Tax time tips can always be of some help as the April 17th deadline approaches. Whether your filing for the first time with an 1040 EZ form or something a little more complicated, here are a few things that you may not have thought of reports the Huffington Post.
1. IRA Contributions: You can still contribute to your IRA and receive credit for 2011, up until April 17, 2012.
According to the IRS:
Amounts in your traditional IRA, including earnings, generally are not taxed until distributed to you.
Learn more about contributing to your IRA on the IRA contribution page at IRS.gov. (Simply search for IRA on the IRS.gov page.) Most Tax programs, and your accountant, will most likely advise to you do this before filing.
2. Charitable Contributions.
Charitable contributions are tax deductible. Whether it be cash donations, donated items, or even time and mileage for volunteering, you can deduct these items for their fair market value as long as they are to a qualified organization.
3. Health Savings Accounts.
Health Savings accounts work best for healthy people able to pay for catastrophic health insurance. Catastrophic insurance could save hundreds of dollars in insurance premiums per month and deposited into your HSA. If you don’t end up using the funds in the account, it rolls over year after year. In addition you can also write-off the contribution and are not taxed on gains you might make through investing the money.
4. Free Federal Online Filing.
Easiest way to do your taxes, as well as the fastest way to get your return. The IRS.gov Website has large list of qualified companies and programs that offer free federal tax filing. Many of which will guide you step by step with questions to help maximize your potential deductions.
Many education costs can be deducted whether they’re for yourself or a student in your immediate family. If the education is work related, you could even qualify for a business deduction. Most education deductions are for higher education such as tuition, book fees, and other necessities.
6. Energy Efficiency Credits.
If you purchased a new electric vehicle, converted to electric or installed solar or wind energy products, you could get a tax credit. Credits go up to $7500 for electric vehicles, and up to 30 percent of the purchase price of wind or solar products.
7. Facing an Audit or Penalty?
The best advice if you’re facing an audit or penalty is to hire an experienced accountant to review your case and communicate with the IRS on your behalf.
Wayne Layton, CPA, offers this advice:
“From time to time the IRS may suspect an error on a tax return or underpayment of tax and send my clients a letter assessing additional tax, along with penalties and interest. Most taxpayers become fearful upon receiving these letters as some of them even refer to liens and levies. That fear that is felt by most, at times simply results in the client writing a check to the IRS in the amount shown as “balance due” on the letter. As I see it, the letters from the IRS are simply telling the taxpayer to pay or prove why you do not owe the balance. There are many times that, on behalf of my clients, I write a letter disagreeing with the IRS’s position, attaching proof of why the taxpayer does not owe the additional tax, and the additional tax assessed is either reduced or the balance is adjusted to zero.”
Check out the Frequently Asked Questions page of IRS.Gov. Online tax services and Certified Public Accountants update their software annually to reflect changes in the law. So if you are using one of these services, it’s much more time efficient than trying to read all of the fine print on your own.