Goodbye 2011, Hello Tax Returns!

January 23, 2012 — Leave a comment

Good news, there are now two extra days to file federal income tax returns (April 17) because of the weekend and Emancipation Day. However, this should not deter a taxpayer from preparing their returns in a timely manner. The chance of errors on their returns significantly increases when waiting until last minute to file them with the IRS and the faster a return is filed, the faster a refund is obtained. The IRS has made new accommodations to tax returns this year that may ease the whole process for the individual taxpayer.

The IRS Free File program is a completely free electronic tax return system that has been instituted this year. In order to be eligible, the taxpayer must earn under $57,000 or less annually (which covers 70% of taxpayers). However, if he/she earns more or prefers an alternative method of filing his/her tax returns, there are plenty of other options to choose from. Some notable programs such as Turbo Tax and H&R Block at Home offer some free programs depending on the simplicity of the returns or first-time usage. Further, senior citizens, military personnel, and low-income households may be eligible for free tax preparation around their respective communities.

This year, the IRS will accept all e-filed tax returns, regardless of what program was used. However, the IRS has become increasingly stricter regarding the Preparer’s Tax Identification Number (PTIN) on the returns. Be sure there is a PTIN on the returns prior to filing.

Some are other key issues to note are taxpayers that converted their traditional retirement accounts to Roth accounts in 2010. They were given the option of spreading the tax payments over 2011 and 2012, thus the final payment on their Roth is due this year. Furthermore, stockbrokers must report how much investors paid for their common stocks to determine how much an investor owes or deducts based on profit or loss.

J.D.Katz, P.C. encourages everyone to file his or her tax returns in the most effective manner possible and with plenty of time to spare.

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