Personal Finance 
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University Pre-Tax Parking Deduction Benefit

The best kind of benefit is a fringe benefit, right?

As it turns out, the IRS has a guide for Federal, State, and Local Governments (FSLG) governing the tax rules of fringe benefits and the reporting of fringe benefits! We ran into this the other day as my lovely wife was signing up for a parking pass at her school. As a graduate student, she’s technically faculty and an employee. Since it’s a public university, the University of Maryland, that makes her a government employee.

So she’s signing up for this parking pass and one checkbox surprised her:

I understand and agree that by giving authorization to have automatic parking deductions taken out of my paycheck the deduction will be on pre-tax basis and will not be included in my Federal, State or FICA wage base.

That’s when she asked me if she was reading it right – “Does that mean I’m paying for my parking pass with pre-tax money?”

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 Taxes 
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Tax Audit Red Flags

Red Flags!Last month I had the pleasure of talking to Rich Preece, Director of Product Management for TurboTax, about the improvements they’ve made to this year’s version of the tax preparation software. One area that they’ve improved is in their Audit Risk Results section, which identifies parts of your return that might trigger an audit. They reviewed the audited returns and collected the top twenty five to thirty reasons they believed triggered an audit. Then they look at your return, see if there are similarities, and bring them to your attention. It’s a feature from year’s past but it was the first time I really paid much attention to it. The purpose of the Audit Risk section isn’t to dissuade you from taking deductions that are rightfully yours, it’s designed to remind you to take a microscope to that section to make sure you did everything correctly.

For example, a common audit trigger is the child and dependent care credit. To claim the credit, you need to provide the social security number of the child or dependent. It’s not uncommon for a divorced couple to both claim a child if they are filing separately. What ends up happening is that when the first tax return is processed, the social security number is claimed. When the second tax return is processed, an audit flag is triggered because the child’s social security number was claimed in another tax return. So the purpose of these features, and of the following list of tax audit red flags, is to identify areas you need to take a closer look. Don’t let the fear of an audit stop you from claiming what is rightfully yours, but be careful.

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 NEWS 
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H&R Block Offering Free Tax Advice March 25th

Have you ever tried to call the IRS to ask a question? How about searched IRS.gov to find the answer to a particularly vexing question? If so, you’re one of millions of people to do so and many of them can’t find the answers they’re looking for. The tax preparation software packages from H&R Block and TurboTax are great for a lot of scenarios but sometimes you have something that doesn’t fit into a nice box and you want to get an answer from a professional, even if it’s just to assuage your fears.

Fortunately, the tax prep companies usually offer free tax advice throughout tax season and this Thursday, March 25th, H&R Block is offering a full day of free tax advice on their H&R Block Tax Talk Line. From rom 12:01 a.m. CT through 11:59 p.m. CT, 50 tax experts will be available to answer questions for free.

  • Call 1-866-HRBLOCK
  • Email taxtalk@hrblock.com

If you had a question, Thursday is your chance to find the answer for free.

If you take advantage of this offer, please let us know how it was!


 Taxes 
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How to Survive a Tax Audit

Rabbit ate my tax return!Now that we know how the IRS picks who to audit, we need to know what we can do to prepare for it. Even if you’re sure you got your return right, that you didn’t participate in an abusive tax avoidance scheme, or can’t possible be snared by the computers, there’s still that “randomly selected” bit.

So, like zombie attacks, the key to surviving a tax audit is to be prepared.

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 Taxes 
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How to Spend Your Tax Refund Check

Sometime over the month or two (depending on how proactive you are about doing your taxes), you’ll probably be getting a nice fat refund check. Last year, the average tax rebate check was a princely sum at over $2,500. If you’re one of the many millions getting a check, you have a pretty big decision ahead of you. Do you pay down some of your credit card debt or put it in savings? (CD rates are looking better lately)

If you aren’t sure what you are going to do, here are a few ideas:
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 Taxes 
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How to Check the Status of Your Tax Refund

1040 Tax FormsIt seems a little early but I’ve been getting a lot of “where is my refund?”-type of emails lately. While I won’t know the answer to that question (and I shouldn’t, the IRS should be that loose with your personal information!), the IRS will. While not usually known for tech savviness, the IRS does have an online tool that lets you check the status of your refund.

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 Taxes 
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How to Report Tax Fraud & Tax Cheats

Tax entry in DictionaryOne of the largest tax fraud schemes was blown wide open last year when ex-UBS AG banker Bradley Birkenfeld blew the whistle on a $20 billion tax evasion scheme at UBS. His testimony played a “key role” in showing US investigators how UBS was helping Americans hide assets. As a result, UBS agreed to hand over information on 4,450 accounts and pay $780 million to avoid prosecution. Birkenfeld himself received 40 months of jail time because he personally helped billionaire Igor Olenicoff evade taxes, which he didn’t disclose when he talked about the widespread tax evasion schemes. However, when Birkenfeld leaves prison he’ll be rewarded many many millions of dollars for his assistance in catching these tax frauds. A fairly new federal rewards program lets tax informants earn a bounty for those they turn in.

So, how can you get in on the action?
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 Taxes 
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What is an IRS CP2000 Clarification Letter?

Angry IRS letterOne of my friends recently got a letter in the mail from the IRS and it freaked them out. The first time I got my official coupons for quarterly estimated payments I freaked out a little because all I saw was an official IRS letter that was thick and ominous looking.

Fortunately, it was “just” a CP2000 letter.

A CP2000 is the letter than the IRS sends out when they want more information from you. The scary part about the letter is that sometimes is says that you may owe more taxes (never a good thing). Fortunately, owing more taxes is generally the worst case scenario. In many instances, they just need to ask you some questions because there were some discrepancies.

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