It Can’t Be Almost April 15th Already!!!

For those of you who can’t keep up, here is your reminder that April 15th is Monday and time to file your income tax return for 2012. But don’t panic! Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember, this is an extension of time to file; not an extension of time to pay. However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief.

Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. Taxpayers should file, even if they can’t pay the full amount due. Here are further details on the options available.

More Time to File

People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly 10.7 million extension forms received by the IRS last year, almost 5.8 million were filed electronically.

Some taxpayers get more time to file without having to ask for it. These include:

• Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 17 to file. Tax payments are still due April 15.
• Members of the military and others serving in Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces Tax Guide.
• People affected by certain tornadoes, severe storms, floods and other recent natural disasters. Currently, parts of Mississippi are covered by a federal disaster declaration, and affected individuals and businesses in these areas have until April 30 to file and pay.

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Get Ready to Pay – Estimated Tax Payments

Six Tips on Making Estimated Tax Payments

Some taxpayers may need to make estimated tax payments during the year. The type of income you receive determines whether you must pay estimated taxes. Here are six tips from the IRS about making estimated tax payments.

1. If you do not have taxes withheld from your income, you may need to make estimated tax payments. This may apply if you have income such as self-employment, interest, dividends or capital gains. It could also apply if you do not have enough taxes withheld from your wages. If you are required to pay estimated taxes during the year, you should make these payments to avoid a penalty.

2. Generally, you may need to pay estimated taxes in 2013 if you expect to owe $1,000 or more in taxes when you file your federal tax return. Other rules apply, and special rules apply to farmers and fishermen.

3. When figuring the amount of your estimated taxes, you should estimate the amount of income you expect to receive for the year. You should also include any tax deductions and credits that you will be eligible to claim. Be aware that life changes, such as a change in marital status or a child born during the year can affect your taxes. Try to make your estimates as accurate as possible.

4. You normally make estimated tax payments four times a year. The dates that apply to most people are April 15, June 17 and Sept. 16 in 2013, and Jan. 15, 2014.

5. You should use Form 1040-ES, Estimated Tax for Individuals, to figure your estimated tax.

6. You may pay online or by phone. You may also pay by check or money order, or by credit or debit card. You’ll find more information about your payment options in the Form 1040-ES instructions. Also, check out the Electronic Payment Options Home Page at IRS.gov. If you mail your payments to the IRS, you should use the payment vouchers that come with Form 1040-ES.

For more information about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. Forms and publications are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Publication 505, Tax Withholding and Estimated Tax
• Form 1040-ES, Estimated Tax for Individuals
• Electronic Payment Options Home Page

IRS YouTube Videos:

• Estimated Tax Payments – English | Spanish | ASL

Saving Cents

Everyone can use a few ideas on how to stretch their dollars and save a few cents. Give these a try and start making the most out of your hard earned money.

1. Replace processed foods with homemade.
2. Cancel or reduce a service.
3. Piggy bank your change.
4. Go camping on your next vacation.
5. DIY your repairs & maintenance.
6. Buy clothing off season.
7. Research online before you make purchases.
8. Unplug…everything.
9. Find cheap gas at gasbuddy.com
10. Time your shopping during Sales Tax Holidays in your state.
11. Check out free Nook/Kindle books.
12. Visit your local library.
13. Make a list & check it twice. Don’t impulse buy!
14. Refer to shopping deals by the month to plan your purchases.
15. Get a programmable thermostat.
16. Teach yourself with DIY videos online.
17. Buy multipack items (3 toothpastes/package) & combine store coupon with manufacturer coupons for each item in package at BJ’s
18. Buy gift cards for local & national restaurants & retail chains at 20% off at Costco
19. Dine at home.
20. Make charitable donations for a tax deduction if you itemize.
21. Increase your retirement savings & reduce your taxable income.
22. Search the internet for coupons before you buy.
23. Have meatless Monday dinners.
24. Use SmartyPig to help you save money.
25. Sell your phone, iPad or Mac on Gazelle for $$$$.
26. Consignment shop online with ThredUP
27. Create a No Spending Day once per month.
28. Buy non-persishable items in bulk.
29. Brew it yourself & skip the coffee shop prices.
30. Consider increasing your insurance deductibles to save on insurance premium costs.
31. Plant a garden.
32. Replace costly cleaning chemicals with the basics of using water, vinegar and baking soda.
33. Hang your laundry up to air-dry.
34. Turn the water off while you brush your teeth.
35. Eat food in season.
36. Never grocery shop when hungry.
37. Pay your bills online and save postage.
38. Towel dry your hair instead of using a hair dryer.
39. Reuse & Recycle.
40. Give up soda.

Happy saving!

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First Time Home Buyer Credit Account Tracking

Need to know your account balance for the repayment of your First Time Homebuyer Credit from 2008? Look no futher through the stacks of paper…check out the tracking provided by the IRS by clicking the link:

First Time Homebuyer Credit Account Look-Up

FREE Tax Help for Military

Many members of the military are able to get their tax returns prepared for free on or off most military bases including overseas locations. The U.S. Armed Forces participates in the Volunteer Income Tax Assistance program sponsored by the IRS. VITA provides free tax advice, tax preparation, tax return filing and other tax help to military members and their families.

Here are four things you need to know about free military tax assistance:

1. Armed Forces Tax Council.  The Armed Forces Tax Council oversees the military tax programs offered worldwide. AFTC partners with the IRS to conduct outreach to military personnel and their families. This includes the Army, Air Force, Navy, Marine Corps and Coast Guard.

2. Volunteer tax sites.  Military-based VITA sites staffed with IRS-trained volunteers provide free tax help and tax return preparation. Volunteers receive training on military tax issues, such as combat zone tax benefits, filing extensions and special benefits that apply to the Earned Income Tax Credit.

3. What to bring.  To receive free tax assistance, bring the following records to your military VITA site:

• Valid photo identification
• Social Security cards for you, your spouse and dependents, or a Social Security number verification letter issued by the Social Security Administration
• Birth dates for you, your spouse and dependents
• Wage and earning statement(s), such as Forms W-2, W-2G, and 1099-R
• Interest and dividend statements (Forms 1099)
• A copy of last year’s federal and state tax returns, if available
• Checkbook for routing and account numbers for direct deposit of your tax refund
• Total amount paid for day care and day care provider’s identifying number. This is usually an Employer Identification Number or      Social Security number.
• Other relevant information about income and expenses

4. Joint returns.  If you are married filing a joint return and wish to file electronically, both you and your spouse should be present to sign the required forms. If both cannot be present, you usually must bring a valid power of attorney form along with you. You may use IRS Form 2848, Power of Attorney and Declaration of Representative for this purpose.

There is a special exception to this rule if your spouse is in a combat zone. The exception allows a spouse to prepare and e-file a joint return with a written statement stating the other spouse is in a combat zone and unable to sign.

IRS Publication 3, Armed Forces’ Tax Guide, has more helpful information for members of the military. You can download free publications from the IRS.gov website or order them by calling 800-TAX-FORM (800-829-3676).

If your aren’t sure how to take advantage of this free help, call me. Happy to help those who serve!

Tax Credits to Reduce Your Taxes

A tax credit reduces the amount of tax you must pay. A refundable tax credit not only reduces the federal tax you owe, but also could result in a refund. Don’t lose out claiming these credits if you qualify.

1. The Earned Income Tax Credit is a refundable credit for people who work and don’t earn a lot of money. The maximum credit for 2012 returns is $5,891 for workers with three or more children. Eligibility is determined based on earnings, filing status and eligible children. Workers without children may be eligible for a smaller credit. If you worked and earned less than $50,270, use the EITC Assistant tool on IRS.gov to see if you qualify. For more information, see Publication 596, Earned Income Credit.

2. The Child and Dependent Care Credit is for expenses you paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent. The care must enable you to work or look for work. For more information, see Publication 503, Child and Dependent Care Expenses.

3. The Child Tax Credit may apply to you if you have a qualifying child under age 17. The credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return. You may be required to file the new Schedule 8812, Child Tax Credit, with your tax return to claim the credit. See Publication 972, Child Tax Credit, for more information.

4. The Retirement Savings Contributions Credit (Saver’s Credit) helps low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or a retirement plan at work. The credit is in addition to any other tax savings that apply to retirement plans. For more information, see Publication 590, Individual Retirement Arrangements (IRAs).

5. The American Opportunity Tax Credit helps offset some of the costs that you pay for higher education. The AOTC applies to the first four years of post-secondary education. The maximum credit is $2,500 per eligible student. Forty percent of the credit, up to $1,000, is refundable. You must file Form 8863, Education Credits, to claim it if you qualify. For more information, see Publication 970, Tax Benefits for Education.

Make sure you qualify before claiming any tax credit. You can always visit IRS.gov to learn about the rules. The free IRS publications mentioned are also available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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Tax Deadlines Fast Approaching – March 15th

 March 15th is the deadline to file Form 1120 Corporate Income Tax Returns and Form 1120S Subchapter S Corporate Income Tax Returns. If you aren’t able to finalize your return, you will need to file a federal extension on Form 7004, and any applicable state extension form, as required by your state. Taxes due for Corporations (other than Subchapter S) will need to be paid by March 15th. Depending upon your state, you may owe State taxes such as franchise or net worth tax. Filing an extension does not extend the time to pay any taxes owed. To avoid underpayment penalties, all taxes owed should be paid by the March 15th deadline. Tick, tick, tick…time is running out!