The IRS has made great strides in recent years in updating its website to provide taxpayers with information to help them understand and comply with increasingly complicated tax issues. This is a terrific service for the taxpayer who has questions and access to a computer and the Internet.
Simply log on to the IRS website, and one of the first things you'll see is the section for online tools. Click on that link, and you'll find more than you ever imagined the IRS might provide. There are separate areas for individuals, large businesses, small businesses, and exempt organizations, with various tools and applications that will help make your life easier in dealing with the IRS.
The IRS has recently added two new applications. For those of you considering taking the state sales tax deduction rather than your state income tax deduction, and can't quite make out the correct amount of the deduction, the IRS has a new sales tax calculator you can use to arrive at your deduction. It looks complicated but really isn't. Basically, enter your adjusted gross income, number of exemptions, and your zip code and the calculator will provide you with your sales tax deduction.
There has also been an update to alternative minimum tax (AMT) computations. The new AMT Assistant is a bit more complicated, but will give you a pretty good handle on your AMT obligations. Essentially, to use the AMT Assistant, you'll have to complete at least a draft form of your 1040 form through line 44. This is basically an automated version of the AMT worksheet found in the Form 1040 instructions, and it's an easy way for the "do-it-yourself" crowd to compute AMT obligations.
Here are some of my favorite IRS applications:
The ever-popular "Where Is My Refund?" is a slick way to track your refund. So if you think your check is overdue (either as a paper check or as a direct deposit into your bank account), use this tool to help in finding out where your refund might be.
You can get help with changing your wage withholding with the W-4 Calculator. It's a handy tool, especially if you (or you and your spouse) have only a single job and not too many moving parts with respect to other income and deductions. The more complicated your tax situation, the more complicated the form becomes, so be careful when using this. A few small missteps could negatively impact your withholding and cause you to be in a balance-due situation without even realizing it.
If you do foul up your withholding and find that you have a large balance due, and you have no other way to make the payment, the IRS also has an online application for a payment agreement. I would still recommend that you exhaust all of your other financial resources before dealing with the IRS on payment issues, but if the IRS does become your lender of last resort, you can complete your application online.
And what about that friend of yours who wants you to make a large donation to the "Save the Scorpions" organization? He swears to you that it's a qualified charitable organization and that you'll receive a tax deduction for your contribution. You're not quite sure. You can put your mind to rest by using the IRS site to search for charities for which you're allowed to make a deductible contribution. While the list isn't necessarily all-inclusive, it is updated on a regular basis and will provide you some assurance that the organization is on the up-and-up. Or if you don't find the organization listed, you can go back to your buddy and request additional IRS acceptance paperwork and/or assurances.
As you can see, if you click on the IRS website, there are many other applications available to you and your business. Don't overlook them. It might make your life dealing with the IRS a bit less taxing.
Roy Lewis lives in a trailer down by the river and is a motivational speaker when not dealing with tax issues. He understands that The Motley Fool is all about investors writing for investors. You can take a look at the stocks he owns as long as you promise not to ask him which stock to buy. He'll be glad to help you compute your gain or loss when you finally sell a stock, though.