The IRS has a number of ways for people to pay their tax bill. From IRS.gov, here are new programs and policies in place to help taxpayers pay back taxes and avoid tax liens.Tax Bill Payments
If you get a bill for late taxes, you are expected to pay it promptly, including any penalties and interest. If you cannot pay the full amount due, it may be in your best interests to get a loan to pay in full, rather than making installment payments to the IRS.Additional Time to Pay
Under some circumstances, a brief additional amount of time to pay can be requested through the Online Payment Agreement application at www.irs.gov or by calling 800-829-1040.Credit Card Payments
You can pay your tax bill with a credit card, through one of several procession companies.Electronic Funds Transfer
You can pay the balance by electronic funds transfer, check, money order, cashier’s check or cash.Installment Agreement
You can request to pay the amount you owe in monthly installment payments. You must first file all required returns and be current with estimated tax payments.Online Payment Agreement
Installment agreements can be requested online, if you owe $25,000 or less in combined tax, penalties and interest.Form 9465
Complete and mail an IRS Form 9465, Installment Agreement Request. The IRS will usually respond within 30 days.Collection Information Statement
If you owe more than $25,000, you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.User Fees
Upon approval for an installment agreement a one-time user fee of $105 will be charged, or $52 for agreements where payments are deducted directly from your bank account.Check Withholding
Taxpayers who have a balance due may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. A withholding calculator at www.irs.gov can help taxpayers determine the amount that should be withheld.View Original Article
From Kay Bell on Bankrate.com, here are some tax planning steps to take now to lower your tax bill or simplify your tax return.File Your 2010 Return
If you filed for an extension, don't wait until October 17 to file. Rushing your return at the last minute is a recipe for mistakes.Adjust Your Withholding
Ideally, your withholding should be just enough to meet your eventual tax bill. If you got a big refund last year, submit a new W-4 to your payroll office.Evaluate Your Estimated Taxes
If your income that isn't subject to withholding, you must make four estimated tax payments a year. Reassess your estimated tax situation so you aren't paying too much or too little.Hold on to Day Camp Receipts
Day camp (but not overnight camp) costs count toward your child care credit claim.Get Organized
Organizing your files now will make filing your next return easier. Pick a simple system for storing your documentation and stick with it.Give to Charity
Donating now will give you the same tax benefit as donating at the end of the year, and helps charities, as they struggle for donations during the summer.Contribute to Your Retirement Plan
The sooner you contribute to your individual retirement account, the sooner the account starts earning money. Contributions to a 401(k) come out of your paycheck before taxes.Buy a House
Interest rates are at near-historic lows and there are lots of real estate bargains out there. Home ownership offers many tax advantages, so if you've been in the market, now is the time to buy.Make Home Energy Improvements
Home energy efficiency tax credits are still available for 2011, though they are smaller than in previous years.Hire a Tax Professional
With filing season over, tax professionals have more time and are more likely to take on new clients. You will have time to find a tax preparer to fit your tax needs.View Original Article
From IRS.gov, here are some things students should know when they start a summer job.
- As with any job, you must fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. To make sure your withholding is correct, use the Withholding Calculator on www.irs.gov.
- All tips you receive are taxable income and subject to federal income tax.
- Earnings you receive from self-employment are subject to income tax.
- If you have net earnings of $400 or more from self-employment, you will also have to pay self-employment tax to pay for your benefits under the Social Security system.
- Food and lodging allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay is taxable.
- Newspaper carriers or distributors are treated as self-employed for federal tax purposes if they meet the following conditions:
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- They are in the business of delivering newspapers.
- Their pay for these services directly relates to sales rather than to the number of hours worked.
- They perform the delivery services under a written contract which states that they will not be treated as an employee for federal tax purposes.
This short video from the IRS explains how to use the withholding calculator
, if you got a tax refund that was too large or you owed too much.
View on YouTube
From the TurboTax blog, here are some tips to make the filing process smoother next year."Save Your Files"
If you used any tax software, store the file in a safe place you can remember. Consider storing it separate from your computer: external drive, disk, or upload to online storage."Make Document Gathering Easy"
Make a file, label it "Taxes", and keep it safe, handy spot. Keep all appropriate receipts and records in the folder."Consider Quicken"
Start keeping your financial records electronically. Or, use free online money management like Mint.com."Avoid a Big Refund"
Adjust your Form W-4 withholdings. Invest your pay increase into a savings account or 401(k)."Reduce Underpayment Penalties"
If you're self-employed, compute estimated taxes and send the IRS the prescribed payments.View Original Article
Federal tax withholding is the amount of your earnings you have told your employer to keep in order to pay your taxes. This can result in getting a big tax refund, or cause you to owe a lot. From the TurboTax blog, here's information about withholding and how to adjust it.
Most federal income tax is collected by employers by taking money from employee earnings prior to paying them. Form W-4 exists to help employers know how much tax to withhold from employee pay. On the form is a series of allowances that affect withholding levels. More allowances translates to less federal tax withheld by an employer while fewer allowances translates to more taxes withheld.
Most people fill out a W-4 when they're hired, and never update it. However, consider revising your W-4 allowances if:
- You were refunded too much tax
- You owed too much tax
- You got married or divorced
- Your spouse’s employment status changed
- Your number of dependents changed
- You purchased a home
To adjust your withholding, complete Form W-4 again and compare your allowances to the old amount. The IRS also provides a withholding calculator
to help you make the right determination.View Original Article