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How to Avoid Common Individual Tax Pitfalls

Filing your taxes can be a difficult process when you’re unfamiliar with the process. In fact, individuals who are inexperienced with today’s tax laws often end up making mistakes that can lead to a number of IRS penalties.  With tax season in full swing, there’s no better time to brush up on the ways you can avoid common individual tax mistakes and get the tax help you need.

• Check Your Math: Mistakes when calculating numbers or transferring figures from one tax form to another is one of the most common tax pitfalls affecting individuals and business alike. While tax software programs use built-in calculators to do the math for you, you’ll still want to double-check your math and ensure that your initial numbers are correct as even the most minor math miscalculations can lead to a correction notice from the IRS.
•  Remember All of Your Accounts: It is important to remember that you’ll need to file taxes for any additional income received during the fiscal year, including your savings, investment accounts, and multiple employment positions. Be sure to request 1099 forms from any employers that you have worked for over the year to avoid penalties or interest on unreported earnings.

• Choose the Right Filing Status: All individuals have five filing status options, each of which will make a difference in your overall tax bill. Make sure that you understand what each filing status entails before making a selection so that you choose the status that best describes both your personal and tax situation.
• Meet the Tax Deadline: A number of individuals face penalties and interest due to missing the tax deadline. A good way to avoid this is to start preparing your taxes at the beginning of the new year to avoid complications that may interfere with your ability to submit your tax forms on time.

The best way to ensure that you do not fall victim to these common tax pitfalls is to consult with an experienced tax help company. For more information on tax return help or accounting help, give IRS HELP, Inc. a call at (716) 827-3793. 

Do I Need to File a Tax Return If I Was Unemployed and Did Not Receive Any Unemployment Benefits?

One of the first questions unemployed individuals have is whether or not they are still required to file a tax return.

This video clip provides a general guideline regarding the tax responsibilities of unemployed tax payers. Individuals who had a gross income of approximately $9,700 may still have to file a tax return regardless of when they became unemployed. Similarly, individuals who received $900 dollars or more in unearned income, such as dividends and interest from investments, may still need to file. However, those who did not receive any income or unemployment benefits are generally not required to file a return. Watch this full video for more information. 

Our tax help specialists with IRS HELP, Inc. are ready to answer all of your tax questions. Find out if you are required to pay taxes or get the filing assistance you need by calling us at (716) 827-3793. 

Do You File Estimated Personal Income Tax? Read This Important Announcement Regarding Lower Tax Rates

The New York State Department of Taxation and Finance has relayed important information if you file estimated personal income tax. According to the New York State Department of Taxation and Finance, “Your first quarter estimated tax payment is calculated under new, lower tax rates and is due by the April 17th 2012 deadline.

Your income tax rate will be lower than last year if your taxable income is more than $40,000 for a married couple filing jointly, $30,000 for a head of household or $20,000 for single filers. If your employer withholds your taxes, your taxes are already being withheld at the lower rates. “

This legislation has created the lowest tax rates for middle-income New Yorkers in 58 years and has also reduced the tax rate for middle-class taxpayers, resulting in a tax reduction of $690 million.

For more information and to view the new personal income tax rate chart, visit the New York State Department of Taxation and Finance here.

Image Source: The New York State Department of Taxation and Finance

Make sure you’re taking advantage of all the tax deductions you can by consulting with a tax return help firm. Let the specialists with IRS HELP, Inc. ensure that you’re getting the most out of your return—call us at (716) 827-3793 to find out what we can do for you. 

Types of Taxable Income for Unemployed Taxpayers

Many people assume that unemployed individuals do not need to pay state or federal taxes at the end of each fiscal year. However, workers who have lost their jobs are still liable for certain taxes. The most important thing for unemployed taxpayers to understand is which types of income are taxable following the loss of a job. Check out these tips for unemployed tax payers to reduce your risk for tax penalties or interest fees:

• Compensation Benefits: Severance pay is taxable for the year in which it was received and should be included in your W-2. In addition, state unemployment compensation benefits up to 26 weeks and extended benefits up to an additional 13 weeks are also taxable. In order to avoid paying taxes on unemployment compensation benefits at the end of the year, you may consider having 10% withheld by completing a W-4V form.

• Money Withdrawn from Retirement Plans: Any money withdrawn from an IRA or qualified retirement plan may also be taxable if the funds are withdrawn during the current tax year before you reach an eligible age. Furthermore, you may also face a 10% tax for funds withdrawn before the eligible age.
• Gifts of Cash or Property: While food stamps or public assistance funding is not taxable, gifts of cash or property given by other individuals may be taxable. In order to be taxable, the gift must produce some kind of interest, dividends, or rent payments. Gifts that do not produce income, however, usually do not hold the recipient liable for any taxes.

The best step unemployed taxpayers can take is to discuss their tax requirements with an experienced tax help specialist. With several years of experience, our CPAs, tax attorneys, and tax return help agents with IRS HELP, Inc. are ready to help you determine which funds may be taxable even when you are unemployed. Get the information you need by contacting us at (716) 827-3793. 

Do I Have To File a Tax Return?

Even if you are not required to file taxes, you may still benefit by doing so. In this video, the Internal Revenue Service provides an overview on who is required to file a tax return. Generally speaking, your need to file taxes will vary based on your filing status, income, age, and what type of income you receive. Single individuals usually are required to file taxes if they earn over $9,000 each year.

Reduce your chances of receiving a notice from the IRS by working with a qualified tax help firm. Give IRS HELP, Inc. a call at (716) 827-3793 for more information on our tax and accounting services.