The National Hustle

As you sit down sometime this weekend (the last one prior to April 15th) to get started on your tax return (tsk, tsk), make sure you review our last-minute tax tips, but these additional resources might also make your personal tax preparation a little less painful:

• IRS – Free File — The free file program is a fast, easy way to prepare and file your federal tax return online.  This program is available to you if your adjusted gross income is less than $56k.
• IRS – Last-minute reminders — These are reminders to those who have not yet filed a tax return, paid what they owe or requested an extension of time to file as the tax filing and payment deadline approaches. Continue reading

As April 15th continues barrelling towards us, here are five last-minute tax tips to help you get through the season:

1. 2008 stimulus payments are not taxable.  We mentioned this previously, but this is a common mistake, so remember that you do not need to include your stimulus payments as taxable income on either your federal or state tax returns.
2. Give your return one final review.  Review your tax ID number(s), recalculate your figures, and make sure all questions have been resolved.  An error on your tax return could be an unwanted headache and cause a delay in your tax refund.  Taking an extra 15 minutes to double-check your work now could end up saving you hours later. Continue reading

Earlier this week, the IRS announced “Super Saturday“, which consists of free tax help and if you make less than $42k, you can have your taxes prepared for free.   This Volunteer Income Tax Assistance (VITA) program is offered by hundreds of IRS community partners, which at Cal Poly consisted of undergraduate accounting students. 

Super Saturday takes place tomorrow, March 21st.  If you’re interested, the IRS has offered a listing of VITA locations in your community.

Good luck and let us know how it goes!

- Matt

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During my time spent in public accounting I had the opportunity to work daily on something most people don’t even like to see once a year: income tax returns.  While my day job no longer requires that I fill out clients’ 1040’s, 1120’s, and 990’s, I have managed to retain a few nuggets of tax knowledge.  And fortunately, I never had to worry about these types of tax issues.

With the individual filing deadline less than one month away, I’d like to share four of the most common income tax return misunderstandings that you’ve likely come across or will in the near future.

1. Getting “bumped up to the next tax bracket.” Years ago, a close friend of mine was complaining about his recent pay raise.  He told me, “Yeah, I got a ‘raise’, but I’m taking home less money now because I got bumped up to the next tax bracket!”  His thought process was not unusual, but I went on to explain how the federal graduated tax brackets work. Essentially, rather than his entire taxable income being taxed at a higher bracket, only the portion of income that exceeds the previous bracket ceiling is taxed at the new rate. More simply, if he was single and his taxable income (line 43 on 2009 Form 1040) was $60k in 2008, his tax would be calculated as follows:
   

   (a) First $8,025 of taxable income is taxed at 10%,
   (b) Next $25,425 is taxed at 15%,
   (c) Final $26,550 is taxed at 25%.

   The graduated brackets result in a tax of roughly $11k, not the $15k he was expecting.  His real “problem” had more to do with the next misunderstanding.

Continue reading

April 15th is approaching quickly and if you’re like most Americans, you (1) Hate preparing your taxes, and (2) Wait until the one-month warning before you start getting things together.

I will be posting on common income tax misunderstandings later this week, but in the meantime, take a look at our resource links for tax preparation.  They include cost-effective options for “simple” tax returns (no additional schedules), self-preparation, and even a regional CPA firm I have a bit of history with.

If you need more guidance or have any tax-related questions, leave them in the comments and I’ll do my best to help you out.

- Matt

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