2009 Taxes - Electronic Online Tax Filing

The Benefits of Using Online Tax Software

February 11, 2012 – 4:41 pm

It’s the start of a new year, and that means it’s time to do last year’s taxes. Are you going to do them yourself, or will you hire a tax professional to do them for you? If you’d prefer to prepare your own tax return, you might want to use an online program to help you. There are lots of different programs available, such as TurboTax and H&R Block. All will help you complete your federal and state tax returns from the comfort of your own home. There are many benefits to using online tax software, and here’s a closer look at some of them.

Convenience
When using online tax software, all you have to do is log on to your computer. It makes it incredibly convenient for you to complete your taxes whenever is best for you, without relying on the schedule of a tax professional you might hire. Also, completing your taxes online means you don’t need to fill out long paper forms by hand. It’s incredibly easy to type in your numbers, so you don’t have to go out and pick up lots of forms, or waste ink and paper printing them out yourself. Doing your taxes online will streamline the process and cut back on your paperwork.

Accuracy
Preparing your taxes involves a lot of math, and when you do them by hand there’s a lot of room for error. Online tax software will figure out all the calculations for you, and it will almost completely eliminate the possibility of mathematical errors. Making an error could cause a delay or an audit, so you want to get it right the first time. Online software will perform and check the math for you.

E-Filing
When you e-file your tax returns, you can confirm that they’ve been received by the IRS within 48 hours. Online software will help you e-file automatically, and this makes the process even easier. You don’t have to buy postage or worry about your paperwork getting delivered. E-filing will also help you get your refund sooner.

Support
Just because you’re doing your taxes at home doesn’t mean you’re on your own. When you purchase online tax software, many programs offer you support from certified tax professionals. You may have to pay a little extra, but if you’re unsure of something, at least you know you have some back up when you need it. Also, software programs will help you through the process by offering step-by-step instructions and definitions of terms. They’ll suggest ways you can maximize your refund or clue you in to additional deductions that you may qualify for.

Cost
Preparing your taxes by yourself with online software can help you save a lot. Purchasing the software will cost a lot less than hiring a tax professional such as an enrolled agent or a certified public accountant. Paying less will help you maximize the net amount of your refund. If you have a very simple federal return, many programs will even let you prepare it for free.

Terry Ford shares tips for saving money and being fiscally secure. She uses the world’s best grammar checker to keep her writing easy for her fans to understand.

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By Steve | Posted in Tax Law, Tax Preparation, TurboTax | Tagged Computer program, H&R Block, internalrevenueservice, tax, Tax advisor, Tax compliance software, Tax return (Canada), TurboTax | Comments (0)

Requirements for Alimony to be Deductible

February 9, 2012 – 11:16 am

Individuals that pay alimony (also known as “spousal support” or “spousal maintenance”) to a former spouse can deduct these payments on their personal federal income tax returns. In turn, the alimony recipient is required to claim the payments as income.

Before a payor takes an alimony deduction they should make sure that their payments meet the IRS qualifications for alimony. Ideally, this was addressed and discussed in detail with their divorce attorney to ensure that the alimony was structured in a way that would allow a deduction. If you are not sure whether your payments are deductible you should consult with a family law or tax attorney. Here are some tips regarding what does and does not meet the general requirements for payments to qualify as alimony under the Internal Revenue Code.

Alimony is Formally Mandated

According to the IRS, alimony payments must be mandated by a legal settlement agreement or court order to qualify for the tax deduction. This means that there must be a legally binding agreement, such as a temporary support order, separation agreement or divorce decree, that describes and mandates the support provided by one spouse to the other. The IRS does not consider voluntary, informal payments of money to a spouse or former spouse to be alimony.

Child Support Is Not Alimony

Child support is not alimony and those who pay child support cannot deduct these payments from their income. Under federal tax laws, child support is not tax deductible by the parent who pays it, and does notneed to be reported as taxable income by the parent who receives the payments.

Cash Payments Only

Non-cash property transfers don’t count as alimony and cannot be deducted from one’s taxable income. Alimony must be paid in cash, or by check or money order, in order to satisfy the statutory requirements.

Third Party Payments

In some cases, court-ordered payments to third parties can be considered alimony and are therefore tax deductible. Examples of this include rent or medical expense payments. In addition, payments made on taxes, mortgages or insurance may also be entirely or partially tax deductible if treated as alimony under a divorce or separation agreement.

Complications Can Arise if You Still Live With Your Ex-Spouse

According to the IRS, a person who is legally separated from his or her spouse, yet still lives in the same home with him or her cannot normally claim a tax deduction on alimony payments. An exception to this rule exists when one spouse leaves the home within one month after receiving an alimony payment. In those states that recognize legal separation, those who are still living with their former spouse and have a legally binding support agreement but are not legally separated, should talk to their attorney or tax adviser to find out whether their payments qualify for a deduction.

About the Author

Scott Morgan is a board certified Austin divorce lawyer who regularly blogs on the subject of divorce and family law. You can read his blog at AustinDivorceSpecialist.com.

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By Steve | Posted in tax credits, tax deductions, Tax Law, TurboTax, Uncategorized | Tagged alimony, Deductible, internalrevenueservice, irs, Payment, requirements, Scott Morgan, tax, Tax deduction, TurboTax, United States | Comments (0)

Tax Breaks for Homeowners: Are You Missing Out?

February 3, 2012 – 12:21 pm

There are many tax breaks that get overlooked, but homeowners often overlook the most obvious deductions. The truth is, as a homeowner, you stand to save hundreds if not thousands off your taxes. However, it all boils down to knowing what you qualify for. The following are just some of the tax breaks homeowners may be missing out on.

Mortgage Interest

The interest you pay on your mortgage should be one the first tax breaks you take advantage of. Those filing single can deduct mortgage interest on homes up to $500,000 ($1 million for married couples). This will require a bit more work because you will need to itemize your deductions, which means you should see an accountant.

Points

Sometimes people are required to pay points on their mortgage to get better rates on their loan. These points may offer a tax break if they meet certain requirements. First of all, points must be allowed in the area where the home was purchased. Second, the mortgage must be for a home that is being bought or built as a main residence. The deduction must also be taken the year the loan to buy a home was obtained and the points cannot be out of the normal range.

Property Taxes

Each year, for as long as you own your home, you can deduct the amount of your property taxes. With most loans these taxes make up a percentage of your monthly payment and are set aside to be paid once a year. You will receive information on the cost of these taxes when you receive information about the interest from the lender.

Mortgage Forgiveness

The Mortgage Forgiveness Act extends through 2012 and allows those that fell into foreclosure the ability to not pay taxes on the forgiven amount. In most cases, forgiven debt is taxed as income. Those that restructured their loan also qualify. The amount forgiven is up to $2 million for married couples and $1 million for single homeowners.

Tax-Free Capital Gains

A capital gain occurs when something is sold for a profit. With most capital gains, the seller is taxed on the amount gained. However, with residential real estate, the homeowner may qualify for a tax break on the first $250,000 ($500,000 if married) of the gain.

Energy Saving Improvements

Last, but certainly not least, homeowners making improvements to their property, in order to have a more energy efficient home, can also take advantage of tax breaks. There are a number of items that qualify ranging from windows to roofing and you may be able to deduct up to 30% of the costs from your taxes up to $1500.

As a homeowner, it pays to take advantage of these tax breaks. While this may mean getting the assistance of a professional accountant, it also means saving hundreds, if not thousands, of dollars.

About the Author: Dennis Allenbaugh is a mortgage specialist who loves seeing people benefit from homeownership each year. He recommends sites like Home Loans Australia and others to those looking to qualify for a home loan. Now’s the time to start thinking about purchasing a home.

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By Steve | Posted in tax assistance, tax credits, tax deductions, Tax Preparation, Tax Relief, TurboTax | Tagged $1 million, Business, Capital gain, internalrevenueservice, Mortgage loan, Property tax, tax, Tax break, Tax deduction, TurboTax, United State, United States | Comments (0)

Options for Investing for Your Retirement

January 30, 2012 – 9:25 pm

Many people get nervous when it comes to thinking about retirement investing. It can be a very confusing process with complicated terms and options available. However, it is vitally important to save for your future. The earlier you start the better when it comes to saving for retirement. The successful investors are the ones who consistently put money away no matter what the markets are doing. To reach your financial retirement goals there are a couple of options available to most people.

401(k)

If you work for an employer who offers a 401(k), or similar plan, it is quite easy to save for retirement. Whether or not you use the 401(k) at your job depends on a couple of factors. Many of these accounts are set up by commissioned salespeople who talk employers into using their plans. These plans often have much higher costs than if you invested on your own. Also, many 401(k) plans are very limited in the choice of funds you can invest in. You must compare your 401(k) with other investment options in order to determine whether or not is the right choice for you. However, if your company offers a match to the dollars you invest then it is wise to at least invest up to the percentage that your company matches no matter what the choices are in the 401(k). The reason is because the match that the company provides creates an automatic return on your investment.

Traditional IRA

If your company does not offer a 401(k) or you do not qualify for it than there is always a traditional IRA. Much like a 401(k), an IRA allows you to deduct the money invested in the taxes you pay. This allows you to put more money to work in your retirement account and you pay taxes later on when you take the money out in retirement. You could easily set up an IRA online with many different companies. You can set up automatic deductions from a checking account or savings which helps make investing for retirement quick and painless.

Roth IRA

Another form of the IRA is the Roth. It is identical to a traditional IRA with one big exception. You do not receive a tax credit for the money invested in the Roth. In return, since you are to pay taxes on your investment money, you never have to pay taxes on the money you withdraw in retirement. The best IRA plans are the ones who feature low-cost investing such as Vanguard.

There are many different financial calculators online which can help determine whether a traditional or a Roth IRA is the best choice for you. There are even calculators which allow you to compare a 401(k) with investing in an IRA.

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By Steve | Posted in Retirement Savings, tax credits, tax deductions, Tax Law, Tax Preparation, TurboTax | Tagged 401k, Individual Retirement Account, Investment, money, Personal finance, retirement, roth, roth ira, tax, Traditional IRA, TurboTax | Comments (0)

What About Romney’s Offshore Tax Havens?

January 30, 2012 – 11:50 am

According to emerging news reports, Romney has a vast amount of wealth invested in funds through Bain Capital LLC. This powerhouse is one of the offshore tax havens often used to help lower the 2012 taxes. Several of the Bain funds have connections offshore that are allowing the financial elite to take advantage of tax breaks.

These news sources are interested in dissecting Romney’s tax returns to see how his use of offshore strategies has allowed him to avoid taxes. Investments by Romney and others in Bain funds, have money scattered from Delaware, to Bermuda, the Cayman Islands, Ireland and Hong Kong, according to sources at Reuters News Group.

The question is if these things add up to the charges of tax evasion or avoidance of taxes. While corporations do not pay taxes on the income unless the money is repatriated, individuals do. The findings of this investigation could have a negative impact on Romney’s campaign.

There are limited numbers of ways to shelter one’s income offshore and these ways are generally transparent as offshore income sheltering. The IRS has become very skilled at locating these attempts and these people are generally required to pay the taxes on the earnings.

If indeed, the investments are listed on Romney’s tax return, then they cannot be the tax haven that others once found in offshore investments. While the tax code is complex and Bain may have found a structure allowing some sheltered income, that structure should not be included on the Romney’ or anyone else’s tax return.

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By Steve | Posted in Retirement Savings, tax deductions, Tax Law, TurboTax | Tagged Bain Capital, Cayman Islands, Hong Kong, internalrevenueservice, Mitt Romney, Reuters, Romney, tax, Tax haven, TurboTax | Comments (0)

Use Turbo Tax For Easy Tax Filing

January 27, 2012 – 5:52 pm

Filing taxes can be a frustrating experience. Hiring a professional for tax filing is not an option for some people. It is easy to file your own taxes with Turbo Tax. In fact, it is possible to file right from an iPhone.

Since many people use their smart phones to do virtually everything, tax filing should not be left out. That is why Turbo Tax has a app for easy filing. It is as easy as snapping pictures of required documents and the app turns them into proper forms.

There is a small charge for electronic tax filing. If the taxpayer falls below a specified income they may not have to pay a fee at all to file. Even so, filing electronically is a quick way to file. If money is owed to the taxpayer it can direct deposited right into their account. If there are no problems, the money can be in the bank in less than two weeks.

The entire process of electronic tax filing and Turbo Tax in particular is completely safe. Some people worry about the privacy of their documents when filing electronically, but the information sent is safe and kept confidential. Errors are also minimal with electronic filing. There is actually a greater chance for errors when filing a paper return.

Many people are switching to electronic filing over the older paper way of filing. It is more convienent, quicker and easier than traditional paper filing. Turbo Tax is an inexpensive way to file on-line. Try out the program and take the stress out of tax filing this year.