As April 15 gets closer, many Americans still haven’t filed their taxes. You may be one of them. As life requires us to do so much in so little time, it is understandable. If you are getting around to your taxes now, here are some things you may want to think about.
Consider turning to the pros. Having your return professionally prepared may be well worth the fee. A good tax professional knows the fundamentals and nuances of the IRC in a way many taxpayers never will. While there are some outstanding software programs that will help you prepare your 1040 (the pros use them too), they don’t have the perspective of a seasoned CPA or tax preparer. If the software presents you with a question you can’t answer or a troubling ambiguity – and it may – you are going to want that perspective.
It is always wise to check out a tax professional. The IRS website (irs.gov) offers a page called Points to Keep in Mind When Choosing a Tax Preparer, which may be instructive.
If you don’t turn to the pros, be meticulous. Get all your forms together – all the ones that were sent to you in January. Double-check that you have all of them. Triple-check that you haven’t left out any forms linked to stray IRAs or other investment accounts that aren’t top of mind. Review the deductions and credits the IRS offers you – if you have children, a dependent living at home, a student or two in college, or find yourself in one of the lower tax brackets, you may be surprised at your eligibility.
Stay safe as you file. What if the IRS emails you and requests your taxpayer ID number or other private information? That isn’t the IRS at all – that is a con. If the IRS wants to contact a taxpayer, the first move is never made by email, text message or social media post. That is IRS policy.
Taxpayer ID theft tends to lessen as April 15 approaches. Thieves know that many Americans put off filing their taxes until spring, so they try to steal EINs, SSNs and ITINs early so that they can get a bogus refund before late March or early April. The threat persists year-round, though – so don’t fall prey to mysterious, purportedly “official” emails.
You can file your 1040 form directly at the IRS website if you choose, using the IRS Free File Program (which is indeed free) at irs.gov. The agency also offers free tax prep help to older and lower-income filers through its Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) programs – there is likely a location near you, and you can find it by calling 1-800-906-9887 (VITA) or 1-888-227-7669 (TCE). Most of the locations offering the TCE program are operated by the AARP Foundation.
Look ahead & ask yourself if you want a refund next year. Most Americans get federal tax refunds – in fact, the IRS expects about 75% of us to receive one this year. That’s not necessarily a good thing. Your refund essentially represents an interest-free short-term loan that you have made to the federal government. A withholding adjustment (Form W-4) may help you bring more money home each month and avoid a federal tax refund next year.
If you are in line for a refund this year, you can track it at irs.gov – specifically, at the Where’s My Refund? page. It is updated daily (not hourly), usually overnight. If you track your refund’s status on an evening or a weekend, you are doing the irs.gov server a big favor. For the record, the IRS says around 90% of online filers get their refunds within 21 days. The average refund last year was $2,803.
Reach for Forms 4868 or 1040X if you need them. Many taxpayers will file extensions via Form 4868 by April 15. The Application for Automatic Extension of Time, as it is officially called, gives you until October 15 to get your paperwork in to the IRS (assuming you aren’t out of the country; see the form for more details). It doesn’t give you six additional months to pay your federal taxes, however – you will still have to calculate your estimate of total tax liability for 2012 and send in whatever you owe to the federal government. If you fail to claim a big credit or deduction or underreport taxable income for 2012, you may need to amend your return using Form 1040X.5