Prepare for the 2008 Tax Season

2008 Tax Accounting Guide & Home Business Tax Help

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2008 Tax Preparation Poll

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Last-Minute Tax Tips

Here's what you need to do.

Tick....tick...tick. 2007 taxes will be due soon! As in years past, plenty of taxpayers will spend the last few days (or hours) scrambling to file their returns.

The IRS estimates that over 20 percent of taxpayers file their return during the final two weeks of the tax season.

But before trying to do your return at breakneck speed to meet the deadline, make sure you have all the documents you'll need (receipts, 1099s, W2s, etc.) to do the job right. If you don't, it may be smarter to file for an extension (See how below.)

But if you've got everything in hand, keep these last-minute tips in mind as you tackle all your tax forms.

Keep an eye out for money savers

You're short on time but don't overlook in haste all the deductions and credits you're entitled to that can reduce your tax bill or increase your refund.

Most tax-friendly places 2007

For starters, consider these

10 don't miss tax breaks. For others, review the

1040 Form instructions, says Maureen McGetrick, a senior manager with the
tax firm BDO Seidman. Another potential deduction source: An IRA contribution.
"The IRA contribution tends to be something that people throw by the wayside,
but it can be a valuable deduction," McGetrick notes. You may open an IRA
account, if you don't already have one, and make a contribution until April 17
in order for it to count as your 2007 contribution, the limit on which is $4,000
(or $5,000 if you're age 50 or older).

Not all IRA contributions are deductible, however. You only qualify for a deductible IRA if:

You have earned income.

You're not covered by a retirement plan at work.

You're covered by a plan at work but your modified adjusted gross income (AGI)
is $50,000 or less ($75,000 for married couples filing jointly). That
qualifies you to deduct your full contribution. You may take a partial
deduction if your modified AGI is more than $50,000 but less than $60,000 (or
more than $75,000 and less than $85,000 for married couples).

You're not covered by a plan but your spouse is and your modified AGI is
$150,000 or less. that qualifies you for the full deduction. But you may take
a partial deduction if it's more than $150,000 and less than $160,000.

Don't be afraid to ask for help

If you have questions about your taxes, consider taking advantage of some free resources that the IRS offers.

For starters, you can always call the IRS directly.

Taxpayers can call 1-800-829-4477 at any time to reach the IRS' TeleTax line, which offers pre-recorded tips on 150 tax topics. The IRS also staffs a help line at 1-800-829-1040 that is open from 7 a.m. to 10 p.m. local time from Monday through Friday.

If you have trouble getting your question answered by phone, you can also take your return to a local IRS Taxpayer Assistance Center. (Find the one nearest you.) You don't need an appointment, but be sure to call ahead as some offices may have relocated.

The IRS also offers free tax assistance programs to low-income and elderly taxpayers and members of the military. To see if you qualify, check with the IRS by calling 1-800-829-1040.

Check and double check

Maybe the most important rule when doing your taxes last minute is not to hurry because ultimately rushing can lead to mistakes. And mistakes can lead to penalties or delayed refunds.

"Be meticulous," says Cindy Hockenberry, a tax information analyst with the
National Association of Tax Professionals. "When people are in a rush they usually get sloppy."

That means double check everything. Make sure the Social Security numbers on your return are entered correctly, all the necessary forms are attached, your check is included if you owe money, your return is signed and, if you're mailing your return, your tax package has enough postage.

Filing your return electronically can cut down on time spent preparing your return, and it can eliminate the worry that your return got lost in the mail or missed the filing deadline if you didn't check to see that it had a postmark of April 17 or earlier.

(Here are some tips on how to electronically file your return safely.)

File an extension if need be

If getting your tax return done on time just isn't feasible, file for an extension.

Requesting one from the IRS is pretty painless and does not increase your chances of being audited. Just fill out IRS Form 4868 for an automatic six-month extension, and check with your state about what forms you need to apply for an extension there. (You can find the Web site for your state's taxation department here.)

Remember, however, an extension to file is not an extension to pay what you owe. You are still obligated to pay your 2007 taxes in full by April 17 or risk excess charges.

So you will have to make an educated estimate about what your total tax liability is for 2007, and if that amount is more than what was withheld from you during the year, you will have to pay the difference when you file your
extension.

If your 2007 income is similar to what it was in 2006, you can use your 2005 return as a guide. But if your financial situation has changed, you're going to have to crunch some numbers to estimate your bill, said Jennifer MacMillan, an accredited tax advisor and enrolled agent -- a designation that allows her to represent taxpayers before the IRS.

Failure to pay what you owe will result in penalties and interest on the unpaid balance due. And if you owe taxes but fail to file for an extension, you will also get hit with a late filing penalty.

To be safe, send in a little more than your estimated unpaid balance in the event you've underestimated what you owe, says Kimberlee Phelan, a partner and certified public accountant with the New Jersey-based accounting firm WithumSmith + Brown.

"If you overestimate you can always get your money refunded or apply it to
your 2007 taxes," Phelan says.

A complete tax savings guide that includes new tax more...5 points

Tax Tips

Just in time for today's tax-filing deadline!

Recommended tax tips and resources to save you even MORE time and money.

I highly recommend spending 45 minutes today going through these articles and special reports I have put together for you as well as bookmarking (saving as a favorite) this webpage. They detail some of the most important and extremely lucrative tax strategies for internet business professionals. This could be the best 45 minutes you spend, resulting in ideas that could save you $1000's year after year in tax savings.

Business Tax Loopholes: This site offers an excellent tax saving manual with a complete listing of tax deductions and legal tax loopholes, many that are seldom used because small business owners just don't know about them. Would you like to turn your child's allowance into a tax deduction? Dozens of other great tips provided with specific examples in this manual.
Estimated Quarterly Taxes: (You might hate them but you have to pay them)
If you are self-employed and earning a profit you have to make quarterly tax payments. This article takes you by the hand through the details of quarterly tax payments.
The Ultimate Tax Shelter: Owning Your Own Business: How to make sure your business is a business and NOT a hobby in the eyes of the IRS. Does the IRS consider YOUR business a hobby?
You Deserve a Tax Break On Your Home Office Costs: If your home is a place of business, many of your personal expenses can be deducted as business expenses. Here are tips on what qualifies for the home office deduction, and how to avoid an audit.
Deducting Your Car Expenses: All of the details on deducting your car for business purposes. Don't ignore this deduction... it can be worth $1000's in tax savings. Also great advice on leasing versus buying from a tax standpoint.
Combine Business with Pleasure, and Deduct it, Too: All of the details on deducting vacations as business trips. The IRS says you can deduct expenses for taking a business trip or business convention. And there's no reason the trip shouldn't coincide with your vacation.
IRS's home page for Small Businesses and Self Employed: If you have a specific question this is the place to turn to. You can find all of the tax laws, forms and explanations. It might take a little work finding what you need, but it is there.
Essential Small Business Links: Large list of online resources for small business owners.
Tax and Accounting Site Directory: Another directory of tax help for businesses.
Tax Reform Still on America's Radar: It's tax time, so there's no shortage of outrage over Internal Revenue Service forms. But according to one survey, a shocking number of those annoyed taxpayers are willing to put their money where their mouths are to get a simpler, less painful tax code.

Ten Real Estate Tax Tips You Missed 2007

Taking Points

The fees paid to mortgage lenders, known as points, are considered a form of prepaid mortgage interest. That means they are fully deductible the year you take out the mortgage, says Bill Abrams, a tax attorney with Abrams Garfinkel Margolis Bergson, who works in New York City and Los Angeles. It's a simple but easily forgotten strategy, since your lender may not have reminded you of it in your year-end statement.

Points In The Right Direction

Being able to deduct those points is great--if you bought a home this year. If you paid points to refinance a home, you can take them off your income too. But the deductions have to be spread over the life of the loan. For a 30-year, $500,000 mortgage, that comes to less than $170 a year per point. We still think it's better than nothing.

Trade Up

If you plan to sell one investment property and buy another, consider what is known as a "like-kind exchange," advises Kevin Roach, a partner in personal financial services for PricewaterhouseCoopers. It's a common practice for real estate professionals, but smaller investors may not know about it. Instead of selling a property and paying taxes, then reinvesting the proceeds, you can trade the property for one of comparable or higher value. The taxable gain is deferred until you cash out, but there is no limit on the number of times you can exchange, Roach says. A few caveats: You have to find the replacement property within 45 days of selling the old real estate and close on it within 180 days. Your cost basis for the new place will be the same as your cost basis for the old. And you can't do this with your home.

Exchange Right

If you're going to go down the like-kind exchange road, remember that you don't get to defer the gains on any cash you may receive in the deal. Take a small-scale example from PricewaterhouseCoopers' Kevin Roach: Say you paid $10 for an apartment building. You exchange it for another property with a fair market value of $12, plus $4 in cash. You got $16, but this year you only have to recognize $4 of it for tax purposes. The rest can be put off until you sell out completely.

Business Or Leisure

There tends to be a lot of confusion over vacation property that is rented out some of the time, Roach says. In these cases, the line between personal and investment property is drawn with time. Use the property for just 14 days or 10% of the time it is rented (whichever is greater), and it's an investment. That means you can record all of your expenses, from depreciation to roof replacement; if they exceed the rental income, you may be able to deduct a business loss. If it's a personal property, you can deduct your expenses from the rental income, but you can't go below zero. In either case, the amount and timing of the deductions allowed depends on your whole financial picture, so plan accordingly.

Take The Damage Deduction

Coastal home owners take note: If you suffered property damage from a hurricane, floods or other sudden events, you can deduct costs that were not covered by insurance or reimbursed in other ways, says Kenneth M. Hart, a tax lawyer at Gunster Yoakley & Stewart in West Palm Beach, Fla. The costs must exceed 10% of your Adjusted Gross Income plus $100 per loss and are not subject to Alternative Minimum Tax limitations. This rule doesn't apply to victims of Hurricanes Katrina, Wilma and Rita, who can fully deduct casualty losses.

Do It In Twos

You can deduct your property taxes on all of your personal holdings, whether you own one home or 16, Roach says. But mortgage interest is only deductible on your primary residence and one other abode, for up to $1.1 million of combined debt. The upside is that you can pick which house to count as the second one, so be sure to choose the one that gives you the biggest break.

Push Paper

In any given year, you might not have enough itemized deductions to make taking them worthwhile. But if you plan ahead, you may be able to "bundle" them, condensing them into the same year so that they get you a bigger deduction. That means you might pay your property taxes in advance to take the deduction in a certain year. Think ahead before you write those checks, and make sure your records properly reflect the payment.

Check It All Out

When it comes to taking tax breaks, you need to look at the whole picture, says Bill Abrams of Abrams Garfinkel Margolis Bergson. If you don't watch out, you may end up canceling out tax breaks, because having too many deductions will throw you into the dreaded Alternative Minimum Tax territory. "You have to do an examination for the following year," he says.

Wed Wisely

OK, it sounds a little far-fetched. But if you're thinking about selling your home and considering getting married this year, timing a double-play might be worthwhile, especially if your future spouse has been sharing the space. When you sell a home, $250,000 of any profit is tax-free, and that goes double for a married couple. The only catch is that, technically, the spouse should have lived there for at least two years.

2008 Survey of U.S. Attitudes on Taxes

What do Americans think about taxes? Public opinion polls commonly include tax-related questions, but few surveys are specifically designed to explore the public's opinion of the U.S. tax system. In an effort to better understand American's views on tax fairness, progressivity and other tax policy issues, we woudl appreicate your input regarding our survey below. Thanks!

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US Government Sites

Internal Revenue Service: Current and back forms, publications, revenue rulings, etc.
The Bureau of Labor Statistics: A wealth of statistics including CPI information.
Bureau of Labor Statistics Occupational Handbook: Details on job prospects in various occupations.
Small Business Administration: Lots of information plus a gateway to other sites. Image map of state sites.
U.S. Business Advisor: Links to U.S. government sites for business info.
Minority Business Development Agency: Help for minority-owned businesses.
Office of Women's Business Ownership: SBA division to help women entrepreneurs.

TaxBrain Online Tax Service

TaxBrain is easy-to-use and FREE to try! See why Forbes, USA Today, PC World, CNN, Smart Computing and many others media outlets are featuring TaxBrain in their media coverage.

E-file your tax return today with TaxBrain Online for 2007 and get your refund in as little as 10 business days. With TaxBrain, e-file is fast, easy and secure. When you want the safety and speed of e-file, TaxBrain is your online solution.

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P.S. TaxBrain Online has everything you need to prepare and file your federal and state taxes online, and offers the fastest and lowest cost tax refund loans in the business. Start your return today and get your tax refund the fastest way possible.

TaxBrain Online Tax Service: TaxBrain is easy-to-use and FREE to try! See why Forbes, USA Today, PC World, CNN, Smart Computing and many others media outlets are featuring TaxBrain in their media coverage.

America Keeps Working to Pay Annual Tax Burden

All things considered, it's hard to say whether taxes are too high or too low at any point in time. But one thing's for sure - it hasn't always been this way.

For most of America's history, we've been a low-tax haven. From the nation's founding through the early part of last century, government spending at all levels rarely exceeded 10% of the nation's income, and even then only during wartime.

In 1904, Supreme Court Justice Oliver Wendell Holmes made his famous observation that "taxes are what we pay for civilized society."

Easy for him to say. At that time, the average American tax burden was around 6% of income, and Tax Freedom Day arrived in late January.

Today, it hovers around 32%. And that doesn't include the high and very real costs of tax compliance.

These "paperwork burdens" add another $265 billion - or 22 cents for every federal tax dollar - to the nation's total tax bill.

Of course, taxes ultimately pay for government services. And many of these are essential to keeping society running smoothly - police, roads, courts. Everyone pitches in for them.

But where is the limit? In addition to these basic services, everyone has a list of publicly funded projects he or she thinks necessary. At what point are we no longer getting a good deal for tax dollars?

One way to answer that is to compare taxes with our other expenses.

This year, we'll work 116 days to pay taxes. In contrast, we'll work just 106 days on average for food, clothing and housing, combined.

That wasn't always the case. Only in the last decade have taxes exceeded spending on those basic necessities.

Today we work 52 days for our own health and medical care, but twice as many for the health of local, state and federal governments.

Opinion Polling on the US Budget Deficit

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Judging Tax Fairness

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How Much is Enough?

What is the maximum percentage of a person's income that should go to taxes - that is, all taxes, state, federal, and local?

To be sure, many Americans believe it's fair to work four months a year for taxes. After all, governments today do a lot of things for a lot of people.

But one thing is clear: the price of government isn't what it used to be. And if you ask Americans about it, they seem ready to shop around for a better deal.

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IRS Tax Tips for 2007

Keeping Good Records

Tax Tip 2007-75 , April 16, 2007

Taxpayer Advocate Service

Tax Tip 2007-74, April 13, 2007

Appeal Rights

Tax Tip 2007-73, April 12, 2007

What To Do If You Receive an IRS Notice

Tax Tip 2007-72, April 11, 2007

Amending Your Tax Return

Tax Tip 2007-71, April 10, 2007

How Long Should It Take To Receive Your Tax Refund?

Tax Tip 2007-70, April 9, 2007

Need More Time to File?

Tax Tip 2007-69, April 6, 2007

Payment Options

Tax Tip 2007-68, April 5, 2007

Making Tax Payments Correctly

Tax Tip 2007-67, April 4, 2007

Last Minute Payment and Filing Tips

Tax Tip 2007-66, April 3, 2007

Filing Your Federal Tax Return

Tax Tip 2007-65, April 2, 2007

Tax Tips for March 2007

March 2007 Tax Tips

Tax Tips for February 2007

February 2007 Tax Tips

Tax Tips for January 2007

January 2007 Tax Tips

Reader Feedback

Questions? Comments? We want to hear from you!

* We love and care for our lenses each day! Show us some love too? If you've found this lens interesting, useful, enjoyable, informative, or fun please lensroll us, leave a comment, vote for us or--even better--add us to your favorites!

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Posted September 08, 2008

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Posted June 09, 2008

mspence5000

Hey Lilly, being new to the tax payers world I read carefully everything and will definitely revisit the site for addtl info. I totally forgot about the like-kind exchange but will use it will my mom's property she is selling. Good stuff here, check out my one and only lens about turning tax dollars into vacations and getting paid in the process!!..... Hope it helps, take care.

Mike

Posted June 04, 2008

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Posted April 22, 2008

Bacony

Fine site to learn about tax in modern days. It gives us differnt view of taxes from different sources. To save money you get new idea from IRS which help all tax and non tax payer. Without hesitation step into it.

Posted April 16, 2008

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Prepare for the 2008 Tax Season

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2008 Tax Accounting Guide & Home Business Tax Help

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2008 Tax Preparation Poll

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Tax Tips

Just in time for today's tax-filing deadline!

Ten Real Estate Tax Tips You Missed 2007

2008 Survey of U.S. Attitudes on Taxes

US Government Sites

TaxBrain Online Tax Service

America Keeps Working to Pay Annual Tax Burden

Opinion Polling on the US Budget Deficit

Judging Tax Fairness

How Much is Enough?

What is the maximum percentage of a person's income that should go to taxes - that is, all taxes, state, federal, and local?

IRS Tax Tips for 2007

Reader Feedback

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