Did You Work For Cash In 2015? Check Out These Tips

If you worked for cash in 2015, here are some important tips

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Note: The advice in this post is not intended to replace the advice of a qualified tax preparer. Always seek professional input before preparing your own taxes.

Most of us at one time or another earn extra cash with a side gig. While this can help your bottom line, there are tax implications.

The 1099 form: If you worked for an individual or organization for cash, they must issue you a 1099 form if you earned over $600.00. You will need to report your earnings on your income tax form under “Misc. income.”

In some cases, a client or employer who paid you cash will go ahead and issue a 1099 even if you earned less than $600.00. This is preferable because record-keeping will be easier for you and there will be less chance of errors in reporting your income.

Either way, employers must mail out these forms  no later than January 31st, so if you have not yet received yours, follow up immediately with your client or cash employer.

Why the 1099 is important: If there is a discrepancy between the earnings you reported to the IRS and the earnings reported by your client(s) and employer(s), processing your tax return will be delayed, along with any refunds.

At the same time, if the employer doesn’t report your earnings to the IRS, they, too, could face additional scrutiny and delays.

At the very least you’ll receive a letter from the IRS requesting correct information. At the very worst, it can trigger an audit or review.

If you’ve kept track of your earnings from each client and employer, be sure their income figures match your records.

Income and expense records: If you earned cash from a side gig in 2015, you’ll not only need to report your income, but you will also need to report your expenses.

Your tax preparer will attach either Schedule C or C-EZ to your tax return. If you are taking the DIY approach and filing your own taxes, you’ll need to complete Schedule SE to calculate your self-employment tax.

Keeping accurate income and expense records is key to filing an accurate return as well as calculating the correct amount of taxes you will owe. There are many apps and software programs that can help you track income and expenses such as Quickbooks, Harvest, or Excel.

Estimated Taxes: The amount of estimated taxes you may need to pay this year are based on your earnings in 2015. These taxes can be paid in quarterly installments or all at once. Your tax preparer can calculate your estimated tax.

Working for cash is a great way to help make ends meet. If 2015 was your first tax year working for cash, tax day will be different for you than in years past.

Have your taxes done by a professional and bring all of your 1099 forms, income/expense records, and any other documentation your tax preparer requests from you.

Don’t let the prospect of paying self-employment taxes scare you. Your tax preparer can help you in determining your estimated tax for this year.

You’ll avoid “sticker shock” and will be able to stay on top of your taxes. You’ll also avoid over-paying estimated taxes so you can keep the money where it belongs: with you.

By keeping accurate income and expense records you can make your side gig work for you and not for Uncle Sam.

 

 

 

Need Tax Filing Assistance? VITA Can Help

Tax filing assistance with VITA

Get tax filing assistance from skilled VITA volunteers


Tax season is upon us, and if you’re in need of tax preparation assistance, you’re in luck. The IRS offers two volunteer-based programs to qualified taxpayers.

VITA (Volunteer Income Tax Assistance) provides tax filing assistance to any taxpayer who meets any of the following criteria:

• Earn $54,000 or less per year
• Disabled
• Limited English proficiency speaker and will need help in reading and interpreting tax forms and tax return instructions.

VITA sites are found in community centers, shopping malls, senior centers, libraries and other community gathering spots. IRS-trained volunteers will help you file a basic tax return at no charge to you.

To locate a VITA site, call (800) 906-9887 or use the online locator to find a site near you.

Help For Taxpayers Over 60

If you’re over 60 and have retirement or pension-related tax concerns, the TCE (Tax Counseling for the Elderly) program is available to you.

IRS-trained volunteers, in cooperation with the AARP Foundation will assist you in preparing and filing a basic tax return, much like they do in the VITA program.

To find the nearest TCE site, call (888) 227-7669 anytime between January and April to find the nearest site and/or to schedule your appointment.

To locate a TCE site online, use the AARP Tax Aide locator.

Getting Organized is Key

Regardless of which program you choose, getting organized ahead of time is essential to filing an accurate and timely return.

Limited-income taxpayers, disabled taxpayers and those with limited English skills are welcome to participate in the VITA program. Older taxpayers also have access to IRS-certified volunteers to help them file their tax returns.

If you are in any of the above groups and prefer to self-file, just look for the “self prep” designation in the VITA/TCE site listing.

Five Things You Need to Do Before Tax Day

Tax day doesn’t need to be stressful if you keep these five things in mindtax day

No one relishes the idea of getting their taxes done. Between work, family, and other commitments, very few of us have the time. Show up unprepared on tax day, however, and you could be in for a stressful ride. Here are five things you need to do before tax day:

Fill out the organizer from your tax preparer: You’ll typically receive it in the mail as early as January. Tax preparers are busy this time of year, so help them out by filling out the organizer form ahead of your appointment.

Tax day will go faster and be less stressful for everyone involved.

Get organized: gather all of your income statements (W2s, 1099s, bank interest statements, stock/bond dividend statements, retirement income statements) and set them aside.

Your tax preparer will need them in order to file your return. If you are missing any of your income documents, contact the issuing party and request a duplicate.

Set aside your mortgage interest statements: Your bank will issue a mortgage interest statement that will disclose how much interest you paid during the tax year. Since mortgage interest is deductible, your tax preparer will need it in order to prepare your return.

Round up receipts for income and expenses if you’re self-employed: Better yet, if you have a spreadsheet that discloses your income and expenses, bring that with you to your tax prep appointment.

Your appointment will go faster and your tax preparer will be grateful. You can also transfer the figures from the spreadsheet to your tax organizer booklet.

Gather receipts for any additional deductions: Gather receipts for child/dependent care, medical/dental expenses not covered by insurance, interest statements, student loan interest statements, and records for any other itemized deduction.

Your tax preparer will be able to determine whether or not you qualify for specific deductions, so be sure to provide all the needed information on the organizer form or bring all records with you on the day of your tax appointment.

Most of all, take tax day in stride: No one ever looks forward to their tax appointment, but with a little advance organization, you could have a less stressful tax day. Allow plenty of time to get to and from your appointment, and allow plenty of time for your appointment. Have all the necessary paperwork that your tax preparer will need so they can prepare your return accurately and quickly.