Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.
Well, it’s Tax Preparation Season, and I know y’all youse all of you are as excited about tax season as I am. And it really isn’t as bad as the dentist. Marketwatch.com reported that tax compliance takes 6.1 billion hours a year. How much time do you take to prepare, or prepare for, your tax return? Remember, no software package is a substitute for knowledge of the Tax Code, and no tax software package is a substitute for a competent, experienced tax professional.
Here Are Your February Reminders…
Reminder #1: Looking for a reason to have another party? The [belated]birthday of the modern tax code — the 16th Amendment to our Constitution — was February 3, 1913. Here’s a short history of the income tax, from the Civil War to the 14th Amendment.
Reminder #2 – Check Your W-2: If you received your W-2, so did the IRS. Is your Social Security number correct? Do the wages agree to your paystub? Remember, some benefits you have may not be taxable, like health insurance, transit passes, or retirement plans. If you aren’t sure of the figures on your W-2, call your employer for an explanation. After all, it’s your money. Note that you cannot correct your own W-2 — that is the employer’s responsibility. If it’s wrong, there’s plenty of time to have your employer correct it. You cannot file your return without the actual W-2. (Also: Double check those 1099 forms you are receiving. Make sure they are correct, and if not, contact the issuer.)
Reminder #3: No W-2 yet? This doesn’t mean you don’t have to file. Contact your employer to find out if and when it was mailed, and verify the address. If the problem continues, call the IRS at 1-800-829-1040 for help. Give them the employer name and address, and the information from your final paystub of the year or when you left that employment, and your wages and withholding taxes.
Reminder #4: Don’t need to file? Not sure? Ask the IRS. The IRS says, even if you don’t have to file, you may want to if:
- Tax Withheld Or Paid: Your employer withheld income tax from your pay, or you paid estimated taxes.
- Earned Income Tax Credit: You worked and earned less than $51,567 last year. Check if you qualify.
- Additional Child Tax Credit: If you worked, earned less than $51,567, and have a child who qualifies. Take a look at Schedule 8812.
- American Opportunity Credit: Post high-school education costs can be offset with this credit, which may be up to $2,500 for each of four years. Even if no tax is due, you may be eligible for a $1,000 credit (for each student). IRS Pub. 970
- NYC School Tax: Do you live in NYC? Get a refund of $62.50 ($125 if married). File form NYC-210.
Reminder #5 – Residential Energy Credit: If you did not claim it on any of your tax return from 2006-2012, you can get a $500 credit on your 2013 tax return. The credit is 10 percent of the amount you spent on insulation, water heater, windows/doors, HVAC. Check it out.
Reminder #7: Digital cameras are a great way to document your possessions — not just valuables. Take pictures from several angles of each room in your home. If something happens, these pictures can help jog your memory about missing items. Save the pictures on your desktop, and back up your desktop data with a cheap program like Carbonite.com.
Reminder #8: Exempt from tax withholding? If you claimed an exemption from income tax withholding for 2013, it needs to be renewed by February 18 by filing a new W-4.
QUIP: Only in America… could politicians talk about the greed of the rich at a $35,000.00 a plate campaign fund-raising event.
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.