Chocolates Today...Taxes Tomorrow

Chocolates Today...Taxes Tomorrow

Well, today is Valentines Day and we certainly wish everyone of you a happy and wonderful day. However, after all the romance, flowers, and chocolates are over with, it never hurts to look ahead to what's coming up next. And as much as we hate to say it, yes, that is tax season. Whether you've already started your taxes or need a little boost to get going, we hope you'll find what you're looking for below! With information on the top ten most common tax return problems, tips on how to file, what software to use to help you file, and much more keep reading to get the most out of your taxes this year! Because after all, you work hard for your money, and we think you should be able to keep as much as you can. Good luck and let us know if you have any questions!

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Ten Most Common Tax Return Problems

1. Not signing and dating the return

2. Providing and incorrect or incomplete Social Security Number

3. Calculation errors

4. Deduction errors

5. Reading tax tables incorrectly

6. Not itemizing

7. Sloppy tax return submission (be sure to attach all W-2s, as well as forms and schedules)

8. Not keeping records of your return

9. Failure to claim credits (energy credit, earned income credit) or calculating them incorrectly

10. Math errors (according to the IRS, a math error is any incorrect number on a return regardless of calculation)

Should You e-File?

Many Americans file their federal taxes online. By filing your taxes online, the IRS is able to check your return for errors right away and ensure that it's complete. If you e-file and owe money, you can send a check, pay with a credit card for a small fee or direct debit your account and delay the debit payment until the filing deadline.

Forms You'll Need

W-2s

You'll need one from each employer you worked for over the past year.

1099-B

You'll receive one from your broker or mutual fund company if you sold stocks, bond or mutual funds during the year. In addition, you will need to know the original purchase date and purchase price for the sold stocks, bonds or mutual funds. 

1099-DIV

These forms report the dividends that individual stocks in your portfolio earned and the dividends and capital gains distributed from your mutual funds. 

1099-G

You'll be sent this form if you received a refund of state or local taxes last year. 

1099-INT

Your bank will send you this form if you earned more than $10 in interest on a bank account or certificate of deposit last year, or if you cashed in savings bonds during the year.

1099-MISC

If you were self-employed and were paid $600 or more, you'll receive a 1099-MISC form from the person or company for whom you worked. 

1099-R

These are distributed to individuals receiving a pension or distribution from an IRA or retirement plan or who converted a traditional IRA to a Roth IRA or rolled over money from a 401(k) to an IRA. 

Childcare records

If you paid a babysitter or daycare center, you'll need the name, address, amount paid and Social Security Number for each provider. 

Medical expense records

If your medical expenses were greater than 7.5% of your adjusted gross income and you itemize your deductions, collect all your receipts and cancelled checks to see if you qualify for a deduction. 

Mortgage/closing documents

In most cases, money spent on mortgage interest, points (sometimes called "loan origination fees"), real estate taxes and prepayment penalties qualify for tax deductions. When you buy, sell or refinance a home, collect all related records and store them in a file. You might also qualify for a deduction for any premiums you paid on private mortgage insurance if you bought or refinanced your home this year. 

Home improvement documents

Keep your receipts and records for home improvements. While in most cases these cannot be deducted each year, they can be used to reduce your taxable gain when you eventually sell your home. If you made energy-efficiency upgrades to your home, ask a tax professional if you qualify for an IRS Energy Credit. 

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Top Tax Preparation Software

TurboTax Software

(TurboTax Basic starts at $29.95 for federal filing, plus $39.95 for state filing)

Highlights:

• Available software packages include Basic, Deluxe, Premier, Home & Business and Business
• Import your W-2s and 1099 from paticipating employers
• If you need help, click the "Guide Me Through" button for step-by-step instructions. 
• Features full access to 700 live tax advisors

 TaxACT Software

(Standard software package features free federal filing, plus $13.95 for each state filing)

Highlights:

• Available software plans include Standard, Deluxe, and Ultimate Bundle
• Consistent navigation from previous versions
• Deluxe and Ultimate versions use tax information to populate a college financial aid worksheet to help parents and students fill out the Free Application for Student Aid (FAFSA)

H&R Block at Home Tax Preparation Software

(Basic software package starts at $19.95, plus $29.95 per state tax filing)

Highlights:

• Available software packages include Basic, Deluxe, Premium, and Premium & Business
• FAQ answers are written by H&R Block staff
• Features "Guide Me" questions intended to walk users through the forms
• Premium users are also entitled to one free session with a tax preparer

Beware of These Errors!

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• Overstating charitable contributions. If you contributed to charities throughout the year, keep your receipts so you can calculate exactly how much you donated. 

• Incorrectly deducting mortgage points. "Points" are charges that you may have paid in the process of getting a home mortgage. Visit IRS.gov to see if you qualify for a deduction.

• Excluding small interest payments, even for interest amounts of less than $10. An omission here can make the IRS think that you may have forgotten to declare other things.