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Consumer Focus: Tackling Your Taxes
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Tackling Your Taxes

First Things First

Get organized. You can significantly reduce the amount of time that it takes to prepare your tax return if all of your financial records are in one place. You will want to make sure that you have all your income and deduction documents handy and a copy of last year's tax returns available for reference.

Don't procrastinate. If you have lost paperwork or if some information is missing, waiting to the last minute may prevent you from obtaining all the forms and documents that you need to file your tax return on time.

Types of income include:
  • Paid earnings from employment including bonuses and commissions.
  • Gains from investments including dividends and profits from the sale of an asset.
  • Social Security benefits.
  • Tax refunds for the previous year.
  • Pension income.
  • Unemployment compensation.
  • Miscellaneous income such as interest on a savings account and rental fees.
  • Monetary prizes and gambling winnings.
  • Alimony received.
  • Scholarships and fellowships.
Types of income that may be exempt include:
  • 401(k) salary deferrals.
  • 403(b) salary deferrals
  • Child support payments received.
  • Gifts.
  • Inheritances.
  • Life Insurance proceeds received.
  • Certain employee fringe benefits.
Here are some deductions that everyone receives. To tax professionals, they are better known as "above the line deductions."
  • One-half of self employment taxes paid.
  • Self-employed health insurance premiums (limited).
  • Alimony paid to an ex-spouse.
  • Contributions to a traditional IRA (limited).
  • Qualified moving expenses.
  • Student loan interest paid.
  • Penalty paid from prematurely cashing in a certificate of deposit.
Here are some deductions you receive only if you itemize*. To tax professionals, they are better known as "below the line deductions."
  • Medical expenses (costs that exceed 7.5% of your Adjusted Gross Income).
  • State and local income taxes.
  • Monies paid related to property including real estate taxes and mortgage interest.
  • Charitable contributions (qualifications apply).
  • Casualty and theft loss.

*If your itemized deductions do not exceed the standard deduction; it is better to take the standard deduction.

These lists do not include every possible item. If you have a unique situation or a question it is best to ask a professional or the IRS. The links below will help you find a professional in your area.


Other Resources

This is just a brief overview. For more information on taxes, check out these resources and on the World Wide Web:

Publications Available:


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So Many Ways to File

When you are ready to sit down and put together the pieces of your tax puzzle, here are your options:

  • Paper File: If you are traditional or just like the feel of putting pen to paper, you can: 1) order the forms you need by calling 1-800-TAX-FORM (1-800-829-3676), 2) printing copies of current tax forms, or 3) picking them up at most local IRS offices, participating libraries, or post offices.
  • E-File: If you are ready to toss the paper aside, filing electronically is an option. Last year over 40 million Americans used IRS e-file to file their income tax return electronically. The IRS e-file program offers a fast, accurate, safe, and convenient alternative to filing a traditional paper return. Note that downloading or purchasing software is required and you will be charged a fee for this.
  • TeleFile: The other paperless option is to file over the telephone. If last year's return met the requirements for Form 1040EZ, you maybe able to use this interactive computer system that automatically calculates your tax and begins the electronic filing process over the telephone. It's quick, easy, free, and available 24 hours a day, seven days a week using a toll-free number. If you qualify, you can order a TeleFile tax package by calling 1-800-829-1040.
Image of baby new year

What's New in 2002

Listed below are a few of the new tax laws that we have for this year. The others can be found on the "New For You 2002" section of the IRS website.

  • Individual income tax rates are reduced.
  • Alternative Minimum Tax exemptions increase by $4,000 for joint filers and $2,000 for single or Head of Household filers.
  • Child tax credit has increased to $600 per child.
  • The Tax Payer Advocate Service represents tax payer's concerns within the IRS. Call 1-877-777-4778 for more information about this service.
  • Many individuals will have new addresses to file their tax returns. You can check online to find out if the address you need is correct.
Image of a man sitting at a computer

Information Is at Your Fingertips

If you have any tax questions from "how long should my refund take" to "what is a refund", the answers may be just a click away.

Internal Revenue Service online information H&R Block online information

If you need a serious break, the Tax Planning: U.S. website has a Tax Humor link along with a plethora of useful information.

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Last Resort

If this is April Fool's Day and you are starting to panic because things are not coming together as nicely as you had planned, don't worry. You still have options.

If you can't immediately pay your taxes, one option is to set up an installment agreement. You can do this by filing a Form 9465 or calling 1-800-829-1040. This installment option will allow you to pay what you owe in monthly payments rather than one lump sum. Note that if you must make payments, interest and penalties will apply. If that does not fit your particular financial situation, you may have a special case and be eligible for the new Tax Payer Advocate Service.

If the clock is about to run out, request an extension of time to file. You can get an automatic four-month extension of time to file, to August 15. Call 1-888-796-1074, e-file or mail a Form 4868 to the IRS. Note that the extension does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty.


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