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.

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Cap
Cap
13 years ago

Off topic, but seeing as how it ends on the same day: Don’t forget to maximize your 2006 contribution to your IRAs if possible ($4,000). There’s still time!

Other than that, I’ll see everyone at the postal office Monday night. heh.

kev
kev
13 years ago

Thank goodness for tax preparation software. It’s a huuuge time saver.

db
db
13 years ago

I’ve always waited until the last minute to start my taxes — literally the day before they were due I’d be running around thinking “now what forms do I need to find at the library?” This is after telling myself for weeks “gotta do the taxes. gotta do the taxes” just to keep myself in a heightened state of anxiety lest I should let the deadline slip by. Until this year. I leisurely compiled my return one slow weekend in early February and mailed it in. My check to the IRS cleared right away, my state mailed me the refund… Read more »

Bongai
Bongai
13 years ago

Then there’s the whole calculation of: Will a CPA / tax prep save me enough money to justify their cost over doing it myself?

MoneyChangesThings
MoneyChangesThings
13 years ago

There is a very cool site http://www.refundsforgood.org/
that explains how to apply for the IRS phone rebate, and suggests how to donate it. For folks who would like to contribute to good causes but haven’t been able to budget for it, sharing a windfall like this is a nice option. Unfortunately you can’t donate it directly. But it does call attention to the whole issue.

Matt
Matt
13 years ago

Oh, just to clarify what JD mentioned about me — whatever you do, don’t waste money on an installable verison of TurboTax. It only works for one single year and it’ll run you $50-60 or so.

Instead, just use TurboTax.com. There’s no software to install and it’s always up to date. In most cases, it’s much cheaper than whatever CD-ROM version is being sold.

Tim
Tim
13 years ago

Bongai’s comment (#6) is a good one, I’m actually wondering that right now. I did my taxes myself by hand (for once) and I’m tempted to have someone redo it for me, just to check what I did… I guess not, but are there any places where you can actually have the accountant run the numbers and then you can decide to go with him if he finds a bigger return than you? Like, you go there and say “I found that, can you beat it and are you ready to bet your time?” Also, does anyone know where you… Read more »

Don
Don
13 years ago

I’ll one up Matt’s comment on TurboTax – this will be the first year in almost ten that I don’t use it. Why? Because Intuit’s predatory pricing has finally pushed me over the edge. Since I have an S Corp I have to file for as well, to use their product I would need to buy a separate application for that (their highfalutin personal one will do sole props but not S corp), pay for the state filing AND the main app. And that doesn’t include any online filing. A few minutes in Staples and I found that Tax Cut,… Read more »

anonymous..
anonymous..
13 years ago

i’ve used turbo tax for the past 3 years since my taxes aren’t too complicated.. i try to do it as quickly as possible too (early march at the latest)

best part about e-filing is that you get your refund through direct deposit after a week or two at the most

Jan Dillaha
Jan Dillaha
13 years ago

Bongai….As a CPA who works in the industry, I know that it is a value consideration. Some of us (the good ones) look for ways to improve your financial life beyond just putting your numbers in the right boxes on the forms. We look for things other tax prep people don’t. This year we found a client who was being over charged for real estate taxes more than $1000 per year. We saw the another client overcharged for homeowners insurance by about $800 per year. In addition to those things we work with clients to get the other tasks done… Read more »

Bongai
Bongai
13 years ago

Jan Dillaha, I agree completely. When I just had a W2 and a 1040-ez to worry about I would always do my taxes myself. Now, with a house, rental property, marriage, LLC with three DBAs, IRA deductions, plus W2 and K1 from the “day job”, it’s a lot of work. I could do it all myself, but my time is wasted doing our taxes myself. I’ll gladly pay a CPA to do it so I can spend my time doing the stuff I know how to do well. I’m beyond using a tax prep service I think. My CPA does… Read more »

donny
donny
13 years ago

Turbo Tax baybee! Thanks to whom ever for the TurboTax.com tip, I’ll be doing that next year. 😉

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