Tax Tips

If you’re one of the many people searching for a job right now, you may be able to deduct some of your expenses, such as attending career fairs, on your tax return as long as you are looking for a new job in your current occupation. Here are a few things to keep in mind:

• Job search expenses fall into the category of miscellaneous itemized deductions on Schedule A, Itemized Deductions. If your total itemized deductions are higher than the standard deduction, it is generally better to choose to include your itemized deductions. Also, in most cases these expenses must exceed your adjusted gross income by 2 percent to provide a tax benefit.
• Your expenses must be spent on a job search in your current occupation. You may not deduct expenses incurred while looking for a job in a new occupation.
• You can deduct the fees you pay for employment and outplacement agencies. If your employer pays you back in a later year for these fees, you must include the amount in your gross income up to the amount of your tax benefit in the earlier year.
• You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers.
• If you travel to a different area to look for a new job, you may be able to deduct travel expenses to and from that area. You can deduct the travel expenses only if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or primarily to look for a new job.
• You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
• You cannot deduct job search expenses if you are looking for a job for the first time.

It’s that time of year again — time to file your tax return. Before you start, make sure you have all your documents at hand, particularly your Form W-2, Wage and Tax Statement. By Jan 31, you should have received a Form W-2 from each of your employers. It’s always a good idea to keep copies of all pay statements in case you need to refer to them when filing your taxes.
If you haven't received your Form W-2 by Jan. 31, follow these three steps:

• Contact your employer/s – Contact your employer to inquire when it was made available or mailed. If it was mailed, it may have been returned because of an incorrect address. After contacting the employer, allow a reasonable amount of time for them to resend or make it available to you.
• Contact the IRS – Contact the IRS for assistance at 800-829-1040 after February 15 if you are unable to obtain your Form W-2 from your employer(s). When you call, you must provide your name, address, city, state, zip code, Social Security number and phone number. You must also have the following information:
• Your employer’s name, address, city, state, zip code and phone number
• Dates of employment
• Estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. (The estimate should be based on year-to-date information from your final pay stub or leave and earnings statement, if possible.)
• File your return – You still must file your tax return or request an extension to file by the April 18, 2011 (this year’s) filing deadline, even if you have not received your Form W-2. If you have not received your Form W-2 by April 18, and have completed Steps 1 and 2 above, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to your return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due until the information is verified.

What if you receive your missing Form W-2 after you filed your return using Form 4852? If you receive your missing Form W-2 after you filed, AND the information is different from what you reported on Form 4852, you must amend your return using Form 1040X, Amended U.S. Individual Income Tax Return.
 

Don't wait around for a paper check. Have you federal tax refund deposited directly to your account. Why? Last year, 2 out of 3 tax returns were filed electronically. Was yours? If not, here are three important reasons to e-file your return:

• It’s fast - your tax return will get processed more quickly if you use e-file. If there is an error on your return, it will typically be identified and can be corrected right away. If you file electronically and choose to have your tax refund deposited directly into your bank account, you will have your money in as few as 10 days.
• It’s safe - the IRS is fully committed to protecting your tax information and e-filed returns are protected by the latest technology.
• It’s time - Don’t miss out on the benefits of e-file, 2 out of 3 taxpayers, 95 million, already get the benefits of e-file.

With e-file, you get the peace of mind that comes with the electronic receipt you’ll receive notifying you that the IRS received your tax return.
 

Don't wait around for a paper check. Have you federal tax refund deposited directly to your account. Why?

• Direct Deposit is secure - there's no chance for a check to get lost in the mail.
• Direct Deposit is convenient - you won't have to make a special trip to the bank, the money goes directly into your bank account.
• Direct Deposit is easy.

Direct Deposit offers options - you can electronically direct your refund to multiple accounts.
 

• 04/18/2011 - Federal Income Tax Return
• 04/18/2011 - State Income Tax Return
• 04/18/2011 - Extension for Federal Income Tax Return
• 04/18/2011 - Federal Return of Partnership Income
• 03/15/2011 - Federal Corporation Tax Return

Don’t wait until the last minute to start tax planning. Mid-April will be here soon enough and there are many things you can do to ensure a stress-free tax filing season.

The first thing you should do is consider any changes in your life that happened in 2010 and that might affect your taxes. Ask yourself a few questions:

• Did my marital status change due to marriage or divorce?
• Did my kids move out?
• Did I buy or sell a home?
• Did my employment situation change? Did I lose my job? Did I retire?
• Did a disaster – like a hurricane, tornado or flooding – cause a hardship for me and my family?
• Do I qualify for tax credits?

Here are a few more things to think about before you sit down to fill out your tax return:

Determine the amount of tax withheld
Use the IRS Withholding Calculator to determine whether you’ve had the correct amount of Federal income tax withheld from your pay. If you find that you need to change your withholding, give your employer a new Form W-4, Employee’s Withholding Allowance Certificate, to avoid having too much or too little tax withheld from your pay. Don’t be surprised come April!

Organize your records
In addition to the Forms W-2, Forms 1099 or other statements you need to support deductions or credits you claim on your tax return, you might also need bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment and other records.

Did you move, have a new name or address?
Use Form 8822, Change of Address Form, to notify the IRS if you changed your name, home or business mailing address or the location of your business. If this change also affects the mailing address for your children who filed income tax returns, complete and file a separate Form 8822 for each child.

Have you taken advantage of all available 2010 credits?
It’s not too late to take advantage of the benefits from the American Recovery and Reinvestment Act of 2009.

Are you a student or do you have students in your household?
You may qualify for the American Opportunity Credit. It is worth up to $2,500 toward the cost of qualified tuition and expenses, and a portion of the credit may be refundable. The term, qualified tuition and related expenses, has been expanded to include expenditures for course materials. For this purpose, the term, course materials, means books, supplies and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.

Did you buy a new computer for college use in 2010?
ARRA added computer technology to the list of college expenses that can be paid for by a Qualified Tuition Plan, also called a 529 Plan. Qualified higher education expenses include expenses paid or incurred for the purchase of computer technology equipment and Internet access used by the student and their family while enrolled at an eligible education institution.

Considering home improvements?
You may qualify for the credit offered for making energy efficient improvements to your home. The credit applies to improvements such as adding insulation, replacing exterior windows or replacing an old furnace or air conditioning unit with new energy efficient systems. Be sure the products you buy qualify for a tax credit.

Did you go green with a new vehicle this year?
A new plug-in electric drive vehicle qualifies for various credits based on its battery capacity. Certain low-speed vehicles and two or three-wheeled vehicles that draw electricity from a battery may also qualify for a credit based on their battery capacity.

Don’t forget the Making Work Pay Credit.
The Making Work Pay Credit provides a refund of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns. The credit is based on earned income and is taken on your 2010 tax return when you file your taxes in 2011.

Do you qualify for other tax credits?
There are temporary increases in the Earned Income Tax Credit, a credit for individuals and families. You may be able to take the credit if you earned less than $43,352 ($48,362 for married couples filing their taxes jointly). Working families with three or more qualifying children may be entitled to a maximum credit of $5,666.

If you have children, you can also benefit from the increase in the Additional Child Tax Credit that changed in 2009 and 2010 to allow more people to get the benefit. ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. This is a refundable credit, which means you may receive refunds even if you don't owe any tax.

Remember, a little planning now can save you a lot of frustration and surprises later.

Outreach Corner, www.irs.gov. Edited 01/03/2010

	Event Documents or information needed Married Prior year return of both spouse Divorced Finalized date of the divorce Copy of the divorce decree Separated Copy of the separate maintenance agreement Community property income allocation Birth or adoption Social Security Cards and adoption papers Death of child or spouse Date of death Additional members of household Date of occupancy and relationship Job change Start date Name of new employer W-2s from new and old employers Unemployment Unemployment form Retirement contribution Type of plan Amount of contribution Retirement distributions Form 1099-R Social Security benefits Form 1099-SSA Sale of stocks, bonds, etc. Form 1099-В or other sale documents Basis or original costs Purchase of stocks, bonds, etc., personal residence, or other real estate Purchase documents Closing papers Inheritance Will; K-1 from the estate Decedent's basis of property if death occurred in 2010 Trade any property Date of trade Property given up and property received Basis and FMV Qualified intermediary sales agreements or closing papers Start or end a small business Formation or termination dates Property contributions or distributions Lawsuit settlements Date received Reason for the settlement 1099-MISC Rental Property Income, expenses, new property purchased Prizes Form 1099-Misc; Value of prizes not included on form 1099-Misc Lottery or gambling winnings Total amount won whether on W-2G or not Total amount of losses Health insurance, medical, dental, or drug expenses Health insurance premiums Post-tax payments Totals of other medical, dental, and drug expenses If the health insurance is pre-tax, premiums have already been deducted from the wage Medical miles Total miles driven Medicare recipients One-time donut hole payment of $250 State tax income, property taxes paid, sales tax paid on vehicles, motorcycles, or homes Prior year's income tax return Property tax bills Closing papers from the purchase or sale of property Letter from the state regarding any change in a prior filed return Refinance a home Closing papers with amount borrowed Forms 1098 Description of use of money First Time Homebuyer Credit Sale or change of use from principal residence Closing papers if sold Charitable contributions of money, property, or out-of-pocket expenses Date and type of contributions Knowledge that receipts from the organizations have been received Mileage log of charitable work Charitable miles Total miles driven Transfer of IRA to charity Custodian statement showing transfer and acknowledgement from charitable organization Job-related expenses Meals, lodging, and miscellaneous expense amounts for items related to employment Business miles Total miles driven, business miles driven by vehicle Education or student loan interest expenses Form 1098 for parents or children Interest record for student loans Actual expense record to verify expenses for credit-deduction purpose Child or disabled spouse care Prior year return of both spouse Energy credit Information regarding the purchase of qualifying vehicle, windows, doors, furnace, solar, or other energy upgrades Amount claimed in 2009 Bankruptcy filing Date filed Bankruptcy papers to show property rejected/returned by court Debt forgiveness or abandonment of property Form 1099-А for abandonment Date property was taken by the bank or sold in foreclosure Form 1099-C for cancellation