Tax planning is an essential element of, management of personal financial resources.Need for tax planning is more acute, in these times of shrinking jobs,rising prices of everyday use items, ever growing demand of funds for Children education and Housing.
In these financially hard times, every dollar saved, followed by discrete spending will be welcome, by majority of households. At least in these days of recession, we need to give a fresh look at our concept of spending.
Tax season 2010 is in full swing.It is therefore important to understand the do’s and dont’s,at the same time, remember the tips before and after filing a tax return.
D’os
Read Important Changes for 2010 Tax season. Understand, what is applicable to you and get hold of documents needed to claim a credit.
Select a Reliable Tax Preparer. Tax preparer must be current on latest changes in the tax laws. He/She should be able to provide the best possible service and be diligent in giving advice to a tax payer.
Know your Rights as a Tax Payer.You have a right to representation.Your civil rights are protected.You have a right to appeal any action taken by the IRS.Innocent spouse relief is available in some cases.
File Your Tax Return In Time.If for some reason cannot, then ask for extension. It cost you nothing.If you don’t file tax return in time,there is a penalty.You pay $135 or 100% of tax owed,whichever is smaller.
E-File. your tax return. In case you claim First time home buyer credit, then file a paper return.
Don’ts
Frauds. Do not give your personal information. Be watchful of any impersonations. These people try to contact on phone, e-mail, internet site, and social networking sites and obtain personal financial information for fraud purpose.
Avoid Accepting A Instant Refund. This may have additional fees, charges or interest attached. Some times this would be in the range of $100 to $350, which you have to pay to get instant refund.
Tips
Making Work Pay Tax Credit. Workers must file schedule M, if you worked during 2009, to claim $400(individuals) $800(married couples).Check if you qualify.
IRS 2009. Open a file marked, to secure all your W-2’s, receipts and other tax related documents handy, if you have not already done so.
IRS 2010. Keep a file marked, for tax year 2010, to save all the related documents.
Free File Program. Use this program to file your return, if you are eligible. This cost you nothing.
Refund. Best way of receiving refund is direct from IRS. Refund goes direct to your bank account.This is received faster than a check.
If You Cannot Pay The Full Amount Of Tax You Owe. File your return in time and pay as much as you can. Call IRS to discuss your payment options. Some times they let you pay in installments. If you decide to in installments,remember they come with a cost. IRS may charge you penalty/interest on the amount of tax you owe.One option is to borrow money to pay taxes.
Readers are welcome to add more tips, do’s and dont’s for filing tax returns.
