Our History ~ Tax Tips
If you haven't received a Form W-2 from your employer by January 31, you should take these steps:
- Ask your employer if and when the W-2 was mailed. If it was mailed, it may have been returned because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for the W-2 to be resent.
- If you do not receive your W-2 by February 14, call the IRS at for help. When you call, you'll need to provide personal information to identify yourself, as well an estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. This should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
- You still must file your tax return or request an extension to file by April 18, 2011, even if you do not receive your Form W-2. If you have not received your Form W-2 by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. Any refund may be delayed while the information is verified.
- You may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return (Form, Instructions).
Are you expecting a refund from the IRS this year? Here are the top 10 things you should know about your refund:
- Refund options - You have two options for receiving your federal refund: a paper check or a direct deposit.
- Separate accounts - You may use Form 8888, Direct Deposit of Refund to More Than One Account, to have your refund split among up to three separate accounts, such as checking or savings or retirement accounts.
- Paper return processing time - If your return is complete and accurate, your refund will usually be issued within six weeks from the date the IRS receives it.
- E-filed returns - If you file electronically, your refund will normally be issued within three weeks after the acknowledgment date.
- Check status online - The fastest and easiest way to find out about your refund is to go to IRS.gov and click on the "Where's My Refund?" link on the home page. You will need your Social Security number, filing status and the exact amount of your refund.
- Check status by phone - Call the IRS Refund Hotline at . You will need to your Social Security number, your filing status and the exact amount of your refund.
- Delayed refund - For things that may delay the processing of your return, read about common tax return errors.
- Larger than expected refund - Do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.
- Smaller than expected refund - If this happens you may cash the check. If the IRS determines that you should have received more, it will later send the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks and then call .
- Missing refund - The IRS will send you a replacement check for a refund check that is lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check. For more information, visit IRS.gov or call .
- Make sure the last name of each individual claimed on your tax return is the official last name of the person. If you have any question or doubt as to the official last name of an individual you will be claiming on your return, verify the information with the Social Security Administration at (800) 772-1213 .
E-filing is fast, and that's a terrific reason to e-file! But the most important reason is that when you e-file through1040.com Online Tax Preparation, the program catches math and other common errors, letting you quickly make corrections and try again.
- File electronically instead of using paper tax forms. If you file electronically and choose direct deposit, you can receive your refund in as few as 10 days.
- Check the identification numbers. Carefully check the identification numbers - usually Social Security numbers - for each person on the return. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.
- Double-check your figures. If you are filing a paper return, you should double-check that you have correctly figured the refund or balance due.
- Check the tax tables. If you are filing a paper return you should double-check that you have used the right figure from the tax table.
- Sign your return. Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.
- Mail to the correct address. Use the coded envelope included with your tax package to mail your return. If you did not receive an envelope, check the section called "Where Do You File?" in the tax instruction booklet.
- Mail a payment correctly. Make any check out to "United States Treasury" and enclose it with, but don't attach it to, your return or Form 1040-V, Payment Voucher. Include your Social Security number, daytime phone number, the tax year and the type of form filed.
- Consider an electronic payment. Electronic payments are a convenient, safe and secure way to pay taxes. You can authorize an electronic funds withdrawal, or use a credit card or a debit card. For more information on electronic payment options, visit IRS.gov.
- Get an extension for your return. By April 15, you should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.
If you cannot pay the tax you owe in full by April 15, you should still file your return on time and pay as much as you can to avoid penalties and interest. There are also other payment options to consider:
- Additional time to pay - Depending on your circumstances, the IRS sometimes allows a brief additional amount of time to pay. Request this through the Online Payment Agreement (OPA) application at IRS.gov or call . If you get an additional 30 to 120 days to pay the tax, you'll usually pay less penalty and interest than if you paid by installment agreement over a longer period.
- Installment agreement - You can apply for an IRS installment agreement using the OPA application on IRS.gov. This is for taxpayers who owe $25,000 or less in combined tax, penalties and interest. You can find out immiately if you're approved. The OPA option gives you a simple and convenient way to set up an installment agreement, eliminates the need for personal interaction with IRS and reduces paper processing.
- Credit or debit card - You can pay your taxes with your credit card or debit card at the Drake E-Payment Center, www.1040paytax.com ( ).
If you can't meet the April 15 deadline to file your return, you can get an automatic six-month extension of time to file from the IRS. Here is what you need to know about filing an extension:
- An extension will give you extra time to get your return to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by April 15, plus a late payment penalty if you have not paid at least 90 percent of your tax by then.
- If your return is completed but you are unable to pay the full amount of tax due, don't request an extension. File on time and pay as much as you can. The IRS will send you a bill or notice for the balance due.
- Request an extension to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, with the IRS by April 15, or make an extension-related electronic credit card payment. For more information about extension-related credit card payments, see Form 4868.
- To obtain a copy of Form 4868 or other forms and publications, use e-file tax preparation software, download them from IRS.gov or visit your local IRS office. Forms and publications can be ordered by calling 800-TAX-Form ( ). However, telephone requests normally take 10 days to fill and may not arrive before the tax deadline of April 15.
If your marriage status changes during the year, it can confuse the issue of which filing status to use on your return. Here are eight facts about the five filing status options to help you choose the best option for your situation.
- Your marital status on the last day of the year determines your marital status for the entire year.
- If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
- Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
- A married couple may file a joint return together. The couple's filing status would be Married Filing Jointly.
- If your spouse died during the year and you did not remarry during 2011, usually you may still file a joint return with that spouse for the year of death.
- A married couple may elect to file their returns separately. Each person's filing status would generally be Married Filing Separately.
- Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
- You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2009 or 2010, you have a dependent child and you meet certain other conditions. There's much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
Here are six important facts about dependents and exemptions that will help you file your 2011 tax return:
- Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.
- Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you're filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
- Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the Social Security Number of any dependent for whom you claim an exemption.
- If someone else claims you as a dependent, you may still have to file your own return. Whether you must file a return depends on several factors, including your income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received.
- If you are a dependent, you may not claim an exemption. If someone else claims you as a dependent, you may not claim your personal exemption on your own tax return.
- Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if that person files a joint return with his or her spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.
If you make your living at least partly by tips, be aware of these tips about tip income:
- Tips are taxable. Tips are subject to federal income, Social Security and Medicare taxes. The value of non-cash tips, such as tickets, passes or other items of value, is also income and subject to tax.
- Include tips on your tax return. You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.
- Report tips to your employer. If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
- Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income.
You may qualify for injured spouse relief if you file a joint return and all or part of your refund is applied against your spouse's past-due federal tax, state income tax, child or spousal support, or federal nontax debt, such as a student loan. Some important facts about claiming injured spouse relief:
- To be considered an injured spouse, you must have made and reported tax payments, such as federal income tax withheld from wages or estimated tax payments, or claimed a refundable tax credit on the joint return, and you must not be legally obligated to pay the past-due amount.
- If you live in a community property state, see IRS Pub 555, Community Property, for special rules.
- If you filed a joint return and you're not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation.
- You may file form 8379 along with your original tax return or your may file it by itself after you are notified of a refund offset.
- You can e-file Form 8379. If you file a paper tax return you can include Form 8379 with your return, write "INJURED SPOUSE" at the top left corner of your return, and the IRS will process your allocation request before an offset occurs.
- If you are filing Form 8379 by itself, it must show both spouses' Social Security Numbers in the same order as they appeared on your income tax return. You, the "injured" spouse, must also sign the form.
- Do not use Form 8379 if you are claiming innocent spouse relief. Instead, file Form 8857, Request for Innocent Spouse Relief. This relief from a joint liability applies only in limited circumstances. IRS Pub 971, Innocent Spouse Relief, explains who may qualify, and how to request this relief.
You may be able to take a tax credit of up to $13,360 for qualified expenses paid to adopt an eligible child. The Affordable Care Act increased the amount of the credit and made it refundable, which means it can increase the amount of your refund.
Here are six tips about the expanded adoption credit:
- For tax years 2010 and 2011 the credit is refundable, meaning that you can get it even if you owe no tax.
- You must file a paper tax return and Form 8839, Qualified Adoption Expenses, to get the credit and you must attach documents supporting the adoption.
- Documents may include a final adoption decree, placement agreement from an authorized agency, court documents and the state's determination for special needs children.
- Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child. These expenses may include adoption fees, court costs, attorney fees and travel expenses.
- An eligible child must be under 18 years old, or physically or mentally incapable of caring for himself or herself.
- If your modified adjusted gross income is more than $185,210, your credit is reduced. If your modified AGI is $225,210 or more, you cannot take the credit.
- Make sure you obtain a receipt for any and all of your charitable cash contributions - if you want to deduct them! Learn more from our Contributions article.
If you want to claim a charitable deduction, be sure the charity or philanthropic organization you select is a tax-qualified organization under IRS rules. Use GuideStar for Donors to research nonprofits' tax-exempt status.
Charitable purchases are only deductible in the amount exceeding the worth of the item purchased. For example, if you attend a fancy $500 a plate dinner for children's hospital, the deductible amount is equal to $500 minus the fair market value of the dinner.