Tax Accounting - Preparing your own tax return

Preparing Your Own Income Tax Return If you are an average working couple with no unusual circumstances, income or expenses, it should be an easy matter to do your taxes yourself. There is a wealth of information available on the internet that will assist you with a simple income tax return. The IRS has a website where you can not only get answers to your questions, but you can file your tax return for free at http://www.irs.gov/efile/ What you need to do is gather all documents relating to income including bank interest or dividends, add them up and enter the amounts in the appropriate fields on the form. You should also have on hand a list and total of all bills you have paid and other expenses that are tax deductible. The 2009 standard deduction for a couple filing jointly is $11,400. If you think you have more than that amount in deductible expenses, you should use the IRS itemized deduction worksheet to list them. This will determine if itemizing deductions is the better choice. Otherwise, you can just complete form 1040 and be done. Although most taxpayers use the standard deduction, itemizing expenses may help lower your taxes in certain circumstances. For instance, if you have had excessive medical or dental expenses, it is worth comparing the two methods to see which would benefit you more. In itemizing deductions, you can include home mortgage interest, real estate taxes, personal property taxes, state and local income taxes as well as contributions to certified charities. Interest paid on student loans may also be partially deductible. You should know that most expenses of a personal nature are not deductible and can not be used on your tax return. This includes bank fees and charges for checks, overdrafts, etc for personal checking or savings accounts. No tax deductions can be taken for any interest paid on credit cards, personal loans or car loans. Any profits you have from selling personal items such as stamps, coins or other hobby collectibles are taxable income. However, losses you may incur from such sales are not tax deductible. By knowing such basics, you should be able to quickly determine if you should use the standard deductions or itemize your expenses on your income tax return.

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