Countdown to April 15: Last-Minute Tax-Time Check List

April 15th is right around the corner, which means it’s time to run down your tax-time check list to make sure you don’t forget anything before it’s time to file. Of course, it’s impossible to cover everything you could forget, but we will certainly try to give you a good check list to help you remember the basics of filing your taxes.

#1: The Basics

There are some basics that you definitely don’t want to forget about when filing your taxes. Here is a short list of what you want to think about when filing out your tax form:

• Social Security numbers: You definitely don’t want to leave off Social Security numbers. When filing your return, make sure that each person you’re claiming is legitimate and the filing process isn’t slowed or audited.
• Your income documents: Whether you need to include a W-2, 1099 or various schedules to prove your income, don’t forget to pull those together to make the filing process easier.
• Taxes you’ve already paid: Whether taxes were automatically deducted from your paycheck, you made quarterly payments or even paid in advance from your refund in 2008, this information should be noted so that you don’t overpay this year.

#2: Standard Deduction vs. Itemized Deductions

Deciding between these two tax deductions can make a big difference when filing your tax forms this year. Depending on which you choose, you could be missing out on some money by forgoing deductions you are owed.

The standard deduction is the amount that the IRS automatically gives a taxpayer to help reduce the amount of IRS tax they must pay. On the other hand, the itemized deduction allows you to choose among a list of deductions you may qualify for that could increase the amount of your total deductions for your federal tax.

To determine which you should take, here’s a look at the amounts you would receive in standard deductions:

• Single: $5,700
• Head of Household: $8,350
• Married Filing Joint: $11,400
• Married Filing Separately: $5,700

If you realize that your itemized deductions add up to more than the amount above for the category you qualify for then you need to take the itemized route.

#3: Other Deductions You Don’t Want to Forget

In addition to your standard or itemized deductions, there are additional deductions that are taken to reduce your taxable income and increased your chances of a tax refund. For instance, you may consider the home mortgage interest tax deduction that is available to homeowners who are paying interest on their mortgage every year.

Another deduction you don’t want to forget this year is the Haitian relief effort deduction. It falls into the category of the itemized deduction and cannot be used if you are taking the standard deduction. There are plenty of other tax deductions you probably forgot as well as common deductions you don’t want to miss, so make sure to run down the list before filing.

#4: Credits You Don’t Want to Forget

Also, on your check list for tax filing should be the credits you may be able to take advantage of. A couple of big ones for this year include:

• Making work pay tax credit: This credit is available for 2009 and 2010 tax years only and allows you to receive up to $400. If you didn’t have the amount automatically added to you check in the amount of $33 then you can claim it at year-end for a total of $400.
• Home buyer tax credit: The home buyer tax credit offers first-time homeowners up to $8,000 and homeowners who are upgrading their homes up to $6,500 for the 2009 and 2010 tax years. This is one you don’t want to miss.

There are other great tax credits you shouldn’t miss, so make sure to take a look before filing.

What to Do if You Can’t Pay or File on Time

In this tough economy, it could be tough to make sure that you’re able to file or pay your taxes on time. However, the IRS makes accommodations for those who are having trouble in this area.

If you think you may not be able to file on time, you may be able to get an extension of time to file your tax return. However, there are special guidelines to consider before taking this route.

Also, if you think you won’t be able to pay on time, by speaking directly with an IRS representative, you could possibly receive an extension to pay. However, all of this must be taken care of before April 15th or you may face penalties:

• Failure to file penalty: This penalty can be as much as 5 percent of the balance due per month with a max of 25 percent of the taxes owed.
• Failure to pay penalty: You could owe more than 10 percent of your final tax liability – or $1,000 – whichever is more. This penalty is usually 0.5 percent per month.

But that’s not all. In addition to the above penalties, you could owe as much as 8 percent in interest for the time that the balance wasn’t paid.

Proper tax preparation is important for you when filing both your federal or state tax return. Both are due on time and must be filed appropriately so that if you’re audited you won’t suffer any repercussions.

Now that the time is coming to a close, you want to make that everything is perfect on your tax return so that you can get it filed and enjoy your refund (if you get one this year). Otherwise, your tax preparation period could be a long and challenging one.