Tips for dealing with taxes

March 26, 2009 5:41:22 PM PDT
April 15th can be the coldest day of the year -- especially if you're out of a job. Special problems face many unemployed Americans as they file their returns.

Benjamin Franklin said it best: nothing is certain but death and taxes. Here are a few tips on how the latter could put more Benjamins in your pocket.

"File early, file electronically, and have the refund that you're anticipating directly deposited into your checking or savings account," said Thomas P. Ochsenschlager, VP, AICPA.

During a time of mounting unemployment, be prepared for another burden if you got a pink slip. Many are left on the hook for hundreds or thousands of dollars because taxes aren't automatically withheld from benefit checks.

"Now the rule does change, a lot of people are aware of the fact maybe that it changes for 2009, but that's only for unemployment benefits received from January 1, 2009 on. In that case the first $2,400 that they receive is tax-free," said Ochsenschlager.

Also tax free, charitable contributions, but like all things tax related -- keep receipts.

"The IRS is getting very tough on that if you're taking a deduction, an itemized deduction for a charitable contribution you do need a receipt from the charity, particularly if it's more than $250," said Ochsenschlager.

The key is to know your options and eligibility. For example, you still have until April 15th to make a contribution to your individual retirement account that can count as a contribution against last year's income.

"I've seen cases where I had a client who owed $5,000 in taxes -- she knocked that by half by contributing to a traditional IRA," said Michelle Price, financial advisor, Edward Jones.

Lastly, file the return even if you can't pay the amount that's due. The IRS can be flexible in these hard times.

"Their ultimate goal is to get as much tax as they can, but they know sometimes that's not possible at the time that you file the tax return, so they're actually pretty reasonable in working out extended payment terms," said Ochsenschlager.


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