Tuesday, April 05, 2011

11 Last Minute Tax Tips

Tax day is so close you can feel the panic in the air as millions of Americans struggle to get their taxes filed on time. Now, I’m sure you already filed your state and federal tax returns, but for everyone else who procrastinated here are 11 tips to help you finish tax season strong!

April 18th

This year the deadline to get your returns filed has been moved to April 18th, giving you three extra days to avoid late penalties. Use them wisely!

Post Office Hours

Your return has to be postmarked on or before the tax deadline to avoid being considered late. If you are cutting it close, you may want to call a few local post offices to find out what their hours are on April 18th. Some stay open until midnight to help last minute filers, but not all of them!

Your Old Return

If you are planning on preparing your own return, then you should be able to use last year’s tax return as a guide. Unless your financial situation has changed significantly most of the information should be the similar and might help remind you if you missed a deduction. If you are using tax preparation software, you can even automatically import your data from the previous year. Just make sure you double check everything!

Always E-File

Unless you are required to mail in a paper return, you should consider e-filing your tax return. Not only is it easier than driving to the post office, but you will also get an electronic confirmation from the IRS showing they have received your return. That little confirmation can save you a lot of worry, and the fees that come along with your return getting “lost in the mail.”

Pay by Credit

As I explained in this response to a question from a reader, you do not have to pay the IRS with a check. If you do owe, you can pay with credit card, however you will have to pay additional convenience fees, up to 2.35%.

Direct Deposit

On the other hand, if you are expecting a refund, I recommend having it directly deposited into your bank account. You could have your refund in as little as 8-10 days, as opposed to the weeks or months it can take the IRS to mail you a paper check.

Automatic Extension

If you are unable to get your return filed before the deadline, you can request an automatic extension from the IRS. It will give you an additional six months to get your return filed, but keep in mind that it does not extend your deadline to pay any owed taxes. For more information, check out this article with tips and instructions on requesting on automatic extensions. And remember, you MUST file for an extension by April 18. Any extension requests sent after that will be denied.

There's Still Time to Reduce your Tax Bill

A few weeks ago I posted this article on your options for reducing your 2010 tax liability. You could contribute to an IRA, or health savings account (HSA). Keep in mind though that these contributions must be made before the tax deadline. If you request an extension it will give you more time to file your return, but not to make IRA or HSA contributions.

Mistakes are Expensive

In your rush to get your returns filed, make sure that you avoid making a costly mistake. It may seem obvious, but you would be surprised how many taxpayers forget to sign their returns, or put down the wrong SSN. Click here for a list of the 10 most common tax preparation mistakes, and make sure you avoid them!

Be Honest

The most important advice I can give you is to be honest on your tax return. Do not claim any credits you are not entitled too, or exaggerate your charitable contributions. The best way to avoid tax problems is to be 100% honest on your tax return.

Tax Day Freebies

Every year a handful of companies offer tax day promotions and freebies to help reduce the stress for all those last minute filers out there. Getting a free cinnamon bun won't help you get your return in time, but it can make tax day a little more enjoyable! Be sure to check the ads in your newspaper, or Google "tax day freebies" to find out which businesses are participating this year.

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