Hello,
This week's issue contains some tax tips. We created a new category in the Budget and Finance section where we will be putting more tips over the coming weeks. You can find that here:
http://www.thriftyfun.com/Finances/Tax%20Tips%202005_fincat.html
If you have any tax tips to share, feel free to send them in.
Thanks for reading,
Susan
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Head Start On Tax Time
Avoid Headaches, Prepare Tax Return Early
By irs.gov
Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.
There are seven easy ways to get a good jump on your taxes long before the April 15 deadline rolls around:
1. 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.
2. Get the right forms. They're available around the clock on IRS.gov in the Forms and Publications section.
3. Take your time. Don't forget to leave room for a coffee break when filling out your tax return. Rushing can mean making a mistake ' and that can be expensive!
4. Double-check your math and Social Security number. These are among the most common errors on tax returns. Taking care on these reduces your chances of hearing from the IRS.
5. Get the fastest refund. When you file early, you get your refund faster. Using e-filing with direct deposit gets you a refund in half the timeas paper filing.
6. E-filing is easy. E-filing catches math problems, provides confirmation your return has been received and gives you a faster refund.
7. Don't panic. If you have a problem or a question, remember the IRS is there to help. Try IRS.gov or call the toll-free customer service number at 1-800-829-1040.
Links:
Forms and Publications
http://www.irs.gov/efile/index.html
E-filing
http://www.irs.gov/efile/index.html
Source: http://www.irs.gov/newsroom/article/0,,id=118985,00.html
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Make Note Of Your Yearly Mileage
Write down the mileage on your vehicle on Jan. 1 of each year, then if you can count mileage on your income tax, you will have this record.
Use your check register for the year to write it on and you have a permanent record.
By Beverly in TN
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Start Working On Your Taxes Early
If you think you may be getting a tax refund this year, START WORKING ON YOUR TAXES NOW. Use your year-end paycheck stubs for income and taxes withheld; start adding up medical bills; start adding up charitable contributions. By breaking the huge job into bite-size pieces, you will be ready to file when the documents are received. That's YOUR MONEY -- get it back where it belongs, in YOUR bank account!
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Save Records For Amended Returns
Keep all receipts for medical expenses, charity donations, real estate taxes, etc. and file with your tax forms even if you don't itemize that year. You have 3 years to file an amended tax return and it will be much harder to locate the information years later.
By Cheryl from Missouri
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Organizing Check Registers By Year
End your check register with the end of the year and start a new one for the new year. That way you can pack the check registers away with each years tax paperwork.
By Beverly in TN
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Free Tax Guide Available (For Individuals)
"Publication 17, Your Federal Income Tax, is a comprehensive tax guide the IRS publishes each year. Use it to find out what's new for your 2004 tax return and some of what to look forward to in 2005."
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Which Form - 1040EZ, 1040A or 1040?
By irs.gov
If you are filing a federal income tax return on paper, use the simplest form you can, the IRS advises. The simpler the form, the less chance of an error that may cost you money or delay the processing of your return. The simplest is Form 1040EZ. Form 1040A covers several additional items not addressed by the EZ. Form 1040 should be used when itemizing deductions and reporting more complex investments and other income. Beginning in 2004, the income limit for using Forms 1040EZ and 1040A has increased to taxable income of less than $100,000, up from previous years' limit of less than $50,000.
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What Is Your Filing Status?
By irs.gov
Your filing status on your federal tax return is a category that identifies you based on your marital and family situation, according to the IRS. It is an important factor in determining whether you must file a return, the amount of your standard deduction and your correct amount of tax. If more than one filing status applies to you, you may choose the one that gives you the lowest tax obligation.
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Who Must File a Tax Return
By irs.gov
There are some instances when you may not be required to file a federal income tax return. But keep this in mind - more than 70 percent of those who file are due a refund, so it may be to your advantage to file even if you are not required to.
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