Taxes 2005 for Dummies® Book

	Introduction	1
	What's New in This Edition	1
	Why Buy This Tax Book?	1
	Your Tax Road Map	2
Part I	Getting Ready to File	5
Chapter 1	Understanding the U.S. Tax System	7
	Figuring Out the U.S. Tax System	7
	Understanding Your Income Tax Rates	11
Chapter 2	Tax Return Preparation Options and Tools	17
	Preparing Your Own Return	17
	Using IRS Publications	18
	Perusing Tax-Preparation and Advice Guides	19
	Buying Software	19
	Accessing Internet Tax Resources	20
	Hiring Help	22
	Finding Tax Preparers and Advisors	25
Chapter 3	Getting and Staying Organized	27
	Keeping Good Records	28
	Reconstructing Missing Tax Records	31
	Requesting Copies of Lost Tax Returns	36
	Understanding the Cohan Rule	37
Chapter 4	No Form Fits All (Or, What Kind of Taxpayer Are You?)	39
	What Rendition of 1040 Shall We Play?	39
	Choosing a Filing Status	41
	Figuring Personal and Dependent Exemptions	49
	Securing Social Security Numbers for Dependents	54
	Filing a Return for a Deceased Taxpayer	55
	Must I File?	55
	A Final Bit of Advice	59
Part II	Tackling the Various Forms	61
Chapter 5	Easy Filing: 1040EZ and 1040A	63
	Who Can File a 1040EZ?	63
	Filling Out a 1040EZ	65
	Who Can File a 1040A?	69
	Final Instructions	81
Chapter 6	Form 1040: Income Stuff	83
	Lines 6a-6d: Exemptions	84
	Lines 7-22: Income	84
Chapter 7	Form 1040, Part II: Adjustments to Income Stuff	117
	Adjusted Gross Income (AGI)	117
Chapter 8	The Rest of the 1040	139
	Tax and Credits	139
	Credits: Lines 46 to 54	148
	Other Taxes	154
	Payments	155
	Refund or Amount You Owe	158
	Finishing Up	160
Part III	Filling Out Schedules and Other Forms	161
Chapter 9	Itemized Deductions: Schedule A	163
	The Standard Deduction	163
	Itemized Deductions	166
	Lines 1-4: Medical and Dental Costs	167
	Lines 5-9: Taxes You Paid	175
	Lines 10-14: Interest You Paid	178
	Lines 15-18: Gifts to Charity	182
	Line 19: Casualty and Theft Losses	187
	Victims of Terrorist Attacks	187
	Lines 20-26: Job Expenses and Most Other Miscellaneous Deductions	190
	Line 27: Other Miscellaneous Deductions	199
	Line 28: Total Itemized Deductions	200
Chapter 10	Interest and Dividend Income: Schedule B (1040), Schedule 1 (1040A)	203
	Part I, Lines 1-4: Interest Income	205
	Part II, Lines 5 and 6: Dividend Income	212
	Part III, Lines 7-8: Foreign Accounts and Trusts	215
Chapter 11	Business Tax Schedules: C, C-EZ, and F	217
	Schedule C-EZ	217
	Schedule C	218
	Basic Information (A-E)	219
	Accounting Method Stuff (F-H)	219
	Part I, Lines 1-7: Income	220
	Part II, Lines 8-27: Expenses	222
	Operating Loss	240
	Schedule F: Profit or Loss from Farming	241
Chapter 12	Capital Gains and Losses: Schedule D	247
	Collectibles and Real Estate	247
	What Part of Schedule D?	248
	Schedule D: Columns	249
	Calculating Your Adjusted Basis	250
	Part I, Lines 1-7a and b: Short-Term Capital Gains and Losses - Assets Held One Year or Less	252
	Part II, Lines 8-15: Long-Term Capital Gains and Losses - Assets Held More than One Year	254
	Part III, Lines 16-22: Summary of Parts I and II	257
	Using Schedule D When You Sell Your Home	258
	Use Schedule D for Other Issues Involving Stocks (Worthless and Otherwise)	263
	Using Schedule D for Nonbusiness Bad Debts	267
Chapter 13	Supplemental Income and Loss: Schedule E	271
Part I	Income or Loss from Rental Real Estate and Royalties	271
Part II	Income or Loss from Partnerships and S Corporations	278
Part III	Income or Loss from Estates and Trusts	280
Part IV	Lines 38-39: Income or Loss from Real Estate Mortgage Investment Conduits (REMIC)	281
Part V	Summary	281
Chapter 14	Giving Credits Where Credits Are Due	283
	Child and Dependent-Care Expenses: Form 2441 (1040) and Schedule 2 (1040A)	284
	Credit for the Elderly or the Disabled: Schedule R (1040) and Schedule 3 (1040A)	286
	Education Credits (Form 8863)	287
	Child Tax Credit	288
	Retirement Savings Contributions Credit (Form 8880)	289
	Adoption Credit (Form 8839)	289
	Earned Income Credit (EIC)	291
Chapter 15	Other Schedules and Forms to File	295
	Estimated Tax for Individuals (Form 1040-ES)	295
	Moving Expenses (Form 3903)	297
	Nondeductible IRAs (Form 8606)	299
	Forms 8615 and 8814, the Kiddie Tax	302
	Form 8829, Expenses for Business Use of Your Home	303
	Form W-4, Employee Withholding	307
	Household Employment Taxes: Schedule H (the Nanny Tax)	308
	Schedule SE: Self-Employment Tax Form	309
Part IV	Audits and Errors: Dealing with the IRS	313
Chapter 16	The Dreaded Envelope I: IRS Notices	315
	Finding Strength in Numbers	315
	Understanding the IRS Notice Process	316
	Assessing Assessment Notices	318
	Collection Due Process Hearing	322
	Handling Nonassessment Notices	324
Chapter 17	The Dreaded Envelope II: Audits	329
	What You Must Know about Audits	329
	Surviving the Four Types of Audits	330
	Questioning Repetitive Audits	333
	Getting Ready for an Audit	334
	Winning Your Audit	335
	Understanding the Statute of Limitations on Audits	335
Chapter 18	Fixing Mistakes the IRS Makes	339
	Pointing the Finger: Common IRS Flubs	339
	Fixing IRS Mistakes: Just the Facts, Ma'am	340
	Sending a Simple Response to a Balance Due Notice	342
	Sending Generic Responses to Generic Notices	342
	Getting Attention When the IRS Ignores You	348
	Finding Your Refund When It Doesn't Find You	350
Chapter 19	Fixing Your Own Mistakes	355
	Amending a Return	355
	When You Can't Pay Your Taxes	357
	Abating a Penalty	362
	Abating Interest	368
	Protecting Yourself with Innocent Spouse Relief	370
	The Taxpayer Bill of Rights	373
	The Taxpayer Bill of Rights - Parts 2 and 3	375
Part V	Year-Round Tax Planning	377
Chapter 20	Tax-Wise Personal Finance Decisions	379
	Taxing Mistakes	380
	Comprehending the Causes of Bad Tax Decisions	383
Chapter 21	Reducing Taxes with Retirement Accounts	387
	Identifying Retirement Account Benefits	387
	Types of Retirement Accounts	391
	Taxing Retirement Account Decisions	400
Chapter 22	Small Businesses and Tax Planning	407
	Organizing Your Business Accounting	407
	Minimizing Your Small-Business Taxes	410
	To Incorporate or Not to Incorporate	415
	Investing in Someone Else's Business	419
	Buying or Selling a Business	419
Chapter 23	Your Investments and Taxes	421
	Tax-Reducing Investment Techniques	421
	Tax-Favored Investments to Avoid	427
	Annuities	430
	Selling Decisions	431
Chapter 24	Real Estate and Taxes	437
	Surveying Real Estate Tax Breaks	437
	Purchasing Your Own Palace	439
	Making Tax-Wise Mortgage Decisions	443
	Selling Your House	446
	Investing in Real Estate	448
Chapter 25	Kids and Taxes	453
	Bringing Up Baby	453
	Education Tax Breaks and Pitfalls	457
	Taxes on Your Kiddies' Investments	462
Chapter 26	Estate Planning	467
	Figuring Whether You May Owe Estate Taxes	467
	How High Are Estate Taxes?	469
	Reducing Expected Estate Taxes (If You're Rich)	470
Part VI	The Part of Tens	479
Chapter 27	Ten Tips for Reducing Your Chances of Being Audited	481
Chapter 28	Ten (or So) Often-Overlooked Tax-Reduction Opportunities	485
Chapter 29	Ten Interview Questions for Tax Advisors	489
Part VII	Appendixes	493
Appendix A	Important IRS Info	495
	IRS Tax Forms and Publications	495
	Recorded Tax Information	495
	IRS Problem Resolution Program	496
Appendix B	Glossary	497
	Index	513