Show Tax Guidelines for Minute Last-Minute Filers Albert R. R Crenshaw The Washington Post Haven't finished your tax return Tut However youre you're not alone A survey last week by Yahoo Finance found that 14 percent of taxpayers plan to wait until April 15 to file and the Internal Revenue Service expects about 9 million taxpayers to apply for extensions l' l minute Last-minute filing does make sense of course for people who will owe money with their returns Experts often recommend recommend recommend mend getting your return done doneso so you know where you stand but then sitting on it until the deadline if youre you're going to have to pay But for the pure procrastinators tors among you the best advice See Taxes continued on page 10 Tax continued from front frontis is get going Sweating out a return Thursday night and into Friday is an invitation to careless care- care less less and and potentially ex pen pen- sive These range from simple math errors which the IRS will likely catch perhaps deflating the refund you had planned on to overlooked deductions and special treatments of income that could be beneficial By this point its it's too late to todo todo todo do much to alter your 2004 situation For many taxpayers ers the best course now is the usual usual check check your return carefully be sure your Social Security number and those of your dependents are correct sign the return But even at this late date there are a few things you cando can cando cando do that may save some dollars or headaches Here are some suggestions First you can still contribute contribute contribute con con- tribute to an individual retirement retirement retirement retire retire- ment account If you dont don't have a retirement plan at work you can contribute and deduct up to assuming assuming assuming assum assum- ing your earnings were at least that much or if you are 50 or older And your spouse can contribute even if he or she doesn't work If you have a retirement plan at work you may still take a deduction if your adjusted gross income is or orless orless less fess for a single taxpayer or or less for a married couple You can take partial deductions if your income is less than single or married And dont don't forget Roth IRAs If you are ineligible for fora a deductible IRA you may be beable beable beable able to contribute to a Roth IRA It wont won't save you any money now now contributions contributions are not deductible but it will later on because withdrawals in retirement are tax Singles with incomes of or less are eligible as are couples earning up to Notice the marriage marriage marriage mar mar- two penalty singles could earn up to For more information check IRS Publication Individual Retirement Arrangements available at Second there are arc lots of education benefits out there and you may qualify There are two credits for higher education the Hope and Lifetime learning credits either of which could save you 1000 or more if youre you're paying tuition Remember a credit reduces your taxes dollar dollar dollar dol dol- lar for dollar Both are complicated complicated complicated com com- to compute and both phase out at incomes between and for a single person and and for a couple However if youre you're over the limits and your child has income it may pay to take your child off your return as a dependent and let her claim one of the credits on her return There are also deductions for college tuition costs and for interest on student loans so if you have a child in college college college col col- lege or are repaying a college loan or have questions about the credits check out IRS Publication Tax Benefits for Education Third do you have interest interest interest inter inter- est to deduct There are six different categories of interest interest interest inter inter- est with different rules and deductions may have to be betaken betaken betaken taken on Schedule A C or E depending Mortgage interest the most common is deductible on purchase debt of up to 1 million and on home equity not used to buy build or improve your house up to of debt And home equity debt may not be deductible for the alternative minimum tax And remember that if you refinanced points must be written off over the life of the new loan But if you refi re any remaining points from the first refi ref can be deducted immediately But there arc are other rules for other kinds of interest For example investment interest- interest interest borrow borrow borrow bor bor- on money you row to buy stocks or bonds for example is is deductible only up to your investment income If you have more interest than income you can carry the extra interest over to toa toa toa a later year But if you have capital gains or qualified dividends spelled out on Form 1099 you can elect to have them treated as investment income and deduct investment interest interest interest inter inter- est against them Normally capital gains and qualified dividends get special low rates but if you have a lot of investment interest you cant can't otherwise deduct the election could save you a bundle Check IRS Publication Investment Income and Expenses Dont Don't forget you can now choose between deducting your state and local income taxes and your sales tax Normally the income tax is a better deduction but if you bought a ticket big-ticket item such as a car or boat last year you might run the numbers both ways Also if you had hefty medical expenses attributable to yourself or your spouse it may pay to file separately Usually that's a bad idea because of the way the brackets brack brack- ets work But since medical expenses are deductible only to the extent they exceed 75 percent of your adjusted gross income filing separately may allow one of you to get past that threshold possibly lowering lowering lowering low low- ering your overall tax bill But you have to run the num num- bers IRS Publication Medical and Dental Expenses gives details on these deductions If If you find you really arent aren't going to get your return done by Friday you can get getan getan getan an automatic month four-month extension You can file Form Application for Automatic Extension of Time Timeto to File US U.S. Individual Income Tax Return but you youcan youcan youcan can also get an extension by phone or online The IRS even has a special toll-free toll phone line for extensions but 1074 have you to have filed a return for 2003 And remember the extension extension extension exten exten- sion is only for filing your return not paying your taxes So you need to do a fairly accurate through run-through of your I return and send a check if you owe If you are getting an extension by phone or computer computer computer com com- puter you can pay any expected balance due by authorizing an automatic withdrawal from your bank account You will need the bank routing and account numbers and you must also be able to state the adjusted gross income from your 2003 tax return to verify your iden iden- An additional extension is is possible but its it's not automat automat- ic You have to show the IRS for you have a good reason needing it either If you cant can't pay when seeking an extension or filing your return you have a couple of choices You can put the amount due on a credit cred cred- it card in effect borrowing it The IRS doesn't charge a fee for this but many card issuers do so there may be a cost beyond any interest you have to pay If borrowing isn isn't t workable workable workable work work- able you can request an installment agreement either by submitting Form Installment Agreement Request or your own written request for a payment plan attached to the front of your return You should specify the amount you can pay and the day you wish to make your payment each month The TheIRS TheIRS TheIRS IRS says it will respond usually usually usually ally within 30 days as to whether your request is approved or denied or if additional information is needed Theres There's a 43 user fee for an installment agreement agreement agreement agree agree- ment and you'll be charged 0 interest and late payment penalties Installment agreements can also be set up as payroll deductions or direct debits from your bank account If you cant can't pay at all there is something called an offer in compromise under which the IRS will settle for less than full payment But you have to satisfy the agency that you really cant can't pay now and wont won't be able to in the future so dont don't think of this as as' an easy w way y out |