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Tax Tip: Things You Have To Do Before Submitting Your Returns

August 24, 2012 By

It is vital that you carefully review your completed tax returns before mailing them to the IRS. It really doesn’t matter if you hired a tax preparer because you are legally responsible for any information contained on the tax return forms. If the forms are being submitted electronically, it is still important that you take time with your tax preparer to review every detail before clicking “SUBMIT.” To avoid common errors on your tax returns, consider the following factors.

Social Security Numbers: It is mandatory that the right Social Security numbers be entered on all the pages of your tax returns. You must therefore, double check that the numbers on each page are correct, as your refunds can be held up if a wrong number appears. Did you change your official name in the year because of either marriage or divorce? Please apply for a new Social Security card before filling the forms using your new last name.

Proper Signing: Do you file joint tax returns with your spouse? Then ensure that both of you sign the return. If during the year your spouse passed away, you need to write “Surviving Spouse” on your spouse’s signature line after signing on the first line. Please note that there are exceptional conditions that apply when signing for a person under a Power of Attorney or non-spouse deceased taxpayer.

Preparer Must Sign: The Internal Revenue Service issues a “PTIN” form which has to be signed by professional tax preparers you hire to prepare your returns. Also, ensure that “Copy B” of all Forms W-2, W-2Gs and 1099-Rs that have tax withholdings attached. The IRS might be forced to return the forms to you if you attach the wrong copy.

Check Address: The IRS’s mailing addresses for returns are often changed and you must ensure that you mail your tax returns to their right address, usually determined by your residential state. The addresses can be found online at the IRS website or the instructions booklet. You are required to use a payment voucher (1040-V) if you have a balance due and then mail the return to a lock box as opposed to mailing them directly to the IRS.

Ensure the Check payable to “United States Treasury Service”: Taxpayers who owe the federal government must write their check to the Treasury and not the “IRS”. Ensure that the Social Security Number and Form 1040/1040A is written on the check.

Finally, make sure that you make and retain a copy of the tax returns for personal filing and record keeping. Don’t forget to weigh the package to ascertain that you have sufficient postage. It is very risky to send off your tax return without carefully reviewing every detail; take your time, as mistakes can be costly.

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How to Track Down and Deal With Lost W-2s before Filing Taxes

July 18, 2012 By

When filing your federal tax returns, there are many tax forms that you require, including the W-2. Sadly, sometimes they just don’t seem to arrive when you need them. If you don’t get your W-2s in time, instead of passively sitting back and waiting for the forms to arrive at your home, there are several things you can actively do to help track down them down.

To begin with, try finding out whether the said form was sent or not. It is an IRS requirement that W-2s and 1099s be send out by the employers and vendors before the end of January of every tax year. These forms should be in your mail box by 5th or 6th of February, if you don’t, try finding out the likely causes of the delay.

One of the likely causes of the delay can be a wrong postal address. Did you relocate or change addresses the previous year? If you did move, did you forward the new address to your new employer? If you moved and forgot to change the address with your employer, it is very likely that the form was either returned to the sender or it is still lying in the post office. To track it down, do the following.

  1. Call your present employer or the previous one, give the new address and request for your W-2 to be sent to your current address. Alternatively, ask if you can download it from the company’s online database.
  2. Does your employer engage in tax W-2 Express Service? If yes, then it is possible to directly download the W-2 into your return.
  3. You can also pay about $10 for W-2 service for the form to be generated and sent to you via mail immediately. More information about this service is available on the Missing W-2 and RapidTax websites.
  4. You can call the IRS via 800-829-1040 (800-TAX 1040) for enquiries. Please note that you should have some details ready before making that call to the IRS on filing of tax returns. Alternatively, use Form 4506-T for electronic copies of the W-2. This option is not ideal if urgency is an issue as it might take a couple of weeks.

What if You Still Don’t Get the W-2?

There are chances that despite following through the listed steps, you still cannot find your W-2. That might not be the main problem, but the likelihood that your employer, who is out of business, is not going to issue the form altogether. In the event of such an eventuality, all you have to do is find your last paystub and enter the required details to Form 4852-Substitute for W-2. By answering all the questions, you can use it instead of a W-2, and is accepted in most states.

If you don’t have your final paystub or it lacks the year-to-date details, you should find a way to make estimates on your withholdings and earnings. Get help from a tax pro like CPAs and Enrolled agents, if you cannot figure it out on your own.

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Is Your W-2 Missing? Don’t Panic! The IRS is at Your Service

June 4, 2012 By

Before filing for a tax return, one should ensure that he or she has all the necessary documents, which include Forms W-2. Every taxpayer should receive a Form W-2, Wage and Tax statement from each employer. These documents should be mailed to you by January 31 of each year to enable you file your return for the previous tax year. However, if you do not receive these documents in this time frame, do not panic. Here are four steps to follow:

  1. Get in touch with your employer:

In case you have not received your W-2 forms, call each employer and find out if and when it was mailed. Perhaps the form may have been returned to the employer if you gave an incorrect or incomplete address. By getting in touch with the employer, you will be certain of how long to wait for it to be resent.

  1. Call the IRS:

If you still don’t have your W-2 by the 14th of February, call the IRS for assistance on 800-829-1040. You will be required to give your full name, address, Social Security Number (SSN), phone number, and also be in possession of other critical pieces of information like: employer’s details (name, address, and phone number), dates of employment, and an estimate of the wages earned, as well as the amount of Federal income tax withheld. Remember that your wage estimation should be based on accurate and proper information.

  1. Start filing your return:

Even with the W-2 missing, you still need to file your tax return or at least request for an extension. In case by the due date you still have not received your W-2 Form and you are already done with steps 1 and 2, you can use Form 4852, which is a substitute for Form W-2, Wage and Tax Statement. Attach this substitute form and accurately estimate income and withholding taxes. Be warned though that there may be a delay in the receipt of any refund while the information given is being verified.

  1. File a Form 1040X if you have to

In the event that you receive the W-2 just after filing your return using the substitute Form 4852, you may have to file a Form 1040X. This only applies on the occasion that the information previously given in the Form 4852 is different from the actual one in the W-2. The 1040X, Amended U.S. Individual Income Tax Return, thus allows you to amend your return.

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Is Your Tax Documentation Ready for Filing?

March 16, 2012 By

The tax deadline is drawing closer and this is a good time to get the required tax documentation in order. If you have a tax file and have been filing all related documents, this should be an easy and straightforward process. However, if all your documentation is not in order, this is also a good time to review your records, collect your tax documentation, and in cases where some are missing, get replacement copies.

The W-2 Forms

The W-2 forms are sent by your employer at the beginning of the preceding year. Employers are given until January 31st to send the W-2 forms and therefore, you should be getting the form at least by the first week of February. If you are unable to get a W-2 form from your employer for whatever reason, you can request for a W-2 copy from the IRS. You will need to file Form 4506-T to request for a copy of the form. If the IRS does not have the form, you may use your pay-stubs as your source document for your employment income. Form W-2G is given for gambling wins that exceed a given threshold. You will need to include such gambling wins as part of your income and pay the appropriate taxes.

The 1099 Forms

Form 1099 is given for various types of incomes. Once again, the issuer of the form is required to do so by end of January for incomes made in the previous year. Form 1099DIV is given against any dividends that you earn and it is issued by stockbrokers and fund managers. Form1099INT is given against interests that your investments earned over the year. Form 1099S is issued by a real estate agent against the sale of a property. Form 1099G is issued by state authorities against any distributions made by the state. Form 1099 MISC is issued for business to business transactions. Those who receive the 1099MISC include independent contractors, consultants and freelancer workers. For the forms 1099DIV, 1099INT and 1099S, you can easily get a replacement by downloading a statement from the institution’s website or by calling the company and requesting for a replacement if you find that you are missing one. Most states also have a procedure of getting a replacement of the Form 1099G. If you do not receive a Form 1099 MISC or have misplaced one, you can simply report the incomes received without using the form.

K-1 Form

The Form K-1 is yet another income related form and it is issued to shareholders of S-Type Corporations, partnerships and other business models. It indicated the share of profit that a shareholder or partner gets in a given year. The issuers of K-1 forms are allowed to extend the time of sending out the forms up to September 15th and therefore, those who do not receive the form on time can either file estimates and later make an amendment or file for an extension to prepare their returns. It is advisable to file for an extension to October as opposed to using estimates, as filing an amendment return increases your chances of being audited.

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Various Tax Related Forms that You Will Need for Your Tax Returns

February 24, 2012 By

There are various tax forms that a taxpayer receives in relations to various incomes and earnings that he or she gets within a given year. These forms are important, as they assist you with your income entries on the Form 1040 when filing returns. It is important that you indicate and use the correct amounts as indicated on these forms as the IRS receives a copy of these forms and counter checks the amounts indicated once you file your returns. These income-related tax forms are explained below:

  • W-2 – The W-2 form is a form that you receive from your employer indicating the wages paid taxes deducted among other deductions. This is an important tax record to file in your tax file. All employees who received wages should be given the W-2 form irrespective of amount paid. However, for contracted workers, they receive form 1099MISC for their pay if the amount exceeds $600. Form 1099MISC is explained below.
  • W-2G – The W-2G form is given for any gambling incomes. The gambling incomes also need to be reported in your tax return and the appropriate taxes paid on this. However, not all gambling wins get the form W-2G. There are various caps that apply. However, irrespective of whether you received a form W-2G for your gambling earnings or not, you are still required to report all such incomes in your return.
  • 1099MISC – The Form 1099MISC is issued for most incomes that are not categorized under a unique form. Some of the incomes that are accompanied by this form include wages from contract labor, incomes for business to business services including rent income from a business, and incomes from winning a competition or tournament. For you to receive the Form 1099MISC for your qualifying income, the income should exceed $600.
  • 1099DIV – The Form 1099DIV is given by all investment managers including stock brokers, fund managers, listed companies, and banks that distribute dividends. If you receive dividends of over $10, you will receive the form. However, even for amounts that are below $10 and therefore are not accompanied by a Form 1099DIV, one is still expected to report the dividend as income.
  • 1099INT – The Form 1099INT is issued by all institutions that distribute investment interest. The rules for this form are similar to those of the Form 1099DIV and interests below $10 do not receive the form but are still to be reported in the returns.
  • 1099S – The Form 1099S is issued by a property agents who gets to sell your property. It is however, not required if you are selling your personal residence and are entitled to an exclusion for personal residence sale. For property that is not personal residence, purchase price of the property should be deducted from amount indicated on the form and the difference indicated on the Form 1040 as a capital gain or capital gain loss.
  • 1099R – The Form 1099R is given for every retirement benefit distribution. This includes pension distributions and distributions from your IRA.
  • 1099G – The Form 1099R is given by states for any distributions made in relation to taxes. This includes itemized deductions that were made of the state tax returns and any unemployment benefits that you received from the state.
  • K-1 – The K- form is issued to shareholders of an S-Corporation, partners of a legal partnership and the beneficiaries of a trust or an estate. It provides details of the share of profits and earning made.
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