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Eight common tax mistakes to avoid

 

We all make mistakes. But if you make a mistake on your tax return, the IRS may need to contact you to correct it. That will delay your refund.

You can avoid most tax return errors by using IRS e-file. People who do their taxes on paper are about 20 times more likely to make an error than e-filers. IRS e-file is the most accurate way to file your tax return.

Here are eight common tax-filing errors to avoid:

1. Wrong or missing Social Security numbers.  Be sure you enter all SSNs on your tax return exactly as they are on the Social Security cards.

2. Wrong names.  Be sure you spell the names of everyone on your tax return exactly as they are on their Social Security cards.

3. Filing status errors.  Some people use the wrong filing status, such as Head of Household instead of Single. The Interactive Tax Assistant on IRS.gov can help you choose the right one. Tax software helps e-filers choose.

4. Math mistakes.  Double-check your math. For example, be careful when you add or subtract or figure items on a form or worksheet. Tax preparation software does all the math for e-filers.

5. Errors in figuring credits or deductions.  Many filers make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit, and the standard deduction. If you’re not e-filing, follow the instructions carefully when figuring credits and deductions. For example, if you’re age 65 or older or blind, be sure you claim the correct, higher standard deduction.

6. Wrong bank account numbers.  You should choose to get your refund by direct deposit. But it’s important that you use the right bank and account numbers on your return. The fastest and safest way to get a tax refund is to combine e-file with direct deposit.

7. Forms not signed or dated.  An unsigned tax return is like an unsigned check; it’s not valid. Remember that both spouses must sign a joint return.

8. Electronic filing PIN errors.  When you e-file, you sign your return electronically with a Personal Identification Number. If you know last year’s e-file PIN, you can use that. If not, you’ll need to enter the Adjusted Gross Income from your originally-filed 2012 federal tax return. Don’t use the AGI amount from an amended 2012 return or a 2012 return that the IRS corrected.

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IRS has $760 Million in unclaimed refunds for 2010

 

 

WASHINGTON — Refunds totaling almost $760 million may be waiting for an estimated 918,600 taxpayers who did not file a federal income tax return for 2010, the Internal Revenue Service announced today. However, to collect the money, a return for 2010 must be filed with the IRS no later than Tuesday, April 15, 2014.

“The window is quickly closing for people who are owed refunds from 2010 who haven’t filed a tax return,” said IRS Commissioner John Koskinen. “We encourage students, part-time workers and others who haven’t filed for 2010 to look into this before time runs out on April 15.”

The IRS estimates that half the potential refunds for 2010 are more than $571.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2010 returns, the window closes on April 15, 2014. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2010 refund that their checks may be held if they have not filed tax returns for 2011 and 2012. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than just their refund of taxes withheld or paid during 2010. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2010, the credit is worth as much as $5,666. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2010 were:

• $43,352 ($48,362 if married filing jointly) for those with three or more qualifying children;

• $40,363 ($45,373 if married filing jointly) for people with two qualifying children;

• $35,535 ($40,545 if married filing jointly) for those with one qualifying child;

• and $13,460 ($18,470 if married filing jointly) for people without qualifying children.

Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2010, 2011 or 2012 should request copies from their employer, bank or other payer.

If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by going to IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.

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Home office deduction features simpler option

 

 

If you work from home, you should learn the rules for how to claim the home office deduction. Starting this year, there is a simpler option to figure the deduction for business use of your home.

The new option will save you time because it simplifies how you figure and claim the deduction. It will also make it easier for you to keep records. It does not change the rules for who may claim the deduction.

Here are six facts from the IRS about the home office deduction.

1. Generally, in order to claim a deduction for a home office, you must use a part of your home exclusively and regularly for business purposes. Also, the part of your home used for business must be: your principal place of business, or a place where you meet clients or customers in the normal course of business, or a separate structure not attached to your home. Examples might include a studio, garage or barn.

2. If you use the actual expense method, the home office deduction includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid could qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid could qualify. The amount you can deduct usually depends on the percentage of your home used for business.

3. Beginning with 2013 tax returns, you may be able to use the simplified option to claim the home office deduction instead of claiming actual expenses. Under this method, you multiply the allowable square footage of your office by a prescribed rate of $5. The maximum footage allowed is 300 square feet. The deduction limit using this method is $1,500 per year.

4. If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited.

5. If you are self-employed and choose the actual expense method, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. You claim your deduction on Schedule C, Profit or Loss From Business, if you use either the simplified or actual expense method. See the Schedule C instructions for how to report your deduction.

6. If you are an employee, you must meet additional rules to claim the deduction. For example, in addition to the above tests, your business use must also be for your employer’s convenience.

For more on this topic, see Publication 587, Business Use of Your Home. It’s available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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Are you the next target?

From the Better Business Bureau

“I am convinced that there are only two types of companies: those that have been hacked and those that will be. And even they are converging into one category: companies that have been hacked and will be hacked again.”—Robert Mueller, director of the Federal Bureau of Investigations.

Are you the next target?

Prepare and protect your data and your business from cyber-crimes. What’s new in cyber security? Everything. As soon as we think we know how to protect our data, resources, and identities, there is a new way to attack, steal, or use them.  Learn the latest techniques and best products to take your security to the next level at the Grand Rapids Çyber Security Conference on April 23 at the LV Eberhard Center on April 23, 2014 7:30 a.m.-12:00 p.m.

This event has content and sessions for any size of business, as well as consumers, covering a range of topics from basic to advanced.

Join us for two plenary Keynote sessions: one featuring Colby Clark, Director of Incident Management from Fishnet Security at 8 a.m. and at 11 a.m. Jennifer Puplava, Attorney from Mika, Meyers, Beckett and Jones, who specializes in intellectual property law and technology law. There will be other speakers and panelists as well.

There is no charge for this event but registration is strongly recommended. A light breakfast and refreshments will be served throughout the morning.

To see all the session speakers and topics lined up, and to register, go to http://securitysummmit.weebly.com/.

 

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The Math of feeding the world

National Ag Day is March 25

One farmer = 144 people fed and clothed. America’s food producers play a vital role in feeding an ever-growing and increasingly affluent global population.

One farmer = 144 people fed and clothed. America’s food producers play a vital role in feeding an ever-growing and increasingly affluent global population.

(NAPS)—The next time you’re enjoying a meal, take a moment to think about where the food came from. Think about the family farmer or rancher who helped put it on your plate—not only that day but all 365 sunrises a year for you and the other 7 billion and counting people around the world American agriculture feeds. The family farmers and ranchers across the country—less than 2 percent of the U.S. population—produce the food, fuel and fiber people around the world depend on to survive.

Simply put, one farmer today produces enough to help feed and clothe more than 144 people on Earth. They contribute to the food and energy security of the nation, providing the safe, healthy, abundant and affordable food we expect each time we visit the store or restaurant. All without fail.

It’s one reason for the annual celebration of National Ag Day—this year, on March 25 (though any day is a good time to be grateful to America’s farmers)—a nation’s tribute to thousands of farm families.

According to the Agriculture Council of America (ACA), the national organization charged with promoting National Ag Day, it’s important that consumers understand where their food comes from and that many of today’s farmers use the latest technologies and safe, modern, sustainable practices to raise vegetables, fruit, meat, milk, eggs and other foods.

The ACA believes an accurate, basic understanding of how food is produced and how it gets from farms to their family’s plates will give consumers a greater appreciation for farmers who produce it and greater confidence in the wholesomeness of the food they eat.

Farming and ranching take a passion and a dedicated 24-hour-a-day, seven-day-a-week commitment. For farm families, it’s a way of life that requires tremendous knowledge and financial resources and is greatly dependent on weather and market conditions to be successful.

For further information about National Ag Day and how your food is produced, go to www.agday.org.

 

 

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Curves holds food drive

 

Curves of Cedar Springs, 55 N. Main Street, is holding their annual Food Drive during the month of March. They are collecting food for the local food pantries, including the North Kent Community Service Center and their first goal is 2,000 pounds.

“All who bring food will be entered to win some fabulous Curves prizes,” said owner Christine Holman. Thirty pounds equals one entry, and everyone can participate.

They will be a collection site for the rest of the month. During the next 2 weeks only, new members can Join Curves free with the donation of a 30-pound bag of non-perishables or a $30.00 donation, which the food banks will use to purchase more than $30 would buy. “Let’s do this!” said Holman. “Feed the need of your community.”

Call Christine Holman at 616-696-1689 if you have any questions. Drop off times are 7 a.m. to 12 p.m. and 3 p.m. to 7 p.m. Monday through Friday and Sat 9-10:30 a.m.

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Five Facts about Unemployment Benefits

 

If you lose your job or your employer lays you off, you may be able to get unemployment benefits. The payments may be a welcomed relief. But you should know that they’re taxable.

Here are five important facts from the IRS about unemployment compensation:

1. You must include all unemployment compensation in your income for the year. You should receive a Form 1099-G, Certain Government Payments. It will show the amount paid to you and the amount of any federal income taxes withheld.

2. There are several types of unemployment compensation. They generally include any amount received under an unemployment compensation law of the U.S. or a state. For more about the various types, see Publication 525, Taxable and Nontaxable Income.

3. You must include benefits paid to you from regular union dues in your income. Different rules may apply if you contribute to a special union fund and those contributions are not deductible. In that case, only include as income any amount you get that is more than the contributions you made.

4. You can choose to have federal income tax withheld from your unemployment. You make this choice using Form W-4V, Voluntary Withholding Request. If you do not choose to have tax withheld, you may have to make estimated tax payments during the year.

5. If you are facing financial difficulties, you should visit IRS.gov. “What Ifs” for Struggling Taxpayers explains the tax effect of events such as the loss of a job. For example, if your income decreased, you may be eligible for some tax credits, such as the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill, contact the IRS as soon as possible. In many cases, the IRS can take steps to help ease your financial burden.

For more details, see IRS Publications 17, Your Federal Income Tax, or IRS Publication 525. You can download these booklets and Form W-4V at IRS.gov. You may also order them by calling 800-TAX-FORM (800-829-3676).

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Itemizing vs. Standard Deduction: Six Tips to Help You Choose

IRS Tax Tip 2014-29

 

When you file your tax return, you usually have a choice whether to itemize deductions or take the standard deduction. Before you choose, it’s a good idea to figure your deductions using both methods. Then choose the one that allows you to pay the lower amount of tax. The one that results in the higher deduction amount often gives you the most benefit.

The IRS offers these six tips to help you choose.

1. Figure your itemized deductions.  Add up deductible expenses you paid during the year. These may include expenses such as:

Home mortgage interest

State and local income taxes or sales taxes (but not both)

Real estate and personal property taxes

Gifts to charities

Casualty or theft losses

Unreimbursed medical expenses

Unreimbursed employee business expenses

Special rules and limits apply. Visit IRS.gov and refer to Publication 17, Your Federal Income Tax for more details.

2. Know your standard deduction.  If you don’t itemize, your basic standard deduction for 2013 depends on your filing status:

Single $6,100

Married Filing Jointly $12,200

Head of Household $8,950

Married Filing Separately $6,100

Qualifying Widow(er) $12,200

Your standard deduction is higher if you’re 65 or older or blind. If someone can claim you as a dependent, that can limit the amount of your deduction.

3. Check the exceptions.  Some people don’t qualify for the standard deduction and therefore should itemize. This includes married couples who file separate returns and one spouse itemizes.

4. Use the IRS’s ITA tool.  Visit IRS.gov and use the Interactive Tax Assistant tool to help determine your standard deduction.

5. File the right forms.  To itemize your deductions, use Form 1040 and Schedule A, Itemized Deductions. You can take the standard deduction on Forms 1040, 1040A or 1040EZ.

6. File Electronically.  You may be eligible for free, brand-name software to prepare and e-file your tax return. IRS Free File will do the work for you. Free File software will help you determine if you should itemize and file the right tax forms. It will do the math and e-file your return – all for free. Otherwise, you may file electronically with commercial software, or through a paid preparer.

 

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Are Your Social Security Benefits Taxable?

Some people must pay taxes on part of their Social Security benefits. Others find that their benefits aren’t taxable. If you get Social Security, the IRS can help you determine if some of your benefits are taxable.

Here are seven tips about how Social Security affects your taxes:

1. If you received these benefits in 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, showing the amount.

2. If Social Security was your only source of income in 2013, your benefits may not be taxable. You also may not need to file a federal income tax return.

3. If you get income from other sources, then you may have to pay taxes on some of your benefits.

4. Your income and filing status affect whether you must pay taxes on your Social Security.

5. The best, and free, way to find out if your benefits are taxable is to use IRS Free File to prepare and e-file your tax return. If you made $58,000 or less, you can use Free File tax software. The software will figure the taxable benefits for you. If your income was more than $58,000 and you feel comfortable doing your own taxes, use Free File Fillable Forms. Free File is available only at IRS.gov/freefile.

6. If you file a paper return, visit IRS.gov and use the Interactive Tax Assistant tool to see if any of your benefits are taxable.

7. A quick way to find out if any of your benefits may be taxable is to add one-half of your Social Security benefits to all your other income, including any tax-exempt interest. Next, compare this total to the base amounts below. If your total is more than the base amount for your filing status, then some of your benefits may be taxable. The three base amounts are:

$25,000 – for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year

$32,000 -for married couples filing jointly

$0 – for married persons filing separately who lived together at any time during the year

For more on this topic visit IRS.gov.
Additional IRS Resources:

• Publication 915, Social Security and Equivalent Railroad Retirement Benefits

• Tax Topic 423 – Social Security and Equivalent Railroad Retirement Benefits

 

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Ten things to know about the Taxpayer Advocate Service

 

1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS and is your voice at the IRS.

2. We help taxpayers whose problems are causing financial difficulty. This includes businesses as well as individuals.

3. You may be eligible for our help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn’t working as it should.

4. As a taxpayer, you have rights that the IRS must respect. We’ll help you understand those rights and ensure that they’re protected in any contacts with the IRS.

5. If you qualify for our help, you’ll be assigned to one advocate who will be with you at every turn. And our service is always free.

6. We have at least one local taxpayer advocate office in every state, the District of Columbia and Puerto Rico. You can call your advocate, whose number is in your local directory, in Publication 1546, Taxpayer Advocate Service—Your Voice at the IRS, and on our website at www.irs.gov/advocate. You can also call us toll-free at 1-877-777-4778.

7. Our tax toolkit at www.TaxpayerAdvocate.irs.gov has basic tax information, details about tax credits (for individuals and businesses), and lots more.

8. TAS also handles large-scale or systemic problems that affect many taxpayers. If you know of one of these broader issues, please report it to us at www.irs.gov/sams.

9. You can get updates at:

www.facebook.com/YourVoiceAtIRS

Twitter.com/YourVoiceatIRS

www.youtube.com/TASNTA

10. TAS is here to help you because when you’re dealing with a tax problem, the worst thing you can do is nothing at all!

 

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