Taxpayers have two extra days to file their federal tax return in 2012. The deadline was extended to April 17 because April 15 falls on a Sunday and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16.
Many Americans have filed their returns already. LSU AgCenter extension specialist Jeanette Tucker suggests that those still waiting to file, file electronically. The IRS e-file has become safe, easy and the most common way to file a tax return. Last year, 78 percent of taxpayers – 112 million people – used IRS e-file. Electronic filing offers a convenient and quick way to file your taxes.
“This will allow you to get your refund more quickly than filing through the mail,” Tucker said. Another quick tip is to have the refund direct-deposited into your bank account. Combine e-file with direct deposit, and you can get your refund in less than 10 days. If you owe money, you have payment options to file immediately and pay on April 17.
Getting a refund quickly can help consumers avoid refund anticipation loans, which allow taxpayers to get their refunds immediately in the form of a high-interest loan from tax preparers or other financial operations such as payday lenders.
“This is an unwise and expensive way to borrow money,” Tucker said.
Earned Income Tax Credit
The Earned Income Tax Credit is a valuable tool to lower taxes or claim a refund. Low- and moderate-income filers should see if they qualify for this credit. Tucker said to file for the Earned Income Credit, you must have earned income during the year, but it must be less than $36,052 (or $41,132 for married workers) if you have one qualifying child. The EIC income limit increases to $43,998 for three or more children and $49,078 for married filing jointly.
“If you were eligible for the credit in previous years and did not claim the EIC, then you may be eligible to file amended tax returns and claim the credit for previous qualifying years,” she said, adding that some workers who owe no taxes may be able to get money back through the credit.
Tax preparation assistance
Low- to moderate-income filers and the elderly can get tax preparation help through the Volunteer Income Tax Assistance (VITA) program or the Tax Counseling for the Elderly program. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations. To locate the nearest VITA site, call 1-800-829-1040.
She also said the AARP offers a tax aid program to low-to-middle income individuals age 60 or older.
“Be sure to bring all your tax documents with you when visiting a VITA site or using another tax preparation service,” Tucker said.
Tax time also is a good time to review your withholdings and adjust them if necessary, said LSU AgCenter family economist Gloria Nye.
If your financial situation changed – if you bought a house, got married or started collecting Social Security, for example – you may want to change the amount withheld from your paycheck.
“If you have to pay more than $500 or get a refund of more than $500, rethink the number of exemptions you are claiming,” Nye said.
Although it may be nice to get a large refund, “you are essentially making an interest-free loan to the U.S. government when you could have that money working for you throughout the year.”
The ideal is to have your withholding come as close as possible to your actual tax owed at the end of the year.
So how do you change your withholding to reduce your tax refund or the balance you had to pay? All you need is your most recent pay stub and your most recent income tax return.
The website www.IRS.gov has a calculator (link to calculator: http://www.irs.gov/individuals/page/0,,id=14806,00.html) that can help you determine the amount that should be withheld.
“Use the results from the calculator to complete a new Form W-4, which you can then submit to your employer,” Nye said.
Doing a withholding review annually after tax time can give you more money to spend or save throughout the year, Nye said. Or it can keep you from having to pay a lump sum for additional taxes next year.
Using your refund
Tax refunds can be sizable for some families. Tucker said by carefully planning ahead, a tax refund can help you get out of debt or help you make more money.
“A good use of a refund would be to put it toward repaying debts such as credit card balances,” she said.
Those with no outstanding debts should consider investments. Another good option is to invest in yourself by taking professional improvement classes or job training classes. This could lead to a raise, promotion or a better job.
Other options include making needed home or vehicle repairs.Learn more about personal finance. The LSU AgCenter is one of 11 institutions of higher education in the Louisiana State University System. Headquartered in Baton Rouge, it provides educational services in every parish and conducts research that contributes to the economic development of the state. The LSU AgCenter does not grant degrees nor benefit from tuition increases. The LSU AgCenter plays an integral role in supporting agricultural industries, enhancing the environment, and improving the quality of life through its 4-H youth, family and community programs.
Send to friend