OK, procrastinators, here’s a friendly reminder: Time is running out. April 15, the deadline for filing your federal and state tax returns, is almost here.
The good news: With few complicated tax changes this year, there aren’t any big head-scratchers to sort out. That’s a big change from a year ago, when filing season was delayed by a flurry of last-minute tax-law changes enacted by Congress.
But that doesn’t mean you can coast. It’s still easy to trip yourself up with math errors, filing mistakes or even forgetting to report your fantasy football winnings.
Here are some last-minute items worth noting:
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1 Don’t panic. But do file. “A lot of people panic this time of year,” said California Franchise Tax Board spokeswoman Denise Azimi, either because they can’t pay what they think they owe or don’t have all their paperwork together.
If that’s you, don’t avoid Tuesday’s deadline. You’re better off filing the return on time and paying what you can, then waiting 30 days for a billing notice with the exact amount of tax due. “You can then get on a payment plan and pay it off over time,” Azimi said. “It’ll save you a lot of headaches and money down the road.”
If you don’t file, you could be subject to penalties and interest, which can only add to your tax burden. The IRS offers monthly installment plans, with a one-time startup fee.
2 Avoid the easy errors. One of the biggest mistakes, especially for those filing a paper return, is basic math. Double-check everything before you file.
If you’re filing an electronic form – and more than 80 percent of taxpayers now e-file their returns – the math computations will be done for you. But you can still make errors by inputting the wrong Social Security number or tax-filing status (married, head of household, filing jointly, etc.) or by mistyping your bank routing number for direct deposit of a refund.
Another common error is misstating what you paid last year in estimated tax payments.
And above all, don’t forget to sign and date your return.
3 Don’t overlook tax credits. When filing, be sure to look for state or federal tax credits that might apply, such as home energy-efficiency improvements, college costs, child care expenses and charitable donations.
One of the commonly overlooked credits is the federal Earned Income Tax Credit, known as the EITC. Designed to help low-income working adults, it’s a refundable credit, so even if you don’t owe taxes, you could still get money back in your pocket. (It’s federal only, not available on state returns.)
It’s based on income and family size, but can be as much as $6,000. Generally, your 2013 earned income must be below $51,567 for couples filing jointly with three children or less than $14,340 for a single person with no children. To see if you qualify, search for the “EITC Assistant” tool on the IRS.gov website. The average credit last year was $2,300, according to the IRS.
4 Don’t overlook any income. Another source of tax return errors is not reporting all your income – even from that online fantasy football league.
“If you don’t report the income, you can expect to hear from the IRS,” Sandra Block, senior associate editor with Kiplinger personal finance magazine, said in an email. If you received a Form 1099-MISC for casino winnings or a Form 1099-DIV for dividends, for instance, be assured that the IRS received a copy, too.
“The IRS views fantasy football in the same way it views gambling and lottery winnings, which are also taxable,” Block said. “Even if you find buried treasure in your backyard – as happened to a couple in Northern California last year – the found property is taxable at its fair market value.”
And, she wryly noted, stolen property is also considered taxable, but “it’s unlikely that most criminals report it.”
5 Think twice on refunds. Lots of taxpayers relish getting that refund in the mail or direct-deposited to their bank. But personal finance advisers say that’s not necessarily a good thing.
“As much as people love getting a big check from the IRS, it’s not good money management,” said Kiplinger’s Block. “By adjusting your withholding, you can give yourself an automatic raise and use the money to pay off debt or increase your retirement savings.” She recommends asking your employer to adjust your W-4 form, so you’ll immediately get more take-home pay that can be allotted to savings or debts.
And she noted, being owed a refund can make you vulnerable to fraud due to identity theft, which has been a nagging problem for the IRS. In recent years, thousands of taxpayers have discovered that someone else, using stolen Social Security or other data, has filed a tax return in their name, stealing their tax refund. As part of a beefed-up enforcement effort, the IRS said last week that it prevented $17.8 billion in refund-fraud attempts in 2013, obtaining more than 1,000 indictments and 400 convictions of tax return fraudsters.
6 Ask for help. With the tax-filing deadline just days away, don’t despair. Sharpen those pencils or, better yet, hit the computer keyboard, pick up the phone or seek out free tax-preparation help that’s still available through April 15.
Call the IRS at 800-829-1040 or go online to: www.irs.gov. The IRS has dozens of tax-filing videos on YouTube and a free mobile app – IRS2Go – for iPhone and Android phones.