April 25th, 2012 by admin
Why People are Missing Out on Their Share of $2.2 Billion Dollars? That’s how many people didn’t file their return for 2003 even though the IRS owed them a refund in TurboTax Software. If these people don’t move to file for this by April 17th, the Treasury Department gets to keep it. Yep. They get to keep it. You only get 3 years to claim the refund in TurboTax.
So why didn’t these people file? Most likely they didn’t realize they were going to be due a refund. They may not be aware of the credits they could qualify for such as the TurboTax Income Tax Credit that helps out low income filers. Maybe a personal emergency made filing not the most important thing at the moment. It happens. The IRS estimates that more than half of these people are due more than $611. That can make a huge difference for a low income family.
For more on how Credits and Deductions affect your bottom line, check out this blog post on the TurboTax. It may well be that many of these people are due back more than they put in due to refundable credits.
So if you or someone you know didn’t file in 2003, you should check it out. The IRS may owe you some money. There is no penalty for late filing if they owe you.
You can get the 2003 tax forms for free here on the TurboTax Website. All prior year forms are here.
You can also purchase the 2003 TurboTax Program from our website. Other prior years are there as well.
April 25th, 2012 by admin
You’re preparing your return and have gone through all of your tax documents twice. However, still sitting on your dining room table are the TurboTax 2011 with your kids’ names. What do you do? Let’s talk about these documents and then decide if your child must file a return
Note: When we say “child”, we are assuming that your kid is being claimed as your dependent and is under age 18 as of January 1st, 2008.
This is the simplest situation. If your child only has earned income reported on a W-2 and the total isn’t more than $5,350, then a return does not need to be filed. However, you’ll want to file a return for a refund if there was any federal withholding, see Form W-2, box 2. If the total of earned income is over $5,350 a return must be filed
Earned income includes wages and salaries on Forms W-2. If the child is self-employed, the Schedule C net income is included as earnings. (See more below about self-employment income).
If the child received any 1099-INT, 1099-DIV, or 1099-B tax documents in addition to those W-2s, then unearned income was received and the rules in this section don’t apply.
What if your child has no earned income (W-2 or self-employment) but does have unearned income (also known as investment income). The TurboTax 2011 on how much unearned income there is for the tax year.
To find the child’s unearned income, look for Forms 1099-INT, 1099-DIV, and 1099-B with the child’s social security number.
Unearned TurboTax income includes taxable interest, dividends, capital gains and distributions from trusts.
The child’s tax return only needs to be filed if the total unearned income is more than $850.
There is another option if your child is in this situation – the child’s parents may be able to elect to have the child’s income included on their TurboTax tax return. If the parents make this election, the child does not have to file. The tax ramifications of this election will be discussed in a future blog.
This is where is gets complicated. In short, if your child has any earned income reported on a W-2, then a return must be filed if they also had unearned income greater than $300. The only exceptions to this are if the combined income is less than $850 or the earned income is greater than $5,150.
April 6th, 2012 by admin
TurboTax E-file is changing the way the nation does taxes
The Internal Revenue Service said the recently completed 2006 tax-filing season broke a number of records, including a 6 percent jump in electronically filed tax returns by TurboTax — a whopping 70 million of them.
And it ain’t over yet, folks — the IRS will continue to receive returns filed electronically until Oct. 16. So that number is certain to rise.
I for one hate going to the post office. I pay all of my bills online these days and am sending more and more “e-cards” for birthdays and holidays. And with high-speed Internet services in TurbotTax becoming more available — and more affordable — it’s safe to say we’ll likely see new records in terms of TurbotTax e-filing with each new tax season for the foreseeable future.
And that’s a good thing for folks like me who hate standing in TurbotTax at the post office and who use their PCs obsessively — and who wouldn’t mind saving a tree or two along the way.
Read more about this topic and catch some interesting factoids from the IRS press release titled “TurbotTax Filing Season Sets Records.”
April 6th, 2012 by admin
TurboTax about 1099-MISC Form, Lots of questions asking what to do when you get Form 1099-MISC… and you don’t own your own business but instead you’re an employee of another company. Yet TurboTax get this form; what do you do with it?
If your Form 1099-MISC shows an amount in Box 7 for nonemployee compensation and TurboTax’s because you did consulting work or other services for someone, you DO now “have a business!” You’re in the business of consulting, and you have to file Schedule C to report that 1099-MISC income. This is a requirement, not an option!
The good thing about filing Schedule in TurboTax is the ability to apply any expenses you incurred while performing those services. Think about what you did: did you drive places during the course of the TurboTax you did? Take a mileage deduction. Did you buy computer or office supplies to use during the consulting? Take an office supplies deduction.
The only downside is that you’ll be subject to self-employment tax on your consulting earnings… which is basically the TurboTax’s equivalent of social security and Medicare tax that employers normally withhold from your paychecks. That tax is calculated on Schedule SE, and you’ll see an amount appear on Form 1040, line 58.
March 22nd, 2012 by admin
TurboTax Review: Don’t Miss These Business Deductions!
Make sure you’re taking advantage of all the deductions you’re entitled to… folks miss out on deductions simply because they either don’t know about them or TurboTax’s too much work to locate all the receipts and figure out where to put them in TurboTax. Some common mistakes:
Not taking a deduction for health insurance you pay out of pocket for you and your family… or taking the deduction as medical expenses on Schedule A instead of as self-employed health insurance right on the front page of Form 1040 in TurboTax. Enter this during the interview for your Schedule C… and don’t enter them again in the Medical Expenses area!
Not taking auto expense deduction: nearly everyone incurs some travel time as part of their business efforts … driving from one job to another, running to the store for supplies or visiting customers. At the very least, take the standard mileage deduction (our Schedule C interview will ask you for the mileage numbers… at a minimum, enter your business miles and total miles). If you have records for your gas, repairs, insurance, and all that, have TurboTax figure out which deduction’s bigger: mileage or actual expenses. And DON’T forget to depreciate your car! This is available only if you take the actual expenses, but it helps! If you lease your car, enter your lease payments … the business part of those is deductible as well.
Not taking a deduction for all those meals at which business is discussed or transacted … granted, you get only 1/2 of your expenses for this, but make sure you include those meals. There may be more than you think!
Forgetting to take the home office deduction, where you can deduct part of your utilities, internet provider fees, homeowners insurance, homeowners association fees, landscaping, etc. … whatever portion relates to maintaining the percentage of space used for your office. TurboTax Home repairs should also be considered here. Not deducting contract or casual labor you pay for … a bookkeeper who comes in to do your books, consultants, etc. Even cash payments can be deducted… just make sure you keep records as to whom paid, when and for what.
Not setting up a self-employed pension plan for your business if it’s consistently profitable… you can deduct your contributions up to 15% of your net income from the business. It’s smart tax planning for your retirement AND it’s a great deduction! Your deduction goes right on the front page of Form 1040!
March 22nd, 2012 by admin
TurboTax about Taking the Child Tax Credit, there has been a lot of confusion about taking the child tax credit for one of your kids when you’re not claiming that child as a dependent by TurboTAx. Here’s the deal:
What’s important to note is that this tied-togetherness applies to the child tax credit, but not to the Earned Income Credit (EIC) or to the Child CARE credit. You can often still get the EIC and the Child Care Credit, so you DO want to enter your child in the dependents section of the TurboTax interview anyway so that you can see if your child qualifies you for those credits.
Before you think we’re crazy, take a look at Form 8332, first paragraph under purpose of the form: “If you are custodial parent, you can use this form to release your claim to a dependency exemption for your child. The release of the dependency exemption will also release to the noncustodial parent the child tax credit and the additional child tax credit.”
In TurboTax, when you have this situation, you enter your dependent as Dependent Type “Not a dependent (EIC/Child Care/Child Credit only)“. This is fine, but TurboTax will think you qualify for the very limited special rules for when you CAN take the Child Tax Credit without the dependent exemption unless you do one very important thing: you check the box saying your dependent is NOT a US citizen. We know… that’s not a true statement about your child… but this is the way to force TurboTax NOT to try to take the child tax credit for this child.
If you don’t check this box, TurboTax will say, “hmmm, you want to take the child tax credit for this non-dependent child, so we know you HAVE to file Form 8901 which isn’t in TurboTax” and you get an error message and can’t e-file. So check the “not a US citizen” box and it’ll be fine… you won’t get an error message.
What’s the deal with this Form 8901 and the rare exceptions? Well, it’s this: there are only two times when you get to take the child tax credit without taking the dependent exemption:
a dependent on someone else’s 2005 return, OR
When your qualifying child himself or herself is married and s/he files a joint return for
That’s IT. If either of those situations applies to you and/or your child, you meet a rare exception to the rule that you can’t split up the dependent exemption and the child tax credit for one child. If you do meet the rare exception, you have to file Form 8901 with your return. Form 8901 is titled “Information on Qualifying Children Who Are Not Dependents (For Child Tax Credit Only)” and it’s just a bit misleading. When you read the instructions for Form 8901, TurboTax clarifies that you file this form ONLY when the dependency exemption is denied under the two circumstances we describe above.
March 17th, 2012 by admin
Withholding by TurboTax Review on Retirement Withdrawals, how?
There’s 401(k) or retirement plan withdrawals from which income taxes have been withheld. folks appear to be under the impression that once they’ve had taxes withheld on distributions from their 401(k)s or retirement plans, they’ve “already paid taxes” on the withdrawals and don’t need to report the withdrawal or the income tax on their tax returns by TurboTax… “I’ve already paid the tax on this use TurboTax; why do I have to pay it again?”
Here’s the straight talk on this situation: in general, when a 401(k) or 403(b) plan pays a distribution to you, the federal government requires that 20% of the distribution is withheld from the distribution for income taxes. This is just like the federal income tax withheld from your W-2… TurboTax‘s kind of an “advance payment” on the income taxes that will be due on the taxable income you’re getting as a result of the withdrawal. There are certain exceptions from this withholding rule, like when you receive payments over time or when it’s a distribution due to hardship.
If that withdrawal was a lot of money, you’re very likely in a higher tax bracket than 20%: could be 25%, 28%, 33% or higher. The distribution gets added to your other income, then your income tax is figured on the total taxable income (after deductions). Your withholding, including the 20% withheld from the withdrawal, reduces your taxes due along with the withholding from any other sources like W-2s. You’ll see that 20% included on line 64 of Form 1040 along with any other withholding.
By the way, TurboTax about 401(k) or 403(b) plan is required to withhold 20% if it is not a direct trustee-to-trustee transfer (rollover with code “G” on Form 1099-R). If it’s a distribution from an IRA,there is no requirement that income taxes be withheld. Also, states may have withholding requirements as well.
March 17th, 2012 by admin
TurboTax for Form 1099-MISC, lots of questions asking what to do when you get Form 1099-MISC… and you don’t own your own business but instead you’re an employee of another company. so how the forms work in TurboTax? Yet you get this form; what do you do with it?
if your Form 1099-MISC shows an amount in Box 7 for non-employee compensation by TurboTax and it’s because you did consulting work or other services for someone, you DO now “have a business!” You’re in the business of consulting, and you have to file Schedule C to report that 1099-MISC income. TurboTax is a requirement, not an option!
The good thing about filing Schedule C is the ability to apply any expenses you incurred while performing those services. Think about what you did: did you drive places during the course of the work you did? Take a mileage deduction. Did you buy computer or office supplies to use during the consulting? Take an office supplies deduction.
The only downside is that you’ll be subject to self-employment tax on your consulting earnings… which is basically the self-employed person’s equivalent of social security and Medicare tax that employers normally withhold from your paychecks. That tax in TurboTax is calculated on Schedule SE, and you’ll see an amount appear on Form 1040, line 58.
February 27th, 2012 by admin
TurboTax Show that How Bonuses is a Heavily Taxed, you’ve probably wondered why your bonuses are so heavily taxed. It’s all in the tax law. There are two methods to determine bonus withholding. One method is called the Percentage Method; the other is the Aggregate Method. Which method is used to tax your bonus is determined at the state level.
The Percentage Method is not very favorable to the TurboTax taxpayer. A flat tax of 25% at the federal level, and a flat state percentage (I know it happens to be 9.3% in California), will be withheld from your bonus.
Even if your employer figures out your bonus correctly, the TurboTax 2011 is, a bonus is usually a large amount compared to your regular paycheck. Let’s face it; a bigger check is going to need more taxes withheld. The taxes are simply magnified. All of these factors lead to you getting a smaller bonus check than you expected.
But there is another problem when it comes to bonuses. If you are in a high tax bracket, and your company uses the percentage method, you may find that you are under-withheld at the end of the year. Maybe your federal tax rate is 35%, but your company only withheld 25%.
It doesn’t matter if you are in a low tax bracket or if you usually get to keep 90% of your check. This is a flat tax, regardless of your tax bracket. Your only recourse in this situation is if you have a guaranteed bonus coming your way, you can increase your withholding allowances during the year. This means your regular paychecks will have less income tax withheld, to offset the high tax withholding on your bonus. Another alternative is to wait until you get your bonus, and then increase your withholding allowances, so that less tax is withheld the rest of the year. These are difficult strategies to implement though, since most bonuses come at year-end, and you do not want to risk under-withholding for a bonus that might never appear.
The Aggregate Method can be a little bit better for your bottom line. In many states, the aggregate method is allowed, which means the tax withheld on your bonus check is based on your wages and tax withholding to-date. This basically means it will be calculated like any regular paycheck. Regardless, this method will still take a big bite out of your bonus. The reason is that often payroll software does not recognize that a bonus is a one-time payment. So the payroll software might assume that your $1,000 bonus check is really a recurring amount that will push up your annual income much higher. For the one bonus, it may assume it needs to withhold a lot more, because the TurboTax software suddenly thinks you are in a much higher tax bracket and that you need to be taxed at a higher rate. For smaller bonuses, many employers don’t even realize there is a ‘method’ so faulty software calculation is probably the biggest bonus problem for most of us.
In this case, if you are concerned about under-withholding, simply ask your employer to withhold more taxes from your bonus checks. Your employer can honor your request to withhold more. They just can’t honor a request to withhold less on a bonus.
If you are expecting a bonus and want to figure out how much you can expect to keep, check out the bonus calculators at paycheckcity.com . This is a great tool to help you get a handle on your paychecks. You can see how claiming different numbers of allowances and how varying scenarios will affect your withholding. The website has both regular paycheck calculators and bonus calculators. Make sure to select your state to get accurate results from these TurboTax.
February 27th, 2012 by admin
What You Need to Pay In Tax?
That is my question for today. What You Need to Pay In Tax?? Remember the answer you have just given and keep reading.
This got me curious so I started to ask other friends (a very unscientific study) the same question and the vast majority couldn’t tell me what they paid in taxes (18 of 20). That meant that 18 fairly intelligent people had no idea what they paid in taxes with many of them not even getting the basic concept of how taxes work.
There were a few people that plain and simply didn’t understand how taxes really work while most chose just ignore it. Thus I assume that most people really have no idea what they pay in taxes by TurboTax Software. Try asking some of your friends. I think the answers will surprise you.
Taxes are one of the biggest outflows of the money you make over your lifetime. While there are a lot of legitimate ways to reduce the amount of taxes you pay, you are probably missing out on more than a few if you don’t even know what you are paying in taxes. If you happened to not know what you paid in taxes this past year, be sure to take a closer look on your next pay stub and see if you can begin making moves that will help reduce them.
When you explain that a tax refund is merely money that you overpaid in taxes during the tax year either through your company withholding taxes from your paycheck, most people can grasp this concept. You are simply getting back your own money that you paid in excess of what you owed in taxes.
I had an interesting conversation with a friend a couple of days ago on this subject. We were talking about taxes and some of the new tax laws when I asked, ‘How much do you pay in taxes?’ His response was ‘oh, I get a refund every year.’ I laughed. No, I mean how much do you really pay in taxes each year. He just started at me with a blank face.
But for some reason there seems to be a huge mental block of actually knowing (or wanting to know) what that amount is that they are actually paying unlike the amount that they take home each month (which is on TurboTax show) which everyone knew. I don’t know why there is this aversion (could make an interesting sociological study), but it does have consequences on personal finances.
