Posts Tagged ‘Standard deduction’

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Tax Returns Errors = Delay in Refunds

In Accounting & Finances,Business,Taxes on June 1, 2014 by Sufen Wang Tagged: , , , , , , , ,

homerMake No Mistake About It: Tax Return Errors Delay Refunds

Tax day has come and gone, and now you just have to wait. And wait and wait and wait and wait a second, what’s taking your refund so long? The delay might be due to a blooper on your tax return – the IRS will need to contact you to correct it. You’re more likely to make a mistake if you file on paper instead of IRS e-file – twenty times more likely in fact.

identity_theft3For example, you might have written in the wrong SSN or even forgot to put it at all. That’s usually the case – we forget the most important thing because we’re so focused on the little details. It’s okay to peek at your SSN card to make sure you got your own number right.

Everybody has crazy spellings of their names nowadays with silent consonants, extra vowels, and missing letters all over the place. Be sure to spell the names of everyone on your tax return exactly as they’re printed on their SSN cards.

help+calculatorFiling status might seem like a guessing game. A lot of folks accidentally file as Head of Household instead of as Single (the former does sound more impressive). Luckily, the Interactive Tax Assistant can give you a helping hand with filing status.

OLYMPUS DIGITAL CAMERASimple arithmetic gets complicated fast when a lot of numbers are involved. If you’re tempted to show that calculator who’s boss and do everything with the old noggin’, don’t. Math mistakes are a common error on tax returns, especially when you don’t have tax preparation software doing the calculations for you.

stop-read-instructionsRead all the instructions. This goes for everything in life, but is especially important when it comes to baking, setting up expensive electronics, and figuring tax credits or deductions. A lot of filers botch up when figuring their EITC, Child and Dependent Care Credit, and the standard deduction.

Choosing direct deposit will get you your refund fastest. However, choosing direct deposit and using the wrong bank and account numbers on your return is a sure way to get your refund slower.

pen_signatureWhew, you made it through the tax return, double-checking your math and ensuring everyone’s names have all the extra letters they’re supposed to have. But all that work will be for nothing if you don’t put your John Hancock on there, along with the date. And go find your spouse if you’re filing jointly – the return isn’t valid unless both of you sign.

You can’t exactly sign with a pen when you’re filing electronically. Well I mean you can try to, but your computer screen won’t look too great afterwards. Instead, use a PIN to sign the return. If you know last year’s e-file PIN, use that. If not, enter the Adjusted Gross Income from your originally-filed 2012 federal tax return, but don’t use the AGI amount from an amended or IRS-corrected 2012 return. 

internet-32340_640To err is human – which is why it’s best to rely on IRS e-file in the future.

Sufen Wang, M.S.Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

 

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Determining Your Correct Filing Status

In Accounting & Finances,Business,Culture,Taxes on April 27, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900151049Single, Married, or Head of Household?

Okay, seriously, now that the tax deadline, April 15, had passed, and tax extension had filed; you really need to start working on your returns!

What’s your status? No, not your Facebook status, your income tax return filing status. Filing status can impact the tax benefits you receive, the amount of your standard deduction, and the amount of taxes you pay. It can even – drum roll please – affect whether you have to file a federal income tax return.

MH900019119Classifying your relationship as “It’s Complicated” will only annoy the overworked IRS Agent. You must choose from five filing statuses on a federal tax return, with the three most common being “Single,” “Married Filing Jointly,” and “Head of Household.”

MH900237191Your marital status on the last day of the year is your marital status for the entire year. So even if you had a New Year’s Eve wedding, in tax return terms, you were married for all of 2012. A married couple can either file together using the Married Filing Jointly status, or separately, in which case each person’s filing status would be Married Filing Separately. Pretty self-explanatory.

If your spouse died during 2012, you usually can still file a joint return for that year. Qualifying Widow(er) with Dependent Child status applies only ifyour spouse died during 2010 or 2011, you have a dependent child, and you meet certain other conditions.

MH900237195If you aren’t married, divorced, or legally separated, in general your filing status will be Single. However, you might be able to file as Head of Household, which has a higher standard deduction and lower tax rates than the Single filing status. To claim Head of Household, you can’t be married and you must have paid more than half the cost of maintaining a home for yourself and a qualifying person. Head of Household is the status most often claimed in error, so make sure you meet all of the requirements.

You can and should shop around for the best income tax deal. If more than one filing status fits you, choose the one that allows you to pay the lowest taxes. IRS e-file will help you determine the correct filing status, and you can also use the Interactive Tax Assistant at IRS.gov.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Year End Charity Giving Tips from the IRS

In Accounting & Finances,Business,Family,Taxes on January 16, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900432375Happy New Year!  But Wait! 

Do not close the book just yet on year 2012…

Year 2012 is past us and hopefully you rang in the new year with a bang. Although the party is over, you can ensure you get more bang for every buck or item you donated in 2012 by reviewing these tips about year-end charity donations
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Contributions are tax deductible in the year made. As long as the donation was submitted before the end of 2012, it can be deducted for 2012 – even the check hasn’t been cashed or the credit card bill paid yet. However, take my word for it, the IRS won’t just take your word for charitable acts. To deduct monetary donations, you must have a bank record or written document from the charity with the name of the charity, the contribution amount, and the date.
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Also be aware that deductible donations must be made to “qualified” organizations. Only churches, synagogues, temples, mosques, government agencies, and anything on the Exempt Organizations Select Check have the IRS’ seal of approval. So although you might have splurged on gifts for yourself, you still don’t count as a qualified organization – no matter how often you call yourself a charity case.
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MH900044904Maybe you couldn’t spare some change and instead donated clothing or household items to a charity. In general, those items must have been in good used condition or better in order to be deductible. That means the bag of ratty old pajamas you left at the Salvation Army drop site probably can’t be deducted. And if you can’t get a receipt, at least keep a detailed written record of every donation.

MH900297557Remember that individuals can only claim deductions for charitable contributions if they itemize their deductions on Form 1040 Schedule A. That form will help you figure out whether itemizing is better than using a short form (Form 1040A and 1040EZ) to claim the standard deduction. Basically, you’ll have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Of course, whether or not you end up deducting your donations, giving is something you should do year-round. 

Remember the old saying….”Spend a little, Save a little, and Give a little…”

On the Money,  Sufen Wang,  Wang Solutions

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Standard Deduction vs. Itemized:

In Accounting & Finances,Business,Taxes on April 11, 2012 by Sufen Wang Tagged: , , , , , , ,

Find Your Perfect Match

To itemize or not to itemize? That is the question with personal tax returns due April 17. When choosing between a standard or itemized deduction, you’ll want to pick the method that gives you the lower taxes.
 
To do this, first figure out the amount of your standard deduction. It’s based on your filing status and can change each year from inflation adjustments. For 2011, the amounts are:

Single: $5,800
Married Filing Jointly:   $11,600
Head of Household:   $8,500
Married Filing Separately:  $5,800
Qualifying Widow(er):  $11,600
 
These numbers are higher for taxpayers who are blind and/or 65 or older. If the total amount you spent on qualifying expenses is more than your standard deduction, you can usually benefit by itemizing.  
 
However, not everybody gets to choose between itemized and standard deduction. Are you a nonresident alien, dual-status alien, or an individual who files returns for periods of less than 12 months due to a change in accounting periods? If you answered yes to any of the above, you are not eligible for the standard deduction.
 

Those in the “Married Filing Separately” category have some extra rules when it comes to deductions. If one spouse itemizes deductions, the other spouse must also itemize to claim their allowable deductions. Better dust off those communication skills and make sure you and your spouse are on the same page, that is “standard or itemized?”  Hit that “refresh” button and make sure both of your tax returns are in sync….

Now that you’ve decided on standard or itemize, the next item on your list should be to finish your taxes…
 
On the Money,
Sufen Wang
Wang Solutions