TurboTax Saves You Time And Money

TurboTax Saves You Time And Money

Again it is that time of the year that you dread; tax time.  It may seem like you just filed, but now you are running out of time to complete and submit your IRS 2012 taxes.  Many people make major mistakes when it comes to filing their taxes.  One common mistake is completing their tax paperwork on their own,  without the use of professional tax expert or professional tax software.  Due to this mistake they underestimate their estimated tax payment and end up owing a lot more than they thought they would.  This can lead to financial trouble for years to come and having to pay penalties and interest.  No one wants to pay more than what they actually owe in IRS 2012 taxes.  Using TurboTax will help you avoid this costly mistake.

IRS Form 1040
IRS Form 1040 (Photo credit: bradleygee)

One benefit to using TurboTax software is that you can use it on your own time. No need to schedule a last minute appointment with a tax professional, who may overcharge you now that you have waited until the last minute to file your taxes.  TurboTax is there and ready when you are.  With TurboTax you do not pay more to file or to use their system if you wait until the deadline to file.  This program is updated with all the new tax laws and codes and will help you get your taxes completely done correctly the first time.

If you are self-employed ,or are an investor, or a landlord, you most likely will need to estimate your tax liability.  People in these categories often do not have enough income tax withholdings to cover what they owe in federal taxes.  TurboTax can help you accurately calculate your estimated tax payments.  To figure out your tax liability when looking at your Form 1040, look at lines 62, which is your total tax, and lines 63, your tax withholding.  Subtract the withholding from the total tax.  The sum is your tax liability.  Estimated tax payments, if you owe them, are due quarterly on the 15th of April, June, September and January.  If your income will change significantly in the next year, you should consider calculating your estimated tax payments from your projected total income.

When submitting your estimated tax payments to the IRS use the 1040-ES form as a voucher to help make sure your payment is processed properly.  Make your check out to “United States Treasury”.  In the memo area of the check be sure to include your social security number and the year for which you are paying taxes.  You can also make a payment using the Electronic Federal Tax Payment System.

No matter you financial situation or tax liability, TurboTax can help you with your IRS 2012 taxes.  This program eliminates the need to track down tax forms, send in W2s, and takes the guesswork out of filing your taxes and your estimated tax payment.  Whether you are ahead of the game or waiting until the 11th hour, TurboTax will help you file your taxes accurately and easily.

Eliminating State Income Taxes Could Spur Economic Growth

Eliminating State Income Taxes

While Washington continues to struggle with attempts at major changes to the federal tax system, individual states have no such problem.  Many states in the South and Midwest that have single-party legislatures and are Republican-controlled are seeking to do away with the tax filing of state income taxes in favor of higher and more diverse sales taxes.

With 37 of the 50 states having single-party control of the legislature and governorship, seemingly radical projects such as tax reform can be handled much easier than in states that struggle with the need for a middle ground between parties.  Of those 37 states, 25 are Republican-controlled, and it is primarily these states that are considering doing away with the tax filing of income taxes  and replacing the lost  revenue with higher sales tax and sales tax on previously untaxed items such as food and luxury services.

This image depicts the total tax revenue (not ...
This image depicts the total tax revenue (not adjusted for inflation) for the U.S. federal government from 1980 to 2009 compared to the amount of revenue coming from individual income taxes. The data comes from the Office of Management and Budget’s record of the ‘Budget of the US Government FY 2011’, specifically the ‘Historical Tables, Table 2.1.’ The information is also here. (Photo credit: Wikipedia)

Much of this shift being considered is not grounded in new ideas, but rather comes partly from the idea of trickle down or supply chain economics, popular during Reagan’s presidency and still somewhat popular with Republicans today.  Critics of the move from income taxes to higher sales taxes are concerned that the shift will place too much of a burden on the poor and middle-class.  However, proponents point out that placing sales tax on services would also tax higher income groups as well.

Proponents of this idea also state that eliminating income taxes at the state level would spur economic growth for everyone.  In addition, it has been proposed that states with lower income tax burdens continually outperform higher tax states.  However, other studies have claimed to show that the opposite is true, using the relative economic strength of higher tax states like New York as an example.

Simple Tips To Help You Save On Taxes At Work

If you want to reduce the amount of tax you pay, you should let your employer cover some of your expenses.

By simply allowing your employer to cover your expenses with pre-tax dollars, you will be able to save hundreds and sometimes even thousands of dollars annually.

The best way to save on taxes.

Make arrangements with your employer to pay for some of your expenses every month. Ask you employer to pay for an expense straight up. Any employer will do this because, a) Its a wonderful thing to do, and b) The expense will be a deductible expense which can be deducted when calculating taxes.
Case  Study
Pretax Expenses

Assuming your income tax bracket is 25 percent and you pay a monthly rail pass of 100 dollars out of your after tax dollars. This means that your income was 133.33 dollars but 33.33 dollars was deducted as taxes before you could put your hands on it and the remaining 100 dollars is what you withdrew from the bank account for your monthly rail pass.

If you asked your employer to pay for your monthly rail pass using pretax dollars, only 100 dollars of your income will be used. This means that you will save 33.33 dollars every month or 400 dollars annually.

All you have to do to save on taxes is to identify expenses that your employer can pay for you using pretax dollars and contact human resources to see how the company can help you.