Here's a look at the laws that could wage a multipronged attack on your wallet and what you can do to prepare.
In fact, nearly 50 percent of taxpayers will be audited in their lifetime because of errors or omissions, according to a guide titled, "Surviving an IRS Tax Audit."
E-filing is the latest and most popular way to file taxes. Filing online not only reduces the errors made during this process, but also cuts down on the amount of time it takes to file. What's more, most e-file websites provide tax experts, communication specialists and economists to help e-filers through the process.
Here are a few other benefits to filing online, according to tax-experts:
The growing popularity and convenience of e-filing prompted the IRS to provide free e-file service to taxpayers. However, only taxpayers with an Adjusted Gross Income of $50,000 or less qualified for the service. The IRS warns that taxpayers who used Free File in the past might not qualify for the services in 2006. Free File users should check IRS.gov in mid-January for information.
If a taxpayer doesn't qualify for Free File, there are other options. But, taxpayers should take certain precautions before buying e-filing software or filing online. The Internal Revenues Service recommends taxpayers verify the following services:
Free Services provided by commercial companies
Members of the tax software industry provide these free tax preparation and electronic filing services; not the IRS. Once taxpayers choose a particular company, they will be sent directly to the company's commercial website. Any questions about a particular service or company should be directed to the company providing the free service and not the IRS. Please contact the company to resolve any income tax issues. To find out how to contact the company, please refer to the company's website for more information about their customer service options.
The government believes that the private industry, given its established expertise and experience in the field of electronic tax preparation, has a proven track record in providing the best technology and services available. In addition, the government believes a partnership with private industry will provide taxpayers with higher quality services by using the existing expertise of the private sector; maximize consumer choice; promote competition within the marketplace; and meet objectives in the least costly manner to taxpayers.
When choosing a company, be sure to link to the company's website through IRS.gov
By going directly to a company's website and not through IRS.gov, taxpayers may be charged a fee. To find out more about each company's pricing policies and fees, refer to pricing information on the company's home page or refer to the "more details" link by each company's free offer description and then scroll down to the bottom of the page and find the section called "Fee-based Offer Information."
Taxpayers are under no obligation to buy any additional services
During the course of preparing an online tax return, taxpayers may choose to browse other products and services that some companies may provide for a fee. Taxpayers are under no obligation to buy additional products and services. The decision to buy these services is entirely up to the taxpayer. For example, a company may offer an Individual Retirement Account (IRA) or a mutual fund or other investment related products for a fee.
There is no obligation to buy these products or services for preparing and e-filing a federal income tax return. As long as the taxpayer meets the company's free offer criteria, it's acceptable to simply prepare and e-file your federal return for free.
Taxpayers may exceed eligibility criteria after selecting a company
Taxpayers may determine that after they start preparing a tax return with a particular company they are not eligible for the company's free service and may be subject to a fee
If this notification occurs taxpayers have the following options:
For example, if taxpayers select a company whose free services are provided to individuals with an AGI of $26,000 or less and, based on the tax data, the company determines the AGI exceeds the $26,000 limit, taxpayers will be notified that they may be subject to a fee. It is important to understand each of the company's eligibility criteria before selecting a company.
Tax information and data will be protected -- Privacy and Security concerns
The IRS monitors the progress of each of the companies. If any problems develop, the companies are required to alert the IRS. If appropriate, the IRS will remove the company from the IRS.gov site until the problem is resolved.
All e-filing servies require a little research. But filing taxes online can save military families time and money, maybe a little sanity too.
Once the VA has granted your disability, an entitlement letter will be provided that outlines the percentage of disability and monthly compensation amount granted.
With tax season in full swing, you should take note of the many deductions and credits available to you because of your military service; whether on active duty or on reserve.
Although going back to school can be a pricey venture, military servicemen and women should keep in mind that their military status makes them eligible for certain education benefits.