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Tips and Tricks - USA
General Tips and Advice
No business wants to have its tax returns examined any more closely than
necessary. Below are some of the most common errors businesses make when filing
their taxes. Be sure you steer clear of these potential red flags.
Preliminary Information, Filing Status, and Exemptions
Include the correct Social Security number for you and your dependents.
If you plan to be out of the country on vacation on April 15, don't assume you're
entitled to an automatic filing extension. You must request an extension on
Form 4868.
Gross Income
If you're reporting any income differently than it was reported to you on
Form 1099, be sure to note the amount of income from the 1099 on your return
then adjust it attaching your own statement explaining the adjustment.
If you rolled over a regular IRA to a Roth IRA in 1998, include one-quarter of
the resulting income on your return (unless you opted to include it all in 1998).
Adjusted Gross Income
You can't make an IRA contribution for 2008 after April 15, 2009, even if you
receive a filing extension.
You can't take a deduction for an IRA rollover.
You can't base IRA contributions on unearned income (such as dividends,
interest, rents from rental property).
You can't convert your regular IRA to a Roth IRA if your income is over a threshold
amount.
Don't deduct any Roth IRA contributions.
Deductions and Tax Computation
If you are self-employed and your children are under 18, hire them. You can pay
them up to $4,700, deduct it from your business, and the children will not pay
income tax on it. You must file a W-2 for them, but there are no Social Security
or Medicare taxes on them. If they make a deductible IRA contribution, they can
earn up to $7,700 without paying income taxes.
Don't deduct prior year state and local taxes you paid in current year (for example, don't
deduct your fourth-quarter state estimated tax payment for 2008 made in 2009).
Don't take a deduction for your commuting expenses.
Make sure to look under the correct column for your filing status when you look
up your tax liability in the tax tables.
Other Taxes
If you had self-employment income of $400 or more, be sure to figure
self-employment tax. You must include in self-employment income directors fees
and income from a partnership or limited liability company.
If you exercised an incentive stock option or owned private activity
bonds, check to see whether you owe any alternative minimum tax.
Payments
Make sure you attach your Form W-2s (and any 1099s showing tax withholding) to
your return.
Re-check your math.
Be sure to sign your return. If you file jointly, both spouses must sign the
return.
If your return is more than five pages, add extra postage to ensure proper
delivery to the IRS.
If you apply for an extension, don't forget to include a check for any estimated
balance due.
Send your estimated taxes separately from your income tax return.
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