Tax season tips

The only thing that makes me more nervous than going to the dentist is filing my taxes.  It feels like a cross between playing the lottery and Russian roulette — I never know if I’m going to have a windfall or fall over in agony. 

This year, tax day actually falls on April 18^th instead of April 15^th.  Instead of just crossing my fingers and hoping for the best, I’m using the next couple of weeks to get smart about filing my taxes.  I found some helpful hints that you can use too:

Know your dough.  There are a variety of tax credits available, so it pays (literally!) to know what you’re eligible for.  The earned income tax credit could score your family up to $5,000. If there’s a student in your household, don’t forget about the federal tax credit on tuition – it can be used by either the parent or the student.  And home-buyer tax credits expired at the end of April 2010, so check your dates if you bought last spring. 

Give a little, get a little.  Have you ever donated anything? Make sure your inner do-gooder gets credit for helping others by saving all of your receipts for donations and charitable contributions.  Even small amounts can add up and make a difference when it’s tax time.

Get ahead.  Are you a single mom or single woman who cared for another dependent family member (such as a parent)? Filing as head of household can help you rack up a great tax break.  To qualify for head of household status, you need to have paid more than 50% of all household expenses and support at least one dependent for at least six months out of the year.

Don’t double count.  If you have a child who is filing a tax return, make sure they don’t claim themselves as a dependent if you are going to claim them as a dependent.  If the IRS sees a social security number claimed twice, they’ll kick the returns back.

Invest in yourself.  Didn’t stash as much as you wanted in your IRA during 2010?  There’s still time to sneak it in!  You have until the tax deadline to contribute to a tax-deductible individual retirement account and treat the payment as a 2010 deposit.

Treat your refund with respect.  When you’re getting ready to file, remember what they say about counting chickens before they’re hatched.  If you do get a refund, look first at how it can help you improve your overall financial situation.  I’m sure I’m not the only one who has the urge to go a little wild when I get a nice fat refund check!  But getting a refund really means you loaned Uncle Sam that money interest-free throughout the year by overpaying — so that refund check is just your own money coming back to you. 

Find the right fit.  That Goldilocks was on to something.  If your annual tax outcome seems “too big” (a large refund) or “too small” (a big tax bill), your withholding is probably at fault.  Talk with a tax professional to find out how you can adjust your withholding so that tax money works more efficiently for you.

Got questions?  Get your worth on by visiting http://www.irs.gov/individuals/index.html for information and http://www.irs.gov/newsroom/content/0,,id=104608,00.html for more tips.