Guard your personal documents to keep thieves from stealing your identity and using it to claim your tax refund.
This post is by Cameron Huddleston of Kiplinger's Personal Finance magazine.
Tax season officially started this week when the IRS began accepting returns. Even if you're not ready to start preparing your taxes, you need to start thinking about protecting your identity because thieves are looking for ways to steal it at tax time. In particular, they're after your Social Security number so they can use it to fraudulently file a return to claim a refund.
Tax- and wage-related fraud often tops the Federal Trade Commission's annual list of identity theft complaints. And the IRS sees thousands of scams meant to trick taxpayers into revealing personal information.
The agency says it has stepped up its efforts this year to protect taxpayers from ID theft, including increasing the number of screening filters to spot fraudulent returns filed by thieves to collect refunds that don't belong to them. However, taxpayers need to take their own steps to protect their identity and guard against fraud during tax season.
Most taxpayers can begin filing their federal income tax returns, and many can file for free through the agency's Free File program.
This post is by Kay Bell of Don't Mess With Taxes.
Have you filed your 2012 tax return yet? Millions already have filed today.
Like racers in the starting blocks, these taxpayers have been poised to send their returns to the Internal Revenue Service for weeks, but had to wait.
Because Congress waited until Jan. 1 to approve the American Tax Relief Act, which includes many provisions affecting 2012 tax returns, the IRS needed time to get forms and instructions updated and its computers reprogrammed.
The IRS is ready to take returns from most (but not all) taxpayers today. It's now accepting returns that are filed the old-fashioned way, filled out paper and snail-mailed in, as well as electronic filings.
The IRS allows taxpayers who take the standard deduction to cut their taxes by claiming certain adjustments to income without filling out Schedule A.
This post is by Kay Bell at Bankrate.com.
What do teachers, divorced people and people paying off student loans have in common? They can cut taxes without itemizing.
These filers, along with other taxpayers who fit into special categories, might be able to claim at least one of the dozen-plus deductions found directly on Form 1040 without hassling with Schedule A.
Taxpayers who file Form 1040A can claim a few of these tax deductions on that shorter form, too.
The agency is struggling to combat identity fraud and answer more questions with fewer employees. That doesn't work very well for taxpayers.
This post is by Janet Novack at Forbes.com.
Customer service at the Internal Revenue Service is dismal and deteriorating. (Only 68% of telephone callers who wanted to talk to a human at the IRS last tax-filing season reached one, and then only after an average 17-minute wait.) The epidemic of identity-theft refund fraud hasn’t yet been contained. Hope for a major reform that might simplify the tax code is waning. And two weeks ago a federal judge issued a permanent injunction blocking an IRS plan to regulate and enforce some minimum competency and continuing education requirements on hundreds of thousands of currently unregulated paid tax preparers.
"If the injunction stands, the taxpayers of the United States will be grievously harmed," IRS National Taxpayer Advocate Nina E. Olson told Forbes. "The practical effect of not having some kind of consumer protection for taxpayers going to return preparers is enormous. And I say that seeing all the return preparer fraud, and the return preparer negligence, and the return preparer inadvertent mistakes that happen."
Repeat victims of refund theft complain that the IRS is slow to fix the problem. You can cut your chances of thieves claiming your refund by filing early.
This post is by Kelly Santos of Credit.com.
But in the past few years, fraudsters have hit Parker again and again, despite IRS efforts to resolve the problem.
Parker is among a growing number of taxpayers who are becoming repeat victims of tax-related identity theft. "It’s a pattern we’re seeing on the rise," said Brett Montgomery, who helps resolve identity fraud cases for Identity Theft 911. "The IRS investigation process takes so long to run its course, that victims are getting hit year after year. It’s a vicious cycle."
The IRS has 210 days to contact victims after they submit a fraud complaint. If a refund or a letter of intent isn’t issued at that time, victims can petition for a referral to a case manager. The first referral request has a 45-day window. If victims don’t receive a response, they can request a second referral, which has a 30-day turnaround time. The third referral has a 10-day window.
Here's all the math you need to know to calculate your income tax return, from the standard deduction to the Alternative Minimum Tax threshold.
This post is by The Associated Press.
Key numbers to know when filing your 2012 tax returns, according to the Internal Revenue Service:
- Each personal or dependent exemption is worth $3,800.
- $11,900 for married couples filing a joint return and qualifying widows and widowers.
- $5,950 for singles and married individuals filing separate returns.
- $8,700 for heads of household.
- Taxpayers who are 65 or older or who are blind may be eligible for a higher standard deduction.
Many Americans depend on tax refunds for savings. But you might be better off adjusting your withholding and opening a savings account.
This post is by Kay Bell at Bankrate.com.
That's no secret. Every tax filing season, the Internal Revenue Service notes that most taxpayers get refunds.
But the American Tax and Financial Center, a new undertaking by tax software giant TurboTax, has taken a closer look at this refund trend.
Taxpayers taking mandatory distributions from IRAs can roll over that money to charity without paying any taxes. There is still time to take a 2012 rollover this month.
This post is by Tom Herman of The Wall Street Journal.
As part of the "fiscal cliff" deal, Congress has resurrected a popular tax-law provision, known as the IRA charitable rollover, which had expired at the end of 2011.
The rule allows many investors 70½ or older to transfer as much as $100,000 a year from an individual retirement account directly to a qualified charity without having to count any of that transfer as taxable income.
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