Do I have to File a Tax Return?
[Diamond Tax Consultants note: ALWAYS file tax return, whether you need to or not. Once you file, you start the clock ticking on the 3 year statute of limitations for audit. If you never file, IRS or the state can come back and ask for a tax return for that year, forever.]
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive.
Even if you don’t have to file, here are eight reasons why you may want to file:
-
Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
-
Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
-
Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
-
Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
-
Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
-
Establish an official record of your earnings and taxes paid for Social Security purposes.
There are other cases where you may have to file a 1040 tax return form that don’t necessarily offer any benefit, such as;
- owing special taxes on tips or self-employment income of more than $400
- Comply with tax laws. In 2008, if you were single, under age 65 and earned at least $8,950, you are required by law to file a tax return. You can view the complete chart of who should file a tax return for 2008 based on age and filing status (e.g. single, married, separated, etc.) on the IRS website.
If you thought this tip was helpful, click this link to share it with a friend!
Did you get a Form 1099-C or Form 1099-A after you’ve renegotiated debt or had a foreclosure, deed-in-lieu of or short sale? Don’t ignore it! It means you owe taxes, but there could be a way out.
o What if you get a Form 1099-A or Form 1099-C for your personal residence
o What if you get a Form 1099-C for credit card debt
o What if you get a Form 1099-A or Form 1099-C for a second home
o What if you get a Form 1099-A or Form 1099-C for an investment property
o What if you get a Form 1099-A or Form 1099-C for a rental property
You’ll probably want to review Publication 4681, available online from irs.gov or from our office, Diamond Tax Consultants.
If the loans were qualified mortgage indebtedness, (which means you haven’t refinanced and pulled out other cash & you lived in the homes for 2 of the previous 5 years) then most likely you will NOT have tax due on this cancellation of debt (COD).
For others, not all states adopted the 2007 Act that gives the exclusion on COD income for principal residences. The exclusion is only through 2011, but you’re well within that time limit as well.
The one thing you MUST do is include a Form 982 with your tax return in the year that you receive the Form 1099-C. If you don’t, you’re telling the IRS that the COD income will be subject to tax.
If you received this form, contact our office immediately as you may qualify for the exemption.
-
Diamond Tax Consultants proudly sponsors “The Bereaved Families Relief Initiative Network” (BFRIN).
-
Donate your wedding gown and receive a Tax Credit for taxyear 2010! For more information, contact BFRIN ~ The Bereaved Families Relief Initiative Network at
610.609.1521.
To note our organization’s Charitable, Tax Exempt Status: Log on to the United States Government Official Website www.irs.gov and click on “Charities and Non-Profits.” On the left-hand side, click on “Search for Charities.” In the middle of the page, click “Search Now.” Under “Organization” type “Bereaved.” Under “Location” type “Philadelphia.” Choose “PA” as the “State” and click “Search”. Feel free to pass this information on to as many generous people as you know. Thank you so much for your support!
For more tax tips and to receive a FREE report on How To Prepare For The Tax Preparer download it at www.diamondtaxconsultans.com
