Written on April 14, 2009 by DMBFinancial
Did you know that if you find extra savings and put it towards your debt settlement program, we’ll be able to settle your debts faster? Here are 66 different money saving tips to help you find some spare change!
Written on February 17, 2009 by DMBFinancial
Year after year, the IRS sees Americans committing the same mistakes on their returns. Many of these errors are easy to avoid; some are more complicated. Nevertheless, whenever in doubt, seek the advice of a professional tax consultant.
Claiming the Wrong Filing Status
Claiming the wrong status could ruin your eligibility for the child tax credit, the earned-income credit and exemptions for dependents. Check out Form 1040 for information to help you select your correct filing status.
Omitting or Using Incorrect Social Security Numbers
The Social Security Numbers you list for your dependents, the earned-income credit and the child tax credit must match your dependents’ Social Security cards. Otherwise, the IRS will reject your credits and deductions. If you’re still doing your return by hand, make sure your handwriting is legible.
Failing To Use Correct Forms and Schedules
Think of the IRS as a vast bureaucracy that responds to the directives of an outdated computer system for audit direction. So, be nice to the computer. Correctly file all of the appropriate forms.
Failing To Sign and Date the Return
Technically, if you don’t sign the return, you haven’t filed. And, if you haven’t filed, you’re going to be subject to all kinds of penalties, not to mention interest on any amounts not paid in full. Don’t forget, both spouses MUST sign a joint return.
Claiming Ineligible Dependents
When the IRS started requiring Social Security numbers for claimed dependents, millions of dependents disappeared. In any case, the qualification criteria to claim a dependent are very specific. Follow the instructions on Form 1040.
Not Using the Earned-Income Credit
It’s a provision to help the poorest in our nation. Unfortunately, because it is one of the most convoluted provisions in our tax code, the IRS reports failure to claim the earned-income credit as its No. 6 top taxpayer mistake!
Failing To Report All Income
Not all income is reported on a W-2 form or a 1099. The fact that there’s no reporting to the IRS doesn’t prevent the agency from auditing your receipts and reconciling your bank deposits with your reported income. Unreported income can lead to civil and criminal sanctions.
Failing To Check For the Alternative Minimum Tax
The AMT, or “awfully mean tax,” was created to catch high-income taxpayers who used allowable deductions and credits to greatly reduce their tax liability. Unfortunately, because it hasn’t been updated to reflect inflation since the original bill was passed, the AMT was projected to hit about 19 million families in 2007. The IRS has an AMT estimation calculator on its Web site, but, to be sure, run through Form 6251.
DMB Financial LLC is not giving tax advice and recommends that you consult your tax attorney or accountant with any tax-related questions.
Written on January 13, 2009 by DMBFinancial
A poet once wrote that April is the cruelest month, and who knows? He might have been motivated to write that line as he filed his income tax return for the previous year.
It’s nobody’s favorite activity – but before you know it, that familiar 1040 time will be here again. Right now is the time to begin lining up those legitimate deductions that will reduce the amount you’ll owe Uncle Sam. In fact, now is also the time to look ahead and begin planning for 2009. In the meantime, don’t forget to consider write-offs that can easily be overlooked, such as these:
Charity begins with a tax deduction. Did you donate clothes, furniture, or other items to a charity such as Goodwill during the previous year? If so, the value of those items is deductible. Just be sure you have a written receipt as proof should you happen to get audited. You’re also entitled to a deduction if you dumped old (but serviceable) clothes into a Salvation Army box; unfortunately, that kind of charitable contribution doesn’t come with a receipt. In the immortal words of Clint Eastwood’s Dirty Harry, “Do you feel lucky?”
Put a premium on health insurance deductions. Your health insurance premiums, as well as certain long-term care premiums, might be deductible. Remember, though, that your total medical expenses must exceed 7.5% of your adjusted gross income (AGI). If, however, you’re self-employed and not covered by another employer’s plan, you can deduct 100% of your health insurance expenses because they’re included in your AGI – meaning that they don’t have to exceed that 7.5% figure. In fact, they don’t have to be itemized at all.
Remember tax planning and investment expenses. It’s easy to forget those expenses because they fall into the category of miscellaneous itemized expenses. Some to keep in mind are employee business expenses, tax preparation fees, and any portion of your legal or accounting fees having to do with tax planning. As for investment expenses, don’t overlook the annual fee paid your broker or any IRA fees. Also, while you’re compiling your long-distance phone calls to your broker and investment adviser, don’t forget that the mileage to visit them is also deductible.
Take retirement into account. Contributions into your retirement account aren’t taxed until you begin withdrawals. In the meantime, those contributions are a deduction from your taxable income. What’s more, you’re entitled to a credit of up to 50% of the first $2,000 you invest – a reduction of as much as $1,000 off your tax bill.
These are only a few of the more common items you’ll want to take into consideration when preparing your return. There are plenty of others, so be sure to thoroughly discuss all potential deductions with your tax advisor. The whole idea is to make your April a kinder, gentler month.
