It’s Tax Season Again

Some things never change. As the song says, “what goes up must come down, spinning wheels got to go round,” and tax season comes back every January. This year is no different. It’s that time again. What should you be focusing on to benefit your overall tax picture?

It’s time to gather your information to file a complete and accurate tax return. Information returns such as W-2 Forms and 1099 Forms and other information forms are required to be dispersed by January 31st. You should also gather all supporting information that you will need to prepare your return such as documentation of investment sales, receipts for charitable contributions, documentation for all itemized deductions if you are itemizing, and business expense documentation if you are filing business returns. If you are taking your information to a professional preparer it is helpful if you bring copies of your prior year returns. There is generally a need for the preparer to have access to this information to properly prepare your return and to Efile your return. If you are going to prepare and file your own taxes you should review the information on Free File options available on www.irs.gov and your state taxing authority’s web site. If you do not qualify for free filing options you should look into other online filing options or commercially available software to purchase. You still have the option to file a paper return but if you are expecting a refund, it will take longer for your refund to be processed than if you Efile.

When you complete your calculations if you find that you are receiving a large refund you may want to file a new W-4 to reduce your federal income tax withholding for 2009 by changing the number of dependency exemptions you claim. This would increase your paychecks throughout the year and reduce your tax refund. This may be helpful in dealing with ongoing tight cash flow by giving you the use of your money throughout the year instead of giving the government the use of your money throughout the year. Remember, you are required to have tax withheld throughout the year on your W-2 income but you are not required to over withhold your taxes throughout the year.

If you are using your personal vehicle for business purposes, and you are reimbursed, be sure to use the 2009 rate of 55 cents per business mile.

It’s tax season, here we go again!

Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.

Content of this site is not intended to replace professional consultation.