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« Back to articles from category "Finances"

The following article was published in our article directory on January 21, 2012.
Learn more about SpinDistribute Article Distribution System.

FAQS: TAX PREPARATION

Article Category: Finances

Author Name: chickie maxwell

Tax preparation is viewed as a difficult process for filing income tax returns. For this reason, professional support is often sought by individual tax payers in order to lessen the burden of the filing process. For the purposes of orientation, listed below are the frequently-asked questions by taxpayers:

E-filing. The electronic system of filing taxes is called e-filing. Done electronically, no paper forms are required to be submitted to the IRS. One benefit e-filing offers is the speedy transmission of tax information. This method of filing taxes is recommended by many as it only allows or a small percentage for errors as opposed to paper filing.

Tax refund. The period between tax filing and receiving a refund varies in accordance to the mode of filing. If the tax forms are mailed, the refund is likely to be received within six weeks. If e-filing is used and direct deposit is employed, the tax refund is received in seven days. If there was a problem in the direct deposit set up, a refund check will be mailed and received in three weeks.

Tax forms. The following tax forms are often encountered during tax preparation:

W-2 Forms. These are forms prepared by employers that detail an individual's annual income and the taxes the latter paid. If an individual has had multiple employers in a year, he will expect multiple W-2 forms from each of them.

1099-INT. These are forms sent by financial institutions containing the details of the income an account holder has earned. Sources of income from financial institutions savings accounts and some checking accounts that pay interest.

1099-DIV. These are forms that provide shares an individual earned for the year. Dividends may be earned from investment accounts.

1099-G. These are tax forms containing government payments to an individual. Tax refunds and unemployment payments are included here.

1099-MISC. These are forms that report miscellaneous income like royalty, self-employment, and rental.

1099-R. These are forms reporting earnings from retirement accounts.

W-4 Forms. This form reports withholding margin for employers. Exception requests may be made towards the employer, a dependent, a sibling, or a spouse.

It is possible for an individual to receive multiple forms from the types above depending on his income potential. Such income information taken from applicable forms are consolidated into the Form 1040. This form is where an individual will find his Adjusted Gross Income or AGI. The Adjusted Gross Income is the difference between an individual's gross income and the tax deductions.

Tax deductions. Tax preparation involves the listing of eligible deductions to determine an individual's correct taxable amount. Tax deductions can be one or more of the following:
- Gambling losses
- Tuition and school fees
- Union dues or any work-related fees
- Income taxes paid to the state or the local government
- Donations made to charitable or non-profit organizations
- Medical expenses which covers extended care, medical supplies, and laboratory expenditures

The deductions listed above are not representative of the actual deductibles an individual may have. Visit the IRS website for more information.

About the Author: MyReviewsNow offers information regarding tax preparation. To learn more about tax preparation, visit our website at MyReviewsNow.net.

Keywords: tax preparation

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