Should I File A Tax Return This Year?

The law requires you to complete a tax return when you have income above a designated amount.  The amount varies according to your age, filing status and income type.  However, even if you are not required to file, you might benefit as you could get a refund if taxes were withheld or you qualify of certain refundable credits.

The IRS website is a helpful resource to see if you should file.  The Interactive Tax Assistant on the site can lead you through a several questions to see if you should file.  Other information is found on printed tax forms.

Six reasons to file a Federal Income Tax Return in 2011 even though you are not required:

Taxes withheld – If any employer withheld taxes, you paid in estimated taxes or had a refund from a previous year credited to this year’s taxes, file for a refund.

EITC – EITC is for those who worked but had limited income.  This credit means you might get a refund even if you did not pay any taxes.  You must complete the return claiming the credit to qualify.

ACTC – A refundable tax credit for those with one or more children who qualifies that did not get the total amount of the  Credit for Child Tax .

AOCS – During the first 4 years of education past high school qualify for this credit of up to $2,500.  Even if there is no tax due 40% of the money ($1000) can be refunded to the filer.

Adoption Credit – This credit is available for expenses paid in adopting a child.

HCTC – This credit is available to some individuals receiving assistance in the back to work programs that were established as a part of economic recovery and those receiving pension benefits from a Pension Benefit Guaranty Corp. for tax year 2011.  Eligible individual can include a large portion of the payments for health insurance they made when they file a tax return this year.

Checking a Status On Your Taxes

After filing taxes, people want a way to check on the status of their refund.  They want to know exactly when they will be getting their money back so they can put it to good use. There is an easy way to check on the status of the refund.

1. To check on the status of your refund, you should first visit the website www.IRS.gov that is provided by the IRS.  This site is very helpful in this means and for answering any questions there may be. This site is available all day every day during tax time.

2. For those who E-file their taxes, they can start checking on their status 72 hours after the filing is done.  For those who do paper filing, they can do it three to four weeks after the filing has been sent in.

3. To check on a refund status, you need to provide three things for the website to identify who you are and what refund is yours.  These three things are your SSN, your filing status, and the amount you will get back.

4. Once you track your refund, the website can tell you that it has been processed already, is still being processed, or that something needs to be changed so that it can be processed.

5. All the customization and personalization makes the answers and the information personal to the individual.  This is very helpful because it helps people with anything they need help with.

6. For people that are visually impaired, there is software on this website that helps them to use it, too.  There is something for recognition and even Braille sometimes where compatible.

7. When a person does not have internet access, they can call the toll-free number 800-829-1954 to get the same information that the website offers.

8. Another great thing that the IRS offers is the smartphone application called IRS2GO, which is also helpful.

Best Use of the Tax Refund

Tax time starts creeping up as soon as the calendar turns to the New Year. No matter how you feel about the experience, it is one that has to be done. What you do after filing your taxes may be the key to setting the tone for your financial future. Finding the best use for the tax refund starts with careful planning and then continues with consistent follow through.

Making Plans for the Tax Refund

1.      Make a list of all the places you would like to use the tax refund.

2.      Put them in order of most important to least important.

3.      Estimate cost of each of the items.

4.      See how far the tax refund would go if you were to spend it on each of the items on the list.

5.      Repeat the process several times over the next few weeks to see if your needs, wants or desires begin to shift.

6.      Only begin to make your purchases AFTER the tax refund has been deposited.

Possibilities for the Tax Refund

  • Look at the big expenses. The last year was a tough one for many people trying to meet the expense of a mortgage. A portion of the tax refund could be used to set up an account that would cover three to six months worth of mortgage expenses if necessary. It would provide some security for the upcoming year.
  • Consider the unexpected. The cost of insurance deductibles, surprise auto repairs or even medical expenses can hurt a budget that is already on tight ropes. One of the best uses of the tax refund can be in setting up an emergency account that would only be used to cover any of those unexpected costs.
  • Pay off a debt. The release that comes from paying off a debt can be a great motivator for tackling the next debt. Review any rotating credit balances or other outstanding debts. Consider using a portion of the tax refund to pay off that balance in full.
  • Invest in the future. Now may be the best opportunity to attend that seminar or take that class that will help you move up the ladder in your career. Measure the amount of increase you will receive with the amount of investment (including time, energy and finances) that it will cost and then thing about taking that leap.
  • Give it away. Put a portion of your tax refund to work for others. Setting aside as little as 10% can go a long ways towards helping your favorite charity meet its budget demands.
  • Invest in a little fun. The tax refund represents a full year of work. Splurge a little on something fun or exciting for the family. Set aside a portion of the tax refund for a great vacation or for a toy the whole family could enjoy (like that outdoor pool table you have been talking about).

There is never one way to spend the tax refund, but there can be one best way. It all starts with preparation. Thinking about the money and how it should be spent will start the process moving in the right direction. Evaluating the options several times begins to focus in on the best choices. Waiting until the check has been deposited will help to complete the package.

No matter when you plan to face down the tax man, start planning on the refund right now. The more time you invest in planning how to best use the tax refund then the more likely you are to make choices that will push you towards a solid financial future.

Nicole has been in the finance industry for 3 years, currently she blogs about the different ways for people to maximize their savings through the use of a brokerage account.

Tax Information For Small Businesses And Self-Employed Individuals

The 2011 Tax season is quickly approaching, and many people are busy getting all of their tax information together so they can file their taxes on time. Business owners face many more challenges at tax time than employees. It is crucial for business owners to have all of the information they need in order to file their taxes, which can be quite a grueling process. In most cases, the law does not require businesses to keep detailed records, but they must be able to supply evidence of all earnings related transactions. Small business owners should keep a record of their sales slips, purchases, receipts, payrolls, paid bills, invoices and any other financial documents. All businesses should employ a qualified bookkeeper or accountant who is able to keep accurate business records throughout the year.

Self-employed individuals must also prepare themselves accordingly before filing their taxes. Most people who work as freelancers do not bother to hire a bookkeeper or accountant. Unless someone knows the ins and outs of taxes, they will need to conduct plenty of research before filing their tax return. For example, there are many tax write offs that need to be considered. A local income tax agency can help a self-employed individual file their income tax return, but the person filing is responsible for providing them with all of the required information. Just like small business owners, self-employed individuals should save all of their financial documents throughout the year.

There is plenty of information for Small Business and Self-Employed Individuals available online. Small business owners and self-employed individuals can find out more information online at the IRS government website. The official IRS website offers information on forms for small businesses, employer ID number applications, social security, Medicare, income tax and more. The IRS website offers helpful articles, videos, virtual workshops and a printable tax calendar. They also offer information on small business tax audits.

Do You Know Your Options For the Tax Season?

Preparing and filing your federal tax return is quite simple with the IRS e-file free tax filing program. The Internal Revenue Service provides this program to help ensure that you can get your taxes done fast and easy. In addition, the IRS E-File is safe, free and ensures that you get the highest refund amount entitled to you.

There are two ways to take advantage of free 2011 tax return filing from the IRS. You can choose to use easy tax software or file electronically online. If you earn less than $58k per year, you are eligible to take advantage of Free File Software.

If you are one of nearly 100 million who are eligible for free 2011 tax filing, you can access the IRS e-file online forms by visiting the government IRS website. Once you begin, you will be assisted in finding free software and after choosing the right one for you, you will then be instructed through the filing process for your 2011 tax forms. The best thing about e-file is that it eliminates the high costs of having a professional complete your tax return and most anyone can successfully file their return online for free without prior tax knowledge. If the government owes you money, such as the EIC, the software will automatically apply your earned income credit to your refund.

Of course, safety and security is always a concern when filling out private information online and the IRS takes this into consideration with Free File. To date, the software has been used both securely and safely by millions of people since the year 2003.

If you are not comfortable doing your 2011 tax return online, there are still options that allow you to mail your tax forms. Although it takes longer to receive a refund when you file by mail, it is still preferred among some tax payers and will likely remain an option when 2012 tax time rolls around as well.