April 15, 2011 in Business

Last-minute filing can tax the wallet

Procrastinators miss simple deductions
Eileen Aj Connelly Associated Press
 

NEW YORK – You can’t put it off any longer. Monday is the deadline for filing your 2010 tax return with the Internal Revenue Service.

If you haven’t started yet, you’re far from alone. Through April 8, the IRS had received 98.6 million returns out of an expected 141 million, which means more than 30 percent of taxpayers left things to the last minute.

The biggest problem with last-minute filing is the deadline pressure. That’s especially true if you’re preparing your own return. With the clock ticking, many do-it-yourselfers make mistakes that can delay their refunds, or result in overpaying or underpaying.

There are two keys to last-minute filing, according to Matt Becker, a tax partner at the Grand Rapids, Mich., office of BDO, an accounting and consulting firm. First, remember that there’s little you can do now to manage your 2010 tax situation – all you can do is deal with the facts as they are and perhaps learn a lesson for 2011.

Second, “documentation is the key to everything,” he said. If you don’t have the receipt or form you need, the safe choice is to skip claiming a deduction. Or, file an extension to give yourself more time to track down the paperwork.

At least 10 million individuals are expected to file an extension to get six more months, according to H&R Block.

Worried that you owe taxes and you can’t pay? File your return anyway, then work out a payment plan with the IRS. Otherwise you’ll pay even more in penalties and interest. “People get so panicked,” said Kathy Pickering, executive director of the H&R Block Tax Institute. “It’s just putting unnecessary stress on themselves. The IRS is not looking to put people in jail.”

If you’re determined to power through this weekend and get your return sent in by midnight on the 18th, there are a few items to double check that can help you avoid the most common mistakes:

• Choose the right filing status.

If you’re unmarried, for instance, you might automatically check off “single.” But if you’re a single parent, you can probably file as head of household and claim a higher standard deduction.

• Double check Social Security numbers.

Transposing digits and listing one child’s Social Security number with another’s name are among the most common tax filing mistakes.

• If you live in a condominium or another type of private community, make sure you deduct only your property taxes.

Items such as, maintenance payments or homeowner association dues, which are often combined with taxes for periodic payments, don’t qualify as deductions.

• If you had more than one job, confirm that you’ve included all of your income.

If you’re missing a W-2 form, use the details on your last pay stub to complete your return, or file an extension so you have time to contact the employer.

• Claim all of the credits you’re entitled to.

You might be eligible for the earned income tax credit if you earned less than $49,999 at your job. The savers credit may apply if your income fell below $41,625 but you managed to stash away some retirement savings. And you might be able to claim the child tax credit if you earned less than $75,000.

• Check your math.

• Make sure you provide the correct account numbers.

• Don’t pay if you can file for free.

The IRS website, www.irs.gov, has links to software from 17 different companies available for free to taxpayers who earned $58,000 or less. You can also get electronic IRS forms that can be e-filed at no cost by taxpayers at all income levels.

© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email