Turbo Tax for the Self-Employed

Everyone knows that they have to pay taxes. For people in the US this includes federal, state, Medicare and Social Security. It may also include other things such as local taxes depending on where they live. A person that works for someone else will see a certain percentage automatically removed from their paycheck to cover these taxes. A self-employed person has to take care of these taxes themselves. Utilizing a program such as TurboTax can make this task much easier for anyone.

Social Security and Medicare taxes together equal to 15.3% of a person’s yearly income. When a person works for someone else, the boss covers 6.2% of the Social Security. As a self-employed individual they are responsible for the entire amount.

By using TurboTax any self-employed individual is guaranteed to file their taxes correctly. The software will ask for either a w-2 or 1099 at the beginning. If the 1099 is chosen then TurboTax knows automatically that this is a self-employed individual. It will then automatically calculate the Social Security and Medicare taxes for the user.

Another useful feature is that the software will ask for you any business deductions that you may have. For a self-employed person this can include equipment such as computers, phones, fax machines, or Internet service. The software will walk you through the entire process to help you make sure that you get all the deductions that are you entitled to.

TurboTax will also warn you should you miss important things such as placing zero in for the amount of your tax. A warning box will appear informing you that such an entry increases your chance of audit. Such warnings help anyone to ensure their taxes are filled out correctly and accurately before they are filed.

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Wise Ideas about Taxes

Many people normally like to skip filing tax returns and they ignore paying taxes. No wonder that it is quite a tedious process and might take people from days to weeks to complete the process. Some of the people even need to pay interest to the IRS. But this mistake is intentional on the part of anybody. It’s only a lack of proper tax preparation. In majority of the cases, these people rush at the final moment to file their returns. The most common reasons of why people get noticed by the IRS are lack of preparedness and proper attention to detail. We have to face it. Audits are no criminal activities, but they are definitely embarrassing and distressing at times.

With a good head start and right preparation, one can easily file tax returns correctly and pay taxes accurately. A good head start helps the taxpayers getting more lead time for preparing and organizing the requisite documents. It’s not a good idea to blindly follow tax software; it is important to give some time for reviewing and analyzing your past returns, present tax laws, and current applications. The tax laws keep changing from time to time; so it’s important to keep yourself updated. You should look for certain things in the revised laws which might affect your deductions and returns. It is useless to plead ignorance of the tax laws in front of the IRS or the government; this is simply unacceptable as everyone is supposed to know the tax laws. In the particular case of getting audited earlier, each taxpayer is recommended to examine their present applications. IRS has the opinion that taxpayers keep on repeating the audited mistakes. One very common mistake that many people make is to forget additional source of income. The IRS looks for any forms of disparity by comparing the issued forms with the reported income on the tax returns. On similar issues, the tax returns are normally checked with the social security records for matching the names and the social security numbers. The forms which are issued wrongly need to be returned back for corrections to the issuer.

Due to rushed work, another common mistake is wrong calculations. Although the tax software proves to be a boon for late filers, it is quite handy for early filers as well for checking their computations. You can normally avoid paying tax charges by making the right calculations on your returns. Even if you can’t pay your taxes because of your present financial condition, you’re always encouraged to do your return filing. The IRS also offers installment facility for paying taxes. These things are sensitive and may be subject to auditing randomly. In case the taxpayers are asked for auditing, they are advised to file returns of at least 6 years. IRS is always ready to provide help and support to the taxpayers as finally the agency is going to bear the burden of all tax issues. If there is good preparation, tax returns may be filed quite easily without any headache.

Try Turbo Tax 2009 or Tax Act 2009 Free Today!

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Donations to Haiti and their Tax Deductions

The IRS has new rules designed to assist those making donations to Haiti in a relief effort after their recent earth quake. Your 2010 donations can be deductible in 2009 if you follow the guidelines provided. First, your donations must be going directly to aid the Haitian people affected by the natural disaster.

There is a specific window of time that your donations must be made in to be eligible. The start date is the day we first heard about the earthquake, January 11th, and the final date is March 1, 2010. Additionally, the donations must be made to qualified chartable organizations and not to families directly.

Cash contributions made by a number of different formats are only allowed. These formats include texting, check, credit card or debit card. Finally, the one provision that might be difficult for some is the need to itemize your deductions. Therefore, if you normally file a 1040EZ tax return, you will need to complete the long form 1040 with a Schedule A attached. Use a program like TurboTax or TaxAct to make completing the extra forms easy. If you do not claim the donations for 2009, you can still claim them for 2010.

See IRS Publication 526 and Publication 3833 for addition details.

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