TaxSlayer Blog is your source for tax preparation news, tips and advice.
We know you’re out there. Yes, you, the taxpayer who owes the IRS and still hasn’t filed your tax return or requested an extension. Maybe you’ve put off filing your taxes for so long you’re in a panic and don’t know what to do. However, we’re here to tell you that you can still save money when you e-file, even though you will face penalties. Here’s how. Go ahead and file your tax return, even though you’ve put it off until past the deadline, because the penalties you already owe will increase if you don’t. E-file today and you can keep that from happening. The IRS charges a failure-to-file penalty at 5 percent of the balance due on your taxes per month. Even letting just part of a month lapse will tack on 5 percent- so don’t wait. The increase can be as high as 25 percent of the balance you owe. That is money you will save if you e-file now. The minimum penalty for a return over 60 days late is the less of $135 or the balance due. The IRS also charges a failure-to-pay penalty at 0.5% per month plus a monthly interest charge. The penalty cannot be more than 25% of the unpaid tax. The reality is that the tax deadline has passed and it is too late to file an extension. In order to save yourself some money and sanity, you should complete your return today and pay any tax due.
In order to get the largest refund you can get, you will need to know what the IRS allows you to deduct on your tax return. When you do your taxes, you should always have your eyes on the prize and think about that tax refund. In order to deduct your moving expenses and get that much closer to the largest refund possible on your tax return, you must be able to meet all three of these requirements: 1. The IRS wants your move to be closely related to the start of work both in time and in place. In other words, you must move within a year from the day you first start work in the new place. However, you don’t need to set up work before moving. In order to satisfy that your move is closely related in place, you must be able to show that the distance from your new home to your new job is not more than the distance from your former home to the new job. 2. You must meet the distance test. Your new job location must be at least 50 miles farther from your old home than your old job was from your former home. 3. You must meet the time test. There are different time tests for employees and self-employed taxpayers. An employee must work full time for 39 weeks during the first 12 months after arrival. The self-employed taxpayer must work 78 weeks during the first 24 months of arrival. If you can meet these conditions you can deduct several moving expenses. You can deduct the cost of moving your household goods and personal effects. You may also deduct ordinary travel expenses including lodging but not meals. Don’t forget that you can deduct the costs of connecting and disconnecting utilities, costs of shipping your car and household pets, and the cost of storing and insuring household goods. All these deductions certainly will help you receive a higher tax refund. It is certainly worth learning about.
As with most other things having to do with taxes and your tax return, the answer to, “Is my disability pension taxable?” is, “It depends.” Getting your maximum refund will depend on knowing the details of your own particular situation. You must claim as income on your tax return disability pension from a plan that your employer paid for. It goes on line 7 of Form 1040 or Form 1040A when you do your taxes. The day after you turn minimum retirement age, the payments you receive are taxable as a pension or annuity and not wages. However, if you receive payments in lump-sum for accrued annual leave, do not count these as disability payments, even if you retired on disability. Pay very close attention to every payment that you receive so that your tax refund won’t be impacted. Whether or not you get that maximum refund depends on how you report the money you receive. TaxSlayer.com tax software can help, of course, but it still helps to know the basics. For instance, you may be able to exclude from your income any disability pension associated with serving in the Armed Forces of any country, and certain non-military government service as well. You do not need to include as income any disability payments you get for injuries from a terrorist or military action. These are only a few of the scenarios you may see if you receive disability payments, and how they may affect your tax refund. Check out TaxSlayer.com’s Help Center for a complete resource to our help articles.
Even though Tax Day is over, you may still have some things to do in order to keep things square with the IRS and to stay on top of your income tax refund. 1. Check on your refund. You can check the status of your income tax refund 72 hours after the IRS accepts it. Here is how: (1) Go to TaxSlayer.com and click on the link ‘Where’s My Refund’ located at the bottom of the home page. (2) call (800) 829-4477 anytime, day or night; (3) call (800) 829-1954. 2. File your 2010 tax records. You will need to keep a copy of your tax return and other records for at least three years after you e-file. Put them in a safe place where you can get to them easily – preferably a filing cabinet and/or an external hard drive. Make sure you have backups. Tax software helps a lot, but it can’t compensate for good recordkeeping. 3. Start keeping records for next year’s taxes. This includes itemized deductions, mileage, charitable donations– everything you do that will have an impact on your taxes so that you don’t forget important income tax deductions next year. You should try TaxSlayer.com’s My Deductions. You can access My Deductions once you log into your account. It will be found under ‘Other Items’ and it will keep track of your deductions throughout the year and they will pull into your return when you are ready to file next year! 4. Let the IRS know where you will be. If you move after filing, send them a Form 8822. 5. Fix mistakes on your return. If your return is rejected by the IRS, fix any errors and e-file it again. Remember to use TaxSlayer’s list of reject codes found in our Help Center if you need further assistance. If it is accepted, you will need to file an amended return. To do this with TaxSlayer.com tax software, click ‘File an Amended Return’ on the Main Menu. The first item on the menu will be step-by-step directions for filing an amended return. You will want to read those first before you begin.