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May 2010 Newsletter

 

Living in a Post-April 15 World. Help! The IRS is in My Mailbox. And How Shoebox Receipts Are Now So Last Year.

You’ve Filed. Now What?

 You’ve filed your federal tax return. The tax season is behind us. Now what should you do and what should you expect? 

Show Me The Money!
Go online to check the status of your 2009 refund 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2009 tax return available because you will need to know your filing status, the first Social Security number shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:

• IRS.gov, and click on "Where’s My Refund"
• Call 1-800-829-4477 24 hours a day, seven days a week for automated refund information
• Call 1-800-829-1954 during the hours shown in your tax form instructions

Do I really need to keep all this paper?
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer. If you aren’t exactly sure what to keep—keep it.

Moving On Up?
If you move after you filed your return, send the IRS a Form 8822, Change of Address. Expecting a refund through the mail? Also file a change of address with the U.S. P.S.

Making Mistakes Less Painful
Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return.

Don’t Panic! A Few Things to Know If You Receive an IRS Notice

The Internal Revenue Service mails out millions of letters and notices to taxpayers every year. So, if one shows up in your mailbox, don’t slam it shut and act as if you haven’t seen it. Here are a few things you should know about IRS notices – just in case one does show up and it’s addressed to you. 

1. Don’t panic. Many of these letters can be dealt with simply and painlessly.  
2. The IRS may contact you for a number of reasons from notices that request payment to requests for additional information. Notices normally cover very specific issues about your account or tax return. There is no “gray area” when it comes to the IRS.
3. Each letter and notice offers specific instructions on what you are asked to do. 
4. Receive a correction notice? Review it and compare with the information on your return. 
5. Agree with the correction to your account? Usually no reply is needed unless a payment is due or the notice directs otherwise.
6. Don’t agree with the correction the IRS made?  Respond as requested. Mail a written explanation of why you disagree and include documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice.  
7. If you have a question that needs attention right now, call the phone number listed on the notice. Have your tax return near to help you respond to the inquiry. 
8. Keep copies of any correspondence with your records. 
9. Take another deep breath. You have just taken a very big step in the right direction. 
     

Should It Stay Or Should It Go?

There are many so many records and receipts that may help document items on your tax return. And they’re items and documentation you will need, if the IRS selects your return for review. Here are some “rules of thumb” about keeping good records:

1. Normally, tax records should be kept for three years.
2. Some documents —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. Keep any and all documents that may have an impact on your federal tax return.
4. Keep 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 claimed.  

Younger Workers—Retirement Is Closer Than You Think

The ink is barely dry on your degree. Your office has a door. Your business cards are being printed. Save for retirement? That’s too far off to worry about now.

Financial experts advise younger workers to open IRA accounts or to take advantage of employer-provided retirement programs to get a head start on their savings. Follow such advice and there can be benefits at tax filing time as well as a more comfortable retirement.

For younger workers, one of the most important choices is to open a Roth IRA, which allows tax-free distributions upon retirement, or the traditional IRA, which allows contributions to be deducted at filing season and then taxed at distribution.

Walter Updegrave of Money Magazine, strongly advised a 30-year-old worker to enroll in his employer’s retirement plan, as it’s common for older workers to regret not devoting more resources to long-term savings.

"And make no mistake: the longer you put off saving, the harder it is to accumulate enough dough for you to maintain the standards you enjoyed during your career," said Updegrave.

So, rather than squirreling your money away in pickle jars or under your new futon mattress, the best investment in the future of your career may be to talk to a tax preparer about retirement options, as well as the potential tax benefits.

Shoeboxes Jump Into the Digital Age

Gone are the days of shoeboxes full of receipts. Gone is the mad scramble digging through your glove compartment to find mileage logs. Liberty Tax Service has launched an online system to revolutionize the way you track expenses—Liberty Tax Expense system.

Liberty Tax Services is the only tax preparation company providing an easy-to-use, simple and economical way to document your deductible business expenses. The Liberty Tax Service Expense is designed to provide the necessary tools to document, preserve, share and summarize all your business expenses from anywhere in the world where you have Internet access. 

For less than 70 cents a day, you can enter your day’s expenses and mileage into an online form from anywhere in the world. Create a folder. Add up your receipts. Categorize them. Enter the receipts and file them away. When tax time comes along, print your report and bring it to the nearest Liberty Tax Service office.

Liberty Expense Tracking is an essential service for anyone who is self employed or needs to keep track of any type of employment expenses. To learn more about Liberty Expense Tracking, call 1-866-871-1040 or visit www.libertytax.com to find the local Liberty Tax Service office nearest you.