Top 9 tax tips for last-minute filers

April 15, 2009 4:35:08 AM PDT
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If you're one of them, experts like Tom Ochsenschlager have some familiar advice: "Don't panic."

With help from Ochsenschlager, the vice president of taxation for the American Institute of Certified Public Accountants, and Jackie Perlman, a tax analyst at The Tax Institute at H&R Block, the tax preparation company, ABCNews.com has compiled a list of tips for those filing their taxes at the last minute:

File online for free. For the first time, no matter what your income, you can file your tax returns online for free through the IRS Web site at www.irs.gov.

Those who earned less than $56,000 in adjusted gross income in 2008 can also qualify for free software for step-by-step help.

If you're eligible for a tax refund, filing electronically will help you get that cash much more quickly than mailing in your returns. Within a matter of days, Perlman said, it can also alert you to certain errors on your tax return, like making a typo on your child's Social Security number.

File for a tax extension but get ready to pay. If you just can't get your returns finished in time, file an extension. Everyone is eligible for an extension, which allows taxpayers six more months -- until Oct. 15 -- to file returns and millions of Americans take advantage of extensions every year.

The bad news is that, like tax returns, extension requests are also due April 15, and filing one doesn't mean you get more time to pay your taxes. It just means you get more time to finish your paperwork. Taxpayers filing extension requests must still estimate roughly how much they owe the IRS (if anything) and send a check for that amount by April 15.

Contrary to popular belief, Ochsenschlager said, filing an extension request -- whether it's once or for several different tax years -- won't make you any more likely to be audited.

Don't pay too little. If you're in a hurry and filing an extension, a good way to determine how much you owe is to use last year's tax filings as your guide. Given the beating that the recession has given to many people's income and investments, if you owe money at all, chances are you owe less than last year. & But don't drop your estimate too much: If the IRS finds you haven't paid enough, you'll face fees and penalties.

Last year's tax returns will be less helpful if you've had a major life change, like purchasing a house or switching jobs. In that situation, it might be best to consult a tax professional.

New, Larger Tax Deductions

Standard deductions make for quick filings. If your financial life isn't a complicated one -- you don't pay interest on a home mortgage, you don't make large charitable contributions, etc. -- you can get your taxes done quickly by filing for a standard deduction instead of itemizing deductions. For 2008 tax returns, the standard deduction for single individuals is $5,450; for married couples, it's $10,900. Additional standard deductions apply for those over age 65 and with disabilities.

Don't forget the new real estate tax deduction. There's a new standard tax deduction for homeowners. They can add a $1,000 standard deduction if they pay real estate taxes. This will prove especially beneficial to homeowners who have paid off their mortgages and don't deduct mortgage interest payments from their taxes.

"A fair number of people," Ochsenschlager said, "will now find taking the standard deduction is better than taking itemized deduction."

Add to your retirement savings quickly and easily. When filing your tax returns electronically, the IRS allows you to designate which accounts it should transfer your refund to. You can opt to have part or all of your refund transferred to your Individual Retirement Account (IRA) and, if you think the stock market is near its lows, use the money to quickly buy up some low-priced shares.

Get a last-minute deduction through an IRA contribution. If you are eligible to make tax-deductible IRA contributions -- eligibility depends on your income and whether or not you participate in a pension, 401(k) or similar plans -- it's not too late to have your contribution count for the 2008 tax year: Just contribute before April 15 and specify to your bank or whatever firm holds your IRA that you'd like it be considered a 2008 contribution.

As much as $5,000 of what you contribute (or $6,000 if you're age 50 or older) can be deducted from your taxes.

Don't forget random sources of income. Did you get paid for jury duty? That must be reported in your taxes. Did you have an interest-bearing bank account that you closed sometime in 2008? That interest income should be reported too.

Get organized and pick a good place to work. Before you start, make sure you have all the information you need to properly fill out your tax return -- that includes W-4 forms from your occupations, 1099 forms from banks accounts and investments, and records of anything you plan to use to claim deductions, like medical bills or receipts for charitable contributions.

When you're ready to start preparing your forms, be sure you're doing it in a place where you won't be distracted too easily.

"As with anything else, it requires some concentration and some care and attention on your part to do it correctly," Perlman said. "Perhaps sitting in the middle of the family room with the TV blaring and the dog barking is not the best atmosphere to do your taxes."

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