Companies will be chosen randomly, and the audits will start in February.

The IRS believes that businesses have dramatically changed since 1984, and this audit will help the government find out where the real tax paying issues are that they must address. Based on the 1984 data, the IRS estimated that businesses underpay employer taxes by about $14 billion every year. But we’ve come a long way since 1984, so my guess is the amount estimated that businesses underpay by will greatly change.

Misclassifying employees poses a significant problem because it cheats our government out of important tax revenue, which is used for important programs such as Medicare. Employers who misclassify employees as independent contractors will soon see the consequences as they can be denied health benefits, overtime pay, and unemployment insurance.

Preparation

Paper Trail – You can’t make a deduction in your tax income without documentation.  Everything must have hard proof if you don’t want the IRS knocking on your door.  Save all your receipts and make notes on what they are for.   Even small purchases count if you’re determined to get back every penny you can from Uncle Sam.

Investment & Savings – Make up your mind where to invest your tax refund once you get it.  You can open a CD account, invest in a mutual fund, buy gold, etc.

Professional Consultation – A tax reviewer isn’t necessary if you know what you’re doing, but it won’t hurt to get a second opine for ion.

Deductible Expenses

Charitable Donations – Even the little things you do for a local charity can be tax deductible.  Get ready to prove you bought supplies for the local humane shelter!  Even non-cash, second-hand donations like toys and books qualify.

Moving Expenses – If you need to move from one place to another because of your job, the expenses are tax deductible.

Medical Expenses – Schedule your health consultations in the same year if it will exceed 7.5% of your adjusted gross income (AGI).

Child Care – You may be eligible for a child tax credit if you have one.  If you and your spouse both work and you pay someone to care for your offspring, you may be eligible for child care tax credit also.

Retirement Contributions – The more you put to this, the smaller your taxable income gets.

Nowadays it’s more crucial than ever to get your tax refund.  Give it the attention it deserves and you will be amply rewarded – literally – by year’s end.

So far as filing your income tax return is concerned, nothing is going to change.  With today’s soft\ware and internet capabilities, you can easily file for your tax refunds online just as before.  However because saving money is much more important now than before, it is advisable that you keep records of all your spending in preparation for filing your income tax.  Save your receipts, print our your bank statements, and consult with a professional if you so desire.  The more you understand your rights to deductions and credits, the better chances you have to maximize on your tax refund.

For some, the economic crisis actually brings benefits to them in the form of tax breaks, such as those put forward by President Barack Obama’s administration.   Aside from a tax deduction that will come in the form of increased paychecks for the average American, there are also numerous tax cuts and deductions.  Most notable of these is the tax break for first-time homebuyers.  You can get up to $7,500 in tax breaks.  The catch there is you will need to pay it back in 15 years’ time, so it is really more of a loan than a tax credit.  If you need a house now and think you can pay it back within that time, you may want to avail of it.

Unfortunately, many Americans feel the current administration’s tax breaks – which also compensates those who don’t file income tax – is actually setting up a tax increase for higher earning citizens.

But perhaps the most significant effect the present economy can have on your tax refund is what you do with it when you get it.   You would want to plan ahead of time what to do with your refund.  You can pay debts, save for a house or vehicle, or put the money in a time deposit account.  Make sure you get all the tax deductions and credits you can get, and then save it for your future.

Currently the state’s income tax is at 3%. Quinn plans to raise it by 1.5% to make it a 4.5% income tax. This potentially being the first state income tax increase in 20 years, will be made up for by raising the standard tax exemption from $2,000 all the way up to $6,000.

Quinn is also expected to tell lawmakers that he wants to fix the state budget, because clearly their current budget isn’t working for Illinois. Illinois is expected to be in about $9 billion in debt currently. Quinn is still in the middle of planning his budget, so the increase in income taxes and tax reliefs could change at any time.

On a smaller note, to help make up for the budget, fee increases for driver licenses and license plate stickers are also supposed to be included in Quinn’s budget plans for Illinois.

Yes.  However the tax breaks won’t come as actual tax refund checks as they normally do.  Rather than mailing the money from the IRS, the Obama tax breaks come as an increase in your regular paychecks.  Single people stand to get as much as $400 in tax breaks, while for couples it is $800.  The average American worker will see a $13 increase in his or her weekly take-home pay.   For first-time homebuyers, there is also an $8,000 tax credit.  Retirees and disabled persons can get a $250 tax credit.  The much-used earned income tax credit will also increase.

A little explanation is necessary for some realities of the Obama tax break.   For example, if you do qualify for an $8,000 tax cut, it may not necessarily mean you’ll get that lump sum.  If you have underpaid your taxes by $1,000 for example, you will get only $7,000.   Furthermore, the credit may be spread over the year and be around $7.70 for each individual in 2010.   Higher income taxpayers will notice little difference in their tax refunds.

The Obama tax breaks mean no additional paperwork for workers.  Since the refunds will come as increase in paychecks, it is employers who must reduce the withholding taxes in their employees’ salaries.

Workers who do not make less money than is required for them to file income tax returns will still be compensated.  Because of this, many critics claim that the Obama tax refunds are not tax breaks at all, but welfare aid.  They argue that, in effect, money is being taken from higher income workers and employers and being doled out to lower income workers.

How Do You File Your Tax Refund?

The traditional way of filing income tax returns is by paper and postal mail.  If you use this option, the process may take about 6 weeks.   But nowadays you can file for a refund online.  This is known as electronic filing or e-filing.  It can cut the processing time by half to about 2-3 weeks.  Sometimes it can take as little as a week.

When Do You File for Your Tax Refund?

If you file around the time everyone else does – in the United States this would be April – you are setting yourself up for competition.  At this time, tax offices are flooded with late and last minute submissions.  The solution is to file for your refund early.  With less paperwork around, the tax folks will get to yours sooner.

How Do You Want to Receive Your Tax Refund?

The best payment method to use is direct deposit to your bank account.  It is faster and more convenient than payment by check, which can take a bit longer.

Do It Yourself or with Help?

You don’t have to spend money for help getting your own money back.  But it sure can make it faster.  Today you can buy affordable tax software to simplify the process.  If you own a small business, it may also be smart to hire a qualified, accredited tax preparer or accountant.

So you have several options to accelerate your refunds: file online, file early, get direct deposit and use modern software or tax services.

Ways to File Your Tax Refund

Free Electronic Filing – This is by far the easiest and simplest method.  If you aren’t too nervous about handling your taxes yourself, but you still want an easier way than pen-and-paper, you can file your tax return online at the IRS web site.  If you earn $54,000 a year or less, you pay nothing for it.

Paid Electronic Filing – If you still want to file your tax refund online but make too much money, you can still file via an IRS e-file partner.  You will be charged a fee.

Tax Preparers – These are professionals who make a living by preparing your income tax return for you.  It’s quick and easy, but if you’re obsessive with details, you might want a more personalized service.   Many tax preparers are not very good at what they do.  Check their credentials first.

Tax Accountants – For small businesses, as well as some individual taxpayers, hiring an accountant makes the process easier.  It saves time and gives you peace of mind.

Tax Lawyers – Some people neglect to file income tax returns.  If you haven’t filed in some time, or need professional advice on your situation, call an attorney.

Tax Software – If you don’t want to hire a professional, you can invest in tax software instead.  A tax program guides you through the IRS forms, do the calculations for you, compute deductions and warns you of possible errors.  With tax software, you can file electronically.  It can also download the latest tax codes and laws from online.

Once you’re done, just sit back and wait for your tax refund check or bank deposit to arrive.   If your refund seems to be taking too long, contact the IRS or your professional consultant.

A tax credit reduces the actual tax you owe unit for unit.  If you get a $100 tax credit, you pay $100 less to the government, period.  Now a tax deduction on the other hand, works indirectly by reducing your taxable income.  Further it depends on which tax bracket you fall in.  If you are in the 15% category and you get a $100 tax deduction, you save $15 in tax. Because of this, a tax credit seems more desirable than a tax deduction.  But in practice what really matters is knowing which of the two you are eligible for, or at least knowing a good accountant or tax lawyer who can do it for you.

Now you know what tax refund options are available, how can you get them?  Generally, by spending money on anything important.  For example, you may qualify for a tax deduction for: home mortgage payments, work- and business-related expenses (such as transportation, clothing, operation costs), school tuition, tax exemptions, charitable donations… and even gambling losses.

You may be eligible for a tax credit if you have low income, are over 65 years old, or have a permanent disability.  If you have a child or disabled relative, or if you adopt a child, you may also qualify for a tax credit.

Knowing what tax refunds you are eligible for can literally save you thousands of dollars.  So it’s important to document all your spending and review them for all possible deductions and credits.  If you find the process too complicated for you, you can hire a tax lawyer or accountant or buy tax software to help you.

How is it possible to overpay one’s taxes?   Partly because tax laws have become complex and preparing taxes can be time-consuming.  Rather than use up their time trying to get their computations right, many people just overpay and get it over with.  By overpaying deliberately, they don’t risk tax evasion—and they also let the government “keep” their money for them as a kind of savings until it is returned to them as a tax refund.

Aside from the tax laws, another factor that complicates tax payment is the matter of tax deduction.   In the United States, certain expenses incurred by the taxpayer reduce his or her taxable income.  Now tax is a percentage of one’s income.  If the income is reduced, the tax is proportionally reduced as well.  So it all has to be recomputed once again and any overpayment qualifies for a tax refund.

Many people think getting a tax refund at the end of the year is a great thing.  Even though it is money they earned in the first place and the government pays no interest for it, it still seems like free money to them.  You can think of it as compulsory savings that you get back after a year.  We all know it is tempting to spend money when it is nearby, but when it’s out of sight there’s no way you could use it.  If money habitually slips from your hands a bit too quickly, a refund in taxes can redeem you at the end of a tax year.

A stimulus check is money the government gives you, that they want you to go out and spend. The government wants you to stimulate the economy with your stimulus check. The amount of your stimulus check is based on your income and your life. If you earn less then $3,000 annually for example, you won’t be getting a stimulus payment, no matter what, whether your single or married. But it’s not only your income that affects your stimulus check, as said before. If your single, married, or have kids, that can also strongly impact your stimulus check.

A tax refund or tax rebate is basically a refund on your taxes when the tax liability is less than the taxes you estimated and paid. So if you over estimated and paid your taxes, the government is being nice, and saying here, take the money you over paid back.

As I said before, there are differences and similarities between stimulus checks and tax refunds. The differences are pretty clear and self-explanitory based on the definitions above. They are simply two different things. But they are both payments from the government. Not everyone gets each, or even either stimulus checks or tax refunds. So they are similar in the way that they are both non-guarenteed payments from the government. But the payments are based off of two different things.