Last-Minute Tax Preparation Tips

Not everyone has an accountant to ensure that they aren’t paying too much in taxes. In fact, more and more Americans are choosing to prepare their own taxes. They also have a tendency to wait until the last minute to do so. Recently released survey results from Rasmussen Reports reveal that just 51% of Americans had filed with less than a month to go before the April 15 deadline. So, for those of you who haven’t filed yet, here is some last-minute tax preparation advice.

There’s actually still time to reduce your tax bill through deductions and credits. Taking the standard deduction is far easier, but some are letting money slip through their fingers by not itemizing. Deductions for mortgage interest and charitable donations are well known, but state and local sales taxes are also deductible, as are student loan interest, moving expenses to take a first job, new points on home refinancing, and contributions to a traditional IRA (more on this below).

Keep in mind, though, that large itemized deductions can draw the attention of the IRS and make you more likely to get flagged for an audit. This does not mean you should not take legitimate deductions. Just be sure to keep all of your documentation in case of an audit. The IRS also pays special attention to professionals with high-income potential, high charitable deductions, large reported gambling losses, and those using the adoption tax credit, which can be worth up to $12,970 for 2013 taxes.

While preparing your taxes, keep in mind that if you didn’t contribute as much in 2013 as you wanted to your retirement savings account, there’s still time. You have until the date you file to contribute to a traditional IRA for the previous tax year.

A small portion of those who haven’t filed are planning to get an extension, but doing so doesn’t help if you owe the government money. You need to file for an extension no later than April 15, and all this does is push the deadline to file a tax return to October 15. However, a filing extension does not give you more time to pay. Any taxes owed are still due by Tax Day, and payments made after that are subject to penalties and interest.

However, the government does allow 3 years to amend tax returns. So if you end up overpaying to avoid penalties and fees, you have some time to file to get your money back.

Have a question about how to handle your own financial challenges? Send it to us at moneymatters@pharmacytimes.com.