Procrastinate on Your Taxes? Try These Tips

We all know someone who waits until the last minute to file taxes, and, in fact, that someone might be you. Don’t worry about rushing and making a mistake. Filing for an extension may be the best advice for last-minute tax filers.

“What most people don’t know, is you lower your chances of audit as long as you file before Aug. 10,” said Thom Swick, an Enrolled Agent and Tax Specialist with an office in La Cañada.

To receive extra time to complete taxes, an extension needs to be filed before Monday’s deadline. An extension gives taxpayers until October to file. However, Swick explained, the IRS bases audits on “when they come in,” with an increase in audits around the April filing deadline and from August 15 to the extension deadline in October.

Do keep in mind, though, if you are going to owe money, even if you file for an extension, you need to send that check by April 18, said Los Angeles tax preparer Marga Bakker, of Marga Bakker Tax & Financial Services. If you don't have the money to send now, expect to pay interest on it until the IRS receives it, she added.

Another thing to keep in mind is the value of items you have donated to charity - something Swick said often goes underestimated and is one of the biggest mistakes tax filers make.

“The IRS is more generous than people think,” Swick said, noting that taxpayers should take pictures of the items they donate and pay close attention to a value chart provided by the IRS.

“It’s drastically low,” Swick said of what people assume their donated items are worth.

La Cañada is home to many professionals who, Swick explained, may not realize the value of previous investments toward their careers. Items required to enter a profession, such as books for law school, art supplies, computers, and musical instruments, can be written off - no matter how long ago they were purchased – during the tax year an individual starts making money in that profession.

“But you can only claim that once,” Swick said. “At fair market value.” A library of medical books bought over the years before completing medical school would be deductible the first year a doctor earns money as a doctor.

Additionally, bribing your boss pays off at tax time. Buying your boss a gift because he or she is awesome is not tax deductible, Swick explained; neither is the cost of your boss’ birthday gift. 

“Money as a motive is tax deductible,” Swick said. “If you give your boss a gift because you’re trying to bribe him for better pay, it’s deductible. If the motive behind what you spent is money, it’s probably deductible.”

According to The Wall Street Journal, last-minute tax filers should also pay attention to medical expenses as deductions, including health insurance premiums for the self-employed.

Also, many taxpayers may not be aware of the Making Work Pay Credit allowing credit up to $400 for an individual making less than $95,000 in 2010 and $800 for joint-filers earning less than $190,000. Taxpayers need to claim this credit by filing a Schedule M.

Professional tax preparer advise filers of the following:

• Rather than rush, reduce chances of audit by filing for an extension.
• File extended returns before Aug. 10.
• Be sure to accurately value donations to charity.
• Pay attention to medical expenses.
• Use the Making Work Pay Credit.
• Deduct all business-related expenses.
• Keep in mind that you have three years to file an amended tax return.