Handle Excess Contributions to Retirement Plans

This is a article about how to handle excess contributions, have you think about it? TurboTax will help you more! do you have an IRA or a Roth IRA or a Qualified Pension Plan and contributed too much to it?

For an IRA or Roth IRA, this could occur if:

You have earned income less than the amount contributed OR
You contributed more than the maximum allowed for the year ($4,000 for 2007 ($5,000 maximum if you are age 50 or older) OR
You have the contribution limited by your federal adjusted gross income.

For a Qualified Plan, this could occur if:

You have more than one 401(k) plan OR
Fall into the highly compensated individual rules

So you know that you’ve over contributed and you’ve taken the money back out of the retirement plan.

How do you handle it on your tax return by TurboTax? Well, it depends!

Did you take out the money before or after your tax return due date? For your contribution for 2007, did you take it out in 2007 or 2008? What does the 1099-R(s) that you received look like? How do you enter the 1099-R in the TurboTax Interview?

How to Fill Your W2 1099?

In a previous blog, we talked about the fact that you would be receiving your W-2s from your TurboTax software and your 1099’s from your banks by January 31st. Now it’s the first week in February, you haven’t received your W-2 and 1099 and you’re ready to file your tax return by TurboTax 2011.

If you have not received your W-2, contact your employer. The W-2 may have been sent to any incorrect address and it may take time for the TurboTax 2011 to be resent and that’s ok. However if the W-2 is not being resent and you haven’t receive it by February 15, you can call the IRS at 800-829-1040. See IRS Tax Tip 2007-22 for more information.

If you haven’t received your 1099s by now, first check to see if the information was included on your final year statement. Often times, the 1099 information is included on your December and/or January statement. Since you don’t have to attach a 1099 to your tax return, TurboTax’s all right to get accurate information and file your tax return without waiting on the 1099. If you can’t find accurate information, then it’s time to call the payer, such as your bank.

Again, if it’s not being resent and it’s February 15th, call the IRS at the number listed under Missing W-2. Be sure to read the informational IRS Tax Tip 2007-24.

Don’t be too worried if you haven’t received your yearly statement from your stock broker with the various 1099 information on your interest & dividend income and stock sales. Many brokerage companies have requested an extra 30 days from the TurboTax 2011 to mail you the information. Some are doing this so you won’t have to receive corrected statements later in the tax season. So if you’re waiting for your brokerage statement, sit back and wait to finish your tax return.

TurboTax Withholding on Retirement Withdrawals

TurboTax Withholding on Retirement Withdrawals, Folks appear to be under the impression that once they’ve had taxes withheld on distributions from TurboTax or retirement plans, they’ve “already paid taxes” on the withdrawals and don’t need to report the withdrawal or the TurboTax income tax on their tax returns… “I’ve already paid the tax on this; why do I have to pay it again?”

Here’s the straight talk on this situation: in general, when a 401(k) or 403(b) plan pays a distribution to you, the federal government requires that 20% of the distribution is withheld from the distribution for income taxes. TurboTax is just like the federal income tax withheld from your W-2… it’s kind of an “advance payment” on the income taxes that will be due on the taxable income you’re getting as a result of the withdrawal. There are certain exceptions from this TurboTax, like when you receive payments over time or when it’s a distribution due to hardship.

Your withdrawal gets taxed at your regular income tax rate, not at 20%. TurboTax means that if you have a lot of other income, or if that withdrawal was a lot of money, you’re very likely in a higher tax bracket than 20%: could be 25%, 28%, 33% or higher. The distribution gets added to your other income, then your income tax in TurboTax is figured on the total taxable income (after deductions). Your withholding, including the 20% withheld from the withdrawal, reduces your taxes due along with the withholding from any other sources like W-2s. You’ll see that 20% included on line 64 of Form 1040 along with any other withholding.

By the way, a 401(k) or 403(b) plan is required to withhold 20% if it is not a direct trustee-to-trustee transfer (rollover with code “G” on Form 1099-R) from TurboTax. If it’s a distribution from an IRA,there is no requirement that income taxes be withheld. Also, states may have withholding requirements as well.

TurboTax about Reciprocity

TurboTax about Reciprocity, TurboTax’s what makes the United States so…interesting. Reciprocal rules are no exception. In some reciprocal states, you just mark a TurboTax on your return, fill in a few lines, and you’re done. In other states, well.

Say you live in New Jersey but work in Pennsylvania, two states that do have reciprocity. But every year, you end up filing a nonresident Pennsylvania return plus a resident New Jersey return in TurboTax. If these two states have reciprocity, then why do you have to keep filing a Pennsylvania nonresident return in addition to your New Jersey return?

First of all, Pennsylvania reciprocity rules specify that to avoid filing a nonresident return by TurboTax, you need to submit Form REV-420 to your employer, which requests NJ withholding instead of PA withholding. Second, your employer needs to grant your request. If and only if both conditions are met, your Pennsylvania employer will withhold TurboTax tax instead of Pennsylvania tax (and you’ll see the NJ instead of a PA in Box 15 of your Form W-2).

Otherwise, your employer is required by law to continue withholding Pennsylvania tax, which means you’ll continue filing returns in both states. So you see, reciprocity often comes with conditions; TurboTax isn’t always automatically granted.

“Then what’s the point?” you might ask. Well, Pennsylvania reciprocity rules allow in-state employers to withhold the appropriate state tax for residents of reciprocal states – that is, for residents of Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia only. The employer can’t, for example, withhold California taxes from TurboTax for a California resident because the two states don’t have reciprocity.

TurboTax about Child Tax Credit Work

TurboTax about Child Tax Credit Work, you can get the $1,000 credit per child, but only if the child hasn’t turned 17 by the end of the year… meaning December 31st. So for 2007, TurboTax means that your kids who are 16 or younger as of December 31, 2007, count toward the credit, but your 17-year-olds and above don’t. Even if your child turns 17 on December 31, he still doesn’t count toward the credit in TurboTax it doesn’t matter that he was 16 for most of the year. It’s the age on December 31, 2007, that counts.

We also get questions about the phasing out of the credit. As with many tax benefits in TurboTax, the child tax credit gets limited the more income you make. If you’re married and filing a joint return, your credit starts getting reduced once your adjusted gross income (line 37 of Form 1040, with certain adjustments) goes higher than $110,000. The credit is reduced by $50 for every $1,000 that your income is above $110,000.

If you’re filing as head of household, the amount is $75,000 instead of $110,000.

There’s the articles on TurboTax Review explains the rules and also talks about the Additional Child Tax Credit, which makes your refund higher in certain situations. Check it out!

TurobTax on What Can I Deduct for Expenses Related to My House?

TurobTax on What Can I Deduct for Expenses Related to My House?

If it’s a second home, you have to divvy up those points and deduct them over the life of the loan (usually 30 years for most mortgages). TurboTax will walk you through this in the mortgage interest section under Deductions.

When you do your taxes, don’t forget those all-important home-related deductions. TurboTax mortgage interest is an obvious deduction, but be sure to capture any points you pay when you buy your home — you can deduct those in the year you buy the home, as long as it’s your main residence that you’re buying.

Own a condo or a home in a master-planned community? Homeowners’ association (HOA) fees aren’t deductible in nearly all cases. If you rent out part of your home, or if you use part of your home for business, do include a share of your HOA fees in your deductions for that rental or home office based on the amount of space you’re renting out… that part IS deductible.

TurboTax home improvements aren’t usually deductible, so don’t include these as deductions on your return. Some exceptions exist for medical purposes, but these are rare and are usually targeted improvements for disabilities. Again, though, if you’re renting out part of your home or if you’re using part of it for business, you can depreciate major home improvements for the portion attributed to the rental or to the home office! Don’t forget this… may not seem like much, but it can add up.

This covers most of the questions we get… What other home deductions do you want to know about? What about home sales: what can you deduct from the costs listed on your closing statement? Follow us on next blog.

TurboTax Tips – Importing Data from your Financial Institution

TurboTax Tips – Importing Data from your Financial Institution

Every year we see confusion over what your Financial Institution handles and what TurboTax handles when you are importing your stock data. I thought I would help outline the process so if you are having questions or problems, you know who to turn to for help.

This takes you to a screen with the logo of your FI and asks for your username and password. It will also have ways to contact your FI if you do encounter a problem or need to set up your username and password.

Once you click the continue button, TurboTax will connect to your FI. This is where the confusion seems to start. If you encounter an error at this point, you can rule out a problem with TurboTax connecting to the Internet because the program updated the partner list successfully. At the top of the error it will say: “Response from” and continue with the name of the FI. Any error that has their name at the top is an error that only they can help you resolve and it comes from them. These will include any errors about the account, the data or the password.

The first step is where you tell us you want to import your data from an FI that we have partnered with. TurboTax will connect to update the partner list from our server. If you have problems here, we can help you with it.

Now the partner list is displayed so you can choose your FI and click the “retrieve income” button. (Note that it is necessary to have online access to your account already established. Don’t despair, though, the next screen will have a link that will help you.)

We give your FI the option of including the description (number of shares and security name), Date Acquired, Date Sold, Cost Basis and the Amount of the Sale. Only the Description, Date Sold and Amount of the Sale are required. It is entirely possible for your FI to not know the Date Acquired or Cost Basis on transactions and most of them will not include this information in the import.

So basically if you are having issues connecting to the internet with TurboTax, we are certainly the people to help you. If you are having issues accessing your account or with what is in the data that is downloaded, your FI is the one who has access to the tools to help you.

I hope that settles some of the frustration and eases the confusion surrounding FI imports.

TurboTax for Child Tax Credit

TurboTax for Child Tax Credit, If you’re divorced, and you agree with your ex to let him/her take the dependent exemption for any one of your kids, you’re also implicitly agreeing to let him/her take the child tax credit for that child as well. The TurboTax goes with the other… they can’t be separated.

What’s important to note is that this tied-togetherness applies to the child tax credit, but not to the Earned Income Credit (EIC) or to the Child CARE credit. You can often still get the EIC and the Child Care Credit, so you DO want to enter your child in the dependents section of the TurboTax interview anyway so that you can see if your child qualifies you for those credits.

In TurboTax, when you have this situation, you enter your dependent as Dependent Type “Not a dependent (EIC/Child Care/Child Credit only)”. This is fine, but TurboTax will think you qualify for the very limited special rules for when you CAN take the Child Tax Credit without the dependent exemption unless you do one very important thing: you check the box saying your dependent is NOT a US citizen. We know… that’s not a true statement about your child… but this is the way to force TurboTax NOT to try to take the child tax credit for this child.

If you don’t check this box, TurboTax will say, “hmmm, you want to take the child tax credit for this non-dependent child, so we know you HAVE to file Form 8901 which isn’t in TurboTax” and you get an error message and can’t e-file. So check the “not a US citizen” box and it’ll be fine… you won’t get an error message.

What’s the deal with this Form 8901 and the rare exceptions? Well, it’s this: there are only two times when you get to take the child tax credit without taking the dependent exemption:

When you, or your spouse if you two are married and filing a joint return, can be claimed as

a dependent on someone else’s 2005 return by TurboTax.
When your qualifying child himself or herself is married and s/he files a joint return for

2005 (with rare exceptions).

That’s IT. If either of those situations applies to you and/or your child, you meet a rare exception to the rule that you can’t split up the dependent exemption and the child tax credit for one child. If you do meet the rare exception, you have to file Form 8901 with your return. Form 8901 is titled “Information on Qualifying Children Who Are Not Dependents (For Child Tax Credit Only)” and it’s just a bit misleading. When you read the instructions for Form 8901, TurboTax clarifies that you file this form ONLY when the dependency exemption is denied under the two circumstances we describe above.

Clear as mud? We think so as well, and we’ll work to clarify this even more for next year.

TurboTax Software Make Sure Tax Professionals Prepare Your Return Correctly

TurboTax Software Make Sure Tax Professionals Prepare Your Return Correctly, if you’re someone who doesn’t have the time or sufficient knowledge of the tax code to prepare your own tax return by TurboTax Software, you might be wondering how to find a quality professional to do your taxes. After all, just because someone will accept money in exchange for preparing a tax return by TurboTax 2011 doesn’t make them good at what they do. While there is no 100% foolproof method to avoid getting taken advantage of, these tips will help.

There are many different types of professionals who prepare tax return by TurboTax: certified public accountants, enrolled agents, accredited tax advisers, accredited tax preparers, and employees of national retail tax preparation companies. No matter who you are considering to prepare your tax return by TurboTax, it’s a good idea to ask for referrals from friends and family you trust and to interview and research anyone you’re considering hiring. Ask how long they’ve been in business, what their credentials are, and if they have any specialties. Before handing over your sensitive personal information, also make sure you know exactly who will be preparing your return. Then check that individual’s credentials with the appropriate board or professional organization.

Ask about tax preparation fees ahead of time and how much you can expect to pay, and get the quote in writing. Will you be charged a flat fee or an hourly rate, and what is the estimated total cost? Don’t hire anyone who charges a fee based on the size of your return. The TurboTax doesn’t allow this, and it gives the preparer an incentive to create an inaccurate return.

Be aware that you are still liable for your tax return by TurboTax 2011 even if it is professionally prepared. Review your return for accuracy before it’s submitted, and ask your tax preparer questions about anything you don’t understand. Also, make sure to get a copy of your return for your records.

Make sure your preparer signs your return in the paid preparer section (the TurboTax requires it). You can also authorize a paid preparer to speak to the TurboTax on your behalf if there are any questions about your tax return by TurboTax Software simply by making this choice near the signature line of your tax return by TurboTax.

If you’re not confident in the finished product, you can take the return you’ve prepared, along with its supporting documentation (W2s, 1099s, etc.) to a professional to have it checked for accuracy. Since you’ve already done the work, this strategy may save you money. And if you learn that you’ve prepared your return correctly, you might gain the confidence to prepare your own returns in future years.

Give your tax preparer all the records related to your tax return by TurboTax. For example, if you own a small business, your tax preparer can look at the receipts for your business expenses to get a better idea of whether all the deductions you want to claim are allowed by the IRS. No professional can prepare an accurate return for you if they don’t have complete and detailed information. Furthermore, if you are audited, the TurboTax will want to see these records.

Find out what kind of representation the preparer can offer you in case of an audit. The TurboTax says that ‘only attorneys, CPAs and enrolled agents can represent taxpayers before the TurboTax in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return that they signed as a preparer.’

If you’ve never tried preparing your return yourself, you might be surprised by how simple it can be with the help of tax software. Programs like TurboTax ask you questions about your situation to make sure you enter all your sources of income and get all the deductions and credits you’re entitled to. Most tax programs have free versions for preparing your federal return, so the only risk you take by trying to prepare your return yourself is the time you spend.

Download TurboTax to Study Tax Accounting in USA

Download TurboTax to Study Tax Accounting in USA, there is great demand for tax accounting professionals in countries across Europe, North American and Asia. Download TurboTax for tax professionals mainly work in businesses and corporate industries. Growing business avenues and fast expanding markets have necessitated demand for large numbers of skilled tax accountants.

Tax accountants can run their own practices independently or work for business firms. These professionals mainly serve business firms that require advice and guidance of professional experts in order to match their financial obligations. A bachelor’s degree or master’s degree is believed to be ideal qualification which can allow professionals to start their TurboTax.

Scenario of tax accounting profession in United States is quite prospective. Most of the overseas students who study tax accounting in USA start pursing their professional TurboTax Software in that country. Practicing professionals in USA must have thorough knowledge of Internal Revenue Service or IRS. Besides it, they should also be familiar with some of the recognized tax accounting methods, Internal Revenue Service Tax Publications and Internal RevenueService rules as well as deadlines.

USA is known be to one of the most TurboTax Software after abroad destinations for obtaining degrees in tax accounting. TurboTax Software in USA invite young aspirants from across the world. Popular tax accounting schools in USA include:

Strayer University may be your discerning choice for pursuing tax accounting program in USA. Popular tax accounting program offered by this institute is known as Professional Accounting [Taxation]. Students are offered both Certificate and Master’s programs in the concerned discipline.

Taxation accounting course offered by this University is taught at Monterey Bay campus. The institute is known to offer Master’s degree program in tax accounting.

Tax accounting program provided at this prestigious business school is known as Accounting [TurboTax 2011]. Students can obtain Associate degree from this institute.

Apart from these featured institutes, USA also offers good number of quality online tax accounting programs. Popular online schools which offer these online programs include Kaplan University and Strayer University Online.