If you were a working taxpayer in 2010, you may be eligible for the Making Work Pay Tax Credit. This credit is based on the income you earned in 2010 and is claimed on your tax return when you file your 2011 taxes.

A great tax tip is to know the facts about the Making Work Pay Tax Credit to ensure you receive the entire amount for which you are entitled.

1. The Making Work Pay Credit provides a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns.
2. Most workers received the benefit of the Making Work Pay Credit through larger paychecks, reflecting reduced federal income tax withholding during 2010.
3. Taxpayers who file Form 1040 or 1040A will use Schedule M to figure the Making Work Pay Tax Credit. Completing Schedule M will help taxpayers determine whether they have already received the full credit in their paycheck or are due more money because of the credit.
4. Taxpayers who file Form 1040-EZ should use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Credit.
5. You cannot take the credit if your modified adjusted gross income is $95,000 for individuals or $190,000 if married filing jointly or more, you can be claimed as a dependent on someone else return, you do not have a valid social security number or you are a nonresident alien.

Visit the IRS website for more information about the Making Work Pay Credit and other tax tips

Source: irs.gov

Income tax season is here again. Now is the time to gather and organize all the paperwork you need to complete your income tax return. Do you know what documents and paperwork you need to file your income tax?

To complete your income tax return, you will need a W-2 form. In addition, be prepared to provide personal, employment, income, financial, housing and other tax related documentation.

Below is a taxpayer checklist identifying the tax information you may need to help you complete your income tax return:

PERSONAL INFO

• Social Security numbers
  You will need the SS# of your spouse and dependents to qualify for tax exemptions
• Child-care provider tax ID
  To qualify for child care credits
• Copies of your divorce decree
  To claim a child living with your ex-spouse

EMPLOYMENT AND INCOME DATA

• W-2 forms
• Partnership and trust income
• Pensions and annuities
• Alimony received
• Jury duty pay
• Lottery and gambling winnings and losses
• Prizes and awards
• Scholarships
• State and local tax refunds

HOUSING DATA

• Your residential address
• Mortgage interest
• 2nd second interest paid
• Home sale or other real estate transaction
• Real estate taxes paid
• Rent paid
• 1st time homebuyer credit

FINANCIAL INFO

• Interest income
• Dividend income
• Broker transactions
• Tax refunds and unemployment compensation
• Retirement plan distribution

LIABILITIES

• Auto loans
• Student load interest paid
• CD early withdrawals

DEDUCTIBLES

• Charitable distributions
• Travel and entertainment expenses
• Job-hunting expenses
• Child-care expenses
• Medical savings account
• Alimony paid
• Tax return preparation fees
• IRA, Keogh and retirement plan contributions
• Medical expenses

For more income tax help visit the IRS website.

source: msn.com

Are you still waiting for last year’s Federal Income Tax refund check? If so, you may be one of over 110,000 taxpayers who didn’t receive their tax refund check due to mailing adress errors. The good news? The IRS is looking to return $164.4 million of these undelivered tax refund checks.

“We want to make sure taxpayers get the money owed to them,” said IRS Commissioner Doug
Shulman. “If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money.”

A taxpayer only needs to update his or her address once for the IRS to send out all checks
due. Undelivered refund checks average $1,471 this year, compared to $1,148 last year. Some
taxpayers are due more than one check.

The average dollar amount for returned refunds rose by just over 28 percent this year,
possibly due to recent changes in tax law which introduced new credits or expanded existing
credits, such as the Earned Income Tax Credit.

If a refund check is returned to the IRS as undelivered, taxpayers can generally update their addresses with the “ Where’s My Refund?” tool on IRS.gov. The tool also enables taxpayers to check the status of their refunds. A taxpayer must submit his or her Social Security number, filing status and amount of refund shown on their 2009 return. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling
1-800-829-1954.

While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Taxpayers can receive refunds directly into their bank, split a tax refund into two or three financial accounts or even buy a savings bond.

The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds. E-file combined with direct deposit is the best option for taxpayers; it’s easy, fast and safe.

The public should be aware that the IRS does not contact taxpayers by e-mail to alert them
of pending refunds and that such messages are common identity theft scams. The agency urges taxpayers not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that will infect their computers. The best way for an individual to verify if she or he has a pending refund is going directly to IRS.gov and using the “ Where’s My Refund?” tool.

source: irs.gov