you can get a six-month extension to file using Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return). However, if you have trouble paying your tax bill, the IRS has several payment options available. The extension will give you extra time to get the paperwork to them, but it does not extend the time you have to pay any tax due.
If you gave any single gifts valued at more than $13,000, it is necessary to report the total gift to the IRS. You may even have to pay tax on the gift.
Marriage or Divorce
Newlyweds and the recently divorced should make sure the names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could cause your tax return to be rejected by the IRS.
“Refund, Where’s My Refund?”
Are you expecting a tax refund from the IRS this year? If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return. If you file your return electronically, your refund should be issued in about half the time it would take if you filed a paper return—even faster when you choose direct deposit.
The Tax Advocate Service by the IRS
Have you tried everything to resolve a tax problem with the IRS but are still experiencing delays? Are you facing what you consider an economic burden or hardship due to the IRS collection or other actions? If so, you can seek the assistance of the Taxpayer Advocate Service or by calling the IRS directly at (877) 777-4778.
Taxation on Gratuities
Do you drive a taxicab or work at a hair salon, casino, golf course, or hotel? The tip income you receive from those services, either cash or charge, is taxable income, according to the IRS.
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