5 Last-Minute Tax Tips You Shouldn't Forget
With just 10 days to go before your tax returns are due, procrastinating taxpayers are truly coming down to the last minute. But just because you're late to the game doesn't mean you should pay even a penny more in tax than you absolutely need to.
As a guide for late filers everywhere, here are five absolute last-minute things to keep in mind as you scurry to meet the April 15 deadline.
1. Attach only what you need to attach to your return.
Usually, the only forms you'll attach with your return are W-2s from your work, and other forms that include amounts of tax that were withheld. Most other supporting documentation shouldn't be attached, although you should make sure you retain them in your own records in case you're audited.
2. Should you itemize or take the standard deduction?
Once you've calculated your total income, most taxpayers are allowed to take either a standard deduction, or to itemize specific deductible items. What's important to remember is that you have a choice between those two options, and you can pick whichever one will save you the most. Making the wrong choice can cost you.
Most taxpayers who make this mistake take the standard deduction rather than itemizing, figuring that the standard deduction requires less work and has less audit risk. But if you've paid mortgage interest, made charitable donations, incurred real estate or state income taxes, or suffered casualty losses or extensive medical expenses during the year, knowing what you'd be entitled to if you itemized is crucial to saving as much as you can.
3. For paper returns, use certified mail to prove when you sent them.
If you wait until the last minute to file, being able to show that you filed on time can be important later on if something happens to your return in the mail. When you use certified mail, you'll get a receipt with your postmark date on it, and the IRS treats that as proof of your filing as of that date -- even if the IRS doesn't receive the return until days later. Registered mail also works for the IRS, but it's much more expensive. Of course, filing electronically avoids any chance of a paper return getting lost in the mail.
4. Think about 2013 estimated taxes, as well.
If you found that you didn't have enough tax withheld from your paycheck last year to cover your tax bill, you may need to pay estimated taxes in 2013 to avoid penalties. If so, the first quarterly installment is due on the same date as your 2012 return -- April 15. Use Form 1040-ES to calculate and pay your taxes.
5. Don't forget that IRA!
If you're still hunting for deductions, the easiest way to cut your tax bill is to open a traditional IRA. If you qualify, you can deduct up to $5,000 from your 2012 taxes -- $6,000 if you're 50 or older. But don't wait until the absolute last minute to open an account, as it will take time to get an account set up. Learn more about the benefits of IRAs here.
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