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Kids are afraid of the monster under the bed; adults are afraid of IRS audits. Although the IRS is going to do a certain number of them a year, and there is no fool-proof way to guarantee you will never be a target, there are some simple ways to be careful during tax preparation and make yourself a little less interesting to them.
1. Check your numbers. Nothing is quite as enticing to the Internal Revenue Service as shoddy math and round numbers. If they think you may not actually know what goes on your tax return, it will be very tempting for them to come and take a look. And the IRS is not required to resist temptation.
2. Inconsistent reporting. If the numbers you are reporting on your tax return don’t match what is on your W2 tax form, then that sets off a red flag. Be careful when copying over amounts during tax preparation.
3. Small businesses reporting a loss. In fact, Schedule C is interesting for the simple reason that some people report income and losses incorrectly because there are no W-2 tax forms. Of course, there are plenty of legitimate losses in the business world. Just remember to keep records.
4. Meals and entertainment deductions. It is way too easy to abuse this one, and the IRS knows it. If you are going to use these deductions, again, keep good records and have legitimate reasons for these write-offs.
5. Home-office deductions. This is a special area of interest when it comes to Home-office deductions. To ensure you are correct, make sure that your home office and equipment are not used for anything other than legitimate business needs.
TaxSlayer Blog
Kids are afraid of the monster under the bed; adults are afraid of IRS audits. Although the IRS is going to do a certain number of them a year, and there is no fool-proof way to guarantee you will never be a target, there are some simple ways to be careful during tax preparation and make yourself a little less interesting to them.
1. Check your numbers. Nothing is quite as enticing to the Internal Revenue Service as shoddy math and round numbers. If they think you may not actually know what goes on your tax return, it will be very tempting for them to come and take a look. And the IRS is not required to resist temptation.
2. Inconsistent reporting. If the numbers you are reporting on your tax return don’t match what is on your W2 tax form, then that sets off a red flag. Be careful when copying over amounts during tax preparation.
3. Small businesses reporting a loss. In fact, Schedule C is interesting for the simple reason that some people report income and losses incorrectly because there are no W-2 tax forms. Of course, there are plenty of legitimate losses in the business world. Just remember to keep records.
4. Meals and entertainment deductions. It is way too easy to abuse this one, and the IRS knows it. If you are going to use these deductions, again, keep good records and have legitimate reasons for these write-offs.
5. Home-office deductions. This is a special area of interest when it comes to Home-office deductions. To ensure you are correct, make sure that your home office and equipment are not used for anything other than legitimate business needs.
Categories: Online Tax Software Tips
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One of the extremely cool things about choosing to e-file with TaxSlayer is that they help you find hidden tax deductions. Unfortunately, sometimes those deductions change, and not always for the better, so it’s good to be aware of what’s different when you e-file your tax return.
Let’s look at one of the really cool tax deductions that the IRS has for teachers named the Educator Expense Deduction.
If you are like many educators, you may be spending several hundred dollars per year out of your own pocket to improve conditions in your classroom and give your kids life-enriching experiences.
Here is how you can use this tax deduction when you e-file with TaxSlayer this year, according to IRS Publication 17.
The IRS allows eligible educators to deduct $250 of qualified education expenses as an adjustment to income. Anything considered “ordinary and necessary” that was over the $250 could be deducted on your tax return as a miscellaneous itemized deduction.
Eligible educators work with kindergarten students through grade 12 as teachers, instructors, counselors, principals or aides. They work at least 900 hours per school year in a school that state law decrees is a provider of elementary or secondary education.
You may claim the deductions on your tax return using Form 1040 (line 23) or 1040A (line 16).
Categories: Online Tax Software Tips
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A common reason customers seek tax help from TaxSlayer is confusion over using their PIN, an identification number that acts as your online signature when you efile your state and federal taxes. The PIN is used on the signature page of the income tax return during the efiling process. The page has two parts, with slightly different rules.
The first has to do with your Current Year PIN, a five-digit number you make up during the final stages of tax prep.
The second part of the TaxSlayer signature page has to do with your Prior Year information, which is your information from last year. You will need last year’s Adjusted Gross Income (AGI) from your federal taxes OR last year’s PIN number.
If you have last year’s AGI, you can go ahead and use it. We recommend actually having a copy of your prior year tax return handy so that you can pull the numbers you need for this year’s return during tax prep.
Here is where you find your AGI from last year:
Form 1040 EZ – line 4.
Form 1040 – line 37.
Form 1040 A – line 21.
Your Prior Year PIN is the PIN you used while filing last year’s income tax return. If you don’t remember it, you will need to go to the IRS website and request an Alternate PIN, which takes about a minute. Put the Alternate PIN in the spot that says Prior Year PIN. Do not forget to check the box underneath that says you are using an Alternate PIN.
Make sure the numbers are correct and in the right places and you should get through using your PIN without needing tax help when you efile.
Categories: Online Tax Software Tips
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If you know how to use the child and dependent care expenses credit and the child tax credit, you are more likely to get the maximum refund when you efile your taxes. First, however, you have to understand how the two credits work in your income tax return – and how they work together, so you don’t spend valuable time worrying over how TaxSlayer estimates your refund.
Many taxpayers who are eligible to claim the child and dependent care expenses credit are confused when they get the TaxSlayer program to estimate their tax refund and it doesn’t change. This is because the credit is nonrefundable, which means that it helps to decrease your tax liability. It doesn’t directly add to your income tax refund.
If you have no tax liability (1040 line 46), then taking the credit will not help you get closer to your maximum refund.
The child tax credit is also a nonrefundable credit – sort of. Before getting into that, though, let’s look at how it affects the child and dependent care expenses credit. If the child tax credit zeroes out line 46, you will not be able to take the child and dependent care credit. However, if there is anything from the child tax credit left over after line 46 is zeroed out, or if the credit adds up to more than $1,000, that leftover amount becomes a refundable credit, which means it will increase your refund. That leftover amount is called the additional child tax credit and appears on line 65 of your income tax return.
Of course, every tax situation is different, but the general rule of thumb is to check on the child tax credit and additional child tax credit before worrying about the child and dependent care expenses credit. This is because using the child tax credit is usually to your benefit, as the leftover amount can be used to increase your income tax refund.
Categories: Online Tax Software Tips
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