Tax Tips

March 4, 2008 7:19:09 AM PST
With the April 15th filing deadline looming, the rush to the finish line is on! If you are among the 40 percent of Americans who've waited until the last minute to file your income taxes, you'll want to listen in. Jason Tyler, senior vice president of Ariel Capital Management, shares the six most common tax-filing errors and steps you can take to maximize your refund.

Know when to ask for help - should you do your taxes yourself or turn it over to an accountant?

If your income comes from wages and some simple investments, you could do it yourself. Once you start itemizing beyond the standard deductions, you should have an accountant prepare your taxes. Unless you are trained in this area, most of us do not know how tricky some deductions can be. Mortgage interest, especially if you have refinanced, and charitable contributions, which require you to include specific forms, can make your return more complicated. The Alternative Minimum Tax, which effects individuals who earn over $100,000, has its' own set of rules and regulations. A tax accountant can help you properly prepare and file.

  • Contact an accountant if you itemize beyond standard deductions.
  • Mortgage interest, charitable contributions and the Alternative Minimum Tax can complicate your filing.
  • Avoid Mistakes - double and triple check your work

    Carpenters follow a rule -- measure twice, cut once. To avoid costly and timely mistakes, a similar rule should apply when doing your taxes. Add twice, file once. Double check everything before you put your return in the mailbox. Make sure you included your Social Security Number, as well as your children and spouse's Social Security Numbers. Also do not forget to sign and date your return. Remember to include all the necessary paperwork needed to file a return. The IRS will not process your return if it does not have the date and your signature. These simple but necessary steps will make for easier filing.

  • Double check everything
  • Be sure to sign and date the return
  • How can I avoid being audited?

    Most importantly, be honest. Prepare your return as though you will be audited. Also, eliminating any errors will decrease your chance of being audited. This is another reason to check all your work. Filing electronically will greatly reduce your errors. When you e-file, your work is automatically checked for mathematical miscalculations. Less than 1% of returns filed electronically contain mistakes.

  • Be honest
  • Take advantage of electronic filing
  • What to do with your refund

    As always, the most important thing to do is pay down any high interest debt you may have. Next, use this opportunity to increase your savings account. You can have your refund automatically deposited into your account. You will be less tempted to spend it if you never had it in the first place. The average tax refund for 2006 was over $2,500. That is nice amount to send to your credit card or to your savings. Take advantage of it.

  • Pay off high interest debt
  • Automatically deposit into savings