Are you one of the millions of Americans who will wait until Tuesday, April 17, 2012 this year to complete your tax returns?
If you STILL haven’t filed, make sure you run through these steps to ensure everything is in order.
Step 1: Don’t forget important numbers
Whether you file an electronic or paper return, the numbers to check most carefully on the tax return are the identification numbers — Social Security numbers — for each person listed. This includes the taxpayer, spouse, dependents and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.
Taxpayers filing paper returns should also double-check that they have correctly figured the refund or balance due and have used the right figure from the tax table.
Step 2: Don’t forget to sign the returns
Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.
People sending a payment should make the check out to “United States Treasury” and should enclose it with, but not attach it to the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the taxpayer’s Social Security number, daytime phone number, the tax year and the type of form filed.
By the April due date, taxpayers should either file a return or request an extension of time to file (Form 4868). Remember, the extension of time to file is not an extension of time to pay.
Forms and publications and helpful information on a variety of tax subjects are available around the clock on the IRS Web site at IRS.gov.
Step 3: Don’t ignore the Alternative Minimum Tax (AMT)
AMT is complex enough to make even a tax pro’s head spin. If you don’t know what it is or if it applies to you, do some digging. The IRS will flag an AMT that’s MIA, and you could get smacked with the taxes you owe plus penalties and interest if you don’t pay your tab on time. CPAs are prepared to discuss in more detail if necessary on this topic.
Step 4: Don’t leave any money on the table
Some common tax return errors actually work in your favor, not Uncle Sam’s. Many people assume that itemizing your deductions is the best way to reduce your tax bill, but don’t automatically dismiss the standard deduction. If your itemized deductions aren’t even close (e.g., if your home is paid off or you live in a state that doesn’t charge income tax), then going with the standard deduction will be better for your bottom line.
Step 5: Don’t mess up state tax refunds
Don’t make the mistake many taxpayers do by blindly reporting prior-year state tax deductions as income in the current year. Even if the state taxing authorities notified you of your refund, they have no idea whether that refund is taxable. If you didn’t receive a benefit for deducting those taxes last year, your refund may be partially or completely untaxable. For example, you may have used the standard deduction for federal purposes and itemized on your state return, or used the sales tax tables rather than state taxes paid in the prior year. If that’s the case, you might be overstating your taxable income by simply reporting your entire state tax refund as current-year income.
Step 6: Don’t overlook carry-forwards
Sometimes lemons (like a stock you own that tanked) can be turned into lemonade (a tax deduction!). And in many cases, you can carry forward losses from prior years to this year’s tax return — so don’t forget about them. (As if they were in danger of slipping your mind this year.)
Step 7: Go to the IRS Web site
Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.
Useful IRS Links That Can Help Taxpayers: