Category: Markets / Finance / April 10, 2013 4:18 PM EDT
Well, it’s that time of year again that most of us try to avoid until the very last minute: tax season. With the April 15th deadline quickly approaching, here are five last minute tax tips for filers:
1. File Online
There are multiple free tax-filing options online and you don’t have to waste time having your taxes prepared. Visit the IRS website by clicking on the free file link to see if you’re eligible to free file.
Participating software companies such as TurboTax, H&R Block and many more make their products available through the IRS. Some also support state tax returns. Review the three-step process on the IRS website, and you'll be on your way to e-filing your return--for free!
Another advantage to filing online is the ability to E-file with direct deposit.
In addition, you can avoid long lines at the post office if you e-file your tax return. Your e-filed return is safely transmitted to the IRS and you can track the status of your tax refund.
If you, instead, mail your tax return, you won’t know where your tax refund is for at least a month and have to deal with the fear that the IRS may not have even received your tax return! The big benefit is that when you e-file with direct deposit, in most cases you’ll receive your refund in a more timely manner.
If you’ve somehow lost your W2 form, visit www.w2express.com where many large companies have W2 forms available. You will need a user ID from your employer. Another benefit of using this is that you can import your W2 directly if you are using an online software program to file your taxes, such as TurboTax.
3. Identity theft
The Internal Revenue Service issued its annual “Dirty Dozen” list of tax scams two weeks ago, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.
One example is a phishing scam, typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.
Another scam includes return preparer fraud where corrupt preparers prey on unsuspecting taxpayers. The result can be refund fraud or identity theft.
You can find the list at irs.gov by clicking on “Avoid dirty dozen tax scams” tab.
In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.
4. Deductions & Credits
There are so many deductions and credits that people overlook each year during the tax season.
Tax service provider Jackson Hewitt has a list of the 50 most overlooked tax deductions, and you can find that list by going to Jackson Hewitt.com/mytaxmanager. Then select the tab called “my resources” and a deductions tab can be viewed on the right hand side of the screen under “My Tax Resources.” Click on “Top 50 overlooked deductions” to see common deductions many overlook. You can also select credits under the “My tax resources” list that shows overlooked credits that are commonly missed.
Some of the most commonly missed tax deductions and credits include Job search expenses, moving expenses, charitable donations, the earned income tax credit plus many more.
5. File an extension
If you aren’t able to file your federal individual income tax return by April 15, file the IRS form 4868 online or by mail to apply for an automatic 6-month extension of time to file.
However, it’s important to note that submitting form 4868 doesn’t extend the time for payment of tax, which is still owed by the April 15 deadline of your return.
If you find you owe money and can’t pay after preparing your taxes, file your taxes and apply for an installment agreement by using form 9465 available at irs.gov which provides relief to struggling tax payers.
If you owe less than $50,000, you may be able to establish an installment agreement on-line, even if you have not yet received a bill for your taxes. Go to IRS.gov to apply to pay on-line.
Click on the payments” tab and click the link called “apply for an installment agreement.” This way, you can still file and lessen some of the penalties incurred on your unpaid tax liability.
Do not file this form if you are currently making payments on an installment agreement or can pay your balance in full within 120 days. Instead, call 1-800-829-1040.
Bottom line, regardless if you file an extension with form 4868 or apply for an installment plan by using form 9465, you still will be hit with fees, fines and penalties by not paying by the April 15 deadline.
Next Year – Get Organized
Use this year’s return as a tool for reducing next year’s taxes!