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This Is A Taxing Time Of The Year

By W. J. Fontenote

You get up in the morning and have your first cup of coffee. You feel pretty good and start thinking about your schedule and making plans for the day. You look over to the calendar and stare with horror at the date. April 15th is on two days away. Oh no you think with panic rising inside. You say to yourself, "I'll never get this done on time".

It doesn't have to be this way. There are ways to cope with your income taxes that will make it much less stressful. If you will use the following techniques, you will sail through this ordeal with banners waving.

Get an Extension

If you're in the above situation, get an extension. Send in Form 4868 and the IRS will grant you a 4-month automatic extension. If you think you owe taxes, then send a check in with the form. You don't have to do this, but they will charge you penalties and interest if you wind up owing taxes.

If you're still not finished you can get another 2 months extension by sending in form 2688. The IRS must approve this, but it is not hard to get an approval.

You now have until Oct 15th with no problem.

You still want to get your forms in by April 15th

There is still plenty of time before the due date. If you use the following steps you will get your forms in with no stress. You should also use these techniques even if you do get an extension.

It's Time to Get Serious

The first thing to do is to get a software program such as Turbo Tax or Tax Act to help you generate the forms. The price of the basic program is less than $20 and is well worth the price. If you have a more complicated tax situation, there are advanced versions of these programs that will help you with any situation.

If you don't have a computer, you need to gather all the necessary forms and get a tax book such as JK Lasser's Your Income Tax Professional Edition 2004 You can get the necessary forms from your local IRS office or the IRS will send them to you.

Get Organized

This is the hard part. You need to get all your financial documents together. This includes W2's, 1099's, mortgage interest and taxes, bank accounts, pension statements, social security statements. Take all of the documents and organize them into categories so you can find them easily, Make sure you get everything. If you leave out some income, for instance, the IRS will write back to you questioning this. Don't make your self noticed by the IRS.

Get Informed

It is very important to be informed about all the recent changes in the income tax laws. There are many new deductions that may significantly reduce your tax liability. There are many books such as the one listed above that can help you. You can also go to http://www.irs.gov to get much valuable information directly from the IRS.

Check Your Status

It is very important to decide which way to file. There are 4 different ways to file: Single, Married Filing Jointly, Married Filing Separately, and Head of Household. They're positives and negatives for each way of filing. Check the requirements carefully to make sure that you select the proper status. If you're married, do you taxes both Married Filing Jointly and Married Filing Separately Due to the way deductions are calculated, you may reduce your tax liability significantly if you file separately. You need to know the rules.

Check Your Itemized Deductions

You can take either the standard deduction or the itemized deduction route. It's easy to just check the standard deduction, but if you own your home or have high medical expenses or maybe a casualty loss, your itemized deductions may exceed the standard deductions. Your taxes may be lowered significantly by doing itemized deductions. Be sure and check it both ways.

Get Your Adjustments

There are many deductions that you can take even if you don't itemize. Such deductions include, Moving Expenses, Alimony, Student Loan Interest, IRA and Qualified Pension Contributions. For the self-employed there is the deduction for Health Insurance and Half the Self-Employment taxes. These known as Above the Line Deductions. These deductions help to lower you Adjusted Gross Income.

Check your Exemptions

Each quantified exemption is worth $3,050 subtracted from your Adjusted Gross Income. This is very important to reducing your taxes. For example: if you are in a 25% bracket, each $1,000 reduction in income provides you with a $250 reduction in taxes.

Check the exemptions carefully. Contrary to conventional wisdom you can claim children if they are under 24 and are full-time students, regardless of their income. It is very easy to miss these types of exemptions.

Get Help if You Need It

If you feel uncomfortable about filing your taxes after doing them yourself, check with a tax professional. They will check over your return and give you some valuable advice. If you have done your homework as described above, the cost will be minimized. Don't hesitate to ask for help. The good news is that the tax professional's fee is deductible.

Filing

After you have completed all the above, be sure you file your return on time. Even if you owe money, there are interest and penalties for not filing or not filing on time. This is in addition to interest and penalty for not paying on time.

If you do a paper file, be sure and send it by certified mail, return receipt requested. If your file is lost in the mail or misplaced by the IRS it is if you had never filed. Protect yourself

Be at Peace With Yourself

Remember this is only your taxes, not a life or death situation. Don't worry and obsess about it. Using the above techniques will minimize any problems with the IRS. If you do your taxes honestly with no intent to defraud, the IRS will work with you. The IRS is somewhat friendlier now, but be sure and respond to them in a friendly manner if they write to you.

W.J. Fontenote
William Jarrell Fontenote succumbed to cancer on February 12, 2006. Rest in Peace, Beloved Friend.

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