While it may be too late for some year-end tax tips, there are still some things you can do to reduce what Uncle Sam will be looking to collect from your hard earned income this year.
As you know, April 15th is the dreaded deadline to file your taxes. It shouldn’t be a surprise; it comes the same time every year.
Despite the knowledge that preparing my tax return is inevitable, I too am among those who procrastinate until the last week. I usually wait until just before penalties are assessed to finally prepare my tax return.
Ways To Reduce Adjusted Income
The key to lowering your tax liability is to reduce your adjusted income to its lowest possible amount.
One of the best ways to do this is to make contributions to an IRA. The beauty of IRA’s is you can pay into an IRA right up until tax day and still deduct the amount from last year’s income.
Those 10 valuable tax tips above also include ideas like paying into a health savings account or claiming a tax credit for a new home.
For some, you may still be eligible for a stimulus rebate. Also, things like deductible job search expenses can easily be overlooked.
E-Filing Your Taxes
Last-minute tax filers often make mistakes that greatly affect the accuracy of their returns. Being rushed to complete calculations often leads to errors. In fact, there are 9 common errors made on tax returns each year.
Such is why you might want to heed the IRS’s number one piece of advice for last-minute tax filers: consider E-filing instead of mailing in the traditional paper tax forms.
The IRS provides great sources for free E-filing online.
Using Tax Return Packages
If your return is more complex (for example, you have many itemized returns or you operate a small business), then consider using a tax software kit.
Some of the more reputable tax preparation packages are:
Tax return software makes preparation much easier because you plug in the information the program requests, and all of the calculations then take place automatically. Plus, the cost of tax preparation software is deductible on next year’s taxes as well.
You do need to be careful to include all the information the software requires in order to complete an accurate return. As seen in the following video, Tim Geithner (U.S. Treasury Secretary) made some mistakes when using Turbo Tax, and he was asked to explain his tax return errors in front of members of Congress:
Need To File An Extension?
Come the deadline on April 15th, there’s no need to panic if you just didn’t get it all done in time.
It’s a simple matter to file for an extension. You can even download the necessary forms online.
Just be sure that you make any payment that may be due, as there will be penalties assessed for late payment.
