Top Tax Tips For 2011
These tax tips will go a long way in preparing you for success but remember that everyone’s situation is unique. You should consult a government tax professional, government tax attorney, and government forum, and the IRS’s web site (www.irs.gov) for complete information. Also, reading up web site featuring help on taxes or various government tax forums can greatly increase your tax knowledge. Tax forums are also useful in that you can post a question to a variety of website and then evaluate the answers received on the various tax forums.
1. Document Collection
We will start with the basics. Throughout 2011, the best tip to prevent a headache when completing your taxes in 2011 is to file your tax-related documents in one location throughout the year. This can be as simple as putting all the documents in one folder. Most basic tax returns will require you to keep records on your income, expenses, home related items, and/or investments. It is helpful to look at a prior year’s government tax return, and if you have had not major changes, use the return as a guide for what documents you will need.
There are documents commonly needed in the areas of income, expenses, home related documents, and/or investments. For income you will need to keep a record of what you earned throughout the year, this could take the form of a W-2, a 1099, bank statements and brokerage statements. For expenses, you will want most commonly to keep receipts and invoices for qualified expenses. If you purchased or own a home, you will want to keep interest paid on the home, home loan closing documents, and insurance records. If you have any investments, keep any brokerage or mutual fund statements. This list is not comprehensive and you should consult the IRS web site or a tax forum for greater detail and government tax help.
2. Document Retention
It is also a good idea to retain important government taxes for a period of time. Many government tax lawyers advise clients to keep the last six to ten year’s worth of tax returns for an average return. The official government review period is three tax years in most cases according to a government forum. How much documentation some people keep is dictated by storage space. With today’s technology, the possibilities are endless to scan in your government taxes or just keep a soft copy on your computer if you use tax preparation software. Many companies and individuals who prepare taxes will also offer to email you a copy of your tax return free of charge.
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The six to ten year guideline does not apply to an asset you might want to sell one day. One common example of an asset is a house. It is a good idea to keep government tax forms around the purchase of a house indefinitely if it might be sold one day in the future. This applies to financial assets such as stocks or bonds as well.
There are some areas that are common red flags to the government, as noted by experienced government tax lawyers. If the government has reason to believe you have under reported your income by 25% or more, retain these records indefinitely. The second area the government may question is a claim filed for worthless securities. If you fall into either of these situations, be sure to retain these records for a minimum of seven years and seek out government tax help or search for a government forum.
3. The Economy: New Tax Tips and Credits in 2011
One way in which the government has responded to the downturn in the economy is through implementing new tax laws in 2010 meant to help consumers get back on their feet in 2011. For a complete list of changes, please refer to the IRS web site or a tax forum for complete information.
Home Buyer Credit
The most well-known change is the first time home-buyer credit. This credit reaches up to $8,000 if your new home’s value qualifies you for the entire credit. There is also a move-up credit of $6,500 for a homeowner who purchased a new home but lived at their previous residence for five consecutive years out of eight years total. If you qualify for this credit, you are not able to file taxes online so please take that into account when filing.
Car Sales Tax Credit
A second change is the new sales tax deduction for purchasing a new car. The tax deduction is capped at a car’s purchase price of $49,500. If the car’s purchase price is greater than this amount, it is still possible to receive credit up to the cap. There are also income caps to this deduction. If you file a single tax return, you must make $135,000 or less. People filing a joint tax return must make $260,000 or less.
The Hope Education credit has been renamed the American Opportunity Credit. The credit can be used for up to $2,500 of the first $4,000 dollars of educational expenses. This is a $700 increase from 2008. In addition, you can make up to $80,000 as a single filer and $160,000 as a joint filer and still qualify for the credit. If your income is over this amount you may still qualify for a partial tax credit. Also, if you do not owe any taxes this credit is partially refundable. This means you could receive an additional $1,000 in your total refund amount.
Many individuals and families felt the impact of unemployment in 2010 and 2011. In previous years, unemployment income has been considered taxable income. If you received unemployment in 2010 or are receiving it in 2011, the first $2400 of unemployment income earned is tax free.
4. File Your Government Taxes for Free
If your income is less than $57,000, you can both prepare and file your government taxes for free through the software Free File available on www.IRS.gov. Details of this software is available at a government forum and government tax help web sites. If you purchase at home tax software, like Turbo Tax, you will have an option to file your Federal tax return for free. There is a small charge to file your state tax return with Turbo Tax but most state web sites allow you to file for free directly with them.
While filing on your own is free, or very low cost (most tax software is deductible), if your life has seen many changes in the previous tax year it may be best to work with a professional to prepare your taxes or even government tax attorneys for specialized advice. Their fee is typically much smaller then deductions and credits you may not realize you qualify for on your own. Also, penalties can apply if your taxes are not completed correctly so do seek the tax advice of government tax attorneys. A search for government tax help can show which government tax attorneys are available in your area. To help choose between government tax attorneys, ask them for references from previous clients who needed help with taxes. Reading through a tax forum or even a few different tax forums will help you evaluate your individual tax situation and guide you on which route to take. Happy filing for 2011!
Changes To The Government Tax Law For 2011
To the never ending consternation and confusion of most Americans who file their government Tax Return each year, the government changes the rules and requirements for filing your federal tax return each year, just before it comes time to file your government Tax Return. Well, we have you covered with the information that you need to know for filing your government Tax Return, whether for a Single head of household or for a Couple filing a joint return. If you want your tax return check as quickly as possible, then it is important to properly and completely fill in your status, dependents, and the tax information from the W-4 or 1099 Tax Information Summary forms that were mailed to you by your employer. If any of the information is not properly entered or the information is entered illegibly then it will take much longer to review your return and process any refund check that you are due from the government.For Preparers
The first change this year is for tax preparers. There are new requirements, the government must now screen anyone offering their services as a tax preparer. In order to submit valid tax return documents as a preparer you must First register with the government as an government Tax Return preparer. Those who register will then be tested. The third requirement is that preparers have to have follow up with continuing education to keep up with the most current requirements and tax laws.New Tax Forms
The government is rolling out new tax forms for 2011. The government is now also requiring businesses to fill out a 1099 if they have payment purchases exceeding $600. Credit and Debit card companies are now also required to report to both their clients and the government of the years transactions. Also the debt indicator was to be used for finding out a taxpayers refund. The government felt that this was extemporaneous as with e-filing and such the turnaround time on your return is so quick that they say there is "no need for it anymore".