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Archive for the ‘Tax and Refund’ Category

Are you expecting a refund on your 2007 taxes? If so, then you probably want to file as soon as you possibly can in order to get the money back as quickly as possible. This is quite normal, but if you want to file as soon as you can then you will want to get organized now. For example, tax filing requires that you have all of your financial information close by. Since you will need this information, you should go ahead and create a tax file. Tax preparation of this nature will keep you prepared and allow you to easily file your taxes when the time comes.

The things you need to keep in this file folder include receipts and things of that nature if you will be itemizing your taxes. You will also want to keep track of your expenses, mileage, doctor’s visits, student loan interest, rental income, and the like when you are preparing your taxes for your free efile. You will find that you are much happier when it comes time to file because you have everything you could possibly need located in your tax file folder. So, when a question is asked you can find the information and answer it within moments. This is the best way to save time when it comes to efiling.

Remember, that you can have a tax file folder you use all year long. Then, when you have qualifying expenses, charitable donations, or the like, you simply add the information to your file folder and it will sit there waiting for you. That way, when you need this information you will have it and you will be so relieved that you can claim all of your exemptions because you have all of the information located close by to claim. You will also love the fact that you can file your taxes early simply because you were organized and kept all of your tax information in one convenient location. If you get into the practice of this then every single year you will be able to file your taxes early and receive your tax refund early, too. There is no reason to get all caught up in the rush to file your taxes on the very last day when you could easily keep up with your tax information all year long and then simply pull it out when filing time comes. This will save you a lot of stress as well as time looking for documents so give it a try. You will find it is not so difficult to keep up with a tax folder and that it really is a great idea.

Preparing your income taxes can seem challenging, but it doesn’t have to be. Millions of people are using tax websites to prepare and file their income tax return online.

By preparing and filing your tax return online you will, avoid the work involved in doing everything by hand, save the cost of paid tax preparation, and you’ll get your tax refund much faster.

Filing online will allow you to get your tax refund in as little as 10 days (according to the IRS)

If you’re still preparing your taxes with pen and paper, you may be surprised to learn that an estimated 70 million tax returns will be filed electronically in 2007. Such trends show the growing popularity of preparing and filing income tax returns online.

There are several good reasons to prepare and file your taxes online

If you expect a refund check, filing online is a great option. The IRS can process your return and issue tax refunds much sooner than if you mailed a paper return. Preparing and filing directly from your computer will cost you much less than going to a tax professional, and way less than going to a CPA. By using your computer, your forms will be much more legible than anything you could hand-write, which will help cut down on possible errors. Join the millions of people who have discovered how easy, online tax filing can be. The cost will be much less, your tax forms will get to the IRS with no hand-written errors, and you’ll get your tax refund in as little as 10 days.

If your home goes through foreclosure, you can wind up owing the IRS money. If the debt wiped out by your foreclosure exceeds the money owed, this money is considered income. As income, it is taxable.

The IRS is, however, making some special relief provisions for taxpayers who lose their homes due to foreclosure. This relief may reduce or eliminate the tax burden of foreclosure. The Internal Revenue Service is currently making this special information available to tax payers at its website at IRS.gov.

They are providing specific information and instruction for taxpayers facing foreclosure. There is a worksheet you can download that will help you to determine if you will owe any taxes on your foreclosure and if you qualify for any sort of relief from those taxes.

In the event that you discover you will owe the Internal Revenue Service money on your foreclosure, you can instantly qualify for an IRS payment plan. Under such a payment plan, the IRS will accept periodic payments against the money you owe for a period of as long as five years.

You may also qualify for a special concession, allowing you to settle your debt for less than is owed through an Offer in Compromise.

Also, not all foreclosures are subject to payment of taxes on debt income. In the case of some foreclosures, the debt is resultant of a non-recourse loan. A non-recourse loan is the type of loan where a lender’s only recourse, in the case of default, is to repossess the property being financed or used as collateral. This means that the lender can only repossess the property and not pursue you personally for any money owed. In the case of non-recourse loans, the IRS has determined that any debt income is not taxable. So, if you have this type of loan go into foreclosure resulting in debt income, you will not have to pay taxes on the debt income to the IRS.

If you are going through or being threatened with foreclosure, you should hire an attorney to represent your interests immediately. There are legal actions, like bankruptcy, that can be taken to at least stall foreclosure. These processes could at least give you enough time to confer with your attorney about how to address your financial situation.

Hopefully, with the aid of legal counsel, you will be able to alleviate your financial problems and not go through the process of foreclosure, or at least avoid the added insult of owing the IRS money on your debt income.

There’s a popular misconception here in Britain that students are exempt from paying income tax. In this article, we uncover the fact and the fiction behind student taxes, and take a look at how to claim back any overpaid tax that you’ve already paid.

We have a popular misconception here in Britain that students do not have to pay Income Tax – and whilst we hate to be the bearer of bad news, we’re not going to lie. You students are just as liable to pay Income Tax as anyone else in Britain.

The confusion is most likely down to the fact that most students earn less than the annual tax-free allowance – the threshold which determines whether you earn enough to have to pay tax in the first place. It’s currently set at 6,475 per year, and with most students earning far less than this figure, the fact that you’re at uni is completely irrelevant.

And yet, despite the overwhelming majority of students earning less than 6,475 per year, a ridiculous number of you end up paying too much tax each year.

Students applying to our service have generally paid too much tax for one of three reasons;

- They’ve paid tax on the wrong tax code

- They’ve left a job prior to the tax year end

- They’ve paid tax on their savings when they didn’t need to

We’ll cover the issue of tax on savings income in a later article. For now, let us consider the first two scenarios – how they arise, how they can be avoided, and what to do if you’ve already overpaid.

Paying tax on the wrong tax code

This situation often arises where students are holding down multiple jobs. Complications arise because your annual tax-free allowance is not split up and shared across all of your jobs. HM Revenue & Customs generally allocates your tax-free allowance to the first job in full – so the first 6,475 you earn with this employer will be tax-free. But by doing this, none of your tax-free allowance is set against the income on your second job. Any income earned here will therefore be taxed at the full basic rate, and you’ll need to claim it back manually.

If this sounds familiar, it’ll be worth checking the tax codes you’ve been given for each job – they should be printed on your pay slip. A ’647L’ tax code indicates that you are receiving the tax free allowance, and a ‘BR’ tax code indicates that you’re not. If you have two jobs, you’ll probably have one of each.

If your combined income for both jobs does not exceed the tax-free allowance, this situation will almost certainly lead to an Income Tax overpayment and you’ll need to apply for a tax refund at the end of the tax year.

If you’re just about to take on a second job, it might be worth speaking to the tax office about splitting your personal allowance between the two of them. If you have an estimate of how much you’ll earn in each job, this arrangement will generally avoid the need to pay any income tax at all.

Leaving your job prior to the tax year end

The second scenario is just as common, and tends to occur when students have taken on full time summer work. HMRC rather primitively calculates your tax on the assumption that you’ll be in that same job for the rest of the tax year (i.e. through to 5th April), so when you finish at the end of summer you’ve not earned as much as the tax office had anticipated – and have therefore almost certainly overpaid.

This situation is particularly common for students taking part in summer internships or work placements, where pay tends to be higher than with most temporary summer jobs.

Example

Lets suppose your 12-week internship starts on 1st June, paying 1,500 a month. Throughout the placement, HMRC will tax you on the assumption that you’ll earn 15,000 by the tax year end (1st June – 5th April). When you finish the placement in late August, and have only earned 4,500, it’s almost certain that any tax paid will have been taken in error because your 4,500 income is far less than the annual tax-free allowance.

How to avoid paying tax as a student

If you’re applying for a placement or internship for Summer 2011, or if you’re looking at taking on some part-time work during term time, be sure to provide your employer with a P38(S) form before your first payday.

This is a student tax concession, allowing your employer to pay you without tax provided your annual income does not exceed the personal allowance. (Just bear in mind that employers are not obliged to play ball – some are not prepared to process students’ pay separately).

How to get your tax back as a student or recent graduate

If you are at university or have graduated since April 2004, and have been given the wrong tax code, not worked for the full tax year, or earned less than the tax free allowance (currently 6,475) whilst at uni, you can almost certainly claim a refund from HMRC – right back to April 2004.

Taxpayers struggle and stress about their income tax returns every year. When the return has finally been filed and the taxes paid or the refund spent, it gets put away. But where does it go? That all depends upon how organized you are in keeping tax records.

Tax records, such as returns, can still be of vital importance even after they have been dutifully filed with the Internal Revenue Service. For this reason, it is important that you keep track of your income tax records and returns.

You might wonder what possible reason you would have to dig out a return a number of years after it has been filled out and filed with the Internal Revenue Service. The obvious, and most distressing, reason you might have to find that old tax return is because you are facing an Internal Revenue Service Tax audit. Because of the possibility of such a circumstance, it is recommended that you retain tax records and income tax returns for a period of at least six years.

There are other, less distressing, reasons that you might want to find an old income tax return. Perhaps, you are engaging the services of a new financial consultant, tax attorney, or accountant and he or she has requested a look at your old tax records. Maybe you are taking out a loan to buy a car, a house, a boat, or some other item for which you want to prove your income over a certain number of years. It could be that you want to show your profit and loss statistics to open a credit account for your business. There are, indeed, many scenarios under which you might find yourself in need of past income tax returns.

Now that I have you running around the house or office, wondering what exactly it was you did with those old tax records, it is time to tell you about the worst part of losing an old income tax return. The worst thing about losing that return is that all of your private information is on there. Mostly, you want to be sure that the return did not fall into hands where that information could be damaging to you. An old income tax return is pure gold for someone seeking to steal an identity.

As far as not being able to find an income tax return that you need for any of the reasons we discussed, don’t worry about it. The IRS keeps copies of all filed returns and you can request yours for a small fee and a wait of about two months for it to come in the mail.

Filing taxes on time is what responsible citizens do. However, in the US, tax payers who pay more than the actual tax liability are entitled to IRS refunds.