Five tips you may be forgetting in your tax rush
Here's how Americans can some time and get great tax deductions before April 15 despite government tax delays.
NEW YORK (MainStreet) — Calculators are humming and pencils are sharpened, all in anticipation of that annual exercise in angst and anxiety — filing your tax returns.
Last year more than 148 million federal tax returns were filed, according to the Internal Revenue Service. That’s up 2.1% from 2011.
In addition, the IRS’ website logged more than 340 million visits last year, up 17% from 2011, as Americans struggled to keep up with changes in the U.S. tax code.
Expect that number to climb this year, as the fiscal cliff negotiations that went right up to Jan. 1 meant the IRS didn’t even start accepting federal tax returns until Jan. 30.
How can Americans save some time and still get great tax deductions before April 15?
Michael Gutter, an associate business and finances professor at the University of Florida, offers up a few overlooked but highly effective tax tips for Americans looking to save time and money:
Get free help. If you earn less than $51,000 per year, you likely qualify for volunteer income tax assistance. It’s free and reliable. Find out if you qualify here.
Here is how the IRS describes the VITA program:
IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals in local communities. They can inform taxpayers about special tax credits for which they may qualify, such as the Earned Income Tax Credit, Child Tax Credit and Credit for the Elderly or the Disabled. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations.
Tax credit for kids. The tax code allows plenty of good deductions for parents with children — even kids in college. The IRS has a good summary of the Child Tax Credit here.
Direct to savings. Gutter advises using IRS Form 8888 to have your tax refund sent right to your bank savings account. That protects you from making “impulse purchases.” He also advises filing your tax returns as soon as possible if you anticipate a refund. That way your money accrues more interest.
Take a mulligan. Amend previous years’ tax returns to grab deductions or tax credits you missed on the first go-round. The IRS does allow “do-overs.”
Don’t forget those IRA contributions. Gutter reminds tax filers that the deadline for making tax-deductible IRA contributions from income earned in 2012 is April 15.
Thanks to the fiscal cliff near-fiasco, this year’s tax filing season is more hectic than usual. So take a page out of Gutter’s handbook and use some handy and timely tax tips that will keep more cash in your pocket — and less in Uncle Sam’s.