Last Minute Tax Tips

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The April 18th 2011 deadline is fast approaching, and if you haven’t filed yet, here are last minute tax tips for holding on to your hard earned dollars.

1. File yourself

Most people don’t need an accountant to file taxes for them, unless you have complicated transactions, a personal business, or a lot of real estate holdings you probably don’t either. Filing yourself saves more than just money — it gives you a chance to glance over your finances from last year and apply lessons you learned to this year. I sincerely believe that filing personal taxes is something everyone should know how to do. There are also plenty of free resources to help you file your taxes if you’ve never done it before, check with your local public library. If you are really struggling I recommend online software like TurboTax or TaxAct (make sure to shop around for the best price and coupons, you shouldn’t be paying more than $50 to file both state and federal taxes)

2. Don’t be lazy

Too many people take the easy route and file 1040-EZ even when they have eligible deductions. You worked hard for your money, and you should work hard to keep it too. Make sure you know what deductions you are eligible for. There are plenty of resources online for this, and you can always register for one of the online software systems which will usually file your federal taxes for free. You don’t have to file your state taxes through them if you don’t want to pay. At a minimum remember the basics: If you own a home, trade stocks, or run a small business you should probably not be filing 1040-EZ. Again, learn to use the free resources out there for your benefit.

3. Don’t take “Refund Anticipation Loans” (RAL)

Many places advertise that they’ll loan you the estimated amount of your refund until your refund comes in. DON’T FALL FOR THIS!! Refund anticipation loans, or RAL loans, are a very expensive form of financing. In many cases, you are being charged a fee upwards of $70 for the loan. If you filed electronically (as you should be) you would be getting your refund in a matter of a week or two anyways. If you work out the math the RAL loan comes out to a staggering 200%+ APR based on what your refund is.

-John

 

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