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Daily Tax Tips April 2014

It's finally here. April. The month that you must file your 1040 or Form 4868 to get six more months to finish the paperwork.Tax_tip_icon_pencil_point

Either way, if you owe Uncle Sam, you must send that amount or a close estimate of it by April 15. If you don't, you'll end up with a bigger bill thanks to penalties and interest.

To ensure you don't run into that or other problems, check out these April 2014 Daily Tax Tips.

And if you've already finished your 2013 filing duties -- I am sooooo jealous! -- you'll also find some tax planning moves to help you cut your 2014 tax bill.

One administrative note. While the January, February and March tax tips list featured a piece of tax advice each day, including weekends, of those months, the April tips will end on the 15th.

But don't worry. I know that tax considerations continue year round. But we're going to catch our breath a bit and switch to weekly tax tips from mid-April through the end of December.

Again, many of the April tips will be from  Bankrate's annual tax guide. Others are original Don't Mess With Taxes advice.

Regardless of the source, and when we switch to weekly tips, you'll find a featured tip in the upper right corner of the the ol' blog.

Or you can bookmark this page, where you can catch up with the Daily Tax Tips for April2014 at your leisure, as well as follow the links at the end of the page to the filing season's earlier advice.

  1. Zero capital gains tax for some investors -- This is not an April Fools Day joke. Some investors will not owe the Internal Revenue Service a cent of tax when they sell their assets. But, as usually is the case in the tax world, there are some limits. First, the 0 percent capital gains tax rate applies only to long-term assets. These are the ones owned for more than a year. Short-term sales remain taxed at your ordinary tax rate. Second, this no-tax rule has an earnings limit. It applies only to the two lowest tax brackets, 10 percent and 15 percent. Because of the progressive system of the tax code and the specifics of the no-capital-gains-tax law, some higher earners still might benefit from this provision. So check it out. Any time there's a chance you won't owe Uncle Sam anything, it's worth looking into. No joke. (April 1, 2014)
  2. Roth rules -- Roth rules as a retirement account as long as you follow the tax rules. The annual maximum contributions, both regular and catch-up, are the same for a Roth IRA as a traditional IRA. You also have until the April 15 filing deadline to put in money for the prior tax year. But after that, the Roth rules change. The major appeal of a Roth account is that it provides tax-free retirement money. This is in exchange for no immediate tax deduction of your contributions. You also won't face any required minimum distributions on a Roth. And you can keep contributing to it regardless of your age as long as you're earning income. (April 2, 2014)
  3. Tax advantages of traditional IRA -- Many people still use this type of IRA, primarily because it offers them an immediate tax deduction. The deduction doesn't require itemizing; it's one of the above-the-line deductions found on both the 1040 and 1040A forms. And you can open a traditional IRA for the prior tax year or contribute to one you already have as late as the April 15 filing deadline. Note, however, that if you or your spouse has a retirement account at work, you might not be able to take a full deduction. The work sheet in the tax form instructions will help you figure out how much of your traditional IRA contribution you can deduct. (April 3, 2014)
  4. Tax reward for retirement savings -- The tax code offers lots of incentives to encourage individuals to save for retirement, but one that can directly cut your current tax bill often is overlooked. The saver's credit, formally known as the Retirement Savings Contributions Credit, could net eligible taxpayers $1,000 at filing time. But it's not for everyone. The credit was created for moderate- and lower-income taxpayers; it's phased out as a saver's income increases. And only $2,000 of your contributions count in figuring your credit amount, with half that amount being the maximum possible credit available. Still, it is a tax credit, meaning any amount reduces your tax bill dollar for dollar. So check it out. (April 4, 2014)
  5. Energy efficient home improvement tax break might be renewed -- The tax credit for making some relatively easy upgrades to your residence's energy efficient expired at the end of 2013. But it was been added to the package of extenders, those tax provisions that expire periodically and must be approved again by Congress, that passed the Senate Finance Committee on April 3. The provisions in the most recent version are extended through 2015 and again would allow for a lifetime maximum credit of $500. But the new version also expands the types of energy efficient roofing material that would be eligible for the credit. (April 5, 2014)
  6. The value of refundable tax credits -- Refundable tax credits not only reduce your tax bill dollar for dollar, when you zero out what your owe Uncle Sam you get the excess credit as, per the name, a tax refund. Three popular refundable tax credits are the Earned Income Tax Credit, the Additional Child Tax Credit and the American Opportunity education tax credit. There's no doubt that many people, especially during the recent U.S. economic travails, have depended greatly on the help from these refundable credits. But many people still question whether from a wider perspective they are worthwhile. Look for the issue to be part of any serious tax reform talks. (April 6, 2014)
  7. Don't miss miscellaneous deductions -- Life is full of things that aren't easily pigeonholed. Taxes are like that, too. That's why there's a place for expenses that don't fit into usual tax categories. They are deductible as miscellaneous expenses on Schedule A. The problem with this group is that before you can deduct the expenses, they must exceed 2 percent of your adjusted gross income. If your AGI is $30,000 then you need more than $600 in miscellaneous deductions before they do you any tax good. And note the "more than" requirement. If you have $650 in miscellaneous expenses, only $50 counts on Schedule A. To get over that hurdle, you can count a variety of unreimbursed employee expenses, investment related fees and even what you paid last year to have your taxes done. (April 7, 2014)
  8. Red flags that tempt the tax auditor -- The IRS is auditing fewer returns, but the chances of your 1040 being more closely examined are higher if you have one of these red flags. Small business get extra attention because there are fewer third-party verifications of earnings and payments, making it easier for the filer to report less taxable income. Returns of richer individuals, already getting whacked by added taxes, also get closer IRS attention because they present the better opportunity for additional collection. And if your itemized deductions deviate from the average amounts for your income range, what the agency calls its discriminant information function, or DIF, will likely get your return pulled for audit. (April 8, 2014)
  9. Choosing between Schedule C and C-EZ -- As a sole proprietor, you get a choice of which form on which to report your self-employment earnings. As the name indicates, the C-EZ is a streamlined version of the more-detailed Schedule C. So when can -- should -- you use one form over the other? Check the full name of the C-EZ: "Net Profit from Business." If your business has a loss, then you must use the long form, known officially as "Profit or Loss From Business (Sole Proprietorship)." You also can't have a lot of expenses; the maximum for C-EZ filing is $5,000 or less in company expenditures. While it's longer and, yes, more complicated, the longer Schedule C might be a better choice. In addition to counting more company expenditures, you're able to depreciate business property and can claim your home office, either using the more detailed original version or the new simplified home office deduction claim. If you have a choice between the C or C-EZ check them both out to make sure you use the form that gives you the best tax result for your business. (April 9, 2014)
  10. Don't deduct that! -- Deductions, either itemized or above-the-line, are a handy way to reduce your taxable income. Less income generally means a smaller tax bill. But if you claim one of these 10 deductions, you could end up paying more in penalties and interest on these bad claims. They include your homeowner's hazard insurance policy, your home phone and commuting costs. But there are some related deductions that you can claim. You might be able to deduct private mortgage insurance, your business phone calls and get a tax break from your employer to help cover some costs of getting to and from work. Check out all 10 "almost" deductions you don't dare deduct and the ones in that tax area that are OK to claim. (April 10, 2014)
  11. Online tax-paying options -- You've gone totally 21st century paperless, no longer writing paper checks. That's not a problem when it comes to paying your tax bill. The Internal Revenue Service gladly accepts a variety of electronic tax payments. You can use a credit or debit card by going to IRS-approved vendors Official Payments, Link2Gov and WorldPay. You can pay via electronic funds withdrawal, or EFW. This essentially is the reverse of the direct deposit that the IRS recommends for those getting refunds. Or you can go to the Electronic Federal Tax Payment System, known as EFTPS, website to pay your April 15 and other tax bills year-round. But check the e-pay options carefully. Most involve some sort of charge in addition to your tax bill. (April 11, 2014)
  12. State e-filing is popular, too -- The Internal Revenue Service's success at getting us to electronically file our federal returns is being replicated at the state level. Around 93 percent of state individual income tax filings this season have been e-filed. That's up 4 percent over last year as of mid-March. A key reason for the growth of e-filing at the state level is that so many states make it so easy. They also make it free, either via direct filing at the states' tax departments or through partnerships with private tax preparation software manufacturers. Check your state's tax department website to see what e-file options are available for you there. And make sure you don't miss the filing deadline, which in most states also is April 15. (April 12, 2014)
  13. Getting more time to file your tax returns -- Millions of taxpayers every year just can't get their returns done by the April 15 filing deadline. No problem, says the Internal Revenue Service. All you have to do is file Form 4868. That will give tax procrastinators six more months, until Oct. 15, to finish their tax paperwork. Most states that require returns from their residents also follow the April 15 deadline and apply the federal request for more time automatically to the state deadline. But remember, the extension is only to file the forms. Both state and federal tax collectors demand that you pay any tax you owe by the due date. (April 13, 2014)
  14. Ways to pay a big tax bill -- Can't come up with the money to pay your huge tax bill? Don't worry. The Internal Revenue Service offers several different ways to pay. If you have a big enough credit card line, you can pay with plastic -- the IRS You can use a credit has approved Official Payments, Link2Gov and WorldPay to take credit (and debit) payments -- and then pay off that account's bill over time. You can set up a installment plan directly with the IRS. Or if you just can't pay off your full tax bill even over time, you can try to convince the IRS to take less via an offer in compromise. All of these routes, however, will cost you more. There's the interest charges on credit card balances or a payment plan with Uncle Sam. And installment plans and offers to pay less require upfront application fees. (April 14, 2014)
  15. It's Tax Day! Time to file something -- April 15 is finally here. You must file your 1040 or an extension request or you could end up owing the Internal Revenue Service even more money. The IRS considers your return as filed on time as long as, if you snail mail it, it has an April 15 postmark. If you plan to e-file, you have until midnight your local time to hit the send button. If you can't do either of those things in the next few hours, then you need to get Form 4868 en route to the IRS today. This extension request is automatic and will give you six more months to file your paperwork. But note that the IRS will give you added time to file your return only. You must pay any tax you owe or the meter starts running on penalties and interest. And remember that if your state income tax is due today, too, the same filing and extension rules likely apply to that return. (April 15, 2014)

Check out

January 2014 Daily Tax Tips

February 2014 Daily Tax Tips

March 2014 Daily Tax Tips

Want more? Check out the rest of the news and advice at Bankrate's Tax Guide, as well as Don't Mess With Taxes' ever-growing collection of year-round tax tips and money moves.

Today's Tax Tip

  • Don't wave these audit red flags — Sure, IRS audit rates have dropped in recent years, but do you really want to take a chance on getting caught? Even rich tax cheats have a hard time fighting Uncle Sam's Criminal Investigation unit officers, who got a recent courtroom victory. A Texas judge has deemed the billionaire alleged to have committed the United States' largest tax evasion scheme is competent to stand trial. (May 27, 2022)

  • Tax Tip; click pencil for all tax tip links

  • The 2022 Tax Tips offer ways to file your annual return, along with post-filing advice, important tax news and, of course, ways to cut your current tax year bill. You'll find the monthly assemblages on their own respective pages: January, February, March, April, May, June, July, August, September, October, November and December. Remember, tax tasks and tips don't stop after you file your annual return!

COVID-19 & Taxes

  • COVID-19
    Coronavirus has wreaked havoc
    on the 2020 and 2021 tax seasons.
    These three Coronavirus (COVID-19) and Taxes pages have details:
    March-July 2020,
    August-December 2020,
    January-December 2021, and
    January-… 2022
    You can find medical coronavirus resource links further down this column.

All About Kay

  • OK, some about Kay
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    Kay Bell — Native Texan (the blog title totally makes sense now, right?). Professional journalist. Tax geek.

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Tick ... Tick ... Tick

  • Tax Season 2022 continues!

    Tax Day 2022 is finally over … unless you're one of the millions who have more time to file — looking at you taxpayers abroad and those in major disaster areas — or you got an extension to file your 2021 tax year return. That's fine. In fact, the Internal Revenue Service appreciates some of us spreading out our filings, especially when we and the agency still are dealing with all the complications of COVID-19 and taxes.

    That's why the ol' blog's focus now is on all y'all still working on returns. But I haven't forgotten my organized taxpayer readers, who are already looking for ways to reduce their 2022 tax year bills. Yep, that amount is adding up, but there are moves you can make. The monthly tips and reminders a little further down this column can help everyone, regardless of which tax year you're working on.

    Those on extension should keep a keen eye on the countdown clock below. It will help you track the days tick, tick, ticking off toward that absolutely final fall filing due date of Oct. 17. Yep, it's a few days later this year.
    Note: I'm in the Central Time Zone, so adjust accordingly for where you live.


Time for Tax Tasks


  • monthly tax moves


  • May has arrived!
    That exclamation mark is sincere and deserved. You've got to love a month that starts with a celebration.

    May Pole Dance via GIPHY


    After the May Day dances are done, the commemorative days just keep coming. There are well-known ones, like Cinco de Mayo, Mother's Day, and Memorial Day, as well as some more obscure ones, like Visit Your Relatives Day, National Smile Day, and my favorite, Eat What You Want Day.

    But even with all these (and more!) celebrations, there's still time to make some money-saving May tax moves. Let's get to it!

    May 1: While May Day isn't a big holiday in the United States, globally the first day of May is a time for celebrating workers' contributions. But that can apply here, too, in connection with some employment-related tax tasks. If you got a big refund or owed more tax than you expected when you filed (or got an extension) last month, today's the perfect time to do paycheck check-up to determine how you should adjust your withholding.

    May 5: ¡Feliz Cinco de Mayo!

    Feliz Cinco de Mayo

    Fiestas are back this year, as more of us have been taken advantage of COVID-19 vaccinations and boosters. Still, be careful out there celebrating this Mexican holiday (and no, it's NOT Mexican Independence Day) that tends to spur more festivities here north of the border. Party responsibly, both when it come to the lingering pandemic and imbibing your favorite adult beverage, likely a margarita, which included the cost of state and federal alcohol taxes. Your state tax collector also will raise a glass to your fiscal contribution, since during the pandemic, sin taxes were a revenue bright spot for many states.

    May 8: Happy Mother's Day!

    Happy Mother's Day

    If you're just this year making up for pandemic paused family visits, give your mom a longer hug on her special day. Love, flowers, and the best of health and happiness to every mother, from the new ones just discovering the joys, tax and otherwise, of new parenthood to those gracefully maneuvering their Golden Years while getting some tax-advantaged help from their families.

    May 10: Eateries are still recovering from the challenges of operating during a national health crisis. Restaurants closed, then opened, then closed again. Others relied on and have stuck with take-out and deliveries. Whether you're dining in or still getting food brought to your house, remember to tip your server or delivery person.

    restaurant check tip iStock
    If a tip isn't included in your food delivery charge, click the image above to calculate how much to tip the person who brought it to you.

    As for servers who now are back on the job, remember that your tips are taxable income. If you worked at least some of March at a job where you got gratuities, you need to account for them today if they came to at least $20 last month. Use Form 4070 to report your tips today to your employer.

    May 16: Before the seasonal shift into summer, take care of spring tax cleaning. Give away clothing and household goods you no longer use. Your philanthropy could provide you a charitable tax deduction.

    May 23: Kick spring cleaning up a notch. Go beyond housekeeping and house clearing and make those home repairs you've been putting off. Many home improvements, including landscaping, could pay off in by increasing your home's basis, which means your profit for tax purposes will be smaller and stay under the amount that's tax-free when you eventually sell your home.

    May 27: If you're heading out early for the long Memorial Day weekend that traditionally kicks off summer, be sure to plan for added costs, like the price of getting to your holiday destination. Most of us will hit the highways, so even though gasoline prices have come down a bit, they still will take a bite of our travel budgets. Sorry, it's not enough to get Congress to create a federal gas tax holiday. And if you're renting your home to incoming tourists, be sure to pay the state and/or local taxes added to short-term home rentals.

    May 30: As you honor military personnel this Memorial Day who made the ultimate sacrifice, don't forget about their families. There are some tax considerations offered survivors of lost soldiers, sailors, and air crew.

    Small Business Tax Calendar: Important filing, deposit and record keeping dates throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page and view the full year's important business and individual tax dates in IRS Pub. 509.

State Tax Help

  • Don't forget your state taxes!
    Forty-three states and D.C. collect personal income taxes. But even if you live in of the seven states without an income levy, you still face other state (and local) taxes.

    State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.

Tax Forms

  • Tax Forms
    Thanks to our increased use of tax preparers and computer software, many of us don't see our tax forms until we sign and file them. But knowing what's on these documents, either in paper or digital form, and why the IRS wants it is key to understanding our tax system. And knowledge definitely is power, especially when it comes to tax savings. Find this valuable information in the ol' blog's special Talking Tax Forms page.

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I gotta tell ya ...

  • AKA Disclaimer:
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    I am not a professional tax preparer.
    The content on Don't Mess With Taxes is my personal opinion based on my study and understanding of tax laws, policies and regulations. It is provided for your private, noncommercial, educational and informational purposes only. It is not a recommendation of any specific tax action(s) you should or should not take. Similarly, mentions of products or services are not endorsements. In other words, my ramblings on the ol' blog are free advice and you know what they say about getting what you pay for. That's why when it comes to filing your taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent or other qualified tax preparer who is familiar with your individual tax circumstances.

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  • DMWT Politics Posts
  • While it's easy to rail at the IRS, for the most part we can thank — or blame — our tax laws on Congress and the White House. So if you have an issue with tax legislation or want a tax bill passed, you need to let your federal legislators and the White House occupant know of your concerns. You can find out who in Washington, D.C., to contact (and how), as well as get information on your local lawmakers for matters, tax or otherwise, closer to home, at USA Gov.

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