If You Still Haven't Done Your Taxes...
Yep, it's that wonderful time of the year again -- time to file your taxes. And if you're still scratching your head and trying to figure out what "head of household" means, you might want to check out some tips from the American Institute of Certified Public Accountants (AICPA), which represents 330,000 CPAs nationwide.
Doing your taxes doesn't have to be stressful, says Laurence Foster, chairman of the AICPA. Foster, with the firm of Richard A. Eisner & Co. in New York, has been an accountant since 1963. He recently gave some tax filing tips and pointed out some potential pitfalls to BusinessWeek Online reporter Olga Kharif.
--It's best to do your return in stages. Assemble all your income information, all your deduction data, and all the forms you need. Then, stop. Take a break. Now do your calculations. Then stop. Take a break. Finally, compare your return to last year's. Stop. Take a break. Finally, give your return one last look, and then send it off.
--Don't be fooled into thinking that a return of a couple of pages will be a snap to get done. There could be a lot of calculations and schedules that have to be filled out, as well, that might not be obvious at a quick glance.
--You can't claim a newborn as a dependent unless he or she has a Social Security number.
--A single parent should check "head of household," not "single" as his or her status.
--This year, you have until Apr. 16 to get your return postmarked because Apr. 15 falls on Sunday.
--Check at least twice before you try to claim a deduction. For example, you may have given clothes or money to an organization that sounds like a charitable organization, but doesn't really have charity tax status. Some groups "sort of create an illusion of deductability," Foster warns.
--If you haven't finished your return and you're afraid you won't get it done on time, file for an extension. You automatically get another four months, until Aug. 15, if you send in the request form in time. But get some advice if you think you're going to owe money. You want to make sure you don't end up paying penalties and/or interest.
--If you do get an extension, don't wait until Aug. 14 to start work on your return, because the only way you can get a second extension is if you can prove that you were missing critical data that had to be sent to you.
--Chances are you'll get a more accurate return -- and a better result -- if you use a professional.
--If you're looking for someone to do your taxes, get a referral from a family, friends, colleagues, someone such as a lawyer or financial planner. Or you can consult the AICPA Web site, www.aicpa.org, and look for the PFS (Personal Financial Specialist) Web site. A CPA is granted this designation only after demonstrating experience in personal financial planning and meeting other accreditation requirements established by the AICPA. "It will help you find someone in your area, who will be familiar with not only your federal problems, but also your state and local problems," points out Foster.
--If you ask someone to prepare your tax return, make sure to find out the extent of the services offered and what certifications the preparer has.
--Don't forget the basics: Sign the return, enclose a check if you owe money, and put a stamp on the envelope. Says Foster: "People try to get tax returns out of their hands so quickly that they forget."
Edited by Patricia O'Connell
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