Tax Tips (from a girl who knows)

Since I fell in love with tax code at the tender age of 18, I’ve been sending my friends emails about taxes to kick off every tax season. Below is the substantive content; you, my internet friends (fans?) may find the resources helpful too. Enjoy and reblog if you like, please!

– http://www.irs.gov/pub/irs-pdf/i1040gi.pdf – 1040 Instructions.  I’m not usually a rules-reader, but my best advice here is to actually read and follow the rules.  It’s not that hard and will make your life much easier.

– http://www.irs.gov/efile/article/0„id=118508,00.html – EFiling….never been easier.  do it and save some trees. And get your refund faster.

– http://www.irs.gov/pub/irs-pdf/p501.pdf – Filing Info, Dependency, Standard Deduction. Read this for basic “do I have to file?” and “am I still a dependent?” answers.  

ON A RELATED NOTE: new this year, you can no longer increase your standard deduction by state or local real estate taxes or new motor vehicle taxes (on cars purchased during the 2010 tax year) BUT you can increase it if you purchased a new motor vehicle between Feb 17, 2009 and December 31, 2009 and paid the sales or excise taxes on it in 2010. Use a Sch. L if that applies to you.

– http://www.irs.gov/taxtopics/tc501.html – Should I Itemize? Short and sweet and will help you figure it out if you’ve never done it before.  If you do, be sure you can back up the expenses you’re taking on Schedule A with documentation, and if you are making enough, read about the Alternative Minimum Tax, and let’s have a debate about that later.

The standard deduction this year remains $5,700 for a single or married filing separately individual. Don’t itemize unless it amounts to more than that.

ON A RELATED NOTE: this is a good reason to start 2011 off right with good record-keeping. It may be advantageous for many of us to itemize, but we would have to estimate numbers and it “just doesn’t seem worth it”. Familiarize yourself with the Sch. A though, see what’s deductible, and keep track this year.

– http://www.irs.gov/pub/irs-pdf/i1040sm.pdf – Fill out a Schedule M: Making Work Pay Credit this year. If you got a paycheck this year and are subject to withholding, your employer probably already reduced your withholding. But you still have to report it. You can get up to $400 back, or $800 if you’re married filing jointly.

http://www.irs.gov/pub/irs-pdf/p521.pdf – Moving Expenses.  If you are itemizing and have moved with significant cost, check this out.

– http://www.irs.gov/pub/irs-pdf/p525.pdf – Taxable and Non Taxable Income. Taxable: gambling winnings, tips and gratuities, IRA distributions, wages, dividends. Non-Taxable: TANF, Relocation payments, Child support, federal income tax refunds. What about your income….which category is it in? Where does it get recorded on your 1040? find out here!

– http://www.irs.gov/pub/irs-pdf/f8863.pdf – Education Credit. Check out the American Opportunity Credit (the improved but temporary version of the former Hope Credit) and the Lifetime Learning Credit. The outdated pub 970 tells you a bit about the credits, but they don’t have an updated one up, which makes me uncomfortable. Also, the expanded definition for qualified expenses is still in effect.

ON A RELATED NOTE: if you used U.S. Savings Bonds to pay for higher ed expenses, check out http://www.irs.gov/formspubs/article/0„id=178003,00.html.

– http://www.irs.gov/publications/p334/index.html – Self Employment / Schedule C. Anyone who did freelance or has a small business should have read this pub but if not, do it now! And please please please keep good track of the expenses that you deduct. Even though this pub is from last taxable year, the only change is that standard milage rate for the cost of operating a business vehicle is 50 cents a mile.

– http://www.irs.gov/pub/irs-pdf/p550.pdf – Investment Income and Expenses Publication.  Read this if 1) you have any investments at all and 2) if you are interested in jumping into investments soon.  It has most of the answers you’re looking for, and then some. I’m finding this one personally helpful going into 2011.

– http://www.irs.gov/formspubs/article/0„id=207332,00.html – Energy Property Credit is restored! You may be able to get up to $1,500 for energy-efficient property that you implemented/improved, so check that out.

– http://www.irs.gov/individuals/article/0„id=163764,00.html – There are a few ways to get your refund, and you can pick one or multiple ways. Again this year, you can buy up to $5,000 in bonds with your refund, which is a great way to put some money into savings and the economy. 

– Websites for state taxes info – www.mass.gov/dor (MA), otr.cfo.dc.gov/(DC), http://www.tax.state.ny.us/forms/ (NY – and note both state and city taxes happen…ug.), annnnd www.oregon.gov/DOR (OR – just for cj).  Obviously, a simple google for other states will help elsewhere. Three things to note though are that online software does NOT always do the state return for you, you do likely have to file in state if you filed a federal return, and if you lived in multiple states, you need to file a part-year return for each state in which you fall under filing requirements.

– You’re living abroad? You probably still have to file, but here are a few things that may be helpful:

http://www.irs.gov/businesses/small/international/article/0„id=97324,00.html

http://www.irs.gov/pub/irs-pdf/p4732.pdf

http://www.irs.gov/publications/p54/index.html

Make sure you know where any of your income is coming from.

Depending on what country you’re in, you might want to explore any tax treaties that exist with the US.

– http://www.irs.gov/ita/index.html – Contacting the IRS. This is a new feature this year that provides answers in real time! I tested it out with a very simple question and it worked well. There’s also the general contact list (http://www.irs.gov/contact/index.html). if irs.gov doesn’t answer all of your questions and more, give them a call.  They’re lovely and friendly….at least some of them.

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