Last Minute Tax Tips

I’ve got three quick questions about doing my taxes. First, should I go with tax prep software of speak with an account? Second, if I can’t get my taxes done on time can I extend the time when my taxes are due? Three, is it true that rebate checks are only sent out after I file my tax return? I need some last minute tax tips – Help!

Good questions. Here are some simple answers. I’m going to start with your second question first.

You are entitled to two extensions: one that goes from April 15th to August 15th; and a second extension to October 15th. Beware, however, of one important fact, the tax you believe you owe, if indeed you do owe additional taxes on your 2007 income, is due along with your extension request on the 15th of April. This is relatively painless. The extension form takes a couple of minutes to fill out and if you’re guesstimate is that you owe another $400 for last year’s taxes, send in a check for that amount along with your extension request. If you find that you overpaid by a relatively small amount you can always apply that money to your 2008 tax bill.

But be careful to not underestimate what you owe. A small amount is not a big deal, but if you send in a check for $200 when your  actual balance for 2007 is $1,200, the IRS is going to be looking for interest and a penalty fee for underestimating your taxes due.

Of course if you are owed money, the IRS is happy to keep that excess cash just as long as it takes for you to file a completed return and request a refund. Another reason to file on time.

As to your third question, that is correct: This year’s tax rebate, designated by the Congress as part of a “one-time economic stimulus” package, is only sent to taxpayers who have filed a completed 2007 return and have earned at least $3,000 in qualifying income. Rebates range from $300 to $600 for individuals and $600 to $1,200 for those filing joint returns. Plus single and joint filers will get an additional $300 for each eligible child in their household.

Now, to your first question, should you take the do-it-yourself approach to your tax return or secure the help of a professional?

That’s an individual call and depends a lot on your personal preference and your comfort level with doing your own taxes. If you don’t know, there are new and easy to use tax preparation software programs that continue to make the process of filing your own return easier and ever more efficient. A lot of this decision has to do with the nature of your income. Is your situation rather simple and straightforward, one where you have one full-time employer, one paycheck, and one W-2?

If that’s the case, you’re probably wise to take the hour you need to learn how to do-it-yourself and just get it done. On the other hand if you’re more like me—self-employed, various sources of income, small business run out of your home, rental income, etc.—there are a lot of little items that you might just miss. In other words, deductions you are entitled to and should take that you simply will overlook without the additional help. I made the choice many years ago to get my taxes done by an outside professional. Your indulgence might be a manipedi, mine is not hassling with my own taxes. So it really is an individual choice.

However you decide, tax time is upon us in two weeks. Take a deep breath and pull your papers together. The taxman cometh! Best be prepared.

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