One question we received several times: Who must/who should file a return?
You do NOT have to file if your income is less than the allowable deductions:For singles: $5,950 plus the $3800 personal exemption=$9,750For marrieds: $11,900 plus $3800 each =19,500
If you are over 65, the amount is even higher:For singles, add another $1450 to that totalFor marrieds, add $1150 per person
You may WANT to file, however, even if your income is less than the 'total' to get back money paid in --for example, deductions from your wages. It's worth figuring!
Who is likely to be audited?Here are some red flags for the IRS!1. if your income is over $200,0002. You have not reported ALL taxable income (the IRS gets copies of all your forms from banks, etc)3. Large charitable deductions (be sure to keep all supporting documents from the charity)4. The home office deduction (it must be used exclusively and regularly as your place of business)5. Claiming rental losses (especially if your day job is not in the real estate business)6. Deducting business meals, travel &/or entertainment (keep detailed records!)7. Claiming 100% business use of a vehicle (keep detailed mileage logs and calendar entries)8. Writing off a loss for a hobby activity (you must report income, and you can deduct expenses)9. Running a cash business10.Failing to report a foreign bank account11.Engaging in currency transactions12.Taking higher than average deductions
Standard or itemized deduction?Do the math--figure your taxes both ways (it won't take that much longer, if you have all the records!)--use the version that gives you the biggest refund or the smallest bill.
Our Certified Financial Planners are back, answering your tax questions on Monday, April 1.Plan on calling (477-9480 from 5 - 6:30pm or email us at firstname.lastname@example.org you need an answer right away, www.irs.gov
Our panel on Monday, March 18:Grace Ghezzi, Benefit Consulting Group (234-7526)Dennis Hebert, Hebert Financial/Blue Ocean (474-1707)Bill Kriesel, Bowers & Company (234-1186)