Last-Minute Tax Tips

As tax day (April 18) rapidly approaches, here’s what you need to do now:

Think: bite-sized chunks

To alleviate the anxiety and stress of filing your taxes, get started TODAY! Start by organizing your paperwork, establishing a filing system, reviewing all your documents, and then e-file! It’s really as simple as that.

Skip the tax store

Let’s face it – it’s getting a little late in the season to hire a pro or make an appointment at a tax store.  And the thing is, especially if your taxes are simple (ie: you claim the standard deduction, as 60% of filers do), you don’t need to pay someone to file your taxes! Last year, taxpayers with a 1040 A/EZ spent some $2.5 billion in preparer fees—a total waste of money! Save yourself several hundred dollars, and file on time with the help of a software program – likeTurboTax. After all, it’s what many pros use behind closed doors—at your expense.

Take advantage of all the breaks you’re entitled to

One of the more valuable tax credits just so happens to be one of the many credits that Americans forget to claim: the Earned Income Credit.  For tax year 2010, the maximum credit for a household with three or more children is a whopping $5,666.  Claim it if you’re eligible; after all, a credit reduces your taxes dollar for dollar.

Make contributions to your IRA

One of the best ways to save for retirement and reduce your tax liability is with an IRA.  The maximum contribution limits for 2010 is $5000 for those under the age 50; $6000 for those age 50 and over.  In most cases, you have until April 18^th to make these contributions (even if you’re planning on filing for an extension).