Your money: Last-minute tax tips
(BPT) - Are you among the millions of Americans who scramble every year to meet Uncle Sam's income tax filing deadline?
The Internal Revenue Service (IRS) estimates that one-third of Americans wait until the last minute to file their personal income tax returns (for 2011 income tax returns, the deadline has been extended to April 17). If you count yourself among that group, it's important to realize the costs could be adding up - from missing important deductions that could affect the amount of your refund to incurring penalties from the IRS for not filing on time.
The keys to paying exactly what you owe and obtaining a refund sooner are timely filing, familiarity with relevant tax deductions and credits, and proper organization, according to FindLaw.com
, the nation's leading website for free legal information. If you don't have the time or inclination to become familiar with the U.S. tax code, consider getting the help of a professional tax preparer or a tax attorney, or at the very least using tax software that can guide you through income tax form preparation.
To help you make the most of tax season, here are some additional tips from FindLaw.com:
Start a file. Somewhere in your home, create a place where you can store all the documents you'll need to complete your taxes. When W-2 forms, mortgage statements and other tax-related documents are mailed to you, put them into this location, file or box them, and check them off as they come in. In addition, keep receipts of potentially deductible items such as medical and dental expenses, tuition, daycare and after-school care expenses.
Seek advice for your small business. Whether by choice or out of necessity, many Americans have decided to go into business for themselves as a result of the "great recession." From the moment you make this choice, go to an accountant who specializes in working with small business owners and get advice on how to properly and accurately record all of your business expenses and revenue. Accurate bookkeeping is essential to ensuring accurate payment of the taxes your business owes. An ounce of prevention will go a long way toward helping avoid an IRS audit.
Get help. Don't have time to figure out all the ongoing changes to tax regulations? Don't have the interest? Then get the help of a professional tax preparer immediately after you receive W-2 forms from your employer in order to complete and file your taxes before the filing deadline. The IRS offers help, too. Visit www.irs.gov for information about filing your income taxes. Check out IRS publication 17, "Your Federal Income Tax," on the IRS website. It highlights everything you need to know about filing your personal income tax return. The IRS also offers help over the phone and interactive tax assistance through its website.
Go electronic. Every year, more and more people file their taxes electronically. Why? Because it offers ease of use and quicker tax refunds, which are typically issued two weeks after filing. In 2010, nearly 100 million Americans (70 percent of tax filers) filed their taxes electronically, using off-the-shelf tax preparation software or the IRS website's filing page, according to IRS estimates. Electronic filing can reduce math errors and the cost of paying for return receipts at the post office. When you file electronically, consider using direct deposit, which authorizes the IRS to deposit your refund directly into your checking account instead of sending you a check in the mail.
Don't avoid filing. Some people, especially those who are self-employed or have been laid off, worry that they can't pay the full amount of taxes they owe. Therefore, they avoid filing. Don't do it. It will only make matters worse. First, give yourself time by filing for an extension, which gives you up to six months to file a return. Second, it's better to pay something rather than nothing if you owe on your taxes. A non-payment of your taxes can result in penalties and interest. Even a partial payment can reduce your penalties and shows good faith if you're audited.
Keep your returns. In the event that you're audited, it's important to have up to seven years of previously filed income tax returns on file. These are also useful in preparing current income tax returns, and may be valuable to your estate's executor if you become incapacitated or die unexpectedly.
Plan ahead. Tax regulations change every year. To lower your tax burden, start keeping good records now and become familiar with changes to the tax code for 2012 by consulting with an experienced tax attorney, accountant, or by visiting the IRS website, www.irs.gov
To learn more about personal income taxes, visit FindLaw.com