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Income Tax - WalletPop
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Tax Basics Stories

    Business mileage deductions could cut your tax bill

    Kelly Phillips Erb Filed Under: , ,

    business mileage deductions explainedA few years ago, it appeared any company that required you to drive for your business would just hand over the keys to a new car -- my friends in sales or service seemed to magically have a new vehicle every few months. In this economy, however, that has changed. While more jobs require reliance on a car (some for multi-tasking), fewer companies are footing the bill for it. But there's still some relief available; If you use your car for business or your job, you can deduct car-related expenses on your tax return.

    Are you eligible for the Making Work Pay tax credit?

    Kelly Phillips Erb Filed Under: , ,

    Making Work Pay tax credit explainedThe highly touted Making Work Pay tax credit is proving to be a headache for many taxpayers this season. Despite a PR campaign by the IRS designed to provide information about the credit, taxpayers are still struggling to understand who is eligible for the credit and how it affects their 2009 federal income tax return. Following are answers to some of the most popular questions about the Making Work Pay credit:

    Who is eligible to claim the credit?

    The Making Work Pay credit is intended to provide tax relief for working and middle class families. This means most taxpayers will be eligible for the credit, but there are some exceptions:

    Are you an early filer? If so, odds are you're getting a refund

    Josh Smith Filed Under: ,

    There are a few things in life that are clear cut. You like Pepsi or you like Coke, you like Ford or you like Chevy and you file your taxes early or you line up at the post office at 11:58 on April 15th. For most people, choosing when to file your taxes boils down to one thing; will you owe Uncle Sam or will you be paying off the HDTV you bought for the Super Bowl with your refund. The good news is that, statistically, if you do file early you are more likely to receive a refund -- and a generous one at that.

    How to avoid tax penalties after an audit

    Kelly Phillips Erb Filed Under: , ,

    The good news: You survived an audit. So what now?

    If you are audited and the result is that there are no adjustments to your return (or if you get a refund), it decreases your odds of being audited in subsequent years. If you are audited on the same items two years in a row with no additional taxes due, the IRS manual actually recommends that you not be audited for the same items for another year.

    But what if you are audited and the IRS finds that you owe additional tax? You'll want to resolve those outstanding tax liabilities as soon as possible in order to avoid further interest and penalties.

    5 tips for maximizing tax deductions

    Kelly Phillips Erb Filed Under: , ,

    When it comes to deductions, many taxpayers miss out -- not because they don't qualify for the deductions, but because they fail to keep good records. It's often difficult to remember on April 15 all of the miles you've driven, charities you've supported and taxes you've paid. Here are five tips for maximizing your tax deductions throughout the year:

    Reducing taxes step by step

    Kelly Phillips Erb Filed Under: ,

    By now, you're aware there's no magic bullet to reduce your taxes. But you can take several steps to reduce your overall tax bill this April. Here are 11 items to consider before filing your federal income tax return:

    How to prepare for a tax audit

    Kelly Phillips Erb Filed Under: , ,

    It's no secret that the IRS is ramping up the number of audits in an attempt to close the "tax gap." That's the term the IRS is using to account for the difference between the taxes it believes it should have collected and what it actually managed to collect. For 2001 (the last year for which data is available), the tax gap was $345 billion.

    Audits can be divided into two general categories: paper audits and people audits.

    Common tax credits explained

    Kelly Phillips Erb Filed Under: , ,

    Tax credits are popular ways to reduce your overall tax burden. Credits are dollar for dollar reductions in the amount of tax due, so it's a pretty big bang for your buck. Here are five of the most common tax credits:

    Credit for child and dependent care expenses. The credit for child and dependent care expenses can be fairly significant, depending on the amount that you paid and your income level. The credit is equal to a percentage of the expenses you actually paid for child care less any reimbursements from any program or social services agency. The credit starts at 35% of expenses if your adjusted gross income is less than $15,000 and phases out to 20% of expenses if your adjusted gross income is more than $43,000. The maximum credit available is $3,000 for one qualifying child and $6,000 for two or more qualifying children.

    8 commonly overlooked tax deductions

    Kelly Phillips Erb Filed Under: , ,

    If you keep good records, deductions can be a great way to reduce your taxable income. Increasing your allowable deductions means the less tax you owe and the more money you get to keep.

    To maximize your deductions, it's a good idea to familiarize yourself with tax rules -- there are likely many deductions that you're missing out on. To get you started, here's a list of eight commonly overlooked tax deductions:


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