Avoiding Tax Problems
1. Review your tax return before sending it to the IRS.
2. Always verify your Form W-2 and all Forms 1099s to ensure they are correct.
3. Always check your math.
4. Make sure that all social security numbers included on the return are correct. An incorrect Social Security Number can cause the return to be rejected.
5. If you are married, try the married filing separate status for both spouses to see if the total from both returns results in paying less tax than filing a joint return.
6. If you are single and have a qualifying individual living with you, you may qualify for the head of household filing status.
7. If you are NOT filing as married filing separately, you may qualify for the earned income credit.
8. If you meet the definition of blindness or are 65 years of age or older, you may be able to claim an additional $1,150 deduction ($1,450 if single or head of household).
9. A portion of your social security benefits may be taxable. If all of your income plus one-half of your social security does not exceed the base amount, none of your social security will be taxable.
10. Make sure to include any credits or deductions carried over from the prior year tax return. For example, capital losses can be carried over from one year to the next.
11. You CANNOT take a personal exemption for yourself if you are claimed as a dependent on another return.
12. You should keep a Form 8606, Nondeductible IRA Contributions, for any contributions made to your traditional IRA when you cannot claim a deduction.
13. Generally, when computing your basis in stock sold this year, include any dividends that were automatically reinvested into shares since the time of purchase. This and any fees involved with the purchase of shares are considered cost basis and will reduce your capital gains.
14. Keep copies of all tax forms and documents that you send to the IRS. Always keep good records for reference in correspondence with IRS.
Liberty Tax® professionals are available for your tax needs. Please call your local Liberty Tax office for further information.