CARL WATTS & ASSOCIATES
January 17, 2011
Washington DC
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tel/fax 202 350-9002 |
It’s tax time again!
Nobody enjoys it ... unless there’s some sadistic character trait. |
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Fun or not, if you are one of the many who dread tax time, please keep on reading. We may not be able to make it more fun but at least we can help get you better organized and prepared to file your tax return. |
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First, do you need to file an income tax return?
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The IRS says that you must file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive.
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The fact is, even if you don’t have to file, there still are some very good reasons you may want to:
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Now that you know why it is better to file an income tax return anyway, should you do it yourself or have a tax preparer do it for you?
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Well, maybe you have heard the saying: “doing your own taxes is a lot like a do-it-yourself mugging.”
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Everybody agrees there are many online tools to help you with your tax return but unless you have a very simple financial situation or you have the time or inclination to read and inform yourself with all the specifics that may apply to your case, getting help from a professional tax preparer is what we recommend.
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The purpose of this newsletter is to help you prepare to meet with your tax preparer but, if you decide to do-it-yourself, the following suggestions can help you too.
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What kind of documents do you need for your tax return? To have everything organized, most tax prepares will provide you with an income tax organizer to help you supply all needed information.
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Whether you are an old-fashioned shoebox user or a well-organized person, here is a checklist of the most commonly needed papers.
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Identity records:
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Income records:
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Expense records:
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Interest (mortgage interest, home equity loan interest, home improvement loan interest, student loan, etc.);
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Medical expenses (eye care, dental care, doctors, prescriptions, insurance premiums, etc.);
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Contributions to IRA, Keogh, SEP, etc. and penalties for early withdrawals from saving accounts;
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Taxes paid (state income taxes, real estate and personal property taxes, etc.);
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Purchase or sale of real residence;
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Expenses from rental property;
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Educational expenses (1098-T);
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Educator expenses;
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Child and dependent care expenses;
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Household employees expenses (wages, unemployment tax, federal income tax, etc.);
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Alimony paid (not child support);
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Charitable contributions (cash and non-cash);
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Business expenses unreimbursed by your employer (vehicle expenses; travel expenses, office supplies, equipment, meals & entertainment, etc.);
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Moving expenses;
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Expenses for energy efficiency improvements to your residence;
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Losses from theft or casualties;
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Other miscellaneous expenses (job search expenses, gambling losses, tax preparation fees, etc.).
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Copies of previous year tax returns;
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Documents for unique tax situations.
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Additional tips:
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If you are uncertain about the usefulness of some of your documents, make a list or bring them with you to consult with your tax preparer;
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If you are missing forms (W-2’s or 1099’s for instance), contact your employer, bank or broker to ask for a copy, or you can get copies of your tax documents from the IRS;
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Make a list of all the questions you want to ask your tax-preparer;
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Remember, your tax preparer is not responsible for the information you supply, so please double check to make sure it is accurate;
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If you don’t have all your information on time, you can always apply for an extension, but keep in mind you still need to pay your due taxes by tax day, which for 2011 is on April 18;
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Make sure to keep copies of your tax returns (as well as all related documents) for at least three years starting on tax return due date;
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If filling out a tax organizer seems like a lot of work on your part, try to see it as a good exercise on how to organize your tax documents in the future, it will certainly look much easier next year.
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Above everything else, remember we are always here, ready to be of service to you. |
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