Last-minute tax tips

Tax filing time falls at the same time every year, but many wait until the very last minute to get their income taxes done. However, this year taxpayers have until April 17, 2007, to file their 2006 tax returns and pay any taxes due. Taxpayers will get the extra time because April 15 falls on a Sunday and the following day, April 16, is Emancipation Day, a legal holiday in the District of Columbia. If that's not enough time, there's also the option of filing for an extension.

File whether you owe money or not.

If you owe the IRS money, you should still file your taxes on time, tax experts advise. "The IRS has gotten hip ... You can basically owe them money, file your tax return and file what is called an installment payment plan ... , " says Shannon King Nash, a CPA and tax attorney in Sherman Oaks, Calif. Request an installment agreement by filing Form 9465. File Form 4868 to get an automatic six-month extension. Interest and penalties continue to accrue during that period, IRS officials say.

Take advantage of the one-time only telephone excise tax refund.

This year taxpayers are eligible for a one-time tax refund for taxes paid on long-distance and bundled telephone service. You can take the standard deduction, which averages between $30 and $50, depending on the number of exemptions, says Barron Harvey, Ph.D., CPA and dean of the school of business at Howard University. Individuals and businesses can take the option of the actual amount of federal telephone taxes they paid by going back through their telephone records, says Dr. Harvey. You can find the actual amount of telephone taxes you have paid by going through invoices for service after February 28, 2003, and before August 1, 2006.

Educator expenses deduction

Eligible educators who paid for supplies out-of-pocket can deduct up to $250 as an adjustment to their gross income, rather than file such expenses as a miscellaneous itemized deduction. If you and your spouse are both eligible educators and are filing jointly, the maximum deduction is $500.

New IRS rules for charitable gifts.

In order to take a deduction for cash contributions donated to a charity, you now must have a dated bank record or dated receipt for any contribution made after August 17, 2006. Any clothing or household items donated to a charity after August 17, 2006, must be in good used condition or better. "Some people have abused the system and have been giving away stuff that doesn't have any value," says Nash.

"Let's say I want to give away my son's bike and it's missing all the wheels. That's borderline trifling, but people were doing that and saying, 'Oh, no, that bike was worth $300.' So the IRS now has decided that you can only take tax deductions for stuff that's in good condition, period. And how are you going to prove that? You have to have a receipt."

Itemized vs. standard deductions

While taxpayers may not enjoy keeping up with and searching for receipts and other necessary documentation, it may pay off in the long run if you itemize. "Many individuals take the standard deduction, but research has shown that many could have itemized and gained close to $500 more in a tax refund," says Dr. Harvey.

Seek professional help or, if eligible, take advantage of free services

You should consider seeing a CPA or tax professional if you have a lot of itemized deductions and charitable contributions, if you've had a life-changing event, if you own a business, or if you have investment properties. However, if you can't afford a full session with a CPA, try to sit down for an hour with a professional to develop a plan for next year.

The IRS also has several free tax preparation services available for individuals and seniors with certain income restrictions. There are the Free File Program, the IRS Volunteer Income Tax Assistance Program and the Tax Counseling for the Elderly Program.

Send tax returns certified

Tax experts suggest that you send your tax returns certified so that you have proof you filed by the deadline. "When I say file with the IRS, I don't mean just go and put a stamp on it," says Nash. "No, you have to send your returns certified to the IRS because [the IRS does] make mistakes."

To find out more about tax law changes, free tax services and how to download forms, visit www.irs.gov.

COPYRIGHT 2007 Johnson Publishing Co.
COPYRIGHT 2008 Gale, Cengage Learning