Do YOU Qualify as Head of Household?

If you qualify, Head of Household is a much better income tax filing status than Single or Married Filing Separately. Why? Because you get a higher standard deduction ($2,750 higher for 2012) and may even qualify for credits not available to folks in the other two categories. Be careful, however – filing as Head of Household when you don’t meet the qualifications is fraud and you don’t want to go there!

I wrote more about this in Can You Claim Head of Household? over at Penny Thots, so go check it out!

It's Tax Time!

As the old saying goes, there are only two certainties in life – death and taxes. And what time of year is it? Why, tax time, of course! The time when accountants across the land are busily crunching numbers and good old John Q. Public is busy biting his nails. How much more fun could you ask for?

I’m the resident income tax preparer in our little group. I actually don’t mind – which is good beings no one else wants to do it! I only take care of the personal taxes, however, and not the taxes for Horn's Jewelry. But between all of us and a few friends and relatives, I stay plenty busy. Here are a couple of tips to make tax time less stressful.

Keep Good Records

It may be too late for the 2009 tax year but certainly not for 2010. Especially if you’ve started a new home based business, keeping good records is crucial. In a previous post, I talked about Outright.com but I’d like to mention them again. After discovering them in January, I entered all my 2009 info for both my freelance writing and custom memorial quilt businesses. When it came time to fill out my federal tax return, Outright.com actually generated the needed Schedule C forms for me! It doesn’t get much easier than that.

Don’t Make It Harder Than It Has To Be

I also use TurboTax Home & Business for all our tax prep. I used to buy the H&R Block or J.K. Lassiter tax guide each year and study like crazy but now I let the software do all that for me. I still stay on top of tax changes and double check the completed forms to make sure nothing is amiss but it sure is nice to just enter the info and have the program put it all in the right place and make all the calculations. Pretty much eliminates the inevitable human errors that tend to occur when using a calculator and filling forms out by hand.

The IRS also has a terrific website where you can access all the forms and publications and more info than you’ll ever want to read. Anything you need to know about your federal taxes is right there, neatly organized and readily available 24/7. Have fun!

Do You Qualify for the Government Retiree Credit?

You may have heard about the Government Retiree Credit and wondered if all retirees qualify. The name sounds like it could be a credit FROM the government FOR retirees, right? Wrong. It’s actually a credit specifically for certain folks who are retired from government service. And not just any government service qualifies – it has to be service that was NOT covered by social security.

The one-time, $250 credit per eligible retiree is part of the American Recovery and Reinvestment Act of 2009. In order to take the credit, a retiree must:

• Have received during 2009, a government pension or annuity for service not covered by social security.
• Have a valid social security number.
• Attach a completed Schedule M to the 1040 or 1040A tax return for 2009.

Please note that this credit is refundable. This means that you may get the money even if you didn’t pay tax in during the year or owe taxes now. You can’t take the credit, however, if you got the $250 economic recovery payment during 2009. And if you also receive the Making Work Pay Credit, the amount will be reduced by the amount of your Government Retiree Credit. Are you confused yet?

For more information, check out the IRS website. The easiest thing to do, however, may be to just fill out a copy of Schedule M, following the instructions for each question, and see what it says at the end. Doing so should clearly show whether or not you qualify.