Should You File a Tax Return?

Posted by Bruce Mc on Jan 14, 2011 in Filling Status, Form 1040 Information, Information | 0 comments

Do you ever wonder whether your income is high enough to warrant the filing of a tax return? Because the minimum income level varies depending on filing status, age, and the type of income you receive, it can be a bit complicated.

Use the following guide to determine whether you must file a federal income tax return for 2010.

Single Taxpayers
If you expect to file a single return, the IRS requires you to file a return for 2010 if your gross income for the year is at least $9,350 if you are under age 65 and $10,750 if you are 65 or older.

Married Filing Jointly
For married persons filing jointly, you are required to file a return if gross income for 2010 is at least $18,700 if both of you are under age 65. If one of you was at least age 65 in 2010, the limit is $19,850 – and if both of you were 65 or over, you must file if you made at least $20,900.

If you are not living with your spouse at the end of the year or you weren’t living with them on the day they passed away, the IRS requires you to file a return if your gross income is at least $3,650. Each personal exemption in 2010 is worth $3,650.

For married persons filing a separate return, no matter what age, you must file a return if gross income is at least $3,650.

Head of Household
For persons filing as head of household, you must file a return for 2010 if gross income is at least $12,000 if under age 65 and $13,400 if at least age 65.

Qualifying Widow or Widower
For persons filing as a qualifying widow or widower with a dependent child, you must file a return for 2010 if gross income is at least $15,050 if under age 65 and $16,150 if at least age 65.

Other Situations That Require Filing
Even if you don’t earn this much income, other situations necessitate filing a tax return. For example, a dependent has to file a return for 2010 if they received more than $950 in unearned income or more than $5,700 in earned income.

Other situations include:

You Owe Certain Taxes. If you owe FICA or Medicare taxes (also called payroll taxes) on unreported tips or other reported income that were not collected, you must file a return. You must also file a tax return if you are liable for any alternative minimum tax. Finally, you must file a return if you owe taxes on individual retirement accounts, Archer MSA accounts, or an employer-sponsored retirement plan.

Advance Earned Income Tax Credit Payments. The Earned Income Tax Credit is a federal income tax credit for eligible low-income workers. The credit reduces the amount of tax an individual owes, which may be returned in the form of a refund. If you receive advance payments for the earned income credit from your employer, you must file a return.

Self-Employment Earnings. If your net earnings from self-employment are $400 or more, you must file a return.

Church Income. If you earn employee income of at least $108.28 from either a church or a qualified church-controlled organization that is exempt from employer-paid FICA and Medicare taxes, you must file a return.

Questions?
Contact me for more information about filing requirements and your eligibility to receive any tax credits.

Need more time to file?

Posted by Bruce Mc on Apr 15, 2009 in Form 1040 Information, News Flash, Tax Preparation | 2 comments

Today is the day, or the last day I should say.

If you can’t meet the April filing deadline to file your tax return, you can get an automatic six month extension of time to file from the IRS.

Some things you need to know about filing for an extension:

1. An extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by todays April 15^th midnight deadline, plus a late payment penalty if you have not paid at least 90% of your total tax.
2. If your return is completed but you are unable to pay the full amount of tax due, do not request an extension. File your return on time and pay as much as you can. The IRS will send you a bill or notice for the balance due.  To apply online for a payment agreement, go to IRS.gov and use the pull-down menu under “I need to …” and select “Set Up a Payment Plan.”
3. Request an extension to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, with the IRS by the April 15, 2009, or make an extension-related electronic credit card payment.  (For more information about extension-related credit card payments, see Form 4868.)
4. You can e-file an extension request using tax preparation software on your own computer or by going to a tax preparer that has the software. The IRS will acknowledge receipt of the extension request if you file by computer.
5. You can use Free File Fill-able Forms to file for an extension.  You can access Free File Fill-able Forms via the IRS Web site.
6. If you ask for an extension via computer, you can also choose to pay any expected balance due by authorizing an electronic funds withdrawal from a checking or savings account. You will need the appropriate bank routing and account numbers and must also have available the adjusted gross income from your 2008 federal income tax return to verify your identity. 

Related Links:

• Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return
• Form 9465, Installment Agreement Request
• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Official Payments Corporation
• Link2 Gov Corporation

Paying Too Little OR Too Much. . .

Posted by Bruce Mc on Oct 13, 2008 in Choosing a preparer, Tax Preparation | 1 comment

Paying Too Little OR Too Much When Filing A Regular Middle Income Tax Return!

This is another addition to the series “Mistakes made when choosing a paid tax preparer”.

Don’t pay to little or too much when filing your income tax return. That might have sounded odd to you?

Why would you not want to pay too little to have your taxes filed with a tax professional? Well, let me explain. What’s too little or too much? It depends. Let’s start with the “paying too little” for filing a middle income person’s tax return. Who is it do you think are the tax professionals charging the least amount or advertise the lowest fees for tax preparation? Some of these folks are the “fly-by-night” tax preparers. Yeah, they may know a thing or two about filing some tax forms. What they don’t know, they try and figure out as they go along. These may be nice people for the most part, but getting them to be your tax representative with the IRS might not be the wisest decision.

What about paying too much when filing a tax return? Did you know to some people, paying the most money to file their taxes is like a badge of honor? (Or if you want to know the secret truth — it makes the person feel important [like a "somebody"] because they paid $500.00 or $700.00 or $1,200.00 to have their taxes filed!) I’m a rich important guy, “I paid my accountant $600 bucks to file my taxes this year!” as he sips his ‘shaken not stirred martini’ at the country club.

No thank you!

Yes, you’d probably be surprised, but in a lot of cases, when someone in the middle income tax bracket wants to be sure they’ve filed correctly with the IRS they (very foolishly) go pay too much at some CPA’s office with the leather couch and fancy plants and wall hangings, and after they write the check to the accountant for $500 bucks or whatever, they feel pretty good, but their gut tells them something is wrong.

Well, there usually is something wrong. It’s called overpaying when you don’t have to!

Regular retail tax offices with nice, clean working environments are just fine. Getting a quality preparer with multiple guarantees backing up their work, ongoing support and year round access to a manager or person in charge is all you need. Do you need to pay $500.00 or $1,000.00 dollars for that? Actually, on most middle income returns, you can pay in the $150 to $250 range and be just fine. Some high-priced tax professionals will charge you $500 or $600 for the same forms and schedules.

My advice is to find a tax professional who charges by the form so he/she is not pulling fees out of thin air. If he adjust the price that is on him. Like I said, you can over pay or actually under pay – either way, both will come back to bite you in the preverbal end.

Getting the best value for your money is always the right way to go!

Again, I want to invite any and all guest post on this subject. I want to hear from all bloggers or just readers with their own input. Let’s see what you see I am missing. If you have some words of wisdom on this subject please let us share it with everyone, if it is something that has already been covered, so what, I am looking for others to tell what they know or have learned about finding a paid preparer.