All Articles Tagged "tax returns"
The President and First Lady have to file tax returns just like the rest of us. However, their returns become a public matter.
According to their tax returns, the Obamas made a total income of $662,076, down 22 percent from the year before in which they reported $844,585. That’s a 22 percent drop year-over-year. Being President pays $400,000 per year, and he pays nearly $6,000 for health insurance.
Business income is where the First Couple lost a chunk of income. That declined from $441,369 in 2011 to $258,772 last year. And book sales have declined.
The Obamas pay an 18.4 percent federal tax rate (in 2011, it was 20.5 percent) and donated $150,034 to charity, most of it, more than $100,000, to the Fisher House Foundation, which serves military families.
The President is a supporter of the Buffett Rule, which, Press Secretary Jay Carney points out, would actually raise the amount of taxes the Obamas pay.
VP Joe Biden and his wife, Dr. Jill Biden, reported adjusted gross income of $385,072, paying more than $87,000 in federal taxes. You can download both the President and Vice President’s tax returns on the White House website.
Today is tax day everyone! We can hear you groaning through the Internet, but honestly, we really need to bring this annoying portion of the year to an end. (Actually, a Pew survey says that about one-third of people actually like doing their taxes. Who are you?!)
To make today a little bit easier, some companies are offering up some sweet deals. TIME rounds up some of the specials that companies are offering today, including free small popcorn at AMC Theaters (in case you need to sit in a dark room and reflect on your taxes for a bit), free Cinnabon bites, and free copies of your taxes at Office Depot. If you really need to take the edge off, Trojan has a special deal for Californians today as well. Wow.
Over the past few weeks, we’ve offered up a number of tips to help you make it through the tax season. Here’s a quick roundup. Good luck out there.
When you work for yourself, you must take extra care when preparing the taxes. And, there are more and more freelance workers in today’s workforce. In fact, according to the advocacy group Freelancers’ Union, one-third of the workforce can be considered independent–self-employed, contractors, consultants, temps and sole proprietors. Preparing taxes for freelancers can a bit more complicated.
Here are nine tips on how to do federal taxes better for freelancers.
Tax return time is a favored time for many because you get back a big check from the government. Of course, while this can seem as if it is “free money,” in reality, you are getting back cash you paid all year. You can squander this money and have nothing left to show for it, or you can make a smart choice and consider one of these better ways to spend your tax return.
Whether you’re a kitchen table CEO, a freelancer, or a work-at-home mom, you need somewhere to make the magic happen. Even if you don’t own your own business, you may need a place in your home where you can perform work for your employer. In some cases, that home office can make a difference on your taxes this year.
The home office deduction is a popular way to decrease your tax bill. Like all deductions, you can subtract the amount you spent maintaining your home office from your total taxable income. The IRS applies your tax rate to your taxable income to determine how much you owe, so the less taxable income you have, the better your return looks.
To qualify for the home office business deduction, you need to use that space as your primary and exclusive workspace. Primary means that this is where most of your business happens. Let’s say your employer has an office for you on his property and you have a home office. You can’t take the deduction because your boss already has a primary place for you to conduct business.
Exclusive means that you use this space only for your work. There should be a clearly defined separation between your personal space and your workspace. It doesn’t have to be a separate room or have a partition but it should be easily identifiable.
Once you’ve determined that you can take this deduction, you need to figure out the amount of money you can subtract from your taxable income. It’s based on what percentage of your home is dedicated to your home office.
For example, let’s say that you have a 1000 square foot apartment and the room you use for your home office is about 450 square feet. That’s 45 percent of the total area and you can take 45 percent of the resources you spend on your home as a deduction. Now that includes the rent/mortgage of your home, the utilities, and the insurance on the home. Just remember that even if it’s a household expense, it must be used for business use to be deductible. If you have telephone service, you can’t claim a percentage of that service if you don’t use it to make business calls.
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Man. I had big plans for my imaginary money.
Every year around this time, since college I would say, I’ve filed taxes, and whether it was an extra $200 to spend on crap, or $1,000 to save…and spend…I’ve always received an income tax return to get giddy about and proudly done the taxes on my own. But this year was a big ‘ol FAIL. Though I had made plans in my head to buy everything from new eyeglasses to a trendy bicycle for the summer with the income tax return I was assuming would come my way after a particularly tough year, that money is going to go the OTHER way on April 15. Come to find out that my year of big moves and switching and ditching jobs has come back to bite me in the butt, and now I owe both the states I live(d) in, and the federal government. Though I was very disappointed by this, I’ve learned a few things that will probably help others too, and make tax season of next year a much more joyous occasion–as it should be (you know, joyous when YOU get your check).
Keep Track of EVERYTHING. Seriously, everything.
In the midst of moving from Chicago to NYC, I gave up piles of clothing to Goodwill, and spent a hefty amount on gas and other moving expenses, but when it was time to start claiming deductions, I had none of the receipts for these things in my possession. FAIL. I’m one of those people who shreds receipts or gets rid of them ASAP, but after watching the chick at H&R Block give me the sad/boo boo face because I couldn’t prove I spent money on a laptop for freelancing purposes, I won’t make that same mistake twice. Everything counts. Keep it and throw it in the face of the government next year, folks.
Be Careful Doing Freelance Work
So I wrote a few stories for a few months for a few people. No big deal, right? Psych. The 1099 I received played a huge part in the fact that I owed the government taxes, because none were taken out for these services. I’m not saying don’t ever freelance, but just be mindful of the fact that this “self-employment” might come back to kick you in the butt, and can even require more complex tax programs and rack on extra charges when you’re trying to navigate Turbo Tax and more.
Get Your Taxes Done Early if You Need Help
I’m not going to lie, the amount of money I paid to get all my taxes done (two states and federal) was way more than I would have liked or even thought it would be. If you know you need to hit up the local H&R Block or other local tax service places, try and get help early so you can take advantage of deals and bargains for early birds. I would also encourage hustling your friends or family members who have tax experience to help you out for the low low if you know your tax situation is a bit more complex than usual.
Get Your W-4 In Order
After being told I owed money instead of being owed money, I was instructed to check with my employer and make sure my W-4 was up-to-date and that my number of dependents was correct. When filling out a 800-page packet the first day at your job, it’s probably overwhelming and you might not even remember what the hell you put for dependents. So to be on the safe side, make sure everything is right and in order so you don’t get a big surprise when you’re finishing up your income tax returns next year. If you know you don’t want much being taken out of your check during the year, then you probably won’t trip when you have to pay folks back, but if you weren’t really trying to duck and dodge your tax responsibilities, then this can be a nightmare-ish mistake.
Hey, In the End, Count Your Blessings
I could be really enraged as I was the minute I saw all those numbers written in red, but it was a Sunday and I had just come from church. In situations such as this one, what made me feel better was knowing that I was still a very lucky and blessed individual. If I really need some money, it will find its way in my account somehow (heeeeeey Mom…), so there was no reason to necessarily go postal. I still have a roof over my head and food in my stomach so hey…the government can have their funky money. For now.
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If you are legally married and share a home with your spouse for most of the tax year, you’re eligible to file your taxes as either “Married Jointly” or “Married Separately.” The difference between the two statuses is mainly in the amount of standard deductions you’re allowed to claim. Married filing jointly gets more tax breaks than opting for married but filing separately.
Whether it’s better to file jointly or separately depends on many different factors, including your total income, your available deductions or credits, and the status of your marriage. When in doubt, contact a tax law professional who can give you a professional opinion based on your specific details. But here are a few things to consider when deciding which one is better for you and your husband.
Things to Consider When Filing Separately
- Only one person can claim the tax deductions and credits relating to your children. In some cases, this might mean that the person who files claiming the kids will get money back while the person who doesn’t claim them will owe money.
- Depending on the laws in your state and the details of your marriage–prenuptial agreement terms, length of marriage, etc–you may not be entitled to any money your husband receives as a refund.
- Filing “Married Separately” is different than filing “Single.” You still need your spouse’s signature on the tax return if you’re filing any type of married status.
- Although your tax rate is based on many factors, filing “Married Separately” generally makes your tax rate higher than filing “Married Jointly”.
Things to Consider When Filing Jointly
- If your spouse has some sort of debt that the government can withhold through his tax refund, your money will likely get taken, too. This includes old tax bills, unearned unemployment benefits, and unpaid child support.
- Any refund money and any tax bill from your return will be a joint asset or debt.
- You will need to wait for your spouse to gather his financial paperwork–W-2 forms, 1099s, etc–before you can file.
- If your spouse is dishonest about anything on the tax return, you can be liable for the repercussions. The IRS can go back as far as six years to audit your returns. Even if you’re not together anymore, you and your spouse both are responsible for any issues related to your joint returns.
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Every year about this time, tax season rolls around and the filing frenzy begins. Although the tax forms come with instructions and the government sponsors many free online programs to help you file your claim yourself, tax preparation companies like H&R Block, Jackson Hewitt and Liberty Tax do a lot of business this time of year. In fact, just about anyone can prepare your tax return for you. Be smart about your taxes, though. Make sure you’re getting a qualified preparer and a legitimate return by asking some smart questions.
What’s your tax preparer ID number? Starting January 1, 2011, it was decided that all paid tax preparers must have a Preparer Tax Identification Number (PTIN) issued by the IRS and renewed each year. Each preparer must prove his competency and take continuing education classes to renew the PTIN each year. This helps the IRS keep tabs on possible scammers and incompetent preparers. If your preparer doesn’t have a PTIN, he’s not legitimate and you should take your returns elsewhere.
What exact deductions and credits did you put on my return? The whole reason you have someone prepare your taxes is to get as many deductions and credits as possible. You’re hoping that your tax bill will be lower or your tax refund will be higher than what you would have come out with on your own. But, if your preparer is adding on bogus claims on your return, you’re the one in hot water with the IRS–not him. So before you sign the dotted line, make sure you understand every single one of your deductions or credits.
What’s your policy on audits? It doesn’t matter who prepared your taxes. You are responsible for what the forms say. So in the event of a tax audit, you have to defend that return to the IRS. Some tax preparation companies offer to help you with an audit but most of them don’t, so know upfront what the policy is so you can either find a new preparer, or be aware of what could happen with an audit.
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(Kiplinger) — State Sales Taxes: This write-off makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state and local income taxes or state and local sales taxes. For most citizens of income-tax states, the income-tax deduction is a better deal. If you purchased a vehicle, boat, airplane or even home-building materials, you get to add the state sales tax you paid to the amount shown in IRS tables for your state, to the extent the sales tax rate you paid doesn’t exceed the state’s general sales tax rate.
(AJC) — Who better to scam the IRS than a bunch of criminals in Georgia’s prisons with plenty of time on their hands? In fact, more than 7,000 Georgia inmates filed fraudulent tax returns in 2009, receiving refunds to which they were not entitled. Those refunds totaled nearly $3.6 million, according to USA Today, and gave the Peach State the dubious distinction of being No. 2, behind only Florida, in the number of fraudulent returns filed by prisoners.
In some Georgia prisons, more than 300 inmates successfully fleeced the IRS in 2009, according to a U.S. Treasury Department audit. Nationwide, nearly 45,000 prisoners in municipal, county, state and federal detention facilities took in $39.1 million of tax refunds they shouldn’t have gotten, the audit revealed. In some cases, inmates received as much as $50,000 in refunds by claiming tax credits for alternative-fuel vehicles they didn’t own.
“The IRS takes prisoner fraud seriously,” IRS spokeswoman Michelle Eldridge said Wednesday. “We stopped the vast majority of prisoner refunds fraud. We give special scrutiny to prisoner returns.” In 2009, Eldridge said the IRS caught 87 percent of prisoner fraud, keeping $256 million in government coffers. Some prisoners file legitimate tax returns, she said. Nevertheless, the fraudulent returns, which have grown dramatically since 2004, led Georgia tax watchers to question what the state is doing to prevent abuse.