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Income Tax Tips for Last Minute Tax Filers PDF Print E-mail
Written by Norton Gappy   
April 15th is the deadline to file your individual income tax return.  For those who have not yet filed your taxes, here are a few tips to consider:

   
   
1. Utilize Your Carryover Losses/Deductions.  Don’t forget to utilize your prior-year unused carryover capital losses on your 2007 income tax return.  Make sure you provide your tax preparer a copy of your 2006 income tax return so that s/he can utilize the carry forward capital losses.  Capital losses result from the sale of stock, bonds and other securities.  Capital losses can be used to offset capital gains plus $3,000 of the excess capital loss can be used to offset ordinary income, annually.  The remaining unused capital loss is carried over to future tax years until they are offset by future capital gains or upon death, which ever occurs first.  Examples of other carry forward deductions that can be carried forward and possibility used against future income are: passive activity losses and investment interest expense deductions. 

2. Contribute to an Individual Retirement Account (IRA) or a ROTH IRA.  You have until April 15th to contribute to your IRA or ROTH.  If you haven’t contributed funds to an IRA for tax year 2007, or if you’ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional IRA or a Roth IRA until April 15 (Note:  you can not use filing extensions to extend the time to make the contributions).  Make sure to tell the IRA trustee that your contribution is for year 2007 otherwise; the trustee may report the contribution as being for 2008 when they get your funds.  You can contribute up to $4,000 of your earnings for 2007 or up to $5,000 if you are age 50 or older in 2007.  Contributions to an IRA are tax deductible (if they are qualified) but the appreciation on the earnings are tax deferred.  Compare with contributions to a ROTH IRA which are not tax deductible but grow tax free.  For more details on whether you qualify to make a contribution to an IRA/ROTH/SEP please see Legalnut’s page on Quick Facts for Preparing your Tax Return.

3. Obtain an Extension of Time to File Your Taxes.  If you cannot get all your tax records organized or you are not able to timely file your taxes, then have your tax preparer file Form 4868 Application for Automatic Extension of Time to File US Individual Income Tax Return.  Use Form 4868 to obtain an automatic 6 month extension to file your taxes.  Remember, this 6 month extension is an extension of time to file your tax return, not an extension of time to pay your taxes.  So, have your tax preparer or tax software estimate your tax liability.  If it’s too difficult to accurately determine your tax liability then it maybe a good idea to overestimate your liability and pay the tax with Form 4868.  It's better to overestimate your tax liability and request a refund upon filing your taxes than to underestimate your taxes and pay a penalty and interest on the tax deficiency. 

4. Use a Credit Card to Make Tax deductible Purchases.  Don’t let the loss of a receipt keep you from claiming deductions on your tax return.  Make tax deductible purchases on a credit card (if self-employed then use your business credit card to make the purchase).  This way if you loose the actual receipt, you still have a record of the purchase on your credit card.  Credit card companies usually retain these records for at least 6 years until they are archived or purged. 

5. Keep Your Records!  It’s a good idea to retain and keep your supporting tax documentation and copies of your tax returns for as long as possible.  If you must destroy them, then at least scan the supporting documentation and tax returns to your computer and secure them with a password. 


Facts and circumstances differ for each taxpayer. So, please always consult with your tax professional to research, review, and obtain answers to all your tax questions before filing your taxes.    

Source for tax related information
IRS Website   
Revenue Procedure 2006-53
IR-2006-162
For law students:
    Federal income tax outline 
    Federal tax procedures outline

 
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