Allow enough time for return

Getting Started

Your Money

April 10, 2005|By CAROLYN BIGDA

The countdown is on: You have less than six days to file your taxes. Even if you thrive on tight deadlines, the tax law's growing complexity might lead you to make unnecessary errors if you wait until midnight Friday.

A recent survey commissioned by CCH Inc., a tax software and information provider in Riverwoods, Ill., found that more than two-thirds of respondents were confused about common tax issues, including rules about capital gains on a home sale and education credits.

"You want enough time to finish the return, set it aside and go back and look at it again," says Sue Hales of the Internal Revenue Service.

And the longer you wait to start your return, the less chance you have to seek help.

"I even hear a lot of complaints about people having trouble getting hold of their own accountant at that point of time," says Mark Luscombe, a principal tax analyst for CCH.

Tax-preparation software, which automates calculations and guides you with a detailed Q&A, is the easiest way to begin a return. And you can file electronically with the click of a mouse up to the last second.

The IRS' Free File program allows you to file your federal return for free electronically. This year, almost every taxpayer qualifies, but you must access the software through the IRS Web site, www.irs.gov.

Some state returns, including those in Maryland, also can be filed for free electronically .

The IRS posts answers to frequently asked questions under the 1040 Central section of its Web site, along with details on tax-law changes.

You can also ask specific questions by calling 800-829-1040, and Volunteer Income Tax Assistance centers offer in-person assistance for people whose income is $36,000 or less.

Tax-preparation services generally extend their hours this week. H&R Block offices will stay open April 15 until the last client is served.

If you can't get your taxes done by the deadline, file for an extension. You're still obligated to estimate and pay taxes - otherwise there's a 5 percent penalty and a 6 percent interest rate - but you have an additional four months to submit a return.

You can request an extension through tax-preparation software, excluding the Free File program. If you filed a return in 2003, you can call the IRS at 888-796-1074 and pay your estimated tax by direct debit (have Form 4868 and your bank information ready).

If you've completed the return but can't pay the bill, apply to make installment payments with Form 9465, saving you from a penalty.

Double-check your return. Common errors include pulling the wrong data from your W-2, putting down the wrong Social Security number and forgetting to sign the return.

Then, plan for the next year.

To avoid overpaying or underpaying your taxes throughout the year, submit a new Form W-4 to your employer and adjust the withdrawal from your paycheck.

Look for opportunities to lower your tax liability, such as contributions to a 401(k) plan or IRA.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.