Filing your tax returns: Get last minute tips

Filing your tax returns: Get last minute tips

The deadline for filing your taxes is Tuesday, April 17. If you're confused about filling out your tax forms or you're not sure what deductions you're allowed, here are a few extra tips to lower your taxes and save you money.

Last Minute Advice

If you haven't contributed to your retirement account, you have until April 17 to open and/or fund a traditional or Roth IRA. You can contribute up to $5,000, or $6,000 if you're over 50.

If you can't finish your return on time, make sure you file Form 4868 by April 17. It will give you a six-month extension of the filing deadline until October 15, 2012.

Filing electronically works best if you expect a tax refund. The IRS processes electronic returns faster than paper ones, so you can expect to get your refund three to six weeks earlier.

Saving You Money

If you are self-employed, you can deduct the cost of health insurance for yourself and your family members. And keep track of car repair bills and how much you spent on gas for business purposes.

If you're self-employed or employed by a company and use your own car on the job, you can take a deduction for your business travel. Standard mileage rate for business use of a vehicle is 51 cents a mile from January 1 through June 30, and 55.5 cents from July 1 through December 31. And, it's 19 cents a mile driven for medical or moving purposes for the first six months of 2011, and 23.5 cents for the second half of the year.

If you purchased a computer or a cell phone that you use for your job, you might be able to claim the business use of the device as a tax deduction. And, you can depreciate the costs over the expected decline in value of the phone or computer over time.

Charitable Contributions

The IRS says for the most part, charitable contributions are only deductible if they're given to a U.S. based nonprofit, not foreign groups that are not recognized as a charitable organization.

Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.

For contributions of $250 or more, including cash and property, you must have a receipt from the qualified organization.

Check the IRS website for a list of qualified organizations: www.irs.gov/app/pub-78.

Job Hunting

Many unemployed people forget about deductions they're entitled to at tax time.

Keep track of your job-search expenses. If you looked for a position in the same line of work in 2011, you can deduct job-hunting costs as miscellaneous expenses if you itemize, but the total itemized deductions must exceed 2 percent of your adjusted gross income. However, you cannot deduct if you looked for a job in a new occupation or if there was a substantial break between your last job and your new search.

Job-hunting expenses incurred while looking for your first job don't qualify.

Deductible job-search costs include food, transportation and lodging (if your search takes you away from home overnight), along with expenses of printing resumes, business cards, and postage.

Overlooked Deductions

If you pay your childcare bills through a reimbursement account at work you can still qualify for a child care credit. If you use up the maximum through a plan at work but spend even more for work-related childcare, you can claim the credit on as much as $1,000 of additional expenses. That would cut your tax bill by at least $200.

You can claim your parents as dependents on your returns if you're responsible for more than half of their financial support.

If you paid someone to prepare your taxes last year, you can deduct those fees on your taxes this year.

If you purchased a home this year, you can fully deduct points in the year. If you refinanced your home, you can deduct any points you paid over the life of the loan.

The American Opportunity Credit is a tax credit of up to $2,500 for college tuition and related expenses paid during the year. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less ($160,000 or less for married couples filing a joint return).

Common Mistakes

Keep track of charitable giving. You might need a receipt to prove it. Contributions over $250 require a letter from the charity to substantiate the deduction.

Make sure to include your W-2 when you spend in your taxes. Many taxpayers actually forget to do this and this simple error could cost you in additional taxes plus interest as it could take a long time to process. Don't spend the time and effort to do your taxes only to find that you forgot to send in the paperwork.

Don't deduct other people's expenses you paid for on your own returns. Even if you're a nice person, the IRS doesn't really care. You can't deduct any expenses for another taxpayer, even if it's for a spouse who is filing separately.

Avoiding an Audit

Report all of your income. IRS computers cross check your W-2s and 1099s to make sure your claiming all of your income.

Pay attention to details. Math errors or incorrect entries of Social Security numbers or tax ID numbers can easily trigger an inquiry into your return.

Avoid deductions that are audit red flags, including excessive write-offs, large charitable contributions, and filing for a home-office deduction.

Anyone can get free advice from any IRS office, but the lines can be extremely long as it gets closer to mid-April. The Volunteer Income Tax Assistance (VITA) offers free tax help for those making less than $50,000 a year, check the IRS website to find a site near you.

And if you earn less than $57,000 a year, you can e-file your taxes for free through IRS approved websites from several companies including H&R Block, FileYourTaxes.com, Turbo Tax and TaxSlayer.

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