Additional Filing Methods Tips

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What income tax form do I file?

Filing the Correct Tax Form

Which 2006 tax form you file with the IRS will depend upon how many forms of income, expenses, and tax credits you have. The least complicated form is the Form 1040EZ. The most complicated is the Form 1040.

Basically, you can file an IRS Form 1040EZ if you are single or married filing jointly. Also:

  • You income must only come from wages, interest and/or unemployment compensation.
  • You can only have the earned income credit. No other tax credits are allowed.
  • You can not have received any advanced earned income credit payments.
  • No itemized deductions are allowed.
  • You can only choose the standard deduction amount.
  • Your total taxable income must be less than $100,000.
  • Both you and your spouse must be under age 65 and not blind as of January 1, 2007.
The Form 1040EZ is meant to be a simple income tax return.

Requirements for filing Form 1040A include:

  • You cannot be self-employed. Period.
  • Your taxable income must be less than $100,000.
  • You cannot have paid any alimony during 2006.
  • You have no moving expenses.
  • You cannot itemize any deductions.
  • Your only deductions are student loan interest, an IRA deduction, educator expenses, and tuition and fees.
  • You can file with any filing status (married, single, head of household, etc.)
Form 1040 covers everything. All filing statuses, all income sources, all expenses, all deductions, all tax credits. In fact, any item you can think of as affecting your income tax return,will be reported on the Form 1040. Form 1040 also applies to you if

You itemize deductions.

Your taxable income is $100,000 or more.

For detailed information about which tax form you need to file, read IRS Publication 17.

   
What about tax filing signatures?

Tax Filing Signatures

The IRS has tax rules regarding the signature lines on your income tax return. Be sure to follow them properly, since you do not want a delay in receiving your refund. Delays in processing your tax return occur when the IRS gets a hold of your tax return and sees no signature on the signature line. This happens thousands of time every tax year. Do not let it happen to you. Here are the IRS rules regarding tax filing signatures: If you prepare your own paper income tax return, you can sign and date it yourself. This is applies to both the paper copy tax filing and the electronic filing of your tax return. Your signature must be in ink. That way, it cannot be erased. This is important for legal reasons.

If you file your 2006 income tax return electronically, you can sign it using an electronic signature. This involves obtaining a PIN (personal identification number). If you file jointly, both you and your spouse will need to obtain a PIN. If you take your tax return to a tax preparer and have them file it with the IRS (file electronically), they can assign you a PIN. Either way, you will need to obtain a PIN to file your income tax return electronically (e-file). Electronic filing of your income tax return is explained in more detail on the IRS website. Or, you can ask a tax professional.

If you file a joint income tax return (paper or electronic), both you and your spouse need to sign the return - generally. However, there are exceptions (exceptions in the IRS rules? Never).

  • If your spouse died during the tax year, before being able to sign your joint income tax return, the administrator or executor must sign the return.
  • If there is no appointed administrator or executor, you may sign the joint tax return for your spouse. On your spouse's signature line, you will need to write in “filing as surviving spouse”.
  • If you are the guardian of your spouse, you can sign for your spouse. Your spouse must be declared mentally incompetent for you to sign as their legal guardian.
  • If your spouse is in a combat zone, you can sign for your spouse. This applies even though you may not have their power of attorney privileges. You simply need to attach a written statement explaining that your spouse is serving in a combat zone. Be sure to include this statement when filing your 2006 joint income tax return.
  • If your spouse has any injury or disease that prevents him or her from signing your joint income tax return, you can sign it for them. Simply sign your spouse's name and follow it by writing “By (your name) as Husband (or Wife).” When you do this, be sure to include (attach) a signed and dated statement by you with your joint income tax return. You need to explain to the IRS why your spouse cannot sign the return. This written statement should also contain the tax form number and the tax year. Even though you are filing this statement with your 2006 tax return, the IRS still needs all this written in a statement. Be sure to attach your statement to your tax return when filing.
  • If your situation is not covered by any of the above-mentioned ones, you can file for your spouse on your joint income tax return only if you have the legal power of attorney to do so. You also need to attach this legal document to your tax return when filing. IRS Form 2848 (Power of Attorney and Declaration of Representative) may be of use to you.
If you pay anyone to prepare your income tax return, they must sign it. There is a special ‘Paid Preparer's' line for them. They can sign using a rubber stamp, computer software program, or manually.

If someone else prepares your income tax return, but you do not pay him or her, they do not need to sign your return anywhere.

   
What are some income tax filing methods?

Income Tax Filing Methods

You have your income taxes all prepared and are ready to file them with the IRS. There are various methods available for you to choose how to file them. Depending on what is the easiest and most convenient for you, choose from the following methods:

Online. By filing online (also known as electronic filing, or e-filing), you can receive your refund quicker than other methods of tax return filing. That is the main benefit. Taxpers using electronic filing are known to receive their refunds in half the time as conventional (paper) filers do. You can file online either yourself or have a tax preparer do it.

You can visit the IRS website for a listing of service providers who you can file your return electronically with. Some offer this service for free, while others charge for it. Check around to see what you are most comfortable with.

Software. Various tax software programs offer the option of filing your taxes through their software. H&R Block tax software, TaxCut, is one such software program taxpayers can utilize to file their 2006 income tax return.

In-person. You can visit a tax preparer's office. Be it a tax preparation firm, a CPA, or an Enrolled Agent – you choose. Here, you will take your prepared tax return and the tax preparer will double check it. Then, they will file it for you. Generally, you choose between ‘snail mail' to the IRS or electronic filing.

Some tax preparation firms and preparers require appointments, others do not. It is recommended to call beforehand to get their hours of operation, anyways. Then you can ask if they accept walk-in clients.

Mail. You can easily mail your 2006 paper tax return to the IRS. You would mail it to your regional IRS service center. The address will be in your IRS Publication 17 – Your Federal Income Tax. Or, if you received a tax package from the IRS, it will be in there. Usually, there is a self-addressed envelope you send your tax return back in. Just be certain to affix the proper postage to it. (Don't laugh. This is a common occurance.)

Telephone filing, formerly known as the IRS Telefile tax return filing program, has been discontinued as of the 2006 tax return year.

   
What are some income tax filing penalties?

Tax Filing Penalties

The IRS provides penalties for various reasons. Here is a listing of some of the reasons the IRS may assess you with a penalty when you file your income tax return:

Filing late. One of the most common reasons for an IRS penalty is due to a failure to file taxes on time (by the due date). If you do not file your income tax return by April 16, 2007, the IRS may assess a penalty.

If you file your 2006 income tax return later than 60 days after April 16, 2007 (or an extended due date), a minimum penalty of $100 will be charged to you. The minimum payment will be the smallest of $100 or 100% of your unpaid tax.

Failure to file. If you fail to file your income tax return by the due date, you will be assessed a 5% penalty by the IRS – in general. This amount applies for each month that your return is late. It cannot exceed 25%.

Late payment. If your taxes are not paid by the due date, you will be assessed a penalty of anywhere from ½ to 1% of your unpaid tax amount. This applies for each month you are late paying. There are stipulations regarding extensions, however. If you filed for an extension, you will not be charged a late paying penalty if you paid at least 90% of your tax due with the extension application.

Substantially understate your taxes. If the amount of taxes on your income tax return is substantially less than the actual amount you owe, you may be assessed a penalty by the IRS.

Understate a reportable transaction. This goes along with the above. If you understate a reportable transaction it may come across that you are trying to avoid paying taxes on the transaction. The IRS does not like this. You do not want this.

File a frivolous return. This penalty may be $500. A frivolous return is one what does not contain enough information to calculate any tax.

Fail to supply a SSN (or individual taxpayer identification number). This is why it is so important to double-check your return before finally filing it with the IRS.

Provide fraudulent information on your income tax return. The IRS will assess hefty penalties if they find you engaged in this activity. Penalties can be 75% of the underpayment.

   
What is Teletax?

IRS Teletax

The IRS offers taxpayer a tax help line to make tax preparation and filing a little easier. By calling the phone number of the IRS Teletax program at 800-829-4477, taxpayers can receive up-to-date information regarding tax laws and other matters affecting proper income tax filing.

The Teletax tax line offers prerecorded messages about a variety of tax matters and issues. Also, you can learn the proper way to fill out your individual 2006 tax return.

There is a wealth of valuable information to be found by using this toll-free tax help line. Use it.

Upon calling the phone number, you will be informed that there are 17 main tax topic areas. Each one coincides with a three digit number. Upon inputting the three digits, you will receive information about what is included in the main tax topic area.

For instance, 100 choice involves the IRS help available. Included in this topic is information about the toll-free phone line, volunteer assistance program, and tax preparation help for the disabled. Each sub-topic has its own three digit number.

Other main topics include: 150-IRS procedures, 200-IRS collection process, 300-general income tax filing, 350-filing status and exemption information, 400-types of income, 450-adjusted to income, and 500-itemized deductions. If you are interested in tax credits, 600 is for you.

By calling the Teletax phone line you can also check on the status of your refund. The online version of this program is known as “Where's My Refund?”.

   
How can I get my tax refund?

Income Tax Refunds

Congratulations! You're getting a refund! There are some things you need to know about your income tax refund.

If you have any outstanding debts in which the IRS can attach your income tax refund to, it will. The IRS will reduce your income tax refund by the amount of your outstanding debt. Debts include: past due income taxes, student loans, state income taxes, and child support. Many an individual has been waiting for an income tax refund only to find that it was applied to a past due federal student loan.

Also, you may choose to apply your tax refund to next year's estimated tax payments.

This does not apply if you file Form 1040EZ, though.

First of all, the quickest way to receive your income tax refund is for you to file electronically. By using the electronic filing method (e-filing), you will receive your income tax refund in half the time as the paper method of filing.

Many paid tax preparation firms offer loans against your income tax refunds. These loans can be received immediately if you have the proper documentation. Normally called ‘Refund Anticipation Loans', they give will give you your refund before actually receiving it from the IRS. Just remember you will need to repay this loan when you do finally receive your IRS tax refund.

You choose to receive your income tax refund either by check or direct deposit. Direct deposit is the quickest way to receive your refund. Here, when applying for this method, you will need your bank account number. The IRS needs both your routing number and bank account number in order to implement the direct deposit.

If you receive your income tax refund by check, and it is the amount calculated on your income tax return, cash the check promptly. If you do not cash your income tax refund check within 12 months after receiving it, it will be cancelled. Your refund, at that point, will be returned to the IRS.

If the tax refund check you received is not the for the same amount on your 2006 tax return, do not cash the check. Call the IRS.

   
What are income tax preparation classes?

Income Tax Classes

A great way to increase your knowledge about filing your income tax returns is by taking a class about the IRS income tax law. Everyone from paid tax professionals to individual taxpayers can benefit by staying current with the IRS tax laws, rules and regulations.

You will find classes offered through your local colleges, through professional continuing education, and the IRS. Plus, many classes are offered online.

Classes cover various levels. For instance, there is a Fundamentals of Tax Preparation I course for the beginning tax preparer. For income tax preparers wanting more advanced income tax information, there are advanced courses offered. In addition to tax law changes, students learn about tax-saving and planning issues. You can also gain a greater understanding about the basic necessities of filing an income tax return.

Considering the amount of information you will receive, classes are very affordable. And, if you own and operate a business, the class enrollment fee could be tax deductible.

   
What are some free income tax filing methods?

Free Income Tax Filing

The IRS offers a couple of programs to help lower income individuals who need help preparing their income tax return. You can visit the IRS website for more information on these programs. You can also find out where your local contacts for these programs would be by visiting this website.

VITA is one of these free programs offering tax preparation help. It stands for Volunteer Income Tax Assistance. Volunteers from various walks of life (all trained in preparing IRS income tax laws), offer their expertise to those needing it.

TCE is the other free tax preparation service/program offered by the IRS. TCE is the acronym for Tax Counseling for the Elderly. The elderly must be low to moderate income (under $39,000 annual gross income) and in need of tax preparation.

AARP (American Association of Retired Persons) has a partnership program with the IRS whereby they provide free tax preparation to those qualifying for it. This combined program offering is titled TaxAide. Check their website at aarp.org for more information. Or, the program is also on the IRS website. You also can call the IRS at 1-800-829-1040 for more information about this program.

Free File Alliance is another free tax filing and preparation program offered. It is a combined effort of the IRS and various service providers. Check the IRS website for more information.

Many volunteers involved in these programs are former tax professionals themselves.

Another source for free tax preparation help is your local university, college, and/or business school. These higher education venues may offer free tax preparation, which many taxpayers overlook. Many times advanced level accounting students team up with the community to offer tax preparation (more than likely basic returns) as a way for the students to gain experience. It is an internship of sorts. Of course, the students are under the supervision of their professor. Call your local university to see if they offer any such program.

   
Are there tax filing timeframes?

Tax Filing Timeframe

You should receive the tax documents you need to file your income tax return by January 31, 2007. If you do not receive them by that date, call the payer and ask about it. For wage-earners (employees) that will be your W-2, for instance. If you do not receive them by February 15, 2007, call the IRS for help.

It is important to know that the sooner you file your income tax return, the sooner the processing of your return will start. This is obvious, but much be stated. Many, many taxpayers wait until the last minute to begin the tax preparation process. (Especially those who know that they will be paying taxes).

If you file your income tax return early in the tax season, you will receive your refund quicker. This applies for both paper and electronic income tax filing. Also, the IRS will be processing less returns earlier in the tax season. Even though all times of the tax season (January through April 16, 2007) are considered the busy season, the income tax returns received early in the season will be processed in a shorter time. That is important to know if you are expecting a refund.

If you take your tax information to a tax professional early, there probably will not be many other taxpayers waiting in line for help. The tax preparer will be more relaxed, have ample time to thoroughly research any tax issues/concerns and give you their undivided attention. This is not to say that tax preparers are grouchy ogres in the later tax season who do not concentrate on your income tax needs. It just means that earlier tax season finds a more relaxed tax preparer.

If you wait until the last minute to schedule an appointment, or walk-in with your tax documents, and if your return is complicated enough (usually anything other than a basic), you will probably have an extension filed.

   
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