Ten Last-Chance Tax Tips
By: Business Wire
Unexpected tax pitfalls - many due to unprecedented economic conditions - practically guarantee maximum distraction and confusion around tax time this year. Potentially devastating implications of incentive stock options (ISOs) and conditions that trigger the dreaded Alternative Minimum Tax (AMT) are just two examples.
With only a few days left for taxpayers to remain focused and carefully complete returns, the California Society of Certified Public Accountants (CalCPA) offers ten last-minute tips to help ensure error-free filing, minimum delays and timely refunds.
- Check returns and schedules one more time for math errors. Despite yearly IRS warnings, transposed numbers or incorrectly totaled columns still result in significant processing delays.
- Double-check all Social Security numbers entered on tax returns. Names and numbers are matched by IRS computers against SSA records, and discrepancies can impede processing.
- To help speed processing of paper returns, use the pre-printed, peel-off mailing label the IRS provides with Forms received in the mail. Verify or correct information directly on the label.
- Carefully choose the filing status. Since California is a community property state, filing jointly is usually best for married couples. Filing separately ordinarily carries no benefits, because income and deductions are split 50-50, unless there are legal agreements to the contrary.
- Be sure all Form W-2s and any 1099s showing federal income tax withheld are attached to the return. If using e-filing, be sure to enter complete information for each W-2 and 1099.
- Check last year's return for items that can be carried over and claimed on this year's return, such as capital losses that exceeded the $3,000 limit or excess charitable deductions.
- Remember that April 16 is also a deadline for making deposits to a tax-deferred IRA. Input from a CPA can make complex IRS rules for traditional IRAs and Roth IRAs more understandable.
- Review all income and other eligibility requirements before claiming the Earned Income, Child or Dependent Care, HOPE Education, or Lifetime Learning credits.
- Taxpayers and tax preparers have the option of requesting extensions by phone if basic information is ready -- including date of birth, Adjusted Gross Income from the 1999 return and a completed Form 4868. The toll-free number is (888) 796-1074.
- Taxpayers who are confused about any aspect of filing -- traditional or electronic -- may still have time to consult with a CPA, provided they act now.
Lastly, remember CalCPA provides extensive assistance and additional tax tips at its free public service Web site: www.calcpa.org. The site features "Ask a CPA," a question and answer service; "Find a CPA," a comprehensive directory of CPAs throughout the State; and a new pamphlet on the Web entitled "18 Ways to Reduce the Hassle of Preparing Year 2000 Taxes."