Typically this is the time of year that most people start filing their taxes in hopes of a large tax refund. Whether they have their taxes prepared by a professional or do it themselves, completing the forms correctly should be your top priority. What does someone do to avoid getting a notice from the IRS about is my tax refund incorrect?
If it is larger than expected this can be a fantastic feeling. Since most Americans claim a smaller amount of tax allowances on their W-4 form, this ensures a larger refund. But what happens if your refund is smaller than expected? What should you do?
List of Possible Reasons Why Refund Is Incorrect
1. Part of your refund was used to pay a debt
2. You made a mistake in your arithmetic or calculations
3. You are a victim of fraud or identity theft
4. You owed a penalty tax on your family health insurance
5. The IRS made an error
The list above is the majority of reasons why your refund could be smaller than expected. These reasons are based on personal tax liabilities only. They do not include business deductions. The tax forms you mailed to the IRS you should always triple check all calculations before mailing. The IRS does not assume any responsibility for any taxpayer or their mistakes. If you cheated yourself on deductions the IRS will not correct this for you either.
What to do if your tax refund is incorrect
There are certain procedures one should follow before phoning the IRS. If there was a problem with your tax form, if a correction was made, you will receive a letter of explanation from the IRS two weeks after receiving your refund.
If you did not receive a letter after two weeks, you can try to talk to someone about it by phoning 1-800-829-1040. You will be required to give details of your refund, social security number(s), the amount of your refund expected, taxes paid in 2015 , date filed, etc.
More and more cases of fraud are showing up. Many times it is from a scam artist or x-wife or x-husband that has hacked your social security number and has filed a tax return in your name. In these cases, if the thief files before you, they will get your refund and get nothing. Once it is paid by the IRS, little, if anything, can be done.
An Alternative Tax Plan
Home-Based Business Deductions
If you would like to know more about how this incredible book, Home Business Tax Savings, made easy, can change your life and increase your tax returns by 300% or more, follow the link above to read my review.
In America, there are only two types of tax systems. The first type of tax system is for the employee, which includes most working Americans, and a second tax system, for the employer, or business owner which is very different and much better.
An employee is very limited in what they can write-off, but Business Owners that are engaged in earning (or attempting to gain) profits are entitled to a wide variety of legally deductible business expenses in their pursuit of that income and profit.
In order to paint a better picture of these two – very different – tax systems, please bare with me for just a moment while I illustrate the differences.
Employee – The first type of Taxpayer
Employees, or W-2 wage earners, earn their wages by working for an employer, trading their time for money. These employees are very limited to the tax deductions the IRS allows, usually just:
- Mortgage Interest and real estate taxes
- Standard deductions for dependents
- Gifts to charity
- Contributions to a retirement plan
Essentially this becomes a three-step process to get paid:
1. Work hard to earn a decent wage
2. Immediately lose a huge chunk of those wages to taxes, insurance, etc
3. Try to make a living on the leftovers, called “take-home pay.”
Employer – The second type of Taxpayer
Business owners, on the other hand, get to write-off lots and lots of expenses. These business owners have a very different three-step tax system:
1. Earn revenue from selling goods or services
2. Spends whatever they need to on operating expenses to keep the business financially solid
3. Then pay taxes only on whatever is left over after deducting salary.
Typical brick and mortar businesses get these standard deductions below. If you are a Business Owner the list are the standard expenses that are allowed as business deductions:
- Mortgage interest or rent
- Gas, electric, water, and sewer
- Cleaning crews to dust, vacuum and empty the trash
- Computers, copiers, fax machines and telephones
- Paper, pens, and postage
- Bank fees on business accounts
- Desks, sofas, coffee tables, and other furniture
- Credit card annual fees (for business-only cards)
- Painting, wallpaper, carpeting, and other repairs/maintenance
- Legal and professional services
- Bad debts from sales or services (accrual method)
- Phone bills, cell phones, pagers, and Personal Digital Assistants
- Costs of goods sold
- Magazines and books for business education
- Newspapers, magazines, books, and online media
- Services performed by independent contractors
- Supplies and materials
- Plane fares, hotel expenses, meals, and rental cars on business trips
- Taxes and licenses
- Special work clothing or uniforms
- Lunches, dinners, ball games and theater tickets
- Security alarms and hidden cameras
- Health, life, dental, vision, disability, and unemployment insurance
- Company cars (even boats)
- Contributions to Employee Retirement plans
- Holiday cards, gifts, and postage
- And any other expense that qualifies as “ordinary and necessary” to operate their business.
If you operate an Internet eCommerce business, you get the standard deductions above plus these other items which include:
- Internet access fees
- Merchant discount fees
- Web hosting fees
- Subscriptions and memberships fees
- Cable, DSL, or Broadband Internet service
- Computer extended warranty costs
- Database backup service
- Ink and toner cartridges for printers
- Software used for business
- Spyware and antivirus subscription services
- Surge protection equipment
- Conference call services
If you operate an Insurance or Real Estate Business your deductions might also include:
- Professional fees
- Chamber of Commerce memberships
- Signs and promotional materials
- Continuing education courses
- Seminars and conferences
- Permits and fees
- Cell phone, pager, and voicemail
- Printing, copying and faxing
- and much more
“It’s How Much You Keep, That Counts!
Not how much you make”
Everyone with a home-based business needs this book!
Anyone without a home-based business needs it even more!
In order to start benefiting from these tax deductions, you need to do two things. First start a home-based business. If you already have a home-based business, then get this book My Home-Based Business Tax Deductions immediately!
Financial freedom is defined as being debt-free. It is an attainable goals. The first steps to becoming debt-free,
1. Save 10% of every paycheck to pay yourself.
2. Give 10% to charity (church, charitable organization, etc)
3. Live on the 80% left over from every paycheck.
4. Start a home-based business to benefit from the deductions legally given to legitimate businesses.
What are you waiting for? Stop procrastinating and get started today! Some other articles to help you get started are: