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Archive for May, 2011

Tips for Managing Your Tax Records

May 30th, 2011

After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

  1. Normally, tax records should be kept for three years.
  2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or
    rental property — should be kept longer.
  3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however,
    you should keep any and all documents that may have an impact on your federal
    tax return.
  4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged
    or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

Nine Facts on filing an Amended Return

May 27th, 2011

An amended
tax return generally allows you to file again to correct your filing status,
your income or to add deductions or credits you may have missed.

Here are nine
points the IRS wants you to know about amending your federal income tax return.

  1. Use Form 1040X, Amended U.S.
    Individual Income Tax Return, to file an amended income tax return.
  2. Use Form 1040X to correct previously filed Forms 1040, 1040A or 1040EZ. An amended return cannot be filed electronically, thus you must file it by paper.
  3. Generally, you do not need to file
    an amended return due to math errors. The IRS will automatically make that
    correction. Also, do not file an amended return because you forgot to attach
    tax forms such as W-2s or schedules. The IRS normally will send a request
    asking for those.
  4. Be sure to enter the year of the
    return you are amending at the top of Form 1040X. Generally, you must file Form
    1040X within three years from the date you filed your original return or within
    two years from the date you paid the tax, whichever is later.
  5. If you are amending more than one
    tax return, prepare a 1040X for each return and mail them in separate envelopes
    to the appropriate IRS campus. The 1040X instructions list the addresses for
    the campuses.
  6. If the changes involve another
    schedule or form, you must attach that schedule or form to the amended return.
  7. If you are filing to claim an
    additional refund, wait until you have received your original refund before
    filing Form 1040X. You may cash that check while waiting for any additional
    refund.
  8. If you owe additional 2010 tax, file
    Form 1040X and pay the tax before the due date to limit interest and penalty
    charges that could accrue on your account. Interest is charged on any tax not
    paid by the due date of the original return, without regard to extensions.

Form 1040X was recently redesigned. Previously the
form consisted of three columns; Column A-Original amount, Column B-Net change,
and Column C-Correct amount. The redesigned form now has just one column where
the Correct Amount is the only figure entered, making it easier to make changes
to previously filed returns.

Eight Things to Know If You Receive an IRS Notice

May 26th, 2011

IRS Marks Small Business Week by Showcasing Tools, Resources; Spotlights Tax Benefits Available in 2011

May 25th, 2011

IRS Begins Enforcement of New Return Preparer Rules

May 12th, 2011

IRS Office of Professional Responsibility Prevails on Appeal Against CPA

May 9th, 2011