Staying organized, even after your taxes have been filed, will make your life a lot easier in the future. Have you ever found yourself looking to buy a home, refinance your mortgage, or buy a car and get a bit of an uneasy feeling when they ask for tax returns, W-2s or other related items from two years ago?

You know you have them, somewhere, but tracking them down might take some time. When you have organized tax records you won’t find yourself in this predicament.

Here’s what I like to do. First, I create a primary folder for each tax year in my file cabinet. This folder will hold everything that’s related to that particular tax year, including a copy of that year’s tax return.

Then within the main folder I create three sub-folders. One for income documents: W-2s, 1099s, rental income, etc.  Another for expense documents: property taxes, mortgage interest, student loan interest, and any other expenses or expense related tax forms. Finally, a folder for receipts.

The benefit of this method is that on a moment’s notice I can find virtually any document in a matter of seconds. If the bank wants a copy of my wife’s 2009 W-2 and the Schedule C for my business, I know exactly where both of those are. No fumbling around through a bunch of paperwork trying to find a needle in a haystack.

More Than Organizing Past Tax Records

Don’t just stop at organizing all your past tax documents. While that is helpful and good practice, it’s also time to start thinking about organizing documents today with your future tax return in mind. This is especially true if you have your own business.

Paperwork tends to pile up quickly and as a busy business owner it’s easy to put paperwork off until later. Then tax time rolls around and what happens? You’re sorting through a mountain of statements, bills, and receipts, and it ends up taking you more time gathering the necessary paperwork than doing your actual tax return.

So, get your paperwork organized before tax time. Even if you don’t immediately have a need for last month’s bank statement or the receipt for printer paper, don’t just tuck it away until later. Have a place, whether it’s a folder, bin, or box, to separate and contain all of your income and expense documents.

You don’t need to worry about organizing every single thing as it comes in, but at least put it into its appropriate pile immediately. You’ll eliminate desk clutter and you’ll save a bunch of time when tax time rolls around.

Build Your Nest Egg and Save on Your Taxes

Don’t ignore the tax benefits of building a nest egg. A 401k and traditional IRA will give you a tax break today by allowing contributions to be considered tax deductions.

You may be getting ready to file your taxes before the April 15th deadline.  You can still make a contribution of up to $5,000 to your IRA ($6,000 if over 50) by the tax deadline and take a tax deduction for the contribution on your 2012 taxes.  You can build your nest egg and at the same time keep more of your hard-earned money.

If you opt for a Roth IRA you won’t see a tax break today, but qualified withdrawals in the future will come out tax free. If Uncle Sam is going to provide a benefit for saving money, take advantage of it.

Use Your Tax Refund to Build Your Nest Egg

After you file your taxes and find out you’re getting a tax refund, you can contribute some of your tax refund to your IRA and get a head start on tax savings for next tax year while growing your retirement.

Contribute a Little More

If you have a 401k at work or you opened up an IRA these vehicles are a great start, and if you’re already contributing something, that’s all the better. The thing is, you can always do more. Chances are you aren’t maxing out your 401k so there’s room for improvement.

You may be thinking that there’s simply no way you can afford to put more away, and it’s true that money is tight in this economy. But you don’t have to feel like you’re taking on another mortgage payment just to boost your retirement savings.

Start small. For example, if you’re currently contributing $200 a month, bump it up to $250. 50 extra dollars a month doesn’t seem like it will help, but over the long run it can be a big difference. Just the extra 50 bucks a month over the next 25 years tucked away in your retirement account will likely add up to $30,000 or more.

Whether you bump up your contributions 20 dollars a month or 200 dollars a month, the idea is to make it a habit every year. When you make a small bump to your monthly contributions your budget won’t take a noticeable hit.

Sure, you might feel the pinch initially, but it doesn’t take long before your spending adjusts and you completely forget about the extra money you’re putting into your nest egg. Now, if you make the same small increase each year it won’t take long before you’re putting a lot of money away toward retirement and you don’t even realize it. You will be thanking yourself when it comes time to rely on that money.

If you aren’t currently building up your nest egg with a 401k, IRA, or even just a savings account, now is a perfect time to start. Just like the advice above about starting small, that’s probably how you’ll want to start for the first time.

If you can’t afford to max out an IRA right now that’s perfectly fine and nothing to be ashamed about. Start with 25 or 50 dollars a month. Sure, that alone won’t give you the retirement of your dreams, but we’re just trying to build a foundation and get into the habit of saving.

Over time you will increase your contributions and it all adds up. Remember, every day that passes is one less day you have to save. You can’t get that time back, so save something, anything, and it will pay big dividends and help you save on your taxes.

Above all else, try to come up with a plan for the tax refund money before you even receive it. One of the worst things that can happen is you don’t have a specific goal in place for the money and it just gets deposited into your checking account.

It sits there and slowly, day by day, you chip away at the money without even realizing it. A few months later it’s gone and you’re not even sure where it went. So, don’t let this happen to you and come up with a use for the money before you have a chance to spend it.

Knock Down Debt

If I told you about an investment that had a guaranteed return of 15-30 percent or more, you’d probably view that as a little pot of gold and would like to invest, right? Well, if you carry a balance on a credit card, you can achieve these rates of return easily.

Most credit cards have an annual rate of anywhere from around 12 percent all the way up to 30 in some cases. Any balance you leave on that card will rack up those finance charges. For example, carrying a $2,500 balance on a card with a 25% APR will cost you $625 in interest a year!

That’s a lot of money being spent on nothing but the privilege of using a credit card and not paying it off right away. So, if you’re getting a tax refund this year and you’re carrying any high-interest credit card debt, one of the best things you can do is to use it to pay down the debt. It’s the easiest way to generate your own personal pot of gold even if you don’t see the total benefit immediately.

Padding Your Golden Years

What if you don’t carry credit card debt? There are still a few good uses for that tax refund. Chances are you haven’t been maxing out your IRA or 401k, and that’s OK. It’s difficult to fully fund these accounts with so many other financial obligations, but it’s something that should not be overlooked or pushed to the back burner just because retirement may be a few decades away.

If there’s tax refund money coming your way, consider dumping it right into an IRA or bump up your 401k contribution at work to make up for the extra money. If you thought paying off a credit card with a tax refund provided a good rate of return, you haven’t seen anything yet. Take that $2,500 tax refund and stick it into your retirement account. Even if you only see a modest return of around 5 percent a year, this year’s tax return would turn into a $8,500 pot of gold in about 25 years.

That may not seem like a lot, but what happens if you take your $2,500 tax refund each year and do the same thing? Now you’re thinking. If you did this, in 25 years your pot of retirement gold would be over $130,000. Think about that for a minute. All you’re doing is taking your tax refund money, that typically gets spent on odds and ends, and significantly padding your nest egg with virtually no effort.

Have a Little Fun

Paying down debt, saving for retirement, or building an emergency fund are not exactly the most exciting things to do with your tax refund money, but the results over time are more than worth it. If your financial house is pretty much in order already, then having a little fun with the money isn’t a bad idea if done right.

Instead of blowing it on a new laptop, television, or other gadget that will be thrown to the curb in a few years, think about long-lasting lifestyle upgrades like making sensible home improvements, which will not only provide enjoyment while you’re living there, but can increase the value of your home, which can put more money in your pocket when it’s time to sell.

Haven’t Filed?  You Can Still File so You Can Get Your Pot of Gold

If you haven’t filed your taxes yet you can still file so you can get your tax refund.  TurboTax will help you get the tax deductions and credits you deserve and help you keep more of your hard-earned money and turn it into a pot of gold.

In most cases, refunds go unclaimed because taxpayers who don’t make a lot of money and may not meet the IRS requirement to file a tax return are actually entitled to a tax refund, but since they never file a return, they can’t claim that money. Another tax break that taxpayers miss is the Earned Income Tax Credit, or EITC. This is a tax credit, not deduction, that’s available to many lower-income taxpayers, and this credit often goes unclaimed.

If this sounds like you, it’s time to get to work so can you claim what’s rightfully yours this tax season and even for previous tax seasons. One thing to keep in mind is the IRS places just a three year window on claiming these past refunds. After that time elapses, the money goes to the U.S. Treasury. You’ll also want to note that if you want to claim a refund from two or three years ago, you’ll likely need to make sure all subsequent year tax returns have been filed in order for the funds to be released.

Unfortunately, if you’re thinking about claiming a potential refund that may be a few years old, that can be troublesome if you haven’t kept good records. As you know, preparing a tax return takes a little time and usually requires some documentation that records your income and taxes paid throughout the year, so coming up with W-2 and 1099 forms a few years after the fact may be an issue.

This is why it’s important to keep all tax-related documents in a safe place for at least 3-7 years. So, check your file cabinets and dig through the box of papers in the closet to see if you can come up with what you need. If you can’t, the next step would be to contact your employer at the time in question and request copies of the forms. If these efforts are unsuccessful, you can get a free transcript showing information from these year-end documents by ordering it on IRS.gov, filing Form 4506-T, or by calling 800-908-9946.

Keep in mind, the average unclaimed tax refund is over $600. So, think about your situation and decide if doing a little legwork to track down documentation and filing old tax returns is worth it.  Also, don’t miss out on your tax refund for the present tax year.  TurboTax can help you easily file your taxes for this tax year as well as previous tax years.

Tax Deadline

Time can get away from us and even those extra six months can fly by and leave you scrambling come October. If so, here are 3 last minute tax tips to help take some of the stress out of this tax deadline.

1. File Electronically

The last thing you want to be bothered with on the tax extension deadline is finding time to get to the post office and mailing out your tax return. Your life is busy enough, and if something comes up at work and you can’t get your tax return sent out in time you’re potentially setting yourself up for additional penalties.

So, stick to filing electronically so that you know your return gets into the hands of the IRS before the deadline passes. Luckily, if you are using TurboTax, you can e-file your tax return any time up until the October 15^th deadline.

2. Review Carefully

Since you are not allowed any additional extensions on personal income taxes past the October 15^th deadline, you’ll want to spend the time to make sure you’ve got everything correct on the return. Even if you find yourself rushing on the tax deadline day, it’s a good idea to make sure it’s accurate to avoid any further issues with the IRS.

Go through your tax return and double check all of the names, social security numbers, and wages reported from your W-2s and 1099s. Then be sure to go over all of your potential tax deductions and check that you’ve included everything and the numbers are correct.

3.  Get Organized

If going through the extension process stressed you out, then now is a good time to get organized so that it doesn’t happen next year. By the time the October 15^th tax deadline passes there’s less than three months until the close of the current tax year. That leaves little time to get things together, but if you take the time to start now, you’ll find that you probably won’t need to rush around in the spring and won’t need to file an extension.

Start by gathering any expenses or deductions from the past year. This is especially important if you’re self-employed and have a lot of expenses to track. By getting those items gathered and put aside today, you won’t need to dig for them in the spring.

Finally, start thinking about year-end tax moves you can make that will reduce your tax bill. This may include making IRA contributions or scheduling January’s mortgage payment to come out of your account at the end of December. Preparing for these tax moves today can help lower your tax bill tomorrow.

Student Loan

Luckily, most taxpayers who make student loan payments on a qualified student loan will get a little relief. A qualified student loan is a loan you took out solely to pay higher education.

In most cases, the interest portion of your student loan payments during the tax year is tax deductible. Your deduction is limited to interest up to $2,500 or the amount of interest you actually paid whichever is less.  As with most tax credits and deductions, there are limits in place.

You can deduct student loan interest if:

• You paid interest on a qualified student loan in the tax year
• You are legally obligated to pay interest on a qualified student loan
• Your filing status is not married filing separately
• You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s tax return
• You are a single filer with income under $60,000, however your full tax deduction phases out between $60,000 and $75,000. Income limits are double for joint filers. If your income falls above those limits, it is not deductible at all.

The other good news regarding the student loan interest deduction is that you do not need to itemize deductions in order to claim it. This makes sense considering many recent college graduates are not itemizing deductions.

If you paid more than $600 in interest to a single lender during the year you should receive a 1098-E form showing how much interest you paid for the year. If you made student loan payments but did not receive a 1098-E, you are still entitled to claim the interest deduction, but you may need to call the lender or pull up your records online.

When filing your taxes, don’t forget about this tax deduction and remember that TurboTax will calculate the deduction for you if you are eligible.

Saving Tips for Singles

Cut Down on Entertainment

One of the biggest expenses of single life is entertainment. You probably don’t enjoy sitting at home by yourself every night, so that means you’re far more likely to meet up with friends for dinner, grab drinks or catch a movie on the weekend, and otherwise spend a lot of time being social. Unfortunately, most of these things don’t come cheap. Dining out frequently can quickly drain your budget and hitting the bar or club on the weekends can cost an arm and a leg. So, moderation in these areas will be key to saving money.

This doesn’t mean you need to cut out all of your fun social activities. Instead, you’ll just want to take stock and determine how much you’re spending and where that money goes. Once you see how much you’re spending on food, drink, and entertainment, you can probably identify some areas of potential savings.

For example, let’s say you’re going out to dinner five nights a week and each time you’re spending 25 dollars. That’s $125 a week, or $500 a month. Just on having dinner! If this is the case, consider cutting back one or two nights a week by eating at home, or by simply grabbing a cheap bite somewhere. Even if you make this small change it could result in an extra $100 in your wallet every month.

Start an Emergency Fund

After you’ve taken a look at your budget and have identified some areas to cut back, what should you do with the money you’re saving? The first thing you should do is take a look at your emergency fund, if you have one.

If you don’t have one, now is the time to start. Having money in the bank that’s set aside for a financial emergency is the first step in building a sound financial foundation. Without this cash cushion you’re bound to resort to credit cards or loans in the event of a financial crisis, which only makes the situation worse. So, if you’re able to save a few bucks by cutting back in other areas, start by making sure you’re putting some of that money into your emergency fund.

Pay Down Debt

You’ll also want to use any savings you’ve realized to tackle high-interest debt. If you’re carrying a balance on a credit card that’s charging something in the neighborhood of 12-29% interest, one of the best things you can do with that money is to pay it down. Even if it’s only an extra 25 dollars on each monthly payment, you’ll shave years off of the repayment term and save hundreds or even thousands in interest.

Don’t Neglect Retirement

Finally, don’t neglect retirement. This one is the most difficult for young singles because retirement is the last thing on your mind. Retirement might be forty years down the road and you haven’t even thought about what you want to do next week, let alone four decades from now. But not thinking about it now is a big mistake.

Time can either be your greatest asset or your biggest enemy. The earlier you begin saving, the less you actually have to save because compound interest over time does the work for you. If you wait just ten years before starting to save for retirement you could end up having a nest egg that’s only half as big as if you had started earlier. So just because you’re single and retirement may feel like it’s half a century away, make sure you’re putting at least something into your work’s 401k or into your own IRA. You’ll thank me later.

Business Travel

If you are aware of any conferences, trade shows, other events, or searching for a job in line with your industry, you probably understand that these trips can be deductible. So, why not combine a business-related trip with pleasure? That’s right, if you have an annual industry conference on the other side of the country, you could plan your trip carefully so that not only do you get to attend the conference, but also make a family vacation out of it. This doesn’t mean the family can tag along tax-free, but here’s how it works.

You can deduct expenses that are “ordinary” and “necessary” for your trade, business or profession. It doesn’t matter if you’re a salaried W-2 employee or self-employed. If attending an event is considered ordinary and necessary for your line of work, you’ll qualify for a deduction. For example, if you’re in the business of selling widgets and there’s an annual widget expo that highlights all the upcoming widgets, attending this event would be considered ordinary and necessary for your line of work and the costs incurred to attend the event could be deductible.

Now, say this is an expo in Florida and you just happened to be considering taking the family on a vacation this summer. If you planned on attending the expo anyway, why not take the family along and spend time together in Florida? You get to attend the event, your family gets to spend time in Florida, and you’re eligible for some tax deductions.

What You Can Deduct

Attending and traveling to events like these come with many possible deductions. For starters, you can deduct the registration fees and any materials required to attend. If you need to travel, you can deduct associated costs to get you to the event. This includes round-trip airfare, car rental, mileage when using your own vehicle, public transportation, and so on. In addition, you’re allowed to deduct lodging expenses. Finally, you will be able to deduct meals, but as you may know, business meals are only 50 percent deductible.

What You Can’t Deduct

If you’re taking the family along, unfortunately their individual expenses cannot be deducted. That means if your family of four is flying, you can only deduct your personal airfare. And if you take the family to do things not related to the event you’re there to attend, those obviously cannot be deducted. Finally, you also cannot deduct expenses incurred for things that occur beyond the event schedule. If you’re attending a three day conference but stay an entire week with your family, you can’t deduct the other four days of lodging, meals, etc.

But one thing that can be a benefit is lodging. Most of the time a hotel room rate will be the same whether it’s just you staying in it or if you’ve got your entire family staying there, so in effect you could be getting a tax break while your entire family stays with you.

Planning and Record Keeping

As you can see, it is possible to turn a business trip into a family vacation that could yield some nice tax breaks while getting your family out of the house. The key is careful planning and record keeping. You’ll first want to make sure the event you’re interested in would qualify as ordinary and necessary for your line of work, and then if so, work to structure the travel so that you can maximize your time and possibly make a nice little trip out of it.

Then, as always, keep good records. Make sure you keep all receipts, log mileage, save copies of event materials, and so on.  And don’t forget to separate the expenses required for the conference or event from the non-deductible family expenses so that you’re not double-dipping. But if done right, you can get ahead professionally and enjoy some tax breaks while bringing the family along for a little leisure time away from home.

W-4 Form

There’s some good news if you’re employed and have taxes taken out of your paycheck automatically. When your income changes in this situation, the taxes taken out will change accordingly. But that doesn’t mean you don’t have anything to worry about. You may still be in a situation where you’re having too much or too little withheld, so now is a good time to check your W-4.

You file form W-4 with your employer and this tells them how many exemptions you want to claim so they can calculate how much should be withheld from your paycheck and sent to the IRS. What you enter on this form will largely determine how much of a refund or how much you owe each April, and most people tend to have more money than necessary withheld, resulting in a tax refund.

You can use the TurboTax W-4 salary calculator.  It will only take a few minutes of your time and it will help you come up with the appropriate number of exemptions so that you can maximize your paycheck without letting the IRS hold on to more of your money throughout the year. While there’s nothing wrong with getting a refund every year, it’s still a good idea to put more money into your pocket every month, which can then be immediately applied to one of your many financial goals without needing to wait for that one refund check each year.

For the Self-Employed

If you’re self-employed and expecting a change in income, you’ve got a little more work to do. Since your taxes probably aren’t automatically withheld from a paycheck, you’re likely relying on paying quarterly estimated taxes. When your income changes, so too does the amount of money you need to send in each quarter. In the event your income goes up and your estimated payments don’t increase to reflect that, it’s possible you could be hit with an underpayment penalty.

While it isn’t an exact science, figuring out how to adjust your quarterly tax payments doesn’t have to be complicated. The easiest thing to do is to simply adjust the tax payments by the same percentage as the change in income. For example, if you’re expecting a 20 percent increase in income, increase your quarterly tax payment by an additional 20 percent. You also need to consider your other tax deductions and credits, but TaxCaster can easily help you estimate if you are taking out enough taxes.

There are obviously many other business items and expenses that can change how much tax is to be paid, but if at first you simply increase or decrease your tax payments in-step with the change in income you’ll be in the ballpark. Once you file your taxes at the end of the year you’ll then have a better idea of what those tax payments need to be going forward and you can fine tune it for the next tax year.

Overlooked Deductions

1. Moving Expenses for a Job

With unemployment still high, a lot of people have needed to go the extra mile, literally, to find work. What many people don’t realize is that moving expenses related to relocating for a job may be deductible. To qualify, you need to move at least fifty miles away from your old home, and you’ll need to work at your new job for at least 39 weeks after the move.

If you qualify based on the information above, you’ll then be able to deduct transportation and storage expenses. This may include hiring movers, renting moving trucks, storage units, tolls, parking, and so on. In addition, you may even be able to deduct lodging if the move is long and takes a few days to reach your destination.

2. State Sales Tax

The money you pay in state sales tax is a potential deduction, but it isn’t always worth taking. Those who can benefit most from this deduction are people who live in states that don’t have a state income tax. Every taxpayer has the option to choose between deducting state and local income taxes, or state and local sales taxes. Obviously, if you aren’t assessed a state income tax but still pay a sales tax, deducting the sales tax will almost certainly provide the greater benefit.

There are tables that give you deduction amounts based on income levels, but keep in mind that big purchases like cars, boats, and recreational vehicles count as well. So, be sure to keep good records of larger purchases which will help you determine if taking the state sales tax deduction is a better option.

3. The Earned Income Tax Credit

While nobody wants to find themselves in a low income situation, those who do have a nice tax credit available to them that often goes overlooked. The average earned income tax credit, or EITC, is around $2,000. Since this is a credit and not a deduction, that’s essentially like putting $2,000 into your pocket. And you don’t have to be strictly low income to qualify, because just losing a job halfway through the year could bring your income down enough to qualify.

Charitable Travel

First, you have to know whether or not the organization you volunteered for was a qualified organization. No matter what you gave, be it time or money, the IRS only allows you to deduct when it’s been given to a qualified organization. The good news is that most public and non-profit private organizations are qualified, but it is up to you to find out if you aren’t sure.

Now when it comes to travel incurred while volunteering there are a few things to consider. First, the IRS says that generally you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. The good news here is that most travel expenses will qualify, but keep in mind that you can’t turn one way of volunteering into a week-long vacation with the family and expect to write off all the airfare and lodging costs.

Deductible Travel Expenses

Most common expenses related to travel are allowed. Here is what the IRS defines as deductible travel expenses:

• Air, rail, and bus transportation,
• Out-of-pocket expenses for your car,
• Taxi fares or other costs of transportation between the airport or station and your hotel,
• Lodging costs, and
• The cost of meals.

When it comes to using your own car for travel you can do one of two things. You may deduct the actual cost of gas used to get to and from the volunteer site, or you can deduct the IRS standard rate of 14 cents per mile. Unlike using your personal car for business, you cannot deduct expenses such as insurance, maintenance, or depreciation.

As always, it pays to keep detailed records regarding all expenses related to the trip. You may need to substantiate your expenses so keep a log of the miles driven, keep all receipts for meals and lodging, tolls or parking, and anything else related to your time volunteering.

Job-Related Deductions

While not as generous as tax deductions available to business owners, the ability to deduct some job-related expenses can certainly add up. If you’re required to travel or conduct a lot of business outside of the office there’s a good chance your employer reimburses you for many of these expenses, but every company is different and you may be footing the bill for things that you could possibly claim as a deduction.

Before getting into the actual deductions we need to understand what the IRS considers unreimbursed employee expenses. Your expenses must have been required for you to carry out the job for which you were hired and must be what the IRS calls “ordinary and necessary.” This means the item or service is common and accepted in your line of work and is appropriate and helpful to your job. In addition, to be able to claim these deductions you must itemize on Schedule A, and your unreimbursed business expenses must total more than 2 percent of your adjusted gross income(AGI). To give you an idea, if you have an AGI of $40,000, your expenses need to be more than $800 before you could begin claiming any deductions.

Possible Deduction Categories

To give you a better idea of what types of expenses might qualify for unreimbursed job-related expenses, here is a brief overview. And again, these only qualify if your employer doesn’t already reimburse you.

• Legal fees related to doing or keeping your job.
• Licenses and regulatory fees as well as occupational taxes.
• Dues to professional groups, unions, or local trade groups.
• Education that is related to or required for employment.
• Work clothes and uniforms, and possibly upkeep costs.
• Subscriptions to professional journals and magazines related to your line of work.
• Medical examinations that are required by your employer.
• Depreciation on technology required to do your job.
• A home office or part of your home used regularly and exclusively for work.

Unfortunately, commuting expenses to get to and from your job are not a deductible expense, but if you do need to use your vehicle for work-related activities such as meetings, conferences, trade shows, or other travel, you may be able to deduct the actual expenses required for the trip or use the IRS standard mileage deduction.

Above all else, keep good records throughout the year. You may or may not reach the 2 percent threshold, but it’s worth keeping track just in case, and it’s a lot easier to tally up receipts at the end of the year rather than trying to come up with all of your expenses after the fact. If you’ve determined that you qualify for deducting some of these expenses you can look to Form 2106 or 2106-EZ. And of course, TurboTax will assist you with recording and claiming these unreimbursed job-related expenses.

Audit

In fact, a true audit happens to very few people every year, and it’s usually because of a glaring problem or unusual situation found on a tax return. More common are correspondence audits and adjustment letters, which are not like the audits you hear horror stories about.

The Examination Audit

A traditional tax audit is usually picked up by computer programs that are set up to detect irregularities on tax returns that might signal there is a problem. While it may seem like a simple error or wrong number may instantly create a red flag and cause you to get audited, that’s not exactly how it works. In fact, the IRS typically audits less than one percent of all tax returns filed each year.  Also, keep in mind that not all audits mean the IRS is out to get you and stick you with a greater tax bill. They are looking for problems and inconsistencies and it could actually result in getting a larger refund.

If you do receive a letter stating that the IRS would like to conduct an examination audit, there will be instructions as to how to provide the information they need. Some of these audits can be conducted through the mail, but in other instances it may require meeting an auditor in person either at your home, place of business, or an IRS office. At the end of the audit process there will be a determination as to what needs to be done to satisfy the IRS. There is an appeals process if you don’t agree with the outcome.

The Correspondence Audit

The correspondence audit is far more common than the examination audit that people think about when they hear the word audit. Again, these are usually triggered by software that compares returns against common trends and selects those that don’t match for a correspondence audit. The IRS will mail the taxpayer either a Letter 566 or a CP 2000 notice. The 566 letter advises taxpayers that their return has been selected for examination and will list documents needed to verify the return. The CP 2000 notice will contain adjustments based on third-party documents associated with the return. In these types of audits it may be as simple as providing copies of a 1099 form to verify the numbers match what was reported to the IRS.

The Adjustment Letter

Finally, the letter you receive from the IRS may simply be an adjustment letter or adjustment notice. These are simply letters sent out to give notice to a taxpayer about additional taxes owed or a change in the refund amount. The reason there may be additional taxes owed is typically just because of a miscalculation or a wrong number entered on your tax return.

For a list of the different IRS notices sent out and what action needs to be taken for each, the IRS has a comprehensive list.

In the unlikely event that you receive an audit notice from the IRS, don’t worry.  If you prepare your taxes with TurboTax this year, TurboTax Audit Support Guarantee provides free one-on-one guidance from an experienced tax professional to help you know what to expect and how to prepare if you receive an audit letter.

Year End Business Tax Tips

Retirement Plan Contributions

Let’s not ignore the obvious, but the easiest thing you can do is to make a retirement plan contribution. Whether you’re using a Traditional IRA or Solo 401k, any pre-tax contribution before the end of the year will result in reducing your taxable income and provide a little relief. As long as you haven’t already maxed out your contributions this is a no-brainer. Don’t have a retirement account? Then set one up and make a contribution before the end of the year!

Take Advantage of Cash Accounting

Many small businesses employ cash accounting. This simply means you don’t pay tax on income until you receive it, and you can’t deduct an expense until the money is spent. So at the end of the year you might be able to accelerate a purchase before the year ends or tell a customer they can wait until January to pay their invoice. Structuring when money comes in and goes out at the end of the year can provide a little tax help.

Accelerated Depreciation

Take advantage of accelerated depreciation while you can. Certain large purchases can significantly benefit from this accelerated depreciation, but it may not be available forever. Congress will be looking at this benefit in 2012 and it could be scaled back significantly.

Make a Donation

Just like individuals can make deductible charitable contributions, so can businesses. You have until December 31^st to make those contributions, so if you’ve got old office equipment or other items going unused, find a place to donate it. If you’re simply looking to make a cash donation you can find a number of worthy charities as well. As long as it’s a qualified charitable organization and you maintain proof of the contribution it will count.

Get Organized

While this might not put money right into your pocket, it can save a lot of time. And time is money. Use the end of the year to get your business finances organized. Sure, you may not need to file for a few more months, but waiting to get all the paperwork and figures together as time runs out is far more stressful than it will be to start before the year is even up. It’s always better to have more time to deal with an error if you spot one.

Tax Credits

A deduction is something that reduces your overall taxable income, therefore lowering your tax bill. A credit is different because it reduces your tax liability, dollar for dollar.

To get a better idea of how significant this is, let’s look at an example. If you were able to take a $1,000 deduction that would mean you would reduce your taxable income by $1,000. So if your taxable income was $40,000, after the deduction it would mean your taxable income would become $39,000. At the 25 percent tax rate, that would effectively lower your tax bill by $250.

Now, let’s say you are entitled to a $1,000 tax credit. In this case, you would simply reduce your tax bill by the full $1,000! As you can see, this is why tax credits are the most sought after.

So, what kind of tax credits are available to you come tax time? Well, here are a few common ones that are worth double checking each year to see if you qualify.

Child and Dependent Care Credits

The most common tax credits have to do with children and there are two main credits. First is the child tax credit, which gives you a credit for qualifying children you take care of. The credit is $1,000 per qualifying child, and you must meet income requirements.

In addition to the child tax credit there is also a credit for child care expenses. Depending on your situation there are many qualifiers and limits to what can be claimed, but any time you have children these are credits worth looking into.

Finally, there is an adoption tax credit as well. This credit is meant to help ease the financial burden of going through the adoption process. This credit can be as high as $13,360 per child.

Elderly and Disabled Credit

Once you reach age 65, or if you are on permanent disability, there are a few tax credits available. Unfortunately, these credits have very low income limits, so they aren’t available to many.

Energy Credits

Going green has its benefits beyond just helping the environment. There are tax credits available on anything from buying Energy Star appliances to a hybrid vehicle. These credits vary greatly depending on what you buy, but you can typically get up to a 10 percent credit of the purchase price on qualifying energy efficient appliances and home improvements, up to a maximum of $500. That’s not too bad if you need to replace an old appliance anyway.

Earned Income Tax Credit

Another popular tax credit for lower income filers is the earned income tax credit, or EITC. If you have earned income that falls below certain limits (based on how you file and family size) you may be entitled to this credit. Families with children really benefit from this credit and may receive a credit anywhere from a few thousand to over five thousand dollars.

Saver’s Credit

Here is a tax credit that often gets overlooked. The saver’s credit helps low to moderate-income filers to save for retirement. This credit is worth up to $1,000 ($2,000 for married filing jointly) for those contributing to a qualifying retirement plan such as a 401k or IRA. As if the credit isn’t enough, keep in mind that contributions made to some retirement plans also count as tax deductions, so you’re basically double-dipping in the tax savings. It makes saving for retirement a no-brainer.

Make Sure You Get Your Credits

As you can see, there are a number of tax credits available, and these are just the most common ones. Some of these can be easy to overlook, and if you aren’t careful you could be leaving money on the table. Using your trusted TurboTax software, you can be sure you’re getting every tax deduction or credit you deserve.

Most unclaimed tax refunds belong to people who did not make much money during the year, and therefore are not required to file a tax return. That’s right, the IRS actually tells you that if you make below a certain amount each year, you don’t have to file a return. But that’s usually a mistake. Just because you don’t have to doesn’t mean you shouldn’t. Even though you didn’t make a lot of money you still probably had taxes deducted from your paychecks. With various tax credits and deductions, you could certainly get some of that back, but you have to file a return in order to be eligible for the refund.

The other big reason that tax refunds go unclaimed has to do with tax credits. There are a number of tax credits out there, but the biggest, most overlooked tax credits are the refundable Earned Income Tax Credit (EITC) and various economic stimulus credits that have been issued in recent years. Sometimes filers do their tax return and submit it on time, but miss out on these tax credits. It is up to you to claim them. It isn’t something the government will catch and gladly send you a check for.  Want to see if you’re eligible for the Earned Income Tax Credit?  Try the TurboTax EITC Calculator.  The calculator is updated every tax season due to tax law changes, but you can still get an idea if you are eligible for the Earned Income Tax Credit even if you are estimating a prior year.

So, how do you determine if you are owed money and how can you go about requesting it? First, in order to collect a refund, a tax return must be filed with the IRS no later than three years from the due date of the return. After that, the money gets absorbed by the treasury, so you should stay on top of it. There is no penalty for filing a late return if you qualify for a refund.  You will also need to have your tax documents, namely your W-2s. If it has been a while, it may mean contacting your employer and getting new copies. Once you have the supporting documentation, you can go ahead and complete those past tax returns.

There is a catch. You have to be caught up on your taxes in the years following the year you’re requesting the refund. For example, if you’re trying to get money back from your 2009 tax return, you will have to make sure you’re squared away with 2010 first.

If you think you may be one of the millions of tax filers who could have some money waiting for you at the IRS, now is the time to start thinking about going after it. If you made money in the past few years but didn’t make enough to be required to file, it’s a no-brainer.  You should think about getting those past returns filed. If you already filed your previous tax returns, it would be a good idea to dust them off and look through them to make sure you took advantage of the EITC (if you qualified), the Making Work Pay Credit, and any others. Sure, it may only be a few hundred dollars, but why not get your hands on it if you’re entitled to it?  TurboTax will guide you through tax deductions and credits so that you don’t miss out on any of your refund.

Check Your Status

There are two possible ways you can be classified: employee or contractor. It makes a big difference, so pay attention to which one you are. As an employee you will have taxes taken directly out of your paycheck and then get a W-2 at the end of the year. Not so if you’re a contractor. Instead you get paid the full amount and are then responsible for paying income and payroll taxes on what you earned. This can trip people up if they get surprised with a tax bill come April. Learn more about how tax implications of life changes like a job change can be handled easily with tax software.

If you are an employee that means you’ll be filling out a W-4 when you start work. This form tells your employer how much money to withhold from your paycheck. Filling this out properly will ensure you’re only giving Uncle Sam as much as he needs, making your paycheck larger. Also, if you worked last year and got a refund for the entire amount that was withheld and expect the same this year, you can claim exempt and not have any income tax withheld.

Keep Good Records

It’s easy to think that just because you may have part-time employment there’s little to keep track of, but it pays to keep good records. Keep your pay stubs, track cash tips (yes, that is taxable income), and any expenses related to your work. This will help ensure you and your employer are on the same page come tax time. Mistakes can happen and the more records you keep, the easier it will be to catch it before it becomes a hassle.

Create Automatic Savings

While a seasonal job may not make you rich, you should still put some of that money to work by saving it. If your employer has direct deposit you should set it up and direct part of your paycheck into a savings account. Even if it’s just $25 per paycheck, over the course of the summer you’ll then have a nice little savings account set aside. If you don’t have direct deposit just swing by the bank and set up a savings account and then create an automatic and recurring transfer from checking into savings. If you put this savings on autopilot you’ll never forget to pay yourself first.

Take Advantage of Retirement Accounts

For students and young adults retirement is about the last thing on their mind, but it shouldn’t be. The magic of compound interest needs time to work, and the more time you have the more your money can grow. So even though retirement may be forty years away it’s not too early to tuck a little away into a retirement account. For one, there are tax benefits. Traditional IRAs or a 401(k) give you a tax break up front on the contributions. Or go with a Roth IRA and your money has the luxury of growing for years and then withdrawn completely tax-free. It may not be the most exciting use of money now, but you will thank yourself when you’re older.

Cut Back on Travel

One of the biggest summer money drains is travel. Whether it’s just a long weekend road trip or a cross-country adventure, the entire trip can cost an arm and a leg. Airfare is costly, gas is very high compared to last year, and dining out while on the road adds up quick. So this year think about some ideas for fun activities that are local. Use this summer to explore your home state or locations nearby you’ve never thought of.

Watch the Impulse Buys

Summer is often a time for shopping, and that can mean danger for your credit card balance. When you are out shopping you should have an idea of what you want to buy. If you’re just shopping for the sake of getting out of the house you’re setting yourself up for unnecessary purchases that you may regret later.

Go To Yard Sales

Once the weather warms up it’s a sure sign of yard sales to start popping up. The great thing about yard sales is that they don’t even take credit cards. So not only can you satisfy your urge to shop, but you can probably find some inexpensive items and leave the credit card at home.

Start Budgeting

I know, you probably think the word budget is a four-letter word, but it isn’t as bad as it sounds. Nobody likes budgeting, especially in the summer, but it really is the key to getting your finances under control and it will help you avoid overspending on credit cards. Think of it this way. If you have ever tried dieting you probably know that you have to pay attention to what you eat and how many calories, carbs, and fat different foods have. Without knowing what you’re eating you have no way of knowing whether or not you’re making the right choices.

The same is true for a budget and your finances. You need to know how much money you have to spend, what your spending it on, and what effect those choices have on your overall financial health. Without knowing that you’ll always be in the dark. But just like dieting, after you get used to the idea of paying better attention to your actions it becomes habit and you don’t even have to think about all the little details any longer. If you haven’t done it already, create a budget and watch your finances improve.

Start Saving for Christmas

Thinking about Christmas in the summer? No, I’m not crazy. But the holidays are always a time of year that creeps up on us and we can get carried away with all the spending for the holiday parties and gifts. So, rather than set yourself up for a credit card fueled holiday start putting some money away today. Just set aside twenty dollars a week and you’ll easily have about $400 saved up by December. Your credit card will be thankful you thought ahead come winter.

Tax debt? Now that’s a different story. Learn how to get rid of an IRS tax lien.

Vacation Locally

Spending a little time away from home is great, but travel costs can turn even a simple vacation into an expensive proposition. Obviously, air travel is costly, especially with all the new fees, so sticking to a local vacation spot can save literally hundreds of dollars. So, toss the idea of flying across the country or overseas and look local. You may be surprised what attractions that are just a few hours away. Look to some of your state’s tourism info and get ideas for what might be interesting to you. Gas may be expensive, but a couple tanks of gas is still far less than a pair of $400 round trip tickets.

Take the Train

In today’s society it’s all about rushing around and getting as much done in as little amount of time as possible. That’s why slowing down a bit and taking your time can be rewarding in and of itself. Taking the train is a leisurely way to travel and save a bundle. For example, I can get an Amtrak ticket to take me from Chicago to Kansas City for just $61 and the trip takes about 7 hours. Guess what? If I wanted to drive that same trip it would cost me more than double in gas and take almost exactly as much time. Plus I’d be behind the wheel the entire time.

By taking the train you have a chance to relax while saving money. Since you aren’t driving you won’t be dealing with stressful traffic, stopping for gas, or worry about falling asleep at the wheel. Instead you can kick back in the train car and read a book, play games on your iPad, watch a movie, or grab a meal.

Go On a Cruise

A cruise can be either a very inexpensive vacation or extremely expensive. It is up to you to decide, but if you’re a smart shopper you can have yourself a wonderfully inexpensive vacation. Start looking far in advance with various cruise lines and consider cruising during the usual “off-season” to save even more.

It isn’t uncommon to find cruise specials for less than you could even get a hotel room anywhere else. I’ve seen 5-day Caribbean cruises for less than $300! That’s less than $60 a day and the best part is all your meals are included and there’s plenty of onboard entertainment that won’t cost you another dime. Try staying at a beachfront hotel and eat three meals a day for less than sixty bucks. You won’t be able to.

Sure, if you don’t live near a port you’ll have to pay for transportation to get there, but these destinations usually have affordable fares. Even so, a round-trip ticket and the cruise fare will often be less than $1,000 per person so you can take that vacation with your spouse and still have some tax refund money to spare.

Still looking for your tax refund? Here’s more information on how to find your tax refund.

Reconsider Withholding

If you’ve filed your taxes and ended up with a large refund or had to cut Uncle Sam a check, it’s time to address your withholding. If you owed money it’s a no-brainer that you want to adjust your withholding so more money is set aside for taxes so that you don’t have a bill next April. But having a large refund can be just as bad. In fact, the average refund this year is a little over $3,000. That means most people are letting Uncle Sam hold a few thousand dollars hostage for 11 months of the year when it could probably be put to better use immediately. Think about it—a $3,000 refund works out to an extra $250 a month of added cash flow. If money is tight you can see how helpful having that money each month would be. By adjusting your W-4 you can have a little less money withheld and put more money in your pocket with every paycheck. TurboTax makes it easy to adjust Form W-4.

Check Your Investments

Now is a good time to check your investments. That’s because the past two years have been two of the best consecutive years in the history of the stock market. If you’ve been invested during this time and saw some of these rapid gains your portfolio is probably a little out of whack. You should have a target asset allocation you try to remain at, but the gains in the market could have skewed your allocation heavily toward stocks if you haven’t rebalanced in a while. If that is the case you are likely more exposed to risk than you realize, so it’s time to check your investments and rebalance your portfolio to get you back on track.

Automate Your Finances

If your finances are in pretty good order and you’re still looking for a change that can help your finances, consider automating everything. Technology is a wonderful thing and these days you can virtually put your entire finances on autopilot. From automatic bill pay to retirement contributions, these days you don’t have to think twice about things.

Start with your savings goals. If you have a 401(k) that’s obviously automatic already, but if you have an IRA or other investment account you can set it up to make regular and automatic contributions on the interval you choose. The same can be said for even a regular savings account. Why wait to make a one-time transfer from checking to savings when you can set it up so that a little bit goes into your savings account with each paycheck? Once it’s automatic you never have to think about it or worry about spending the money before it gets deposited. Finally, the most obvious choice is automating bills. The fewer checks you have to write and accounts to login to, the easier your life will be. Why spend an hour or two each week paying bills when you can pay them without thinking twice about it? Not only will you have more free time on your hands, but you may even save some money by making it automatic.