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Tax Tips for the Last Minute Filer

Apr 09, 2013 09:28AM ● By tina

With less than a week before the April 15 filing deadline, there's still time and no need to panic

Sponsored by Thomas Stephen & Company, LLP - Certified Public Accountants

Written by Barrett Stutzman, Tax Supervisor

We’re now less than a week from the April 15th individual income tax filing deadline.  If you’ve yet to file there’s no need to panic just yet.  We’re here to help.  Use these last minute tips and tricks; you’ll be glad you did.

1.)   Take advantage of the IRA contribution deduction.

Taxpayers have until April 15th, 2013 to make an IRA contribution and elect to claim the deduction on their 2012 tax returns. 

2.)   File electronically and avoid worrying about the dreaded postmark date.

Avoid last-minute trips to the post office and the risk of your return getting lost in the mail.  Additionally it saves time and money.  If you have a refund coming, e-filing is the fastest way to get it. 

3.)   Keep records of charitable activity.

Cash donations to charities may seem obvious but you can also deduct things like mileage driving from charity to charity or expenses related to singing in your local church choir. 

4.)   Avoid obvious audit red flags.

Increased 1099 reporting rules and improved technology at the IRS have made it easier than ever for problems on your tax return to stand out.  It’s also easy to compare you against taxpayers in your bracket.  So if you earn $50,000 to $100,000 annually and claim to give $20,000 a year to charity, you can expect an audit since the "average contribution" in this income bracket is just $2,600. In addition, one of the most abused and misunderstood deductions surrounds writing off the costs of a home office.   The IRS requires the space to be used exclusively and solely for business purposes so don’t risk embellishment.

5.)   Make sure your children’s returns get filed.

If your dependents received a W-2 during the year, a separate tax return should be filed.  However, that doesn’t mean you can’t still claim them as a dependent on your return, they just need to specify this when filing their own 1040.

Additionally, if your children received investment income in their name during the tax year, you should familiarize yourself with the “kiddie tax” rules.  Generally when a child who is under 18, or a full-time student under age 24, had greater than $1,900 in investment income AND a tax rate lower than their parents’, investment income will be taxed at the parents’ rate.

6.)   Ask for an extension.

The IRS offers an automatic six-month extension of time to file your 1040 if you can’t have it ready by April 15th.  However this is only an extension of time to file your return, not pay any liability.  If at the time of the extension, your withholding and estimated payments do not meet the lesser of 90% of current year tax liability, or 110% of last year’s tax liability, the difference should be paid in order to avoid penalties.

If the reason for your extension is simply because you don’t have the money to pay at this time, there are options for you too.  The IRS offers payment plans but interest rates are generally higher than those you may be able to get on a small loan from a bank or even credit card company.  Choosing one of these alternatives may be less expensive in the long run. 

7.)   Hire a tax professional.

If all this sounds like too much to handle, it may be worth talking to a tax professional.  If you’re looking for assistance with your individual or business income tax return, Thomas Stephen & Company is a full service accounting firm with offices in Dallas and Southlake.  Our accountants and advisors have established a reputation for providing clients timely, insightful advice and a better understanding of their businesses across a broad spectrum of industries.  For more information, contact our professionals in one of the offices below. 

Southlake

Susan Todd: (817) 552-3100

Dallas

Barrett Stutzman: (214)253-2059

Thomas Stephen: (214)824-2640