May 7, 2010Last Minute Tax Tips
Last Minute Tax Tips
by Ginita Wall
Hey, tax procrastinators! With just a few days left until taxes are due April 15, here are some last minute tips to help ease the pain.
Just because you are filing at the last minute, don't get flustered and overlook deductions. Take time to review last year's activity to be sure you claim all the deductions to which you are entitled.
If you bought a new house last year, the points you paid to acquire the mortgage are deductible, as are interest and property taxes. If you refinanced your house last year, the points you paid must be written off over the length of the loan (on a 30-year loan, you can deduct 1/30 each year). Be sure to deduct any remaining unamortized points from the prior loan when you refinance (unless you refinance with the same lender).
If you spent money on education, you're in luck. If you were a full- or half-time student pursuing a degree, and your income is under $51,000 if single ($102,000 if married filing jointly), you can claim the Hope Credit for up to $2,000 of tuition you pay during the first two years of college. The Lifetime Learning Credit is available for up to $5,000 of tuition in 2002, and you don't have to be pursuing a degree.
. Deduct Job-Hunting Expenses
You can deduct all the expenses of hunting for a new job, even if you didn't find one. This doesn't apply to the cost of finding your first job, or changing careers.
Claim Child Care Expenses
You can get credit for the first $3,000 of expenses ($6,000 if more than one child) for caring for a child while you work or go to school. Expenses include nursery school, private kindergarten, after school programs and day care. If only one spouse works, you can still take the credit if the other parent is a full-time student or is disabled.
Deduct Your Work Expenses
If you spend money for business and you aren't reimbursed, you can claim a deduction. Toting up the cost of using your car to run errands, supplies, business dues, and so forth, can add up to a healthy deduction.
Invest in an IRA
If you aren't covered by a retirement plan at work, you can deduct $3,000 if you invest by April 15. (If you are 50 or older, you can contribute another $500 over the regular $3,000 limit.) If you have a retirement plan at work, your deduction for IRA contributions phases out when your income is between $34,000 and $44,000 for singles ($54,000 and $64,000 for married filing jointly).
Don't Blow it Off
Even if you don't owe taxes, file a tax return if you are due a refund of withheld income taxes. If you wait more than two years to file, the IRS is not required to issue you a check.
Extend if You Must
If you file for an extension by April 15, you'll have until August 15 to file your return. But that extension doesn't extend the time to pay your taxes - send in what you owe with the extension to avoid penalties for late payment of tax.
File Even if you Can't Pay
If you owe taxes, send in what you can with the return, and the IRS will bill you for the rest. You can use Form 9465 to ask to make monthly installment payments, but you'll still owe interest and possibly late payment penalties.
Invest Your Refund
If you filed early and are getting a tax refund, consider putting part of that refund into a Roth IRA. You have until April 15 to put up to $3,000 into a Roth IRA for last year ($3,500 if you are age 50 or older at the end of the year), and you can contribute $3,000 (or $3,500 if you are age 50 or over) for 2003 as well. Your contributions aren't deductible, it's true, but the funds won't be taxable when you withdraw them at retirement. (Roth IRA contributions are limited to those with income of under $110,000 for single or head of household ($160,000 for married filing jointly).
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Posted by Staff at 1:29 AM