Last Minute Tax Tips
Because I love a big tax refund, I filed my return long ago, received the money, and used it to pay down debt. But like many people, my cousin Nick hasn't even started. He doesn't get a refund, so he waits until April to do his taxes. He's been skulking around the office for the past week muttering, “I need to start my taxes,” and, “You should write an entry reminding people to start their taxes.”
Many of you are probably last-minute filers, too. If you haven't submitted your tax return yet, here are some tips to make the process less painful:
- Get help from the source. The IRS web site is surprisingly useful. There's a library of forms and publications, an extensive list of frequently asked questions, and information on how to file for an extension.
- Claim your telephone excise tax refund. If you've had phone service since 2003, you can claim a standard refund of either $30 or $60 (depending on the exemptions you claim). If you saved your phone records, you may be able to claim even more! The IRS says that 30% of those filing returns are forgetting to claim this.
- Take advantage of the Free File program. The IRS reports that 70% of all taxpayers qualify for free electronic tax filing. If your 2006 adjusted gross income was $52,000 or less, check the IRS web site for more information.
- Use tax preparation software. It's quicker and less prone to errors. It can even save you money. Matt recently told me about an experiment he conducted: he prepared his own taxes with software, took them to a small-town CPA, and also had them done by a big-name firm. Though the big-name firm had the best results, the tax software was a close second.
- Check your work. The IRS doesn't like a sloppy return. (Accidental errors are the top reason for tax audits.) Make sure your numbers are correct. Include your social security number. Attach all retired paperwork. Sign your return! Note that this is another reason to file an electronic return — computers help to catch bonehead errors.
- Beware of audit flags. Take deductions you can substantiate, but don't stretch the truth. Don't be tempted to cut corners. Your best defense against an audit is to be honest.
- If you can't pay, don't panic. The worst thing you can do is nothing at all. The IRS offers several payment options. In January, CPA Brian Brown told GRS readers what to do if you can't pay your taxes.
Be sure to store a copy of your return and all supporting documents in a safe place. After you've finished, visit SaveorSpend.com, where sharing your tax story qualifies you for a chance to win an Amazon gift certificate.
Update: I just got the latest Dave Ramsey update via e-mail. His site has some tax tips, too.