IRS Tax Returns

It is tax time again. That dreaded time of the year where records are meticulously pored over and forms need to be filled out precisely and correctly. A time that for many people, is associated with stress, headaches and numerous moments of temporary insanity. If you are self-employed or own your own home-based business, you may have some idea about the tax returns process, but if you don't, here is the essential information you need about tax time and your responsibilities.

What Exactly is the IRS and an IRS Tax Return?

Firstly, the IRS, or the Internal Revenue Service, is the federal agency that is responsible for administering and enforcing the American Treasury Department's revenue laws through the assessment and collection of taxes and other related procedures. An IRS tax return is the general name for the form used to file taxes payable to the federal or local government, which is filed with the IRS.

This form includes information such as your gross income, allowable deductions, tax credits and tax that is due. As an individual taxpayer, you would file the Form 1040 on a calendar-year basis. Corporations should file the Form 1120 on either the calendar-year or fiscal-year basis. Also, tax returns must also be filed for partnerships using a Form 1065, estates with Form 706 and Form 709 is used for gifts you have received.

Claiming Deductions on Your Tax Return.

Claiming more federal tax deductions is a fantastic way to lower your tax bill. There are five easy ways that help you take full advantage of the federal tax deduction and ensure you don't overpay on your tax return. Firstly, if you own a home, check to see if the interest you paid on your mortgage is more than the standard deduction.

If it is, it may save you money by itemizing. If you paid state or local taxes the amount you paid is tax deductable through itemizing as well. Money or items donated to non-profit organizations qualify as federal tax deductions for the value of the monetary donation, or the items given (as long as a receipt is received and a value placed on the items). Medical expenses can qualify as a tax deduction based on your adjusted gross income (AGI), but this can be a little difficult.

Finally, miscellaneous tax deductions can be claimed on over 300 different reasons. For all these reasons it may be best to speak to a professional tax attorney to get everything you can.

What Happens if Your Tax Return is Late?

If you should file a late tax return there are ramifications that you will have to face in most cases. If your tax return is to be filed by accountants or tax attorneys, there is an extension of the due date that can be negotiated between the IRS and the tax attorneys or accountants. If you are owed a tax refund, the IRS usually are not too concerned when you lodge your return, they seem to be happy enough to hold onto your tax refund for as long as you let them.

However, if you are calculated by the IRS to owe them money, this is when you will have to face the ramifications of your inaction. Late fines ranging from $110 to $550 will apply if you manage to file your late tax return within four months of the due date. Fines of between $550 and $2,750 will be charged to you if you have still not filed you tax return after four months. Interest is then added to the amount of outstanding tax that the IRS calculates that you owe them.

The amount they calculate that you owe them will also probably be more than you would normally owe them, as they will not be dedicated to giving you tax deductions that they cannot support (as they don't have the supporting documents). So even if you are six months late with filing your tax return, it will still be beneficial to you to lodge it. If you are found to be avoiding tax, more serious financial and legal penalty will, of course, apply.

The most import thing to remember when it comes to tax time is to have the necessary supporting documentation for everything that you state on your tax form, fill out the tax form correctly, claim as many tax deductions as legally possible and file it when it is due, no later.