A Better Way To File Your Federal and California Income Taxes

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A Better Way To File Your Federal and California Income Taxes Flag

Filing your federal and California state income tax returns used to mean poring over complicated forms and instructions or hiring an accountant to do all that for you. Now online tax preparation programs such as those provided by e-File.com and TaxAct allow you to file your income tax returns faster and more easily -- often for free or at a low cost.

Simply visit one of these tax preparation websites and select the tax filing program that matches your situation, such as someone filing a simple return, someone who's self-employed or someone who's a homeowner or investor. Enter your information in the spaces provided and the online tax filing software will guide you through the process. These programs are kept up-to-date so there's need to worry about keeping up on the latest tax law changes at either the federal or state level.

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California Franchise Tax Board website

California residents have an additional resource available to them, the California Franchise Tax Board's website at ftb.ca.gov. The tax board deals with California's personal income tax and corporation tax programs. The agency's website features account balances, payment options and refund status. It offers tax forms and instructions, tax calculator tables and rates, and information on whether you need to file. The website also offers "webinars" on topics such as avoiding common tax return errors, estimated tax payments and how to properly file a "power of attorney" form.

In addition to those services, ftb.ca.gov website administers delinquent vehicle registration debt for the DMV, Industrial Health and Safety assessments and court-ordered debt. A complete explanation of what the agency/website provides is available at https://ftb.ca.gov/aboutFTB/index.shtml?WT.mc_id=Global_Utility_About.

Tax Forms And Filing Methods To Use

When filing federal taxes, standard forms include the familiar 1040, 1040A or 1040EZ along with Schedule D (for capital gains and losses), Schedule C (for self employment), 1099-INT (taxable interest income) and Form 1098 (mortgage interest deduction). When filing California income taxes, full-time state residents must use Form 540, Form 540A or Form 540 2EZ while non-residents or part-time state residents must use Form 540 NR. Those estimating their state income taxes must use Form 540 ES. If you just can't wade through all the paperwork by the tax filing deadline, then file Form FTB 3519 (Payment for Automatic Extension for Individuals). It allows to estimate your tax payment so can pay that amount while you figure out what you actually owe.

You can file your state and federal income taxes several ways, including the old-fashioned way, paper forms sent through "snail mail," paying an accountant to do the same thing or filing electronically through either a website such as TurboTax or TaxACT, the Internal Revenue Service's website (irs.gov) or through the California Franchise Tax Board's website (ftb.ca.gov).

Paying California Taxes

The California Franchise Tax Board's site includes a section on payment choices, https://www.ftb.ca.gov/online/payment_choices.shtml. Individual taxpayers and businesses have the option of paying online through their checking or savings account; paying by credit card; mailing a payment; using Western Union to pay online, by phone or in person; or setting up a monthly payment plan.

Why You Should File Early, Not Late

Filing your state and federal income tax forms as soon as you receive all necessary documentation presents several advantages. Not only does filing sooner mean getting your refund sooner, filing sooner also means getting your refund more quickly. Many people want to "hang on to their money" for as long as possible or don't want to slog through the paperwork or just simply procrastinate. When all those people finally do submit to the envitable and file their returns, the IRS and California Franchise Tax Board get swamped. So a refund that might take four weeks to process in February might take twice that long in April.

As the old saying goes, idle hands are the devil's work. However, procrastination towards filing your income tax return can lead to far more immediate consequences than eternal damnation. The Internal Revenue Service can and will impose interest and penalties on late tax filers that can add thousands of dollars to one's tax bill. The agency also force taxpayers to sell or mortgage assets or take out a loan to pay their tax bills. Further enforcement action includes garnishing wages, levying bank accounts, seizing assets or filing a federal tax lien which can wreck one's credit rating.

California also imposes a delinquent penalty on unpaid taxes if a tax return isn't filed by the deadline. It equals five percent of the taxes due per month for every month the payment is late, up to 25 percent. The minimum is 100 percent of the taxes due or $135, whichever is less. Interest is charged beginning from the tax return's original due date until the taxes are paid. Interest also is charged on penalties, beginning 15 days from notice of the penalty until it is paid. Late filers also must deal with that financial workhorse known as "compound interest." Interest on late taxes is compounded daily and interest rate is adjusted every six months. Other penalties are levied for insufficient funds checks, understating taxes owed, negligence and fraud.

Where is My Refund?

Once you've filed your California state income tax return, visit ftb.ca.gov to check on its status. Simply create an account, then visit the "Check Your Refund Status" section of the ftb.ca.gov website. You will need your Social Security number, mailing address (update if online if it's changed) and refund amount, along with a compatible computer operating system and Internet browser.

You also can check the status of your federal income tax return at "Get Refund Status" section of the IRS website, https://sa2.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp. Simply enter your Social Security number, filing status and exact refund amount. You should get your California income tax refund within seven to ten days if you filed electronically or eight to twelve weeks if you mailed your return.