Tax Refunds & Advice

Do you dream about the freedom, both personal and financial, of working for yourself? If so, you are not as far away from this dream as you make think. Believe it or not, there are millions of people all over the world working as a self-employed professional. Joining them is possible. And while the freedom you will receive is a great benefit, you also have to remember that a lot of work comes along with the territory. One thing you cannot forget about is making quarterly tax payments.

As a self-employed worker you need to make quarterly payments to your state and the IRS. Why do I have to do this? There is no employer to withhold taxes from your paycheck. For this reason you will need to pay on your own.

If you are going to become self-employed you need to speak with a tax professional or CPA before you start to earn money. A professional can talk to you about keeping track of your income, how much to pay, where to send your quarterly payments, and much more. It is important that you know the ins and out of the quarterly tax payment system. If you don’t you may come up short and in turn owe your state and the IRS a large sum of money upon filing your final return.

Don’t let this scare you away. As mentioned above there are millions of people in the world who are self-employed. And the majority of those in the United States pay quarterly taxes without ever running into a problem. Once you speak to a tax professional, so you know what you are doing, you will be ready to handle this facet of being self-employed without any issue.

New president Barack Obama is hard at work on the American Recovery and Reinvestment Act. This is the first major bill of 2009. This bill includes many of the tax breaks that president Obama talked about on the campaign trail and during many debates. Of course, this bill contains more than tax breaks. It is also pushing for roughly $550 billion in spending. It is important for taxpayers to be aware of both the pros and cons of this legislation.

Are you more worried about how this legislation will effect your tax situation? If so, here are a few changes that will come about if the bill is passed as it currently stands:

1. Making Work Pay Tax Credit: a $500 tax credit to offset FICA taxes on the first 6.2 percent of income.

2. American Opportunity Tax Credit: a provision that will expand the current setup of the Hope education tax credit.

3. Changes to the First Time Homebuyer Tax Credit: as it stands a tax credit of $7,500 is available to first time homebuyers as long as it is repaid. This bill hopes to eliminate the repayment portion.

4. Refundable Child Tax Credit: hopes to make this tax credit refundable for 2009 and 2010.

5. Increase tax credit amount for energy efficiency to 30 percent.

Will any of these changes work in your favor? While these are five of the most talked about details of the American Recovery and Reinvestment Act, they are not the only ones. Keep an eye out for changes and modifications to this legislation over the next few days. As a taxpayer you want to know exactly what is going on at all times.

Every year, millions of people wonder if they will owe the IRS more money or receive a refund check. And of course, the only way to find out for sure is to file your final return. If you find that you owe the IRS more money it is not the end of the world. That being said, you do need to pay what you owe. Remember, this is not something the IRS is doing to you; it is something you did to yourself. If you owe the IRS additional money it is because you did not pay enough in taxes during the previous year. Instead of getting mad you should pay what you owe while learning from this experience so it does not happen to you again.

If you owe more money you have two options: pay it in full or opt for a payment plan (often times through the IRS). Which option works better for you? Simply put, if you can pay your entire liability in full you should do so. This way you don’t have to worry about applying for a payment plan, and of course, having interest tacked on top of what you already owe. If you don’t have the money on hand you may want to opt for a bank loan as opposed to dealing directly with the IRS. This may help you save on interest, but you won’t know for sure until you see what both options are offering.

As noted above, there is no way of knowing whether or not you will owe the IRS more money until you file your final return. Keep your fingers crossed that you will receive a refund. If this doesn’t work out and you owe additional taxes you need to consider how you will pay and then take care of it before the deadline.