Monday, March 15, 2010

7 Lucky Tax Prep Tips to Celebrate St. Patrick's Day

I am a huge fan of St. Patrick’s Day, as you can probably tell from this picture of me in my leprechaun outfit from 2008…

To celebrate the luck of the Irish, I thought it would be fun to share 7 “lucky” tips for getting your return prepared and filed this tax season.

1. Do NOT Wait Until April 14th

Although the tax deadline is April 15th (just a few weeks away), you should try to get your return prepared and filed as early in advance as possible. If you have not finished your return already, then I highly recommend doing so. Tax offices and accountants get overwhelmed during the first two weeks of April and sometimes it can be almost impossible to get an appointment. Even if you are planning to prepare your own return you never know what obstacles you might run into, such as missing documents or endless piles of paperwork to sort through.

2. Request an Extension if your Rushed

It is always better to request an extension from the IRS then send in a return full of errors. If you feel rushed, then take a deep breath, complete and file IRS Form 4868, and will have an additional six months to file your income tax return. However, keep in mind that this is an extension on the deadline to file your return, not an extension on the deadline to pay any taxes owed. If you do have an unpaid tax liability, the IRS will probably assess a late payment penalty.

3. File Even if you Cannot Pay

Unfortunately, thousands of taxpayers put off filing a tax return because they are afraid of having to pay a huge IRS bill. However, even if you cannot pay Uncle Sam you should still file a return. The IRS assesses separate penalties for not filing and for not paying your taxes, so by filing a return (or an automatic extension) you can help reduce the amount of fees you will have to pay the IRS.

4. Always e-File

Whenever possible you should e-file your income tax return. It is faster, more convenient, and more accurate than filing a paper return. Additionally, you can receive your refund in as little as 10 days if you e-file and select to have your refund directly deposited into a bank account. On the other hand, if you file by mail, it can take over 10 weeks to get your refund.

5. Pay with Plastic

If you owe the IRS, and do not have the cash to make the payment, you can always pay with a credit card. The IRS accepts payments through the two companies listed below. Both accept tax payments either over the phone or through their websites and allow you to pay with American Express, Discover, MasterCard or VISA. However, there is a fee for paying through these companies.

Link2Gov Corp.

(888) PAY1040

Official Payments Corp.

(800) 2PAYTAX

6. Get Help from a Professional

If you are confused about your tax returns, I highly recommend seeking help from a professional. Click here to find the closest Roni Deutch Tax Center to your home and you can have one of my highly trained professionals prepare your return. If there aren't any locations near you, then check out this list of tips on how to find a quality tax specialist from the RDTC Tax Help Blog.

7. Use your Refund to Reduce your Tax Liability

If you get a refund from the IRS this year, I highly recommend using the money to do something smart—don’t waste it on a purchase you will regret in the future. I posted a useful article on how to use your refund to reduce your 2010 tax liability earlier this month. Some suggestions include opening up a traditional IRA, purchasing an I-Bond or making charitable contributions. You can find the full list of tips here.

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