With the start of income tax filing season only a few months away, the Internal Revenue Service reminds taxpayers that fall is a good time to conduct a review of their tax situation — and take a look at the latest tax changes, change withholding status and start organizing records.
"Looking at tax breaks and reviewing your current tax situation could mean a bigger refund or less tax owed come tax time next year," said Karen Connelly, IRS spokeswoman for Colorado. "It only makes sense to start now with practicing good record-keeping habits, and it's easy to constantly stay informed about the latest federal income tax information by visiting our website — www.irs.gov."
- Cash charitable contributions: If you plan to donate and deduct your charitable contributions for 2011 as an itemized deduction, you should be aware of the process. Charitable contributions can be tax deductible, but you must have the proper records to support your deduction. Rules on record keeping for charitable contributions were revised by the Pension Protection Act of 2006. To deduct a charitable cash donation, regardless of the amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Acceptable bank records would include canceled checks or bank statements containing the name of the charity and the date and amount of the contribution. A good resource is IRS Publication 526, Charitable Contributions.
- Check your withholding status on IRS.gov: Taxpayers should take a few minutes to check their withholding to ensure what is being taken out of their paychecks matches their projected tax bill. If not enough is withheld, tax will be owed at the end of the year and may, in some cases, have a penalty assessed. If too much tax is withheld, taxpayers lose the use of their money until they get their refund.
- Record-keeping: The IRS encourages taxpayers to take the time now to gather and organzie tax records to reduce stress at tax time. In most cases the IRS does not require you to keep records in any special manner. Generally, you should keep any and all documents that may have an impact on your tax return. Such items might include bills, receipts, invoices, mileage logs, canceled checks or any other proof of payment, and any other records to support deductions or credits you plan to claim on your tax return.Normally, tax records should be kept for three years, but some documents — like records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
- Avoid phishing scams: The IRS reminds taxpayers not to become a victim of email scams, referred to as phishing scams. The IRS does not initiate contact with taxpayers through email. Recipients of questionable emails claiming to come from the IRS should forward the emails to email@example.com
- Assistance: For more information about federal income tax matters or to access IRS forms or publications, go to www.IRS.gov.