Yahoo Finance 9 Last-Minute Tax Tips for Procrastinators
The April 15 tax deadline is growing close, but there's no need to panic. More than half of taxpayers have already filed their returns, but every year about 28 percent wait until the last few weeks to file. If you're in that group, here are some steps to help you file your taxes by the deadline, avoid mistakes and boost your refund.
Gather and organize your documents. When you sit down to prepare your taxes, make sure documents like W-2s from employers or 1099s from contract work are all in one place. Also, don't forget receipts for things like Department of Motor Vehicles fees, charitable contributions and job search expenses.
Go online. According to the Internal Revenue Service, self-prepared, e-filed tax returns from home computers have increased close to 6 percent compared with the same time last season. By going online, you can avoid the hassle of waiting for an appointment and instead file conveniently from your own home. If you have a simple tax return, you can save an average of $100 versus the leading tax store. You don't want to wait until the last minute, but you can file online up until 11:59 p.m. on the April 15 deadline.
E-file with direct deposit. The IRS reports that about 85 percent of refunds have been direct deposited this tax season. E-file with direct deposit is easy, secure and the fastest way to get your tax refund. Nine out of 10 tax refunds are issued within 21 days or less, compared with six to eight weeks for paper-filed tax returns.
Double-check important information. One of the top mistakes taxpayers make when rushing to meet the deadline is gathering incorrect Social Security numbers for their children and spouses. Make sure you have the correct Social Security numbers when you prepare your taxes. Correct Social Security numbers are required to get valuable deductions, credits and exemptions.
Maximize your deductions. You may be thinking you're only eligible for the standard deduction the IRS gives you, which is $6,100 if you're single and $12,200 if you're married filing jointly. You may be able to maximize your deductions by gathering your receipts for things like charitable contributions and other expenses that will give you a bigger tax deduction.
The IRS reports that the majority of taxpayers -- about 75 percent -- take the standard deduction. Many take the easy way out with the standard deduction, but including a few additional receipts may push you over the standard deduction, lowering your tax liability.
Take above-the-line deductions. Even if you don't have enough deductions to itemize, you can lower your taxable income with above-the-line deductions like moving expenses for a job, alimony paid, the educator expense deduction and the tuition and fees deduction. Above-the-line deductions cut your taxes without itemizing.
Don't forget often-missed deductions, including:
-- Charitable contributions: If you did spring cleaning last year and donated to your favorite charity, don't forget to have acknowledgments for your donations ready. Automatic deductions from your paycheck for charitable donations are also easily forgotten.
-- Tuition and fees deduction: Even though you may have taken only one college course to secure that promotion you've been dreaming of, you may be eligible for a deduction worth up to $4,000.
-- Points: If you bought a new home and paid points or loan origination fees to secure your loan, don't forget to have that amount in front of you, since you can deduct the amount paid in full. You can also deduct points paid to refinance your home, but the amount paid has to be divided up over the life of the loan. You can find points paid on your 1098 mortgage interest statement and your settlement statement.
-- Gambling losses: If you were lucky enough to win at the casino last year, remember that your gambling losses can offset your winnings up to the amount of your winnings.
Make a last-minute tax move. Most money-saving tax moves have to be made by the end of the tax year, but you still have one more opportunity to lower your tax liability on the taxes you're filing. Until you file by the April 15 deadline, you can still contribute up to $5,500 ($6,500 if you're over 50) to your traditional individual retirement account and take advantage of a deduction for your contribution.
File even if you owe. You can get an extra six months to file your taxes with an extension, but remember that a tax extension is an extension to file and not to pay. If you owe money, you still need to send the IRS at least 90 percent of your tax liability to avoid a penalty. If you can't pay, you may be eligible for an installment payment plan for up to six years.
Lisa Greene-Lewis is a certified public accountant and TurboTax tax expert. She has more than 15 years of experience in tax preparation, including positions as a public auditor, controller and operations manager. For more tax-related tips, go to blog.turbotax.intuit.com.
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