By Samantha Bomkamp
Chicago Tribune
WWR Article Summary (tl;dr) The deadline to file your taxes is just around the corner. If you haven’t filed yet, there are a few things to keep in mind when preparing your return.
Chicago Tribune
Good news for tax procrastinators: You have a little more time than you think to file your federal income tax forms.
Tax day this year is on Tuesday, April 17 because the usual deadline, April 15, falls on a Sunday. And Monday, April 16 is Emancipation Day, a holiday observed in Washington, D.C.
Still, the deadline is creeping up. If you haven’t filed, there are a few things to keep in mind when preparing your return.
Maximize your refund
You can still take steps to boost your refund. You can contribute to a health savings account or an individual retirement account, if you have them, right up until the filing deadline and lower your taxable income for the 2017 tax year.
Paul Joseph of Joseph & Joseph Tax & Payroll in Williamston, Mich., calls the IRA contribution one of the most advantageous things you can do to reduce your tax burden.
File soon, but don’t rush
Kimberly Butler, a tax preparer who manages two Chicago H&R Block locations, said that mistakes become more common when procrastinators rush to finish. She said some people miss out when their tax status changes because of a life event like a new house or a baby, and in the rush to finish their taxes, they leave a big potential deduction associated with their changed tax status on the table. Others forget to take advantage of common deductions and credits, like student loan interest, or fail to explore options they don’t fully understand, like the earned income credit.
Butler said that many people take the standard deduction when they have the ability to get a bigger refund through itemizing. Itemizing takes work, but it’s worth it, she said. Even a messy shoe box full of receipts can lead a tax preparer to find some hidden refund opportunities, so it’s advantageous to consider itemizing if you have a home, kids, or a newly complicated tax situation.
The little (itemized) things
When it comes to getting a refund, it’s sometimes the little things that make the biggest difference, Joseph said. While it tends to be common knowledge that charitable contributions are deductible, so is your mileage to a volunteer job, a secondhand store to drop off a donation, or to medical appointments.
Joseph said he sometimes goes through a client’s checkbook to make sure they are maximizing their deductions, and often they’ve missed things as small as mileage, or as big as having an aging parent live with them and failing to claim them as a dependent.
“It almost takes detective work to get these deductions out of people,” he said.
Stay organized
It may sound basic, but keeping all your tax documents in one place, including your W-2 and all applicable interest statements and receipts, is key to making sure you get all the deductions you are eligible for, said Chris Mann, a Bloomfield Hills, Mich.-based tax attorney. It’s too easy to overlook a deduction or skip something if you get frustrated looking for a form, he said. And along with those forms, Mann also recommends compiling all your log-in information for applicable websites, like your company’s intranet or a student loan lender, so you can access the information if you misplace some paperwork.
Lesson learned?
We know what you’re thinking: It doesn’t matter how late I file my taxes, as long as I get them in before the deadline. But there’s a reason this should be your last year of last-minute filing. The longer you wait, the better chance there is that someone will steal your identity and file a return in your name in an attempt to snag a refund, Joseph said. That’s why it’s especially important to request a PIN from the IRS, if you’re not already required to have one through your e-filing software. The PIN will provide an extra layer of security and help prevent identity theft, something that Joseph notes is especially important in the wake of the massive Equifax data breach.
For next time
There are a lot of changes ahead for the 2018 tax year because of the tax law that passed late last year. The result? Itemizing might not be so rewarding next time you file. The standard deduction nearly doubles for single filers and married couples who file together thanks to the new tax law, so it may make sense to opt for the standard deduction when preparing your 2018 taxes. At the same time, the new tax law also strips out some personal exemptions.
The current tax season is also a good time to check the withholding allowance you’ve designated on your W-4. Life changes, coupled with adjustments made to withholding tables by the IRS in concert with the new tax law, mean many Americans run the risk of having either too much or too little money taken out of their paychecks.
Getting a few thousand dollars from the IRS may seem like a great thing, but it’s not so great when you think about what you could have spent that on during the year, like paying for an unexpected expense or building a rainy day fund.
“No one should ever celebrate getting a big tax refund,” Mann said. “Figure out why, and adjust your withholdings or exemptions.”
