Tax Help Archives  

2005 Tax Tips

This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

These easy-to-read Tax Tips cover a wide range of topics, from child credits and higher education benefits to IRAs and Social Security. These Tax Tips are for Tax Year 2005.

April 5, 2006
Making Tax Payments Correctly
When filing your return, remember to make sure your tax payment check or money order is payable to the "United States Treasury."
April 4, 2006
Last Minute Payment and Filing Tips
If you�re trying to beat the tax deadline, there are several options for last-minute help: � Receive a six-month extension of time to file using Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return � Payment options are available to taxpayers having trouble paying their tax bill � Download forms and publications at
April 3, 2006
Filing Your Federal Tax Return
Once you complete your 2005 federal tax return, you can either file it electronically or mail it to the IRS. If you choose to mail your return, you will find directions on where to send it on the back cover of your instruction booklet.
March 31, 2006
Preparing Your Tax Return for Mailing
If you are mailing a paper return to the IRS, take a few minutes to make certain that all information is complete and accurate before sealing the envelope. This simple precaution could help you avoid mistakes that can delay your refund or result in correspondence from the IRS.
March 30, 2006
Avoid Common Errors
The IRS recommends reviewing your entire tax return to be sure it is accurate and complete. Even a simple mistake can cause problems which might lead to delays in processing your return and receiving your refund.
March 29, 2006
Tips for Last-Minute Filers
With the tax filing deadline close at hand, the IRS offers some tips for those still working on their paper tax forms:
March 28, 2006
You Can Still Make a 2005 IRA Contribution
If you haven�t contributed funds to an Individual Retirement Arrangement for tax year 2005, or if you�ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April due date for filing your tax return for 2005, not including extensions.
March 27, 2006
How to Check on Your Tax Refund
If you already filed your federal tax return and are due a refund, you have several options for checking on the status of your refund.
March 24, 2006
Coverdell Education Savings Accounts
A Coverdell Education Savings Account is an account created as an incentive to help parents and students save for education expenses
March 23, 2006
Deducting Vehicle Donations
If you donated a car or other vehicle to charity in 2005 and claim a deduction greater than $500, remember the rules for deducting that donation have changed. If the vehicle is sold by the charitable organization, the deduction claimed by the donor may not exceed the gross proceeds from the sale.
March 22, 2006
Tips for Deducting Charitable Contributions
When preparing to file your federal tax return, don�t forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize on IRS Form 1040, Schedule A.
March 21, 2006
Deduction For Hybrid Vehicles
If you are the original owner of a qualifying hybrid vehicle � one that combines an electric motor with a gasoline-powered engine � you may be eligible to claim a one-time tax deduction on your federal income tax return.
March 20, 2006
Deducting Costs of Refinancing Your Home
Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans. The term "points" is used to describe certain charges paid to obtain a home mortgage.Here are some things to remember when deducting points: � Generally, for taxpayers who itemize, the �points� paid to obtain a home mortgage may be deductible as mortgage interest � Depending on circumstances, points can be fully deductible in the year paid � Points paid solely to refinance a home mortgage usually must be deducted over the life of the loan
March 17, 2006
Sale of Your Home
If you sold your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return. This exclusion is allowed each time that you sell your main home, but generally no more frequently than once every two years.
March 16, 2006
Home Office Deduction
If you use a portion of your home for business purposes, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs. You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: * As your principal place of business for any trade or business * As a place to meet or deal with your patients, clients or customers in the normal course of your trade or business.
March 15, 2006
Deduction for Educator Expense
If you are an eligible educator, you may be able to deduct up to $250 of expenses you paid for purchases of books and classroom supplies. These out-of-pocket expenses may lower your 2005 tax bill even if you don�t itemize your deductions.
March 14, 2006
Itemizers can Deduct Certain Taxes
Did you know that you may be able to deduct certain taxes on your federal income tax return? You can receive these deductions if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation.
March 13, 2006
How to Avoid Tax Time Problems
Are you looking for ways to avoid the last-minute rush for doing your taxes? Here are some stress relieving ideas to help you.
March 10, 2006
Credit for Retirement Savings Contributions
If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you may be able to take a tax credit.
March 9, 2006
Offset Education Costs
Education tax credits can help offset the costs of higher education for yourself or a dependent. The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you. You may be able to subtract them in full from your federal income tax, rather than just deducting from your taxable income.
March 8 2006
Claiming the Credit for the Elderly or the Disabled
You may be able to take the Credit for the Elderly or the Disabled if you were age 65 or older at the end of 2005, or if you are retired on permanent and total disability. Like any other tax credit, it�s a dollar-for-dollar reduction of your tax bill, with a maximum amount of $1,125.
March 7, 2006
Claiming the Child and Dependent Care Credit
If you paid someone to care for a child or a dependent so you could work or look for work, you may be able to reduce your tax by claiming the Child and Dependent Care Credit on your federal income tax return. You may also be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for a spouse or a dependent of any age who is physically or mentally incapable of self-care.
March 6, 2006
Claiming the Child Tax Credit
With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under the age of 17.
March 3, 2006
The Earned Income Tax Credit
Millions of Americans forfeit critical tax relief each year by failing to claim the Earned Income Tax Credit, a federal tax credit for low-to-moderate income individuals who work. Taxpayers who qualify and claim the credit could owe less federal tax, owe no tax or even receive a refund.
March 2, 2006
Are You Eligible for a Tax Credit?
Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable � taxes could be reduced to the point that a taxpayer would receive a refund rather than owing any taxes. Below are some of the credits taxpayers could be eligible to claim:
March 1, 2006
Volunteer Tax Return Preparation
Are you puzzled by the tax law and which credits and deductions you can take? If so, then why not look into the free, IRS-sponsored, volunteer tax return preparation services? In addition to tax preparation, many also offer free electronic filing of tax returns.
Feb. 27, 2006
Free Tax Services
The IRS provides free publications, forms and other tax material and information to help taxpayers meet their tax obligations. Free help is available on the IRS website, by phone, at local IRS offices and at other community locations.
Feb. 27, 2006
Free Tax Help for the Military
If you, or your spouse, are a member of the military, you may be eligible to receive free assistance with the preparation and filing of your federal tax return. The U.S. Armed Forces participate in the Volunteer Income Tax Assistance Program. The Armed Forces Tax Council oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. The AFTC consists of tax program coordinators for the Marine Corps, Air Force, Army, Navy and Coast Guard.
Feb. 24, 2006
Deferral of Back Taxes for Military
Reservists called to active duty and enlistees in the armed forces may qualify for a deferral of taxes owed if they can show that their ability to pay taxes was affected by their military service.
Feb. 23, 2006
IRS Toll-Free Help
Free tax help from the IRS is just a phone call away. The IRS provides various services through its toll-free telephone numbers. Some of these services are available 24 hours a day.
Feb. 22, 2006
Tax Rates for a Child's Investment Income
Part or all of a child's investment income may be taxed at the parent's rate rather than the child's rate. Because a parent's taxable income is usually higher than a child's income, the parent's top tax rate will often be higher as well. This special method of figuring the federal income tax only applies to children who are under the age of 14. For 2005, it applies if the child's total investment income for the year was more than $1,600. Investment income includes interest, dividends, capital gains, and other unearned income.
Feb. 21, 2006
Income from Foreign Sources
Many United States citizens earn money from foreign sources. These taxpayers must remember that they must report all such income on their tax return, unless it is exempt under federal law.
Feb. 20, 2006
Taxes on Early Distributions from Retirement Plans
Payments that you receive from your IRA or qualified retirement plan before you reach age 59� are normally called �early� or �premature� distributions. These funds are subject to an additional 10 percent tax and must be reported to the IRS.
Feb. 17, 2006
Tax Facts About Capital Gains and Losses
Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. When you sell a capital asset, the difference between the amounts you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. While you must report all capital gains, you may deduct only capital losses on investment property, not personal property.
Feb. 16, 2006
Gambling Income and Losses
Gambling winnings are fully taxable and must be reported on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.
Feb. 15, 2006
Tips are Subject to Taxes
Do you work at a hair salon, barber shop, casino, golf course, hotel or restaurant or drive a taxicab? The tip income you receive as an employee from those services is taxable income. Here as some tips about tips:
Feb. 14, 2006
Paying or Receiving Alimony?
If you were recently divorced and are paying or receiving alimony under a divorce decree or agreement, you need to consider the tax implication for your 2005 federal income tax return. Here are the general guidelines.
Feb. 13, 2006
Are Your Social Security Benefits Taxable?
How much, if any, of your Social Security benefits are taxable depends on your total income and marital status. Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return
Feb. 10, 2006
What Income is Taxable? Nontaxable?
Generally, most income you receive is taxable. But there are some situations when certain types of income are partially taxed or not taxed at all. A complete list is available in IRS Publication 525, Taxable and Nontaxable Income.
Feb. 9, 2006
Deducting State and Local Sales Tax
If you itemize your taxes, you may choose to deduct state and local sales taxes instead of state and local income taxes. The State and Local General Sales Tax Deduction Worksheet in the 2005 Form 1040 instruction booklet will help you determine your sales tax deduction amount in lieu of saving receipts throughout the year. You also may be able to add the state and local general sales tax paid on certain specified items.
Feb. 8, 2006
Can You Use Schedule C-EZ?
Your business may be eligible to use the abbreviated Schedule C-EZ instead of the longer Schedule C when reporting business profit and loss on your 2005 Form 1040 federal income tax return. The maximum deductible business expense threshold for filing Schedule C-EZ is $5,000.
Feb. 7, 2006
Changes to Tax Law for 2005
Taxpayers should make sure that they are aware of important changes to the tax law before they complete their 2005 federal income tax forms. Here are some significant changes that may affect you when completing your 2005 federal tax return.
Feb. 6, 2006
Guidelines for Roth IRA Contributions
Taxpayers confused about whether they can contribute to a Roth IRA should consider guidelines based on the following categories.
Feb. 3, 2006
Beware of Tax Scams
Don�t fall victim to tax scams. These schemes take several shapes, ranging from promises of large tax refunds to illegal ways of untaxing yourself. Beware of these common schemes.
Feb. 2, 2006
Missing a Form 1099?
If you receive certain types of income, you may get a Form 1099 for use with your federal tax return. Form 1099 is an information return provided by the payer of the income. You should receive your Form 1099-series information returns by January 31, 2006.
Feb. 1, 2006
Missing Your Form W-2?
You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2005 earnings and withheld taxes no later than January 31, 2006 (if mailed, allow a few days for delivery).
Jan. 31, 2006
Use EFTPS to Pay Your Taxes Electronically
If you are going to owe taxes when you file your federal tax return, consider paying through the Electronic Federal Tax Payment System. EFTPS is a fast, easy, convenient and secure service provided free by the Department of Treasury.
Jan. 30, 2006
Check Out Free File
If you have access to a computer and the Internet, you may be eligible to prepare and file your 2005 federal tax return electronically for free. Free File is an easy way to file your taxes and get your refund in half the time.
Jan. 27, 2006
Receive Your Refund Faster with Direct Deposit
Want your refund faster? Have it deposited directly into your bank account. More taxpayers are choosing direct deposit as the way to receive their federal tax refunds. More than 52 million people had their tax refunds deposited directly into their bank accounts in 2005. It�s a secure and convenient way to get your money in your pocket faster.
Jan. 26, 2006
E-file - A Smart Way to do Your Taxes
Every year, more taxpayers discover the benefits of filing their tax return electronically. Whether you use a professional tax preparer authorized by the IRS or do it yourself on a home computer, there are many reasons to consider e-filing your tax return this year.
Jan. 25, 2006
What to do if You Haven't Filed Your 2004 Return
The failure to file a federal tax return can be costly � whether you end up owing more or missing out on a refund. There are several reasons taxpayers don�t file their taxes. Perhaps you didn�t know you were required to file. Maybe, you just kept putting it off and simply forgot. Whatever the reason, it�s best to file your return as soon as possible. If you need help, even with a late return, the IRS is ready to assist you.
Jan. 24, 2006
Tips for Recently Married or Divorced Taxpayers
Newlyweds and the recently divorced should ensure the name on their tax return matches the name registered with the Social Security Administration. A mismatch could unexpectedly increase a tax bill or reduce the size of any refund.
Jan. 23, 2006
Moving Soon? Let the IRS Know
If you changed your home or business address, notify the IRS to ensure that you receive any refunds or correspondence. While the IRS uses the Postal Service�s change of address files to update taxpayer addresses, notifying the IRS directly is still a good idea.
Jan. 20, 2006
Gift Taxes
If you gave any one person gifts in 2005 that valued at more than $11,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts.
Jan. 19, 2006
Quick and Easy Access to IRS Tax Forms and Publications
The Internal Revenue Service has many forms and free publications on a wide variety of topics to help you understand and meet tax filing requirements. If you need IRS materials try one of these easy options:
Jan. 18, 2006
How to Get a Copy of Your Tax Return Information
There are two easy and convenient options for obtaining copies of your federal tax return information � tax return transcripts and tax account transcripts � by phone or by mail.
Jan.17, 2006
Tax Information available in Spanish � Ayuda en Espanol
If you need federal tax information, the IRS provides free Spanish-language products and services. Pages on the Internal Revenue Service�s Web site, pre-recorded tax topics, refund information, tax publications and toll-free telephone assistance are all available in the Spanish-language.
Jan. 16, 2006
IRS Publication 17 � Free Tax Guide for Individuals
Are you facing a lot of different tax questions this year? IRS experts have pulled together an overview of common tax issues in one convenient place � Publication 17, Your Federal Income Tax. This updated publication, available on the IRS Web site,, contains a vast array of helpful information for individual taxpayers.
Jan. 13, 2006
IRS Has Free Publications on Every Topic You Need
The IRS has a free publication that answers any tax question you have. Publications on a variety of tax-related topics are available by phone or the Internet at From students to seniors, first-time home buyers to landlords - everyone can find useful information in IRS forms and publications.
Jan. 12, 2006
1040 Central � One Click Away
Don�t wait in line, go on-line. The IRS Web site is home to a great resource for answers to tax questions that arise during the filing season. Access 1040 Central at under the �Individuals� tab and discover user-friendly tools that will make completing your 2005 tax return quick and easy.
Jan. 11, 2006
Keeping Good Records
You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good record-keeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience.
Jan. 10, 2006
Advice for Choosing a Tax Preparer
Taxpayers who pay someone to do their taxes should choose a preparer wisely. If you choose to use a paid tax preparer, it is important that you find a qualified tax professional. Taxpayers are ultimately responsible for everything on their return even when it�s prepared by someone else. While most tax return preparers are professional and honest, taxpayers can use the following tips to choose a preparer who will offer the best service for their tax preparation needs.
Jan. 9, 2006
Should You Itemize?
Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.
Jan. 6, 2006
Choose the Simplest Federal Tax Form for Your Needs
The three forms used for filing individual federal income tax returns are Form 1040EZ, Form 1040A, and Form 1040. If you are filing a federal income tax return on paper, use the simplest form you can. Using the simplest allowable form will reduce the chance of an error that may cost you money or delay the processing of your return.
Jan. 5, 2006
Choose Your Correct Filing Status
Your federal tax filing status is based on your marital and family situation. It is an important factor in determining whether you must file a return, your standard deduction and your correct amount of tax.
Jan. 4, 2006
Should You File a Tax Return?
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive. For example a married couple, under age 65, generally is not required to file until their joint income reaches $16,400. However self-employed individuals generally must file a tax return if their net income from self employment exceeds $400.
Jan. 3, 2006
Seven Ways to Get a Jump Start on Your Taxes
Earlier is better when it comes to working on your taxes. Taxpayers are encouraged to get a head start on tax preparation, especially since early filers avoid the last minute rush and get their refunds sooner. Here are seven easy ways to get a good jump on your taxes long before the April deadline is here.

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