Get 7 tips to complete your income tax return and file it on time.
This is the third and final session in our Tax Boot Camp series—because Uncle Sam wants you, but he also wants your money!
Let’s review the training you recruits have already gotten from Sergeant Adams (that’s me). In the first session of Tax Boot Camp you learned how to fight for a lower tax bill using tax deductions and credits. In the second session I told you how to successfully navigate a land mine known as a tax audit.
7 Last-Minute Tips for Filing Your Tax Return
Now it’s time to conquer the enemy—you’ve come this far, so don’t turn soft on me now. If you’re ready to finally get your tax return done, this article is for you.
Here are seven last-minute tips for filing your tax return:
Tax Filing Tip #1: Don’t Procrastinate
If you haven’t already filed your taxes, you might think this tip is a little too late. But just because you didn’t get your taxes done early doesn’t mean you have to take it down to the wire. Though you have three extra days to file your taxes this year, there’s nothing more stressful than putting it off until the very last minute. Your tax return must be filed electronically or postmarked no later than midnight on April 18th. Be sure to give yourself plenty of time because rushing to meet the deadline only increases the chance that you’ll forget something important and make a costly mistake.
Tax-Filing Tip #2: Gather All the Right Paperwork
Whether you do your taxes yourself or hire an accountant, you have to round up all your data and tax forms. It’s also helpful to have last year’s tax return handy so you or your tax pro can verify how certain amounts of income or losses were treated. If you have dependents or file jointly with a spouse, you’ll also need to have everyone’s Social Security numbers at your fingertips.
Here’s a list of the various documents that you may need to collect:
W-2 forms for wages from employers.
Various 1099 forms for income from different sources, like non-employee compensation, investments, bank interest, dividends, unemployment benefits, real estate sales, retirement distributions, Health Savings Account distributions, royalties, prizes, and debt cancellation.
Records of other income that may not be reported on a 1099 form, like jury duty pay, gambling proceeds, and rental income. Remember that most income is taxable, even if you didn’t receive a tax form for it. When in doubt, refer to IRS Publication 525, Taxable and Nontaxable Income.
Tax-Filing Tip #3: Gather Expense Records
In addition to receiving tax forms for your income, you should also receive tax forms for certain types of expenses. You need to gather those forms and any receipts or records that can support tax deductions and credits that you may be eligible for. Here are a few records that you may need:
1098 forms for expenses like student loan interest, mortgage interest, mortgage insurance premiums, and loan points.
5498 forms for contributions you made to an IRA or a Health Savings Account.
Receipts for tax credits that you might qualify for if you made energy-efficient improvements to your home, purchased a home, bought a hybrid vehicle, or had education expenses, for instance.
Receipts for tax deductions like medical expenses, charitable donations, state taxes, work-related expenses, tuition and fees, and moving expenses.
In Tax Boot Camp session #2, we discussed how tax deductions that are unusually large for your amount of income can be a red flag for the IRS. So, if you don’t have receipts to support your tax-related expenses, be sure to keep a copy of your bank or credit card statements for documentation.
Tax-Filing Tip #4: Decide Whether You Can Itemize
As we discussed in Tax Boot Camp session #1, keeping track of your tax-deductible expenses is a powerful way to lower your taxes. It’s completely legal to reduce your tax bill as much as you can by taking advantage of every single tax benefit that you qualify for.
If the total amount of your deductions exceeds the standard deduction for your filing status, you’ll come out ahead by itemizing your deductions on Schedule A. Here are the standard deduction amounts that your total deductions must exceed in order to make it worthwhile to itemize for 2010:
Single or Married Filing Separately: $5,700
Head of Household: $8,400
Married Filing Jointly or Qualifying Widow(er): $11,400
Tax-Filing Tip #5: Use the IRS website
If you have questions there’s a ton of information at irs.gov. Filing your return electronically through the IRS website is free, safe, and the fastest way to get a tax refund. The IRS offers the following four electronic options:
E-file through a tax professional. If you hire a tax pro to do your return, they typically e-file your return to the IRS.
Use Free File. If you have adjusted gross income that’s $58,000 or less, you qualify to use a special free service on the IRS site called Free File. Free File gives you access to commercial tax software without having to buy it.
You’ll find links to more information and videos about filing your taxes electronically at the bottom of this post.
Tax-Filing Tip #6: Don’t Panic
If you realize that you won’t have time to complete your tax return by the April 18 deadline, take a deep breath. You can request a six-month extension by submitting Form 4868 using e-file or mailing in the paper form. However, an extension does not give you additional time to pay tax that you owe. The IRS expects your money on time or you’ll be subject to interest and penalties.
If you don’t have the money to pay your taxes, you should still file your return (or an extension) and pay as much as you can. Contact the IRS by phone or go to irs.gov to find out what payment options are available.
Tax-Filing Tip #7: Hire a professional
As you’ve heard me say before, sometimes you’re much better off having a tax pro do your return because they can save you time and money. That’s certainly the case if you’re self-employed or feel unsure that you’re taking advantage of every tax deduction and credit that you can. When in doubt, it’s best to consult a tax professional or, at a minimum, use tax software to guide you through the filing process.
Congratulations! You just made it through Tax Boot Camp.
Get a Travel Hacking Trial
TravelHacking.org is a new service that helps you earn Frequent Flier Miles to travel anywhere in the world for nearly free! For as little as $15 a month, the service includes a guarantee that you’ll earn at least four plane tickets a year. Visit TravelHacking.org/moneygirl and explore the clever ways to make travel more affordable with a 14-day trial that’s just $1.
Download FREE chapters of Money Girl’s Smart Moves to Grow Rich
If you like the tips you got in this article and want to take more control of your money, I think you’ll like my book, Money Girl’s Smart Moves to Grow Rich. The book tells you what you need to know about money without bogging you down with what you don’t. It’s available at your favorite book store in print or as an e-book for your Kindle, Nook, iPad, PC, Mac, or smart phone. Get two free chapters here.
Get More Money Girl!
IRS E-File for Individuals
E-File VIDEO: English | Spanish | ASL
IRS Free File
Free File VIDEO: English | Spanish | ASL
Online Payment Agreement Application
Electronic payment options
Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return
Image courtesy of Shutterstock