And down the stretch they come!
No, it’s not the thoroughbreds charging toward the finish line in the Kentucky Derby, but the millions of US taxpayers who have yet to file their individual income tax returns before the April 15 deadline.
As of March 8, nearly 67.2 million taxpayers have filed their income tax returns, up 0.1 percent from the 67.1 million taxpayers who filed their taxes by March 7 of last year, according to data the IRS released last Thursday. The IRS expected to receive approximately 150 million individual income tax returns this filing season.
According to Edward Karl, vice president of taxation for the American Institute of CPAs (AICPA), the three best suggestions for taxpayers who have not yet filed their taxes are getting organized, not waiting until the last minute to begin preparing their tax returns, and asking questions.
“Many individuals pay more taxes than they are required to under the law because they don’t take the time to organize their paperwork or find out about recent changes,” Karl said in a written statement. “CPAs can be of tremendous help to a taxpayer particularly if she or he doesn’t wait until the very last minute to get started.”
According to the AICPA, individual taxpayers should consider the following 10 tax tips before they file their returns.
1. Get organized: Whether you have a tax preparer or complete your return yourself, the most important thing to do is keep the W-2 and 1099 forms where you can easily find them. You can’t prepare or file your returns without them. Collect and organize all of the receipts, canceled checks, and other documents that support the income, deductions, and credits you’ll be reporting or claiming on your return. The better your records, the more likely you won’t overpay.
2. Don’t be late: Your federal tax return must be filed before midnight on April 15; however, taxpayers who file IRS Form 4868 by April 15 can delay filing their federal return until October 15. Keep in mind that getting the automatic extension does not delay the requirement that you pay your taxes by April 15, and penalties still could be imposed and interest charged on taxes not paid by April 15. Also, don’t forget that many states have different filing deadlines; make sure you know what the due date is for your state income tax return.
3. Protect your ID: Identity theft is a fast-growing problem in the United States, and your tax return and most of your records include important identification information. The IRS does not e-mail or text taxpayers to request personal or financial information. Be careful to protect information, such as your Social Security number, that could be used to steal your identity from unscrupulous individuals.
4. Investigate the details if you are a legally married same-sex couple: For the first time, legally married same-sex couples will file their federal taxes as married filing jointly or married filing separately. The couples do not have to reside in the state in which they were legally married to qualify. The new IRS rules do not apply to domestic partnerships or civil unions. Because state income tax laws vary, same-sex couples may want to get help from a local CPA.
5. Check your tax breaks: Don’t assume you can claim the same amounts in exemptions and deductions that you did last year. New rules have kicked in phasing out exemptions at certain income levels and imposing new limits on deductions. For example, medical and dental deductions must exceed 10 percent of your adjusted gross income, unless you or your spouse is age 65 or older, and then it’s still 7.5 percent.
6. Prepare and hold: It’s not unusual for taxpayers to receive corrected 1099 forms late in the tax-filing season. If you have investments, prepare your tax return now, and then delay filing it electronically until just before the April 15 deadline. That way, you don’t have to rush to prepare the return, you can make any last-minute changes, and you avoid having to file an amended return.
7. Review. Review. Review.: Two of the most common mistakes made by taxpayers – incorrect Social Security numbers and math calculations – significantly slow down the refund process. They’re also the easiest to correct. Just double check your return before it’s filed.
8. Use direct deposit: The fastest way to get a refund is to have it deposited directly into your bank account. You won’t have to wait for it to be delivered by the US Postal Service, and you won’t have to make the deposit yourself.
9. File electronically: E-filing is the easiest way to file a tax return. You’ll avoid the last-minute rush and long lines at the post office – and you’ll save on postage. Filing your return electronically also expedites its processing by the IRS.
10. Don’t be shy: Many taxpayers are uncomfortable asking questions and often pay more tax than they need to because of it. Don't guess. Your local CPA can help you determine how the tax law applies to your specific situation, including whether you qualify for one or more of the special provisions in the tax code.