I have a confession: I have not completed my 2011 tax return. Yes, “Ms. Personal Finance Expert” is procrastinating. I have a pretty good excuse: some of the information I need to file won’t be available for a few more months, but the truth is that this is my most dreaded personal finance chore, and I often file an extension.
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If you’re like me, and putting off finishing your taxes until the last minute, you can at least be thankful that we have until April 17th this year to file. That gives us a little more time to dig up possible deductions. To help you (and me) get our taxes done on time, and get the maximum refund possible, I turned to Lisa Greene-Lewis, a CPA and the Turbotax Blog Manager for advice. She has 15 years of experience in tax preparation, she helps a lot of people through the blog, and she shared her advice in an interview on Talk Credit Radio last week.
Here are some last minute tax tips, excerpted and edited from our interview:
Lisa: You still have time. It just amazes me how many people think they don’t have time or they think, “I’m going to owe money,” so I don’t want to file. According to IRS, 28% wait to file until these last weeks and they’re surprised to find that they do end up getting a refund. You can go online and e-File and you’ll be guided through 350 legitimate tax deductions and credits.
E-filing is easy, you can use any tax software and you can go online and you’ll be guided through your tax return. And then it prompts you whether or not you want to e-File or paper file and it electronically transmits your information to the IRS securely, based on what you input into the tax return.
[Related Story: 1099-C: The Worst Tax Mess of the Year?]
It will also let you know if there are any errors in your input. It syncs up with the IRS and lets you know if there are any type of errors that you put in incorrectly; Social Security number or anything like that. And there is no fee for e-Filing. It is free.
Gerri: What if you still need more time?
If you need more time you can file an extension. You can file that online and it’s free as well. People just have to keep in mind that it is only an extension of time to file, it is not an extension of time to pay. So you will incur interest and penalties [if you can't pay what you owe].
Gerri: What if you discover you owe money and you can’t pay it?
Lisa: If you don’t have enough money to pay, there are other options. You can do an installment agreement. They’ve increased the eligible amount. You (can use an installment agreement) if you have tax liability up to $50,000 as long as your income is under $100,000.
I suggest you file your taxes, pay what you can – even if it’s a small amount – and then request the installment agreement. They are understanding that people are struggling and as long as you’re acting in good faith, trying to send a little amount or even just sending in your tax return, they will work out something with you.
[Related Article: What To Do If You Can't Pay Your Taxes]
Gerri: Any suggestions for last minute deductions?
Lisa: There are some deductions that you can actually get right up to the deadline. One of my favorite ones is the IRA contribution. You have until April 17th to contribute to your IRA. You can contribute $5,000 and an additional $1,000 if you’re 50 and over. You can do that and still get a deduction on your 2011 tax return.
In addition to that, many people don’t even know about the Saver’s Credit, that goes hand in hand with your contribution to an IRA. The Saver’s Credit is available to lower income families who make contributions to their IRA. You’re able to get a $1,000 tax credit and $2,000 if you’re married filing jointly. Many people miss that one.
Gerri: What about charitable donations?
Lisa: (Taxpayers) don’t realize you can deduct mileage for volunteer work; the travel to get to the charitable institution. People often miss that. They think about the tangible things that they donate, they don’t think about that mileage.
Gerri: Any last words for procrastinators like me?
Lisa: There’s no reason to procrastinate. After all, you don’t want to miss out on your refund. We will have our tax experts available to answer your questions all the way up until the deadline. We want everybody to be able to complete their tax returns.
To listen to the entire interview with Lisa simply right click on the link below to download it or open and play it on your computer. It is also available to download for free in iTunes.
Image: Tax Credits, via Flickr