Tax Season is Back: Tax Tips for your 2009 Return

Believe it or else, tax season is back. The arrival of the 2009 tax filing season reminds us that income tax planning is a year round effort.

As a comprehensive financial planner I encourage clients to understand how tax related decisions impact their overall financial plan. Contact a fee only financial planner or tax professional (CFP, CPA, EA) if you have any questions regarding the tax planning component of your comprehensive financial life plan. Always make sure that your professional support system is working together as a team with your best interests at the forefront of every decision. In the meantime, check out these basic filing tips:

• Employers are required to send W-2 forms to employees by the end of January.

• The American Opportunity Credit for Education Expenses gives credit up to $2,500 per student for qualified households. This credit is designed to help Did you purchase a car through the Cash for Clunkers program? That money is not taxable and should not be reported on your 2009 tax return.

• The first $2,400 of unemployment benefits received by jobless taxpayers in 2009 are not taxed. Unemployment benefits over $2,400 are taxable.

• Check the credentials of your tax preparer. Only attorneys, CPAs and Enrolled Agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.

• Use a reputable tax professional who signs the tax return and provides a copy.

• Use caution if a tax preparer claims they can obtain larger refunds than others. Large refunds are often a sign of poor planning and are equivalent to loaning the federal government your money in return for zero percent interest. Not a great idea!

• Electronically file your returns. Taxpayers who use e-file and direct deposit can get a refund in as few as 10 days.

• Taxes must be filed by April 15 unless you are granted an extension. Keep in mind an extension to file is not an extension to pay.