Last Minute Tax Tips if You’re Still Working on Your Tax Return
Tax day is getting closer, and it’s time to review a few tips if you’ve not yet completed your tax return.
If you’re doing it by hand (this year will be my 29th return filed using TurboTax, but I’ve read some people still use pen and paper) check your math. It’s easy to transpose numbers or make a simple arithmetic error. Don’t risk interest and penalty for such a simple error.
If you spent time volunteering, the time itself isn’t a deduction, but you may be able to take a deduction for the miles driven. A weekly round trip of 20 miles can add up at the current rate of $0.14 per mile. If you already itemize, this adds a bit to your potential tax refund. Remember, any cash donations must be acknowledged by the charity in writing before you file your return.
If you have a deduction from your paycheck to a charity, don’t forget to include this. This is a valid tax deduction even though you may not receive a direct acknowledgement from the end charity. Your final pay stub for the year should show the total donation you’ve made.
You know that real estate tax is tax deductible, but don’t forget the tax you pay each year for your car or boat also counts as personal property tax. It may be a couple hundred dollars added to your tax deductions.
Did you refinance again in 2012? If you paid any points on the new loan, you can deduct the points over the life of the loan. The good news is that if you were taking the partial points deduction for the prior loan, you now get to deduct the balance. With how rates dropped to record lows last year, this affects many people who were serial refinancers.
Did you purchase stock in your company at a discount and then sell it for a gain in 2012? The cost listed may not be what you paid. That discount was included on your W2 as ordinary income and should be added to your cost basis when you sell. It’s common to buy stock at a 15% discount, so be careful to check your records, and not let yourself be taxed twice on that discount.
I can’t end a last minute article without mentioning IRAs. Nearly everything on your return has already happened, income, stock sales, 401(k) deposits, and so on. Dec 31st came and went. The IRA is one of the few exceptions to this rule, you can still deposit, until April 15th, up to $5000, or $6000 if you were 50 or older in 2012, and have it count for your 2012 return.
If you converted any IRA money to a Roth IRA, you may be able to still recharacterize any or all of that conversion back to the traditional IRA if you decide it will be in your best interest while reviewing your tax return. This is one of the rare chances at a financial “do-over” and can benefit you if the converted shares fell in value or if your marginal tax rate was higher than you anticipated.
Lastly, go online and prepare your tax return. TurboTax will help you get all of the tax deductions and credits you’re eligible for and help you keep more of your hard-earned money. You can e-file up until 11:59 on April 15th if you go online, but the sooner you finish the quicker you can get your tax refund. If you still have questions, you can get your questions answered by TurboTax tax experts who are CPAs, IRS enrolled agents, and tax attorneys, free.
If all else fails, you can file for an extension with TurboTax Easy Extension. This doesn’t buy you time to pay your tax bill, just some extra time to get your paperwork together. You’ll want to take what information you have and make the best estimation of what you’ll owe and send it with the extension request.
Comment and let me know if I helped you catch a potential mistake or oversight on you return.