The deadline to file state and federal tax returns is bearing down on us.
For last-minute-types, that probably feels like plenty of time. For everyone else, it’s time to take a big gulp and get it done.
If you can’t gather all your documents and get your return filed on time, complete Form 4868 for an automatic six-month extension. If you don’t file your return or extension on time, you’ll be charged 5 percent of taxes owed each month up to 25 percent until return is filed.
You should, however, pay on time. Find out how much you expect to owe and pay at least 90 percent of the balance to avoid more penalties and interest. You can get an idea of what you might owe by using free tax calculators on the Internet. One is http:///www.efile.com/tax-service/tax-calculator/.
Here are five reasons to start that return now.
1. You still have time to hunt down missing receipts.
The days of automatically getting a letter thanking you for every little donation are over. Indeed, some smaller churches and nonprofits are asking donors to request documentation.
If you claim a tax deduction of $500 or less, you need a standard statement from a charity for a non-cash gift of $250 or more. For a larger deduction, you need a Form 1098-C, or a similar statement, from the charitable organization.
If you donate a car, truck, boat or plane, you cannot claim a write-off that’s more than $500 if the charity does not give you a Form 1098-C.
2. You’re less likely to fall victim to scams.
The N.C. Attorney General says that scams seeking to take advantage of taxpayers are common leading up to the filing deadline. One such scam includes an official-looking IRS logo and claims that the recipient owes a $10,000 penalty for “not filing the income tax return prior to January 31, 2012.” The message says the penalty may be waived and prompts the taxpayer to click on a link and enter a website for more information. Other fraudulent emails tell people they are owed money by the IRS and ask them to provide their bank account number to get a refund.
3. Individuals still have time to fund an IRA, which can help reduce their tax burden. Small business owners can still fund an employee retirement plan.
4. You don’t have to pay now. If you’ve held off because you owe Uncle Sam and you need to see one more paycheck before you can send a check, stop waiting and file right away. You can wait and send in what you owe by the deadline. When you electronically file a return with a balance due, the software provides a voucher you can print out and later mail with your payment.
The advantage in filing early, even if you can’t pay, is that you can spot any fraud early on. For instance, you’d know sooner rather than later if someone tried to file a return using your name and Social Security number to get a refund — and identity thieves are doing just that this tax season. If that happens to you, contact the IRS identity protection specialized unit at 800-908-4490.
5. There’s time to get help. If you start working on your taxes and it’s just too much to handle, you can still get help — often free — from a taxpayer assistance program, such as AARP Tax Aide or Volunteer Income Tax Assistance. You’ll need your Social Security card, a valid photo ID, wage and earning statements, a check book for routing and accounting numbers for direct deposit of any refunds, and a copy of last year’s returns if available. If you’re married and filing jointly, you’ll both need to be there to sign the return or have a valid power of attorney for the missing spouse.
ONE MORE DEADLINE:
April 17 is also the deadline for filing 2008 returns.
Yes, if you didn’t file a return because you didn’t think you made enough money, you might want to reconsider. According to the IRS, 30,800 people in North Carolina could qualify for a 2008 refund. The average refund amount would be $558.
The law allows most taxpayers a three-year window for the opportunity to claim a refund. There is no penalty for filing a late return that qualifies for a refund.
One caveat: If you have not filed for 2009 or 2010, any refund check may be held up until those returns are done as well.
The unclaimed money becomes the property of the U.S. Treasury.