tax season 2013

10 Ways to Avoid Problems at Tax Time

Follow our recommendations for tax filing and finding a Westchester accountant

You can avoid problems at tax time by following our recommendations

Westchester CPA firm Herman & Company CPA’s have all the answers to your personal finance questions!

If you’re looking for ways to avoid last-minute problems with filing your taxes, take a look at these tips from the IRS:

1.     Don’t Procrastinate. If you wait until the last minute, your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and may increase your risk of making an error.

2.     Organize your tax records. Tax preparation time can be significantly reduced if you develop a system for organizing your records and receipts. Start with the income, deduction or tax credit items that were on last year’s return.

3.     Visit the IRS online at: www.irs.gov You can find tax law information and answers to frequently asked tax questions.

4.     Take advantage of free assistance. The IRS offers recorded messages on about 150 tax topics through its toll-free TeleTax service at 1-800-829-4477. It also offers federal tax forms and publications at 1-800-829-3676. Some libraries, post offices, banks, copy centers and grocery and office supply stores carry the most widely requested forms and instructions. Libraries may also have reference sets of IRS publications.

The IRS also staffs a tax Help Line for Individuals at 1-800-829-1040 and a Business and Specialty Tax Line at 1-800-829-4933. Hearing-impaired individuals with access to TTY/TDD equipment may call 1-800-829-4059 for assistance.

5.     Use IRS Taxpayer Assistance Centers and Volunteer Programs. Free tax help is available at IRS offices nationwide. Also, check your newspaper or local IRS office to find locations for Volunteer Income Tax Assistance or Tax Counseling for the Elderly sites. To obtain the location, dates, and hours of the VITA or TCE volunteer site closest to you, call the IRS toll-free Tax Help Line for Individuals at 1-800-829-1040.

6.     Double-check your math and data entries for possible errors and make sure you have provided the names and correct (and legibly written) Social Security or other identification numbers for yourself, your spouse and your dependents.

7.     Have your refund deposited directly to your bank account to speed it up and to reduce the chance of theft. Check the tax instructions for details on entering the routing and account numbers on your tax return and make sure the numbers you enter are correct.

8.     Don’t panic if you can’t immediately pay any taxes owed. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late payment penalty rate. You also have options for charging your balance on a credit card either online as part of an electronic return or by phone through a processing agent.

9.     Electronic filers with a balance due can file early and authorize the government’s financial agent to take the money directly from their checking or savings account on April 15th, with no fee.  Note that if you file your tax return or a request for a filing extension on time, even if you can’t pay, you avoid potential late filing penalties.

10.  Ask your accountant to request an extension of time to file. If the clock runs out, you can get an automatic six-month extension of time to file, i.e. until October 15th. An extension of time to file does not give you an extension of time to pay, however. You can call 1-888-796-1074, e-file a Form 4868, Application for Automatic Extension of Time to File, that is included in most tax preparation software, or send a paper Form 4868 to the IRS to request the extension. You will need the adjusted gross income and total tax amounts from last year’s return if you request the extension by computer or phone. You may also get an extension by charging your expected balance on a credit card, and then you won’t have to file the form. Contact Official Payments Corporation at 1-800-272-9829 or Link2Gov Corporation. There is no IRS fee for credit card payments, but the processors charge a convenience fee.

Our tip? Contact us. We’re experts in tax preparation and filing. Visit our website: http://www.hermancpa.com/ for advice on:

  • Tax preparation Scarsdale NY
  • Bookkeeping Purchase NY
  • Accounting Rye NY
  • Financial Services Greenwich CT
  • Estate Planning and Retirement Planning Westchester NY

Retirement Contribution and Other Limitations for 2013

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Westchester tax preparers at Herman & Company CPA’s have all the answers to your personal finance questions!

The IRS has announced cost-of-living adjustments affecting the dollar limitations for retirement plans, deductions, and other items. Several of the limitations are higher for 2013 because the increase in the cost-of-living index met the statutory threshold. However, some limitations did not meet that threshold and remain unchanged from 2012.

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan increased from $17,000 in 2012 to $17,500 in 2013. The catch-up contribution limit for those age 50 and over remains unchanged at $5,500.

The contribution limit for both Roth and traditional IRAs has increased $500 from 2012. You can contribute up to $5,500 ($6,500 if you are age 50 or older by year-end) to your IRA in 2013 if certain conditions are met (i.e., sufficient earned income). For married couples, the combined contribution limits are $11,000 ($5,500 each) and $13,000 ($6,500 each if both are age 50 by year-end) when a joint return is filed, provided one or both spouses had at least that much earned income.

Keep in mind that contributions to traditional IRAs may be tax-deductible, subject to specific limitations that increase for 2013. When you establish and contribute to a Roth IRA, contributions are not deductible, but withdrawals are tax-free when specific requirements are satisfied. In addition, there are no mandatory distribution rules at age 70 1/2 with a Roth IRA, and you can continue to make contributions past age 70 1/2 if you meet the earned income requirement.

The 2013 limitation for SIMPLE retirement accounts increased $500 to $12,000. However, the SIMPLE catch-up contribution for those age 50 by year-end is unchanged from 2012 at $2,500.

The 2013 contribution limit for profit-sharing, SEP, and money purchase pension plans is the lesser of (1) 25% of the employee’s compensation-limited to $255,000, an increase of $5,000 from 2012 or (2) $51,000, an increase of $1,000 from 2012.

The social security wage base, for computing the social security tax (OASDI), increases to $113,700 in 2013, up from $110,100 for 2012. The additional $3,600 for 2013 represents an increase of 3.3% in the wage base.

Finally, the annual exclusion for gifts increased by $1,000 and is $14,000 in 2013.

Please contact Westchester tax preparation firm Herman & Company CPA’s if you have any questions!

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.