Your Money Matters: Down to the wire tax tips

Cliff Morgan

Cliff’s Tips:

File timely.
This year, Tax Day falls on April 15. It is not being pushed back because of the sequestration and it does not fall on a holiday this year. Your return is considered timely filed if it’s postmarked or electronically submitted on April 15, 2014.

File even if you can’t pay.
Don’t make a bad situation worse by racking up extra penalties: the IRS can impose a failure to file penalty for returns that aren’t filed timely. So file even if you can’t pay. You can enter into an agreement to pay what you owe over time (or try one of these strategies).

Put some money into your individual retirement account (IRA).
You still have time to contribute to your IRA and make it count for the 2013 tax year. You can claim a tax deduction – above the line, so you don’t need to itemize in order to take the deduction – for contributions made to your traditional IRA (but not a Roth IRA). You can make those deductions all the way up to April 15; be sure to tell your financial advisor that the contribution is for 2013 so that it’s coded properly. For 2013, you can contribute up to $5,500 or the amount of your taxable compensation (whichever is smaller) to your traditional and Roth IRAs. And don’t forget about a spousal IRA: if you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation.

Pay attention to the details.
Many schedules and forms have additional questions and check-boxes that are easy to overlook. For example, if you have interest and dividends of more than $1,500 to report on a Schedule B, you have to answer the questions at Part III even if you don’t have any foreign interests. Be sure to read to the bottom of each form and if you’re using tax software, use the long form interview (it only takes a few more minutes).

Don’t forget about mileage and other “small” things.
Numbers add up. When you’re double-checking your return one more time (see the next tip), don’t forget to include deductions for mileage (for business, charity, medical and moving), donations to Goodwill and other relatively small numbers. It’s easy to remember the big ticket items but keep in mind that, if you itemize, those dollars can add up quickly.

Double-check your return.
Even if you file electronically or use a paid tax preparer, look your return over before you sign it to make sure that you don’t have silly errors that could slow down processing times. Transposed numbers, names spelled wrong and bad math are all errors that taxpayers make all of the time – but you could catch them before you submit those returns.

Mail your forms to the right place.
You can find a listing “where to file addresses” for individual tax forms, organized by state, on the IRS website. If you’re using a private delivery service, be aware that those addresses are different and you can find a list of those delivery addresses on the IRS website.

Don’t leave money on the table.
According to the IRS, almost $1 billion is available to thousands of taxpayers for the 2009 tax year. If you didn’t file in 2009 but think you might be subject to a refund, you have until April 15, 2014 to claim it.

File electronically.
Returns that are filed electronically tend to be processed faster and have fewer mistakes (no pesky math errors). Bonus? No waiting in line at the Post Office.

Consider filing for extension.
If you’re not ready to file your taxes, you can file for an automatic six month extension using a form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return (downloads as a pdf). Contrary to popular belief, filing for extension doesn’t make you an audit target – and may, in fact, do just the opposite since a correct, complete return filed on extension is always better than a sloppy, flawed return filed on April 15. Don’t forget, however, that the form allows an extension of the time to file, not the time to pay.

For more information:

www.strategicwealthinc.com

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