IRS Presents: Know When to File a Return Even When You’re Not Required
[Stacie says: you know the IRS actually makes some good points here. There could be a time that you should file a return even when you are not required. Check out some good reasons the IRS has listed below.]
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive.
Check the Individuals section of IRS.gov or consult the instructions for Form 1040, 1040A, or 1040EZ [Stacie says: or better yet, check with your CPA or professional tax preparer] for specific details that may affect your need to file a tax return with the IRS this year.
Even if you don’t have to file, here are eight reasons why you may want to file:
- Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
- Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
- Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
- Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
- Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
- Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
- First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
- Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.
For more information about filing requirements and your eligibility to receive tax credits, visit IRS.gov.
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You Might Want to Contact A Professional When – And Some IRS Free File Tips
By Stacie Clifford Kitts, CPA
Knowing when to prepare your own return and when to hire a professional can be confusing. I suppose if you have some training in the world of tax preparation that preparing your own return is a fine idea. However, the IRS’s release of the “Free File” tax tips listed below made me think that it might be a good idea to talk about when you should contact a professional.
Now, if your only source of income is a W2 from a single employer, you have not changed jobs during the year, you don’t own your home, you don’t have any questions about dependents, and your income is relatively low, then I think you are pretty safe preparing your own tax return. Although I suggest that you buy some tax software to walk you through the process or check out the IRS’s Free File Program.
Okay, sooo if you are unsure of how to treat a certain situation or your return is more complicated than the example above, you might want to consider contacting a professional when:
- You are itemizing deductions – unless you have a good grip on alternative minimum taxes, you could cause yourself some additional tax by improperly prepaying property taxes or state income tax. There is also the possibility that you could miss out on some current year deductions by not prepaying some property or state income taxes…confused? Well now is the time to call the professional.
- You have a rental property – do you know the rules about passive activities, participation rules, grouping activities?…NO.. Then it’s time to call the professional.
- You are self-employed – do you know what constitutes space for a home office? How about when meals are limited and when they are not? How about gifts or vehicle expenses – actual vs mileage…Ya know, if you are self-employed you should just call a professional.
- You sold assets or have investment income – Do you know the difference between outside and inside basis? For that matter, do you know what basis means? Do you know what the following tax forms are for, 1099-S, 1099B, 1099INT, 1099Div, 1099G,Schedule K-1…NO…It’s time to call the professional.
- You supported someone who is not your child – do you know the dependant rules? Honesty, you might think that you do, but these rules can be complicated – if you supported someone who is not your child, you should contact a professional.
Well, I think that’s enough for now. If you are still interested in preparing your own return, here are some IRS free file tips:
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The IRS Presents:
The IRS Free File service provides free federal income tax return preparation and electronic filing for all taxpayers. All you need is access to a computer and the Internet and you can prepare and e-file your federal tax return for free.
Free File is offered through a partnership between the IRS and the Free File Alliance, a group of private-sector tax software companies. Since Free File’s debut in 2003, more than 27 million returns have been prepared and e-filed through this program.
Free File offers two options. The first is Traditional Free File, which includes approximately 20 tax preparation software products from which to choose. Taxpayers with 2009 incomes of $57,000 or less are eligible for this service. The second option is Free File Fillable Forms, which is an electronic version of IRS paper forms. All taxpayers can use Free File Fillable Forms to prepare and file tax forms electronically.
Use the following steps to file your return through IRS Free File:
Step 1. Get Started Access IRS.gov and click the Free File logo or go to www.irs.gov/freefile. You must access Free File companies through the official IRS Web site to qualify for the free service.
Step 2. Determine Your Eligibility If your 2009 income was $57,000 or less, you’re eligible for Traditional Free File’s easy-to-use, step-by-step software. If your income was higher, you are eligible for Free File Fillable Forms.
Step 3. Link to Free File Company Service If you opt for Traditional Free File, you can choose one of the approximate 20 offerings by reviewing which one fits your situation. You can click “I Will Choose A Free File Company” or “Help Me Find A Free File Company.” To get started with Free File Fillable Forms, just click the “Choose Free File Fillable Forms” button.
Step 4. Prepare and e-file your Federal Income Tax Return Either Traditional Free File or Free File Fillable Forms will allow you to file your return electronically, for free.
Both the fillable-forms option and the “full service” Free File offerings are only available through IRS.gov. Whether you are new to Free File or a returning taxpayer, you must access Free File through IRS.gov; otherwise, the provider may charge a fee.
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Stacie's Tax Stuff 