Tax Time Checklist

checklist taxAre you one of the millions of Americans who will wait until Tuesday, April 17, 2012 this year to complete your tax returns?


If you STILL haven’t filed, make sure you run through these steps to ensure everything is in order.


Step 1: Don’t forget important numbers

Whether you file an electronic or paper return, the numbers to check most carefully on the tax return are the identification numbers — Social Security numbers — for each person listed. This includes the taxpayer, spouse, dependents and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.


Taxpayers filing paper returns should also double-check that they have correctly figured the refund or balance due and have used the right figure from the tax table.


Step 2: Don’t forget to sign the returns

Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.

People sending a payment should make the check out to “United States Treasury” and should enclose it with, but not attach it to the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the taxpayer’s Social Security number, daytime phone number, the tax year and the type of form filed.

By the April due date, taxpayers should either file a return or request an extension of time to file (Form 4868). Remember, the extension of time to file is not an extension of time to pay.

 Forms and publications and helpful information on a variety of tax subjects are available around the clock on the IRS Web site at


Step 3: Don’t ignore the Alternative Minimum Tax (AMT)

AMT is complex enough to make even a tax pro’s head spin. If you don’t know what it is or if it applies to you, do some digging. The IRS will flag an AMT that’s MIA, and you could get smacked with the taxes you owe plus penalties and interest if you don’t pay your tab on time. CPAs are prepared to discuss in more detail if necessary on this topic.


Step 4: Don’t leave any money on the table

Some common tax return errors actually work in your favor, not Uncle Sam’s. Many people assume that itemizing your deductions is the best way to reduce your tax bill, but don’t automatically dismiss the standard deduction. If your itemized deductions aren’t even close (e.g., if your home is paid off or you live in a state that doesn’t charge income tax), then going with the standard deduction will be better for your bottom line.


Step 5: Don’t mess up state tax refunds

Don’t make the mistake many taxpayers do by blindly reporting prior-year state tax deductions as income in the current year. Even if the state taxing authorities notified you of your refund, they have no idea whether that refund is taxable. If you didn’t receive a benefit for deducting those taxes last year, your refund may be partially or completely untaxable. For example, you may have used the standard deduction for federal purposes and itemized on your state return, or used the sales tax tables rather than state taxes paid in the prior year. If that’s the case, you might be overstating your taxable income by simply reporting your entire state tax refund as current-year income.


Step 6: Don’t overlook carry-forwards

Sometimes lemons (like a stock you own that tanked) can be turned into lemonade (a tax deduction!). And in many cases, you can carry forward losses from prior years to this year’s tax return — so don’t forget about them. (As if they were in danger of slipping your mind this year.)


Step 7: Go to the IRS Web site

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is

Useful IRS Links That Can Help Taxpayers:

Five Important Tax Facts for the Self Employed

Tax On.

checklist tax self exployedBeing your own boss and/or being the boss of others is a difficult and daunting endeavour.

Sure, it’s great that when you work for yourself you are no longer a “slave to the man,” but simultaneously it’s intimidating because you must accurately report all of your income and expenses to the IRS every year.
If you are a self-employed person, an independent contractor, or plan on becoming one, you have come to the right place!

One of the overall goals at Tax On Tax Off is to provide you with as many excellent tips for deducting business expenses as possible.

Before we do that however, we feel it best to start out with an introductory article for those not as well versed in the self-employed arena.

Today and onward, we are going to de-mystify technical jargon, feed you informative stats, and explain the current climate for self-employed people as clearly as possible.

Before we get into whether or not you can deduct your Gym Membership (sorry bro) and your new Gucci suit (nope), we are going to cover five important areas that self-employed people will benefit from knowing:

Five Important Tax Facts for the Self Employed

1. The terms sole-proprietor and self-employed person pretty much mean the same thing

In general you can classify yourself as any of these two terms. The important thing is that you are carrying on a trade or business with the intent of making a profit. Most of the time, the term independent contractor is very similar to these two terms but not as synonymous because you can be both incorporated and an independent contractor.

2. Self-employed persons report their business income or loss on Schedule C of IRS Form 1040

Self-employment tax is calculated on Schedule SE, which is also part of IRS Form 1040. If your estimated tax liability exceeds $1,000 U.S. dollars, estimated taxes should be paid quarterly using form 1040-ES (FYI the ES stands for ‘estimated’). If you choose not to pay estimated taxes the IRS will very likely choose to charge you interest and penalties.

3. The amount you pay in self-employment tax is based completely upon your net self-employment income

What is “net” income you ask?

“Net income,” to keep it simple is your gross income less your business expenses. Expenses can range from property tax to freight to your everyday business expenses. Having well-kept, contemporaneous records will assure greater piece-of-mind come tax time.

4. The 2010 Tax Relief Act reduced the self-employment tax by 2% for self-employment income earned in calendar year 2011

The self-employment tax rate for self-employment income earned in 2011 is 13.3% (10.4% for Social Security and 2.9% for Medicare). By comparison, for self-employment income earned in 2010, the self-employment tax rate was 15.3%. The rate consists of two parts: 12.4% for social security and 2.9% for Medicare.

5. You are not alone in your journey as a sole-proprietor and there are resources available to help you

And we’re not just talking about the kind folks at Tax On Tax Off of course!

In fact, approximately one-quarter of the working population in America identify as a sole-proprietor. You can join the National Association for the Self-Employed or visit their website at for continued information and on-going support for your line of work.


Of the five areas outlined above, the most important facts for you to remember as someone reading this is that the self-employment tax rate for 2011 is 2% lower than in prior years and that if you have an estimated tax liability of $1,000 or more you should strongly consider making estimated tax payments every quarter.
Now that we have gone over the essential facts of being self-employed, in our next article we will delve into properly deducting those pesky business expenses of yours. Stay tuned for an article aptly titled: Deductions for the Self-Employed.


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Tax Filing Season | Do You Need To File?

start tax season

Tax On.


It’s Tax-filing season in the US.

The IRS started accepted electronic filing on Jan 17th so there’s never been a  better time to ensure you know all the tax rules and laws to make sure you only pay the tax you need to.


If you’re just starting out in the world you may be wondering how much money do you have to earn to file taxes.

It’s an important question, but thankfully it’s easily answered. In short, it’s $9,500 if you’re single.

For the full breakdown here’s the handy table for income earned in 2011.




Filing Status Minimum Gross Income (under 65) Minimum Gross Income (65+)
Single $9,500 $10,950
Head of Household $12,200 $13,650
Married Filing Jointly $19,000 $20,150 (one spouse)
$21,300 (both spouses)
Married Filing Separately $3,700 $3,700
Widow with Dependent Child $15,300 $16,450


Important Tax exceptions and considerations

These figures refer to ‘Gross Income’ – the total money you have earned before taxes.

As a general rule if you receive social security income this is not counted in your threshold. However, if half of your social securities and your other group income is more than $25k (or $32k if married filing jointly) then you do have to file a tax return for 2011.

For more info from the IRS: Are Your Social Security Benefits Taxable?

If you have other income sources like if you are self employed you must file if your 2011 Self employment net earnings are greater than $400.


Why You Should File Regardless of Income

Even if you think you are not required to file a tax return, it might be worth doing so anyway.

It definitely makes sense if you have had any federal withholding or are entitled to tax credits. For example if you qualify for earned income tax credit you may get a tax refund.

And regardless of income you need to file if you have sold your home in 2011 (as detailed in Publication 17)


If you have any other tax questions we’d love to hear from you – you certainly will not be the first or last person to have the same question and by sharing the answers we can help more people only pay the tax they need to. Email:


Tax Off.