|
After You File
Your return's been filed. No need to worry about taxes for another year. We all wish it were this simple!
There is no rest at IRS. They receive about 130 million tax returns. They scrutinize all of them. This takes a few months. As returns are sifted, problems pop up. Someone changed a digit of their Social Security Number - now it matches yours. The interest reported by your bank does not jive with your tax return. A few refund checks got lost. It takes a while to clean everything up.
Extended Return?
If we filed an extension, your return is due by October 15. Any payment was due April 17. IRS will add carrying charges for late payments. I urge you to gather the missing paperwork quickly - a last-minute surprise might be expensive!
Refund Late?
IRS says they can't check until 1 0 weeks after you file, but often are faster. Or try:
1-800-829-4477 - automated help
1-800-829-1954 - refund hotline
The IRS website www.irs.gov has a "Where's My Refund?" link.
Uh-Oh - an IRS Letter!
If you get a letter from IRS, call me. The letter may be confusing. Don't risk making an even bigger mess I'll be glad to handle it.
Will You Be Audited?
There's no sure way to know. IRS compares returns with W-2s and records from banks and brokers. Computers do the work. Most audits start here. IRS sends you a letter. It shows how much you owe if they are right - it looks like a bill. Don't pay! Send it to me, and we'll see what's what.
When IRS questions anything on your return they call this an "audit". You probably picture an "audit" as a face-to-face meeting with an IRS employee who asks lots of questions. IRS says for 2006 only two out of every nine "audits" were face-to-face meetings. In 1992, more than five of every nine "audits" were face-to-face meetings. Since 2002 IRS has nearly doubled the number of audits, and they'd like to do even more.
Find an Error?
If you should find you failed to claim an item on your return, we can file an amended return. You and IRS both have the same time frame to question your return. It's 3 years after the filing deadline. During this period IRS can audit you, but you can also amend your return voluntarily. If you owe IRS you pay the tax plus some interest. If IRS owes you, the same thing applies - you collect the tax savings plus interest.
Protect Your Records.
For now, simply put your return, records, receipts, and cancelled checks in a safe place. You might need to dig them out, but the chances are slim.
Older Records.
It's a good idea to keep tax returns indefinitely. Also, keep records of investments and properties you still own. Other records - cancelled checks, receipts, bank statements, etc. - keep five years' worth of these for safety. Destroy or shred any older records. Don't toss them in the trash!
Planning for 2007
Here are some of the key changes in store for 2007.
Filing Thresholds inch upward. A single filer pays no tax until income reaches $8,750. For a couple it's $17,500. If you'll reach age 65 or older this year, single filers add $1,300, joint filers add $1,050 for each spouse of age 65 or older.
Popular Deductions
Extended through 2007.
A law late in 2006 gave a reprieve to 3 popular deductions. 2007 is the last year for:
- Sales Tax or state income tax - deduct whichever is larger. A big help in states with no income tax.
- Educator Expenses up to $250 of classroom supplies are deductible without itemizing.
- Tuition deductions for any family member who takes post-secondary education. Can be lost to high income.
Energy Credits. Credits for your home are gone after 2007. Get 10% of cost (up to $500) for:
- Exterior windows or skylights - Maximum $200.
- Insulation (window films, too) or exterior insulating doors.
Ask the dealer which items have the correct energy ratings.
Also, collect credits up to:
- $150 for furnaces or water heaters
- $50 for main circulating fans for heating or cooling.
Even larger credits apply to more expensive changes: Up to $2000 in credits for:
- 30% of cost for solar electric generators or water heating.
Mileage Deductions are 48.5¢ per mile this year. Driving for job, business, or rental property counts. This is the simplest way to get your deduction - easier than tracking all costs and driving for the vehicle. Be sure to keep records of activity and mileage.
Child Tax Credit stays at $1,000. It's for any dependent child not age 17 by end of 2007 and reduces your tax bill by $1,000. The credit begins to phase out for couples if income reaches $110,000 (for single filers it's $75,000).
Retirement Savings have higher limits in 2007. Here are the maximum figures:
| Plan |
Maximum Contribution |
50 & up, may add |
401 (k), 403(b),
or 457
SIMPLE
SEP
Keogh IRA,
Roth |
$15,500
$10,500
$45,000
$45,000
$4,000 |
$5,000
$2,500
N/A
N/A
$1,000 |
Other Changes are minor for most folks. One new law will help buyers of a new home. For 2007 ONLY ~ they will be able to deduct mortgage insurance premiums as if they were interest. It's only for new loans and applies only for filers with income below $100,000 with a phase-out above this income level. Not a change, but definitely good news: capital gains rates remain low, and most dividends continue to benefit from the same lower rate as capital gains.
Call Me For Help with new items - family changes, large change of income, a move, job change, or new investments. I may be able to find some help for you. Next February will be too late!
Would you like to read a past issue. Please check out one of these issues:
Spring 2007
Winter 2007
Fall 2006
Winter 2006
Fall 2005
Summer 2005
Spring 2005
Winter 2004
Summer 2004
Spring 2004
|
