It's Tax Time -
April 15th, your favorite time of year? Probably not. But here are some things to hopefully help make it a little easier.
Note: The tips found on this site do not act as a replacement for professional advice or tax preparation, although they certainly can be used to assist you in being less frustrated as you sort though all the scattered receipts, endless papers and complicated forms.
Be Careful and Thorough.
Avoid common problems like illegible handwriting, mathematical errors, transposing of numbers, and missing signature. These little oversights can really end up costing you time, as well as money if you are slapped with penalties.
Deductions are anything that will lower your income, bringing you to a lower tax bracket.
Credits are even more valuable than deductions. They lower your tax bill dollar for dollar.
Did you work but not earn very much in 2011? You might be able to cash in on the Earned Income Tax Credit (EITC). The EITC is a refundable tax credit, meaning it could lead to a tax refund even if you didn't have federal income tax withheld. For more information, visit irs.gov.
Your house is a giant tax deduction. Remember to deduct your property taxes, your mortgage interest and points you paid when purchasing the house.
The tuition and fees deduction covers up to $4,000 that you pay for yourself, your spouse or a dependent, and you don't have to itemize to qualify.
Are you a teacher? If so, you'll want to take advantage of the educator expense deduction that allows you to deduct the cost of books, supplies, equipment, and software used in the classroom - up to $250.
Do you pay for child care? Look into using these expenses to minimize your tax bill. Through the Child and Dependent Care credit the IRS allows you to recoup a percentage (up to 35 percent) of these costs (up to $6,000 for two individuals although this may change year-to-year).
First-Job Moving Expenses. While job-hunting expenses are not deductible, some moving expenses are. If you moved more than 50 miles for a new job, you can deduct the cost of getting yourself and your household items to the new area, including every mile (plus parking fees and tolls) for driving your own car. For more information, see Topic 445.
If you have the money to do so, use up your gift exclusion. Each year, you are allowed to give thousands to someone else tax-free. Find out what this year's maximum allowance is because if you give more than the allowed deductible amount, then you are subject to what is known as the gift tax. So, best thing to do, find out the details and if you were planning on giving someone a very generous gift, don’t forget to do it.
Any document that you send to the IRS, you should keep a copy of. Use certified mail for all important correspondence to the IRS. Don’t forget to keep your records in good shape so that you can find answers to any IRS questions about your return.
Always Double Check
Once you've finished the return, print a copy and go over it line by line.
It's pretty unlikely you'll find any math errors, but this gives you a chance to confirm that you've entered information correctly. It also gives you one more chance to spot anything you may have missed. Reviewing your return allows you to correct any errors before filing, potentially saving you money or headaches with the IRS.
- Most importantly, check your math.
- Double-check that your Social Security number has been correctly written on the return. If you are married, check that your spouse’s Social Security number is properly listed, whether filing a joint or separate return.
- Include your Social Security number on each page of the return so that if a page is misplaced by the IRS, it can be reattached.
- Check that you have claimed all of your dependents, such as elderly parents who may not live with you.
- Include on the return the Social Security numbers for all dependents including those born during the year.
- If you are single and have a dependent who lives with you, check to see if you qualify for the lower tax rates available to a head of household or surviving spouse.
- If you are married, check to see if filing separate returns rather than a joint return is more beneficial.
- Be sure to sign your check and write your Social Security number, the form number and the tax year on the face of any checks made out to the IRS.
Tax Terms Glossary
Confused by tax terms and lingo? Get plain-English definitions that make tax return terminology less, well, taxing.