Top 9 Errors To Avoid At Tax Time

Courtesy of the IRS, here's a great list of the most common mistakes folks make on their personal income tax returns.  With April 15 less than 3 weeks away, please take note!

1. Incorrect or missing Social Security Numbers. When entering SSNs for anyone listed on your tax return, be sure to enter them exactly as they appear on the Social Security cards.

2. Incorrect or misspelling of dependent’s last name. When entering a dependent’s last name on your tax return, ensure they are entered exactly as they appear on their Social Security card.

3. Filing status errors. Make sure you choose the correct filing status for your situation. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. See Publication 501, Exemptions, Standard Deduction, and Filing Information to determine the filing status that best fits your needs.

4. Math errors. When preparing paper returns, review all math for accuracy. Remember, when you file electronically, the software takes care of the math for you!

5. Computation errors. Take your time. Many taxpayers make mistakes when figuring their taxable income, withholding and estimated tax payments, Earned Income Tax Credit, Standard Deduction for age 65 or over or blind, the taxable amount of Social Security benefits, and the Child and Dependent Care Credit.

6. Incorrect bank account numbers for Direct Deposit. If you are due a refund and requested direct deposit, be sure to review the routing and account numbers for your financial institution.

7. Forgetting to sign and date the return. An unsigned tax return is like an unsigned check – it is invalid.

8. Incorrect Adjusted Gross Income information. Taxpayers filing electronically must sign the return electronically using a Personal Identification Number. To verify their identity, taxpayers will be prompted to enter their AGI from their originally filed 2008 federal income tax return or their prior year PIN if they used one to file electronically last year. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math error correction made by IRS.

9. Claiming the Making Work Pay Tax Credit. Taxpayers with earned income should claim the Making Work Pay Tax Credit by attaching a Schedule M, Making Work Pay and Government Retiree Credits to their 2009 Form 1040 or 1040 A. Taxpayers who file Form 1040-EZ will use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Tax Credit. The credit is worth up to $400 for individuals and $800 for married couples filing jointly. Many people who worked during 2009 are slowing down the processing of their tax return by not properly claiming this credit.

How To End All Your Record Keeping Frustrations

Looking for an easy way to both get organized and save a bundle on your tax bill this year?

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Here's what The Experts say....

"For years I've been telling all my tax clients and readers around the world that the IRS and the Tax Court require you to keep good records & receipts. Now, finally, you don't have to go out and create your own system — just use this one!"
-- TaxMama™ Eva Rosenberg, EA, MBA
www.TaxMama.com

"The Tax MiniMiser is, by far, the best of all the manual record systems I’ve seen in my 40 years of helping small and home-based business clients in all 50 states. It is easy to use in effectively helping my clients bring me excellent records so that I can do my best job for them. And when I represent clients in tax audits, these accurate records will help make them completely IRS compliant."
-- Mr. Tom Buck, CPA
www.buckcpa.com

"Looking for an easy and affordable way to end all your bookkeeping and record keeping frustrations? Then get the Tax MiniMiser today! It is by far the most user-friendly bookkeeping system on the planet. I recommend it to any and every small business owner or self-employed person who is sick and tired of fighting the IRS-mandated paperwork battle. It will help you sleep better at night because once you start using the Tax MiniMiser to organize your tax records, you'll no longer have any fear of what might happen to you if you get audited. You'll be ready, willing, and able to prove every deduction. With the Tax MiniMiser in hand, you will audit-proof your tax return forever. Good-bye shoe box, hello Tax MiniMiser!
-- Wayne M. Davies, author,
The Ultimate Small Business Tax Reduction Guide
www.SmallBusinessTaxReductionGuide.com


Go for it!
https://tdpi.infusionsoft.com/go/home/wmdctp/

And Many Happy Returns,
Wayne Davies
www.YouSaveOnTaxes.com

Where to Find a Boatload of Free Tax Advice for the Self-Employed

Believe it or not, there's a boatload of tax resources available for self-employed folks at the IRS website.

If you are reluctant to spend a dime on tax advice, this is a good place to start looking for help:

Self-Employed Individuals Tax Center
http://www.irs.gov/businesses/small/article/0,,id=115045,00.html

Small Business & Self-Employed Tax Center
http://www.irs.gov/businesses/small/index.html

Small Business Forms & Publications
http://www.irs.gov/businesses/small/article/0,,id=99200,00.html

Small Business Tax Workshops, Phone Forums and Webinars
http://www.irs.gov/businesses/small/article/0,,id=99202,00.html

e-file for Business and Self-Employed Taxpayers
http://www.irs.gov/efile/article/0,,id=118520,00.html

Small Business Products (these are free too!)
http://www.irs.gov/businesses/small/article/0,,id=101169,00.html

S Corporations
http://www.irs.gov/businesses/small/article/0,,id=98263,00.html

And if you are willing to spend a few dollars to get help with your tax return or to get answers to your tax questions, check out my new Tax Return Coaching Service:
http://www.YouSaveOnTaxes.com/tax-return-coaching.html


Either way.....Many Happy Returns!

How To Deduct Anything

Looking for an easy way to know exactly what you can and cannot deduct on your income tax return? Knowing what is deductible and what isn't deductible has mystified self-employed people for decades. This post should help you see the big picture.

What's deductible? Believe it or not, anything is deductible. Anything? Yes, anything. Let me explain.

Anything is deductible, provided that it is specifically mentioned in the tax code as deductible. It's as if Uncle Sam is saying, with a big smile on his face, "This particular item is deductible, no doubt about it."

Anything is deductible, provided that it is not specifically mentioned in the tax code as non-deductible. There are deductions that are specifically disallowed. Again, imagine Uncle Sam (this time with a frown) telling you, "Sorry, but this particular item is not deductible, no doubt about it."

But what most taxpayers do not realize (and the IRS is in no hurry to tell you this) is that most deductions are not specifically mentioned anywhere in the tax code. By that I mean this: most allowable deductions are not said to be deductible or non-deductible.

Getting confused? Bear with me....

For example, where does it say in the tax code that paper clips used in your office are deductible? Guess what - it doesn't. How about staples? Same thing -- there isn't really a specific reference to that either. But neither does it say that paper clips (or staples) are non-deductible.

Then how do we know what is deductible and what isn't? Because the tax code does provide some general rules about what is deductible, and these general rules can be boiled down to this famous statement: Anything is deductible, provided that it is an ordinary and necessary business expense. Any expense that meets that two-part requirement is deductible. Let's unpack that concept.

Here's how the IRS defines these two requirements: By "ordinary", the tax code simply means an expense that is "common and accepted" in your type of business. Is it common for an office to use paper clips in the normal course of business? Obviously. How about staples (not to mention the stapler)? Of course.

Not only are basic office supplies commonly used in virtually every business, but it is an accepted practice for these items to be a normal part of a typical business, right? I think you get the idea. And you should also now see why the tax code doesn't specifically mention paper clips or staples in it's list of legitimate business deductions.

By "necessary", the tax code means an expense that is appropriate and helpful for your business. Now apply that concept to office supplies. Are paper clips and staples appropriate and helpful? Naturally.

One more key concept: An expense does not have to be indispensable to be considered necessary.

Do you have specific questions about what's deductible and non-deductible?  Looking for a way to get those questions answered quickly while you are preparing your 2009 income tax returns? 

Check out my new Tax Return Coaching Service:
www.YouSaveOnTaxes.com/tax-return-coaching.html

Many Happy Returns!