Tax Season is Easy with TurboTax
Now that the Tax Season has just begun again and TurboTax 2014 is here to help you with guarantee to help you to reduce tax payment with the least knowledge about taxes for both home and business. With TurboTax, you don’t need to know tax but just wait for the refund, that’s because TurboTax will guide you step by step which is very easy to get tax refund by turbotax. Firstly, before getting any refund, answer the simple questions about yourselves, based on what you tell Turbotax, the team will start preparing tax return for you. Next, another step to get tax refunded, Turbotax will ask you about the money you’ve earned during last year and the sweet thing is you don’t have to do any math as TurboTax will do all the work for you. Then, Turbo tax will start on maximizing your tax refund. TurboTax comes with hundreds of tax deduction which included charitable donation, student loan interest to get the maximum refund you deserved. TurboTax will track your refund as you go along so you will always know where you stand. You can always save your work and come back to it later and helps will always there when you need it. You can also get answers anytime with the expert helps. When you’re done, TurboTax Online will double check everything to make sure the return is accurate so you can get your maximum refund guaranteed. That’s it, it is that easy, Turbo tax will also help to e-file your return. Now, for this year, the IRS has issued more than 9 out of 10 refunds to taxpayers less than 21 days last year and TurboTax is expected to be the same this year.
Imagine that you have completed your tax return for the year and expect a large refund. Some months later, you receive a notice from the IRS that not only eliminates the refund, but also demands an additional sum because of something known as the alternative way minimum tax refund. Not knowing what this alternative tax means, you ponder whether this is an error. Previously, thirteen different adjustments were discussed. The purpose of this chapter is to review the five tax preference items (TPIs) and see how they might affect the individual taxpayer. An item of tax preference (tax preference item or TPI) is any one of a series of deductions or preferentially treated income under the AMT. While adjustments can either increase or decrease AMTI, TPIs can only increase AMTI. It is this difference that casts emphasis on TPIs, but impacts few individual taxpayers. The nature of TPIs is vastly different for the average, middle-class taxpayer than the character of the adjustments. While all taxpayers who file take the standard deduction or itemize and claim personal exemptions, few have tax-exempt bonds, oil and gas properties, or pre-1987 (in 2004) depreciable properties. TPIs are to be avoided at all costs because they can only put a taxpayer in a worse AMT position. While tax planning is vital for both adjustments and TPIs, the latter, if left unchecked, can create real havoc to a taxpayer’s AMT liability. TPIs are applicable to both individual and corporate taxpayers, but only two (or possibly three) of the TPIs have any real significance for individuals. These are accelerated depreciation, small business stock exclusion, and the most important, tax-exempt interest.
There is substantial confusion, even among highly educated CPAs, lawyers, bankers, etc., as to what the terms exemption, exclusion, deduction, and credit mean in the tax area. The following should prove helpful.
- Exemptions – are special deductions that allow certain classes of income or taxpayers to pay no tax (e.g., personal and dependency exemptions).
- Exclusions – are specific classes of income or taxpayers that need not be included in income or pay tax, respectively (e.g., receipt of a Christmas gift).
- Deductions – are always based on what Congress and the tax law say. In general terms, a deduction is an expense paid in cash, in kind, or claimed on paper that reduces taxable income. However, unlike a tax credit, the value of a tax deduction is directly measured by your marginal tax bracket. For instance, if you decide to give $1,000 to your church for its building campaign and your tax bracket is 35%, your out-of-pocket cost is $650 (tax deduction x (1 – tax rate)). Uncle Sam lets you deduct against your taxable income on Form 1040, Schedule A, “Itemized Deductions,” the $1,000 charitable deduction. Notice that the higher a taxpayer’s marginal tax bracket, the more valuable the deduction.
- Credits – are amounts that offset, dollar-for-dollar, tax liability. Deductions only reduce taxable income. They do not directly lower your tax liability. Tax credits are either refundable (reduction in tax liability may become a negative amount, for example, earned income credit or credit for withholding on wages) or nonrefundable (reduction in tax liability cannot be reduced below $0, for example, foreign tax credit or minimum tax credit). Tax credits are more valuable than tax deductions and are not based upon a taxpayer’s marginal tax bracket.