| One thing is for certain, there is no shortage of | | | | from your business income. The office must be |
| tax forms in this country, and having an | | | | used exclusively for business on a regular basis to |
| understanding for each one is a daunting task, | | | | enable you to take the deduction. To figure the |
| even for most accountants. The most practical | | | | allowed expense, take your total home expenses |
| approach for taxpayers is to have a general | | | | and multiply that number by this ratio, total office |
| understanding of the forms that might affect | | | | square feet/ total home square feet. |
| them the most. Here are a few to consider, listed | | | | 4868: Application for Automatic Extension to File |
| in no particular order of importance: | | | | Tax Return |
| W-4: Employee Withholding Allowance Form | | | | This form allows taxpayers to extend their filing |
| This form determines the amount of federal | | | | deadline six months, but it is not an extension to |
| taxes that are withheld from your paycheck each | | | | pay, only an extension to file. You will still incur |
| period. It is important because the number of | | | | penalties and interest for not paying on time, |
| allowances that you claim will directly affect your | | | | even if you file the extension. The failure to pay |
| paycheck cash flow and the size and scope of a | | | | penalty is only 0.5% per month of the balance |
| refund or balance due at tax time. It is not in | | | | due, while the failure to file penalty is 5% per |
| your financial interest to have either a large | | | | month of the balance due, with a maximum |
| refund or a balance due, so adjust your | | | | penalty of 25%. |
| withholding allowances accordingly to avoid sizeable | | | | One other caveat is that if you have no tax |
| balances in either direction. | | | | liability, or are receiving a refund, there is no |
| 1040-X: Amended U.S Tax Return | | | | penalty to file late. So if you expect a refund, it is |
| The 1040-X form is used to amend and adjust | | | | not necessary to file an extension. |
| returns that have already been submitted to the | | | | 5695-Residential Energy Credits |
| IRS. The most common use of this form stems | | | | This form is used to claim a tax credit resulting |
| from a late arriving W2 or 1099 interest | | | | from the purchase and installation of energy |
| statement that was omitted from the original tax | | | | efficient materials and appliances in your main |
| calculation. You can also use this form to correct | | | | home. Examples of allowable improvements |
| mistakes made by yourself, or by a tax preparer | | | | include upgrades to insulation, windows, doors, |
| on your tax return and receive compensation | | | | central air units, heat pumps, and furnaces that |
| from the IRS; taxpayers can amend back up to | | | | meet energy efficiency requirements. |
| three years. The 1040-X form is also used in to | | | | The credit is non refundable, and amounts to |
| claim various tax credits, like the home buyer tax | | | | either thirty percent of the improvement cost, or |
| credit, and the credit for energy efficient | | | | 1,500 dollars whichever is less. Taxpayers would |
| improvements. | | | | need to file this form in conjunction with form |
| 8829: Expenses for Business Use of Your Home | | | | 1040-X to amend your 2009 taxes, if the |
| This is more commonly known as the home | | | | improvements were made in 2009, |
| office deduction, and what this form allows you to | | | | improvements made this year can be filed on |
| do is to deduct ordinary home expenses like | | | | your 2010 tax return. |
| utilities, taxes, interest, depreciation and insurance | | | | |