Beat the Clock: Time Ticking Down for Filing Taxes

Filing taxesYou can’t put it off any longer. Monday is the deadline for filing your 2010 tax return with the Internal Revenue Service.

If you haven’t started yet, you’re far from alone. Through April 8, the IRS had received 98.6 million returns out of an expected 141 million, which means more than 30 percent of taxpayers left things to the last minute.

The biggest problem with last-minute filing is the deadline pressure. That’s especially true if you’re preparing your own return. With the clock ticking, many do-it-yourselfers make mistakes that can delay their refunds, or result in overpaying or underpaying.

There are two keys to last-minute filing, according to Matt Becker, a tax partner at the Grand Rapids, Mich., office of BDO, an accounting and consulting firm. First, remember that there’s little you can do now to manage your 2010 tax situation ? all you can do is deal with the facts as they are and perhaps learn a lesson for 2011.

Second, “documentation is the key to everything,” he said. If you don’t have the receipt or form you need, the safe choice is to skip claiming a deduction. Or, file an extension to give yourself more time to track down the paperwork.

At least 10 million individuals are expected to file an extension to get six more months, according to H&R Block.

Worried that you owe taxes and you can’t pay? File your return anyway, then work out a payment plan with the IRS. Otherwise you’ll pay even more in penalties and interest. “People get so panicked,” said Kathy Pickering, executive director of the H&R Block Tax Institute. “It’s just putting unnecessary stress on themselves. The IRS is not looking to put people in jail.”

If you’re determined to power through this weekend and get your return sent in by midnight on the 18th, there are a few items to double check that can help you avoid the most common mistakes:

Choose the right filing status.

If you’re unmarried, for instance, you might automatically check off “single.” But if you’re a single parent, you can probably file as head of household and claim a higher standard deduction. In general, married people are better off filing a joint return, although in limited circumstances, such as if one spouse has very high medical expenses, it might make sense to file separately.

Double check Social Security numbers.

Transposing digits and listing one child’s Social Security number with another’s name are among the most common tax filing mistakes. Make sure you spell your kids’ names as they appear on their Social Security cards, too.

If you changed your name during the year, confirm that you informed the Social Security Administration before using your new name on your tax return.

If you live in a condominium or another type of private community, make sure you deduct only your property taxes.

Items such as, maintenance payments or homeowner association dues, which are often combined with taxes for periodic payments, don’t qualify as deductions and will lead to miscalculations.

If you had more than one job, confirm that you’ve included all of your income.

If you’re missing a W-2 form, use the details on your last pay stub to complete your return, or file an extension so you have time to contact the employer.

Claim all of the credits you’re entitled to.

You might be eligible for the earned income tax credit if you earned less than $49,999 at your job. The savers credit may apply if your income fell below $41,625 but you managed to stash away some retirement savings. And you might be able to claim the child tax credit if you earned less than $75,000. There are also credits for child and dependent care, buying a home, and making energy-efficient home improvements that can shave thousands from a tax bill.

Don’t try to double up education credits.

For each student in a household, you can choose to claim either the American Opportunity Credit or the Lifetime Learning Credit. You can take different credits for two or more students ? including adults taking classes to update job skills ? but make that clear on your return.

Check your math.

If you’re filing a paper statement or filling out forms without software assistance, make sure your calculations are correct.

Make sure you provide the correct account numbers.

Direct deposit can speed up delivery of your refund, but only if you provide the IRS with the correct bank account information.

Don’t forget to sign and date the return.

Electronic signatures are fine but paper returns must still have a John Hancock ? and both spouses must sign if you’re filing a joint return.

Don’t pay if you can file for free.

The IRS website, , has links to software from 17 different companies available for free to taxpayers who earned $58,000 or less. H&R Block, TurboTax and other software makers also provide links to free programs for simple returns on their own websites. You can also get electronic IRS forms that can be e-filed at no cost by taxpayers at all income levels.

Source: The Associated Press.