START PREPARING FOR 2012 TAXES

You are finally breathing a sigh of relief after completing your 2011 taxes. However, you feel that you overpaid or were  not able to take advantage of all the deductions. Well, you can avoid this next year when you are ready to file your taxes for 2012. However, to make sure you do not overpay or are not overlooking any deductions you have to get your ducks in a row this year. Here are the following strategies you need to follow to make sure you have a smoother tax filing:

1) Check your Withholding &  Payroll Deductions - If your Refund check was big this year, you can adjust you paycheck withholding so that you can get a bigger paycheck. If your withholding is adjusted correctly you don't have to wait till the end of the year for your money rather right away. However, if you owed taxes, you can adjust your withholding to be higher so that you don't have to write a big paycheck to the IRS at the end of the year.Make sure your Paycheck deductions like Health Insurance, Retirement Contributions etc are being correctly withheld and reported by your employer. Any of these deductions reported incorrectly could make an impact on your Tax liability at the end of the year. It is easier to get this fixed early on than later.

2) Organize your 2011 Tax Returns and all future Tax Documentation & Receipts  - Make sure your 2011 Tax Returns and all the supporting documents are kept in a secure place. In case, you get a notice from the IRS, if you have all your paperwork available to you it will be easier for correspondence. Also, for 2012 return it will prove as a good reference tool. Organization is the key to a better prepared 2013 Tax Return. Make sure you keep all your documents related to 2013 tax returns in one place. Make sure all family members know of this place as well so that all your documents are easier to find and you do not miss any important information for your record keeping. Ex. Charitable Contributions Receipts, Sales Tax Receipts etc. As long as it is all in one place it does not make a difference if it is in a file, shoe box or a drawer. Consistency and persistence pays off during tax time

3) Strategic Itemized Deductions & Credits - If you were not able to itemize your deductions this year or missed the itemized deductions by just a few dollars, now is a good time to plan ahead and make sure you are able to take full advantage of all the deductions and credits available to you. See Schedule A for all the expense categories applicable to you and make sure you are taking full advantage of it. For example, by making an extra mortgage payment before the end of the year, making sure you pay your medical bill ahead of time, charitable donations you can make sure you will take full advantage of Itemized Deductions.

4) Update yourself with any tax law changes - IRS updates its website the whole year about any tax law changes to affect your Tax Returns. Check the IRS website regularly to make sure if any change is applicable to you. For example, after 2012, the American Opportunity Tax Credit which is a credit for higher education expenses will no longer be valid. This credit allows you to get a maximum of $2500 of tax credit. To take full advantage it might be a wise idea not only to pay 2012 tuition but also pay 2013 tuition in advance to get the maximum advantage of this tax credit.

5) Let a Tax Professional guide you - Choose a tax professional early on who can help you be more prepared for doing your tax returns. If you work with a professional early in the process you will save yourself a lot of frustrations during tax time regarding strategies or last minute issue. Choosing a tax professional is a very serious issue and should be done very carefully. Let Maxim Tax Services help you with this decision. Call us at 954-362-9927 for more information or visit us at www.maximtaxservices.com.

MISSED TAX DEADLINE – APRIL 17, 2012 – OPTIONS AND HELP FOR TAXPAYERS

The last date to file your tax returns was April 17, 2012 and if you missed the deadline here are some options that might help you:

1. File your taxes ASAP- If you owe taxes files your taxes right away. The longer you wait to file your taxes the more you have to pay the IRS in interest and penalties. So, to avoid the high fees the sooner the IRS receives the return the better
2. EFILE your taxes – To make sure the IRS receives your tax filing soon, EFILE your taxes which can be done till October 15, 2012
3. File your return for free – If your income was less than $57,000 you can qualify to file your return for free through IRS Free File. For taxpayers who earn more than $57,000 and can file their own tax returns, you can use the Free fillable forms on IRS' website which allows you to do basic math calculations to complete your taxes.
4. Pay the most you can of your taxes – For taxpayers who owe the IRS, it is wise if you can pay as much as possible even though it is less than what you owe. After you pay the most, apply for Installment Agreement for the remaining balance. Taxpayers who file and pay late have to pay a penalty and interest. This will keep your tax penalty low.
5. Installment Agreement – Taxpayers who owe money and cannot afford to pay the full amount at once, can request a payment agreement with the IRS. You can file by mail using form 9465 or you can do it online on irs.gov in the IRS Online Payment Agreement Application section. Although, the installment agreement will not waive the interest charges you owe but the IRS can reduce the interest and penalty charges if there was a reasonable cause associated with low payment.
6. You may be due a Refund - You may be due a Refund from the IRS even if your income in below the normal filing requirements due the amounts withheld from your wages, quarterly estimated payments or due to special credits. For taxpayers who are due a Refund, you will not be charged any interest and late payment penalties but can forfeit your refund if you do not file your return within three years.

Form 1040X – A Band-Aid for Incorrect Form 1040.

Form 1040X – A Band-Aid for Incorrect Form 1040.

Last minute tax filing stress, lack of information or plain oversight causes taxpayers to flounder on their Form 1040. But it’s okay to make mistakes, provided you correct them in time, within 3 years, in this case.

IRS gives you a chance to correct your tax filing mistakes on Form 1040X. Form 1040X will be your new tax return. It can be used to

·         Correct forms 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ.

·         Make certain elections after the prescribed deadline.

·         Change amounts previously adjusted by the IRS.

·         Make a claim for a carryback due to loss or unused credit.

Explain your mistakes:

The IRS needs to know why you are filing Form 1040X. The possible answers could be you received another W-2 after filing the return, forgot to claim child tax credit, forgot to claim a tuition and fees deduction, changed your filing status, did not add sales tax on your new car etc. Part III of Form 1040X gives you the chance to explain your mistake.

How to file:

All schedules and forms should be attached to Form 1040X in the order of the “attachment sequence no.” shown in the upper right corner of the schedule or form. IF there are supporting documents, they should be arranged in the same order as they were in the last return.

If you owe tax, enclose your check or money order in the envelope with the amended return.

Amended Tax returns cannot be e-filed. They have to be mailed in. If you are filing Form 1040X:

1.       In response to IRS notice, mail it to the address shown in the notice.

2.       Received reimbursement for a hurricane-related loss, mail it to Department of the Treasury, Internal Revenue Service Center Austin TX 73301-0255.

3.       With Form 1040NR or 1040NR-EZ, mail it to Department of the Treasury, Internal Revenue Service Center Austin TX 73301-0215.

Fact:

In 2010, the reported national average of time burden was 7 hrs, and cost was $100 per 1040X taxpayer.