Don't fall victim to tax scams. Remember that if it sounds too good to be true, it probably is. If you think you're being scammed, you can report suspected tax fraud activity by sending completed Form 3949-A, Information Referral, to Internal Revenue Service, Fresno, CA 93888. You can download the form or call 1-800-829-3676 to order by mail.

If your return is completed but you are unable to pay the tax due, do not request an extension. File your return on time and pay as much as you can. The IRS will send you a bill or notice for the balance due.

Do you know that if you can't meet the April filing deadline to file your tax return, you can get an automatic six month extension of time to file from the IRS.

E-services is a suite of web-based products that will allow tax professionals and payers to conduct business with the IRS electronically. These services are available 24 hours a day, 7 days a week from just about any computer with an internet connection.

E-services is not available to the general public. Only approved IRS business partners, such as e-filing tax professionals and payers, are eligible to participate in e-services.

Whoever said there is no such thing as a free lunch may have been right. But for millions of eligible taxpayers, with an Adjusted Gross Income of $50,000 or less, there is Free File. Free File is online tax preparation and electronic filing through a partnership agreement between the IRS and the Free File Alliance, LLC. In other words, you can e-file... free.

CHILD AND DEPENDENT CARE CREDIT - COMBAT PAY
Earned income is calculated two different ways on Form 2441, Child and Dependent Care Expenses. The earned income calculation for Form 2441, Page 1, includes certain nontaxable earned income, including meals and lodging provided for the convenience of your employer and nontaxable combat pay. This calculation may affect your Child and Dependent Care Credit. To calculate the earned income amount for Form 2441, Page 2, you can elect whether or not to include combat pay as earned income. This calculation may affect how much of your dependent care benefit is excludable. You should calculate your return both ways -- including and not including combat pay as earned income on Form 2441, Page 2 -- to determine which gives you the more advantageous result.

CHILD AND DEPENDENT CARE CREDIT - AMENDING RETURNS
The 2002 and 2003 IRS instructions for Form 2441, Child and Dependent Care Expenses, contained an error that may have incorrectly reduced your Child and Dependent Care Credit for those years. This error was corrected in 2004. You may be entitled to an additional refund if you filed Form 2441 for tax years 2002 or 2003. Contact a local Jackson Hewitt office to discuss your situation and determine whether amending your return would result in additional tax savings.

CHILD TAX CREDIT - QUALIFYING CHILD
You may get a credit of up to $1,000 for a qualifying child under age 17 at the end of the year. A qualifying child is your dependent who is a son, daughter, stepchild, adopted child, grandchild or eligible foster child. This credit may be refundable depending on your earned income.

CHILD TAX CREDIT - REFUNDABLE CREDIT
You may get a credit of up to $1,000 for a qualifying child under age 17. If you receive less than the full amount of the Child Tax Credit because it is limited to your available tax liability, you may be entitled to an additional credit in excess of your tax liability. This may be a refundable credit depending on your earned income.

CHILD TAX CREDIT - COMBAT PAY
Although combat pay is not included in income for purposes of calculating your federal income tax, combat pay is included as earned income when calculating the refundable portion of the Child Tax Credit. This could mean a higher credit for those with low taxable income because the amount of additional credit depends on earned income.

Do you receive tips as part of your income? You must report all tips as wages on Form 1040. If you receive tips of $20 or more in one month, you must also keep a daily record of tips received and give your employer a written report of your tips for that month by the 10th day of the next month.

You may be able to claim a deduction of up to $5,000 for start-up and organizational costs incurred after October 22, 2004. The deduction is reduced by the amount by which the start-up costs exceed $50,000. If you cannot deduct all your costs in the first year the business begins, amortize the remaining costs over 15 years.

If you are a member of the National Guard or Reserves and you must travel away from home to perform your service (such as for a drill or a meeting) in a location that is more than 100 miles away from your home, you can take a deduction for related travel expenses as an adjustment to income, even if you do not itemize your deductions. Allowable expenses include expenses for overnight transportation, meals, and lodging. The amount of the allowable expenses cannot exceed the amount the federal government pays its employees for travel expenses.

There are circumstances that cause the IRS to examine your return more closely. For example, the IRS may examine your return and request more information if your itemized deductions exceed any IRS internal guidelines, or you claim tax shelter losses. Also, if your business expenses and/or cash charitable contributions are substantial in relation to your income, you may receive an audit notice.

If you did not pay enough tax either through withholding or by making estimated tax payments, you will have an underpayment of estimated tax, and you may have to pay a penalty. Generally, there will be no penalty for underpayment unless the amount you owe is $1,000 or more.

If you are employed and receive large refunds, consider adjusting your withholding amounts with your employer. Instead of waiting until the end of the year to receive a big refund, you can complete a new Form W-4, give it to your employer, and have less withholding tax taken out of your paycheck. If income or employment circumstances change, it might also be to your advantage to revise your Form W-4 at that time.

For tax years beginning in 2005, the allowable deductions for the standard mileage rate for the period January 1, 2005, through August 31, 2005, are as follows:

• Business miles. The standard mileage rate for the cost of operating your car becomes 40.5 cents a mile for all business miles driven.
  
• Charitable services. The standard mileage rate allowed for use of your car when you use your car to provide charitable services to a charitable organization is 14 cents a mile.
  
• Charitable services — Hurricane Katrina relief services. If you used your vehicle in giving services to a charitable organization to provide relief related to Hurricane Katrina, the standard mileage rate allowed for use of your car is 29 cents a mile for miles driven after August 24, 2005, and before September 1, 2005.
  
• Medical reasons. The standard mileage rate allowed for use of your car for medical reasons is 15 cents a mile.
  
• Moving. The standard mileage rate for determining moving expenses is 15 cents a mile.

The allowable deductions for the standard mileage rate for the period September 1, 2005, through December 31, 2005, are as follows:

• Business miles. The standard mileage rate for the cost of operating your car becomes 48.5 cents a mile for all business miles driven.
  
• Charitable services. The standard mileage rate allowed for use of your car when you use your car to provide charitable services to a charitable organization remains at 14 cents a mile.
  
• Charitable services — Hurricane Katrina relief services. If you used your vehicle in giving services to a charitable organization to provide relief related to Hurricane Katrina, the standard mileage rate allowed for use of your car is 34 cents a mile.
  
• Medical reasons. The standard mileage rate allowed for use of your car for medical reasons is 22 cents a mile.
  
• Moving. The standard mileage rate for determining moving expenses is 22 cents a mile.

The standard deduction for taxpayers who do not itemize deductions on Schedule A of Form 1040 is, in most cases, higher for 2005 than it was for 2004. The amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer.

The basic standard deduction amounts for 2005 are:

• Head of household — $7,300


• Married taxpayers filing jointly and qualifying widow(er)s — $10,000


• Married taxpayers filing separately — $5,000


• Single — $5,000

The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $800 or the sum of $250 and the individual's earned income.

For 2005, the employer and employee will continue to pay:

• 6.2% each for social security tax (old-age, survivors, and disability insurance), and


• 1.45% each for Medicare tax (hospital insurance).

Wage limits. For social security tax, the maximum amount of 2005 wages subject to the tax is $90,000. For Medicare tax, all covered 2005 wages are subject to the tax.

Monday, April 17, is the federal tax filing deadline for most of the nation. However, if you live in Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont or the District of Columbia, your deadline is Tuesday, April 18.

When you use a car for business, you may deduct the mileage expense by using either the standard mileage rate or the actual expenses of maintaining the vehicle. If you take the actual expenses, you can deduct the depreciation, gas, oil, insurance, tires, licenses, repairs, etc. If you choose to take actual expenses when you first start using the car for business, you cannot change to the standard mileage rate deduction.

If you use your car for business purposes, you may deduct 40.5 cents per mile for unreimbursed mileage expenses from January 1 through August 31, 2005 and 48.5 cents per mile for expenses from September 1 through December 31, 2005. Be sure that you keep a written record of your total mileage and business mileage.

If you are looking for a job in your current profession and can itemize your deductions, certain expenses may qualify as miscellaneous deductions. Employment agency fees, résumé printing, phone calls, and mailing expenses are examples of deductible items.

As you consider making charitable contributions to assist natural disaster victims, keep in mind that you can deduct your contributions only if you make them to a qualified organization.

You can ask any organization whether it is a qualified organization, or you can investigate by calling the IRS (toll-free) at 1-877-829-5500 or by checking the online version of Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986 on the IRS Web site at http://apps.irs.gov/app/pub78. Some organizations, such as churches and governments, may be qualified even though they are not listed. Learn more about the tax consequences of a disaster.

Special bonus depreciation is not available for most property purchased after 2004.

If you obtain an annulment that declares your marriage never existed, you are considered unmarried for this and any previous tax years. You must amend your tax returns for all the tax years not affected by the statue of limitations for filing a return (usually three years) to show this change in marital status.

Who will pay the taxes when you win the lottery pool? Form 5754, Statement by Persons Receiving Gambling Winnings, has been provided by the IRS to alleviate the problem of reporting multiple ownership of lottery tickets. The form is prepared by the person who actually receives the winnings and it identifies all those entitled to a share of the winnings. The federal taxes should already have been withheld by the lottery.