Waukesha Accountant | Edith Christian CPA | Itemize

Should I itemize?

You should itemize deductions if your total deductions are more than the standard deduction amount. Also, if your standard deduction is zero, you should itemize any deductions you have if:

• You are married and filing a separate return, and your spouse itemizes deductions,
• You are filing a tax return for a short tax year because of a change in your annual accounting period, or
• You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.

NOTE: If you are a nonresident alien who is married to a U.S. citizen or resident at the end of the year, you can choose to be treated as a U.S. resident. (See Publication 519, U.S. Tax Guide for Aliens.) If you make this choice, you can take the standard deduction.
When to itemize
You may benefit from itemizing your deductions on Schedule A (Form 1040) if you:

• Do not qualify for the standard deduction, or the amount you can claim is limited,
• Had large uninsured medical and dental expenses during the year,
• Paid interest and taxes on your home,
• Had large unreimbursed employee business expenses or other miscellaneous deductions,
• Had large uninsured casualty or theft losses,
• Made large contributions to qualified charities, or
• Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.

Helpful Publications

• Publication 17, Your Federal Income Tax
• Publication 463, Travel, Entertainment, Gift, and Car Expenses
• Publication 501, Exemptions, Standard Deduction, and Filing Information
• Publication 502, Medical and Dental Expenses
• Pub 526, Charitable Contributions
• Pub 529, Miscellaneous Deductions
• Publication 530, Tax Information for First-Time Homeowners
• Pub 535, Business Expenses
• Publication 544, Sales and Other Dispositions of Assets
• Publication 547,Casualties, Disasters, and Thefts
• Publication 561, Determining the Value of Donated Property
• Pub 584, Casualty, Disaster, and Theft Loss Workbook
• Pub 2194 Disaster Losses Kit for Individuals
• Publication 936, Home Mortgage Interest Deduction
• Publication 970, Tax Benefits for Education
• Form 2106, Employee Business Expenses
• Form 2106-EZ, Unreimbursed Employee Business Expenses
• Instructions for Form 2106
• Form 8283, Noncash Charitable Contributions
• Inst 8283, Instructions
  

Tax Tips

Waukesha Accounting | Tips for People Who Pay Estimated Taxes

Tips for People Who Pay Estimated Taxes

If you have income that is not subject to withholding you may need to pay estimated taxes to the IRS during the year. Whether you need to pay estimated taxes is dependent upon your financial circumstances, what you do for a living (if you're self-employed for example), and the types of income you receive. Here are six tips from the IRS that explain estimated taxes and how to pay them.

If you have income from sources such as self-employment, interest, dividends, alimony, rent, gains from the sales of assets, prizes or awards, then you may have to pay estimated tax.

As a general rule, you must pay estimated taxes in 2012 if both of these statements apply:

1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and tax credits, and 2)You expect your withholding and credits to be less than the smaller of 90 percent of your 2012 taxes or 100 percent of the tax on your 2011 return. Special rules apply for farmers, fishermen, certain household employers and certain higher income taxpayers.

Sole Proprietors, Partners, and S Corporation shareholders generally have to make estimated tax payments if they expect to owe $1,000 or more in taxes when they file a return.

To figure estimated tax, include expected gross income, taxable income, taxes, deductions and credits for the year. You'll want to be as accurate as possible to avoid penalties and don't forget to consider changes in your situation and recent tax law changes.

For estimated tax purposes the year is divided into four payment periods or due dates. These dates are generally April 15, June 15, Sept. 15 and Jan. 15 of the next or following year.

The easiest way to pay estimated taxes is electronically through the Electronic Federal Tax Payment System, or EFTPS, but you can also figure your tax using Form 1040-ES, Estimated Tax for Individuals and pay any estimated taxes by check or money order using the Estimated Tax Payment Voucher, or by credit or debit card.