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  2007 Tax Year / 2008 Filing Season

2007 IRS 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 2007.

April 14, 2008
Help from the Taxpayer Advocate Service
If you have tried to resolve tax problems with the IRS and are still having problems or facing economic harm, you have somewhere to turn: seek the free assistance of the Taxpayer Advocate Service.
April 11, 2008
Appeal Rights
Are you in the middle of a disagreement with the IRS? If you disagree with the IRS about the amount of your tax liability or about proposed collection actions, you have the right to ask the IRS Appeals Office to review your case.
April 10, 2008
What To Do If You Receive an IRS Notice
It�s a moment many taxpayers dread. A letter arrives from the IRS � and it�s not a refund check. Don�t panic; many of these letters can be dealt with simply and painlessly.
April 9, 2008
Amending Your Tax Return
Oops! You�ve discovered an error after your tax return has been filed or maybe you need to adjust your 2007 return to include certain non-taxable benefits to reach the $3000 qualifying income level to qualify for an economic stimulus payment. What should you do? You may need to amend your return.
April 8, 2008
How Long Should It Take To Receive Your Tax Refund?
Are you expecting a tax refund from the Internal Revenue Service this year? If you file a complete and accurate paper tax return, your refund should be issued about six to eight weeks after the IRS receives your return. If you file your return electronically, your refund is issued in about half that time � even faster if you choose direct deposit.
April 7, 2008
Need More Time to File?
If you can't meet the April filing deadline to file your tax return, you can get an automatic six month extension of time to file from the IRS.
April 6, 2008
Payment Options
If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. There are also alternative payment options to consider:
April 4, 2008
Making Tax Payments Correctly
If you have a balance due when filing your 2007 income tax return, remember to make sure your tax payment check or money order is payable to the "United States Treasury." Complete and include Form 1040-V, Payment Voucher, when sending your payment and tax return to the IRS. This will help the IRS process your payment more accurately and efficiently.
April 2, 2008
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 1, 2008
Filing Your Federal Tax Return
Once you complete your 2007 federal tax return, you can either file it electronically or mail it to the IRS. More than one-half of all taxpayers file electronically because they know that IRS e-file provides a fast, easy, accurate, secure and convenient way to file. Taxpayers who file electronically receive an acknowledgement that their return has been received and accepted for processing.
March 31, 2008
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 28, 2008
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 27, 2008
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: * Consider filing electronically instead of using paper tax forms * Put all required Social Security numbers on the return * Double-check your figures * Sign your form * Attach all required schedules * Send your return or request an extension by the April filing deadline
March 26, 2008
You Can Still Make a 2007 IRA Contribution
If you haven�t contributed funds to an Individual Retirement Arrangement for tax year 2007, 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 2007, not including extensions.
March 25, 2008
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. One way is to use "Where�s My Refund?" an interactive tool on the IRS Web site at Simple online instructions guide taxpayers through a process that checks the status of their refund after they provide identifying information shown on their tax return. Once the information is processed, you could get several responses, including: * Acknowledgement that your return was received and is in processing. * The mailing date or direct deposit date of your refund. * Notice that the IRS could not deliver your refund due to an incorrect address. In this instance, you can change or correct your address online.
March 24, 2008
Coverdell Education Savings Accounts
A Coverdell Education Savings Account (ESA) is an account created as an incentive to help parents and students save for education expenses.
March 21, 2008
Deducting Vehicle Donations
If you donated a car or other vehicle to a qualified charitable organization in 2007 and intend to claim a deduction you should review the special rules that apply to vehicle donations. You can deduct contributions to a charity only if you itemize deductions on Schedule A of Form 1040.
March 20, 2008
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 19, 2008
Tax Credit for Hybrid Vehicles
If you bought a hybrid vehicle in 2007, you may be entitled to a tax credit on your 2007 return. The credit is worth as much as $3,000 for the most fuel-efficient models. The precise amount depends on the make and model of the vehicle and when the vehicle was purchased.
March 18, 2008
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: * Taxpayers who itemize deductions generally may be able to deduct the points paid to obtain a home mortgage as mortgage interest * Points paid solely to refinance a home mortgage usually must be deducted over the life of the loan * Points can be fully deducted in the year paid if certain tests are met
March 17, 2008
Sale of Your Home
If you have a gain from the sale or exchange of your main home, you may be able to exclude all or part of the gain from your income. Individuals may be able to exclude up to $250,000 of capital gain, and married taxpayers filing joint returns may be able to exclude up to $500,000 of gain each time you sell your main home, but generally no more frequently than once every two years.
March 13, 2008
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.
March 13, 2008
Deduction for Educator Expenses
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 2007 tax bill even if you don�t itemize your deductions.
March 12, 2008
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 take these deductions if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation.
March 11, 2008
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, 2008
Saver�s 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. The Savers Credit formally known as the Retirement Savings Contributions Credit applies to individuals with a filing status and income of: * Single with income up to $26,000 * Head of Household with income up to $39,000 * Married Filing Jointly, with incomes up to $52,000
March 7, 2008
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. Because they are credits, rather than deductions, you may be able to subtract them in full dollar for dollar from your federal income tax.
March 6, 2008
New Form for Employees Misclassified as Independent Contractors
In 2007 were you an employee whose employer paid you as an independent contractor? Employees usually receive a Form W-2 while independent contractors usually receive a Form 1099-MISC.
March 5, 2008
Claiming the Child and Dependent Care Credit
If you paid someone to care for a child under age 13 or a qualifying spouse or 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. To qualify, your spouse, children age 13 or older, and other dependents must be physically or mentally incapable of self-care.
March 4, 2008
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. A qualifying child for this credit is someone who meets the following criteria: * Age - Was under age 17 at the end of 2007 * Relationship - Is your son, daughter, adopted child, stepchild or eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals * Citizenship - Is a U.S. citizen, U.S. national or resident of the U.S. * Support - Did not provide over half of his or her own support, and * Lived with you - Must have lived with you for more than half of 2007 (note that some exceptions to this criteria exist)
March 3, 2008
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. The IRS suggests that you remember three important guidelines: * You are responsible and liable for the content of your tax return. * Anyone who promises you a bigger refund without knowing your tax situation could be misleading you, and * Never sign a tax return without looking it over to make sure it is accurate.
February 29, 2008
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.
February 28, 2008
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?
February 27, 2008
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 many community locations.
February 26, 2008
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 (VITA). The Armed Forces Tax Council (AFTC) 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.
February 25, 2008
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.
February 22, 2008
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.
February 21, 2008
Income from Foreign Sources
Many United States citizens and resident aliens receive 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.
February 20, 2008
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.
February 19, 2008
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.
February 18, 2008
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.
February 15, 2008
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 and other services is taxable income.
February 14, 2008
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 2007 federal income tax return.
February 13, 2008
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.
February 12, 2008
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 comprehensive list is available in IRS Publication 525, Taxable and Nontaxable Income.
February 11, 2008
Direct Deposit and Split Refund
Taxpayers have choices and flexibility for the direct deposit of 2007 federal income tax refunds. They can: * Split their refunds among up to three accounts held by as many as three different U.S. financial institutions, such as banks, mutual funds, brokerage firms or credit unions; * Direct deposit their refunds to one account; or * Opt to receive a slower paper check through the mail.
February 8, 2008
Can You Use Schedule C-EZ?
Want to save time and trouble when filing taxes for your small business? You may be eligible to use the abbreviated Schedule C-EZ instead of the longer Schedule C when reporting business income and expenses on your 2007 Form 1040 federal income tax return. The maximum deductible business expense threshold for filing Schedule C-EZ is $5,000.
February 7, 2008
Changes to Tax Laws in 2007
Taxpayers should be aware of important changes to the tax law before they complete their 2007 federal income tax forms. Here are some changes that may affect your return.
February 6, 2008
Guidelines for Roth IRA Contributions
Although Roth IRAs are popular retirement arrangements, some taxpayers may be confused about whether they can contribute to a Roth IRA. Here are some helpful guidelines:
February 5, 2008
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. The payer should send or provide your Form 1099-series information returns by January 31, 2007.
February 4, 2008
Missing Your Form W-2?
Did you get your W-2? These documents are essential to filling out most individual tax returns. You should receive a Form W-2, Wage and Tax Statement, from each of your employers each year. Employers have until January 31, 2008 to provide or send you a 2007 W-2 earnings statement either electronically or in paper form. You should allow two weeks to receive your W-2 from employers who send them by mail.
February 1, 2008
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). EFTPS is a fast, easy, convenient and secure service provided free by the U.S. Department of the Treasury.
January 31, 2008
The Earned Income Tax Credit
The EITC is for people who work, but have lower incomes. If you qualify, it could be worth up to $4,700 this year. So you could pay less federal tax or even get a refund. That�s money you can use to make a difference in your life.
January 30, 2008
Check Out Free File
If you have access to a computer and the Internet you may be eligible to prepare and file your 2007 federal tax return electronically�for free. Free File is an easy way to file your taxes and get your refund in half the time.
January 29, 2008
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 61 million people had their tax refunds deposited directly into their bank accounts in 2007. It�s a secure and convenient way to get your money in your pocket faster.
January 28, 2008
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 from a home computer, there are many reasons to consider e-filing your tax return this year.
January 25, 2008
What to do if You Haven't Filed Your 2006 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.
January 24, 2008
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 (SSA). A mismatch could unexpectedly delay a tax refund.
January 23, 2008
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.
January 22, 2008
Gift Taxes
If you gave any one person gifts in 2007 that are valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.
January 21, 2008
Quick and Easy Access to IRS 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:
January 18, 2008
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.
January 17, 2008
Tax Information Available in Spanish - Informaci�n Tributaria en Espa�ol
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.
January 16, 2008
IRS Publication 17 � Now Easier to Navigate Online
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.
January 15, 2008
IRS Has Free Publications on Every Topic You Need
The IRS has free publications to answer just about 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.
January 14, 2008
1040 Central � One Click Away
Don�t wait in line, go on-line. The IRS Web site is 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 2007 tax return quick and easy.
January 11, 2008
Keeping Good Records
You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good recordkeeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience.
January 10, 2008
Advice for Choosing a Tax Return 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
January 9, 2008
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.
January 8, 2008
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.
January 7, 2008
Will the AMT delay your refund?
This year, some early filers may have to wait a few extra weeks for their refunds. The delay is due to the Alternative Minimum Tax (AMT) legislation enacted in December.
January 4, 2008
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.
January 3, 2008
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.
January 2, 2008
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.

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