Tax Refund Withholdings and Offsets

If you owe money because of certain delinquent debts, the IRS or the Department of Treasury's Financial Management Service (FMS), which issues IRS tax refunds, can offset or reduce your federal tax refund or withhold the entire amount to satisfy the debt.

FMS
Outstanding debts include past–due child support, federal agency nontax debts such as student loans, or state income tax obligations.

The Cliff Notes of Form 1040

A lot of taxpayers use a paid preparer when filing their return. It doesn't hurt to understand a few basic rules about Form 1040.

First you need to determine if you have To file a tax return? Once you've done that let's look at the different sections of the tax return.

Filing Status
There are five filing status available. Married taxpayers can file together (Married Filing Jointly) or apart (Married Filing Separate). Single, Head of Household, and Qualifying Widower are filing statuses for unmarried taxpayers.

Self-Employment Income this year? Here's how to report it.

Schedule C is the form to use when reporting Self-Employment and business income.

All income pertaining to the business is reported. Expenses are subtracted from income to determine if there is a gain (profit) or loss. The net profit or loss is entered on line 12 of Form 1040. If a taxpayer owns and operates more than one business activity, file a separate Schedule C for each business. Combine the profits and losses on Form 1040 line 12 if there is more than one Schedule C.

If net earnings from self-employment are $400 or more, the taxpayer must file an income tax return. If net earnings from are less than $400, the taxpayer may still have to file a return and would still report the net earnings.

Need a Tax Form?

The Internal Revenue Service (IRS) no longer mails booklets to taxpayers. Even the post office and local libraries are no longer supplying tax forms. Here is your one stop spot for tax forms, instructions, schedules, worksheets, W-2 and 1099 examples, planning forms, publications and tables.

FORMS
Form 1040
Form 1040 Instructions
Form 1040A
Form 1040A Instructions
Form 1040EZ
Form 1040EZ Instructions
Form 1040ES Estimated Tax for Individuals
Form 1040V Payment Voucher
Form 1040X Amended U.S. Individual Income Tax Return
Form 1040X Instructions

To itemize or not to itemize? Here's the answer:

Taxpayers have a choice of taking the standard deduction or itemizing their deductions. If itemizing certain expenses results in a greater refund, then file Schedule A and claim the greater deduction on line 40 of Form 1040.

First you have to determine your standard deduction based on your filing status. For 2010, they are:

• Single $5,700
• Married Filing Jointly $11,400
• Head of Household $8,400
• Married Filing Separately $5,700
• Qualifying Widow(er) $11,400

Where to File Paper Tax Returns

Tax Professionals - Where to File Individual Returns for Your Clients
Addresses by state for Forms 1040, 1040A, 1040EZ, 1040ES, 1040V, amended returns, and extensions (also addresses for taxpayers in foreign countries, U.S. possessions, or with other international filing characteristics)

Individual Taxpayers - Where to File Your Own Individual Return
Addresses by state for Forms 1040, 1040A, 1040EZ, 1040ES, 1040V, amended returns, and extensions (also addresses for taxpayers in foreign countries, U.S. possessions, or with other international filing characteristics)

Where to File - All Types of Tax Returns (By Form Number)
Mailing addresses for all types of returns: individual, corporation, partnership, and many others (search for address based on form number)

Pay your January Mortgage Payment now

Increase your mortgage interest deduction in 2010 by paying your January mortgage before December 31. This will give you 13 payments in the calendar year than the usual 12 payments. The additional interest paid will be reported on Form 1098 which is then reported on line 10 of Schedule A.

Let's put it this way: in the 25% bracket for 2010 on a $1,000 interest payment, that saves you an immediate $250 on April 15, 2011. By doing that each year, you have created an interest-free loan of that $250 every year until the loan is paid off.

Next you need to do the following:

• Make it habit to make an early payment every year. Otherwise, 2011 will only have 11 mortgage payments.
• Make sure your mortgage lender calculates interest based on payment date and calculates interest up to that date. If you read your monthly mortgage statement and the interest applied to your principal is the same amount every month, that is a red flag.