If you are thinking about taking the standard deduction -- which two-thirds of all taxpayers do -- there are some new things this year which could save you some money. First, single filers can now claim $5,350, up $200 from 2006. Married couples filing jointly can now claim $10,700, up $400 from 2006.
For those who will use the last hours to itemize their deductions, there are some deductions which expire this year which you should definitely take advantage of as well.
If you made energy efficient improvements to your home in 2007, this may be your final opportunity to get a credit. You can get up to $500 for remodeling projects, like added insulation, and $200 for energy-efficient windows -- these credits expire this year. The most generous, environmentally-friendly tax credit is for solar upgrades -- up to $2,000. These solar tax credits expire in 2008.
The Deal With the Stimulus Package
In mid-February, President George Bush signed the economic stimulus act, which provides rebates ranging from $300 to $1,200 to taxpayers who file a 2007 tax return. More than 130 million households will receive a check in the mail.
However, if you do not file, you do not get a rebate. The IRS expects the first 34 million rebate checks will be mailed out beginning May 2, and the last checks should be mailed by early July.
Commonly Missed Deductions
Some of the most commonly missed deductions are for teachers who miss out on a deduction of up to $250 for books or classroom expenses. Also, parents who paid college tuition in 2007 can deduct up to $4,000. Both of these deductions do not require the taxpayer to itemize their return.
For those taxpayers who itemize, the declining stock market does have a silver lining when it comes to taxes. You can deduct some of your losses to offset gains -- a sweetener for the otherwise sour stock market for investors.
The bottom line is you need to file to get a refund. The IRS is holding billions of dollars in refunds for taxpayers who have not filed a return. In my home state of Illinois, more than 50,000 people are owed an average of $608 -- money they will never see unless they file.
If you are an active member of the military and are serving in Iraq, Afghanistan or another combat zone, you have an additional 180 days to file after you are relieved from the combat zone.
Additionally, for taxpayers living in parts of the country, like Illinois, Georgia, Missouri and Arkansas -- where unfortunate disasters have taken place: floods and tornadoes -- your deadlines have been extended into May. If you think you are in an area which has been affected by a storm and the IRS has granted a special extension, either log on to http://www.IRS.gov or call 1-800-829-1040.
Procrastinators' Best Filing Option
E-filing is absolutely a much more efficient way to file. In fact, on average it takes about two hours to prepare your return to e-file versus more than 10 hours to file with traditional pen and paper.
According to the IRS, as of March 28, more than 62 million of the 87 million individual returns received, or 71 percent, were filed electronically. Not only does e-filing decrease your chances of making a mistake, it also speeds up your refund.
As of that date, 80 percent of all returns filed this year have received an average refund of $2,464 -- that is real money which can help pay off nagging credit card bills and other debts.
Final Check List
This is all about dotting your I's and crossing your T's. The IRS is a stickler for accuracy and is more likely to audit a return with a mistake -- even if it is just a minor one or immaterial. For those who do not e-file, here is my last minute check list:
Wrong Numbers: Be sure to provide correct social security numbers for yourself, your spouse and your dependents. According to the IRS, this is the second most common mistake on returns. Accuracy is everything -- missing one number or writing an incorrect number can slow down your refund, if you are owed one.
Incorrect Deductions: Missing information and drastic increases in income are known to draw attention and potentially result in an audit. So, do not be overzealous with deductions, and make an extra effort to be detail-oriented when completing your return.
Missing Signature: Neglecting to provide your John Hancock is a frequent mistake among paper filers. If you do not sign it, you did not file it. If you are filing jointly, you must have both signatures. Think of this like endorsing a check -- without the signature, your deposit is not valid.
Silly Math Errors: As math mistakes are common, double-check your math before you file.
What to Do If You Fail to Meet the Deadline
Realize that you are not alone. The IRS expects to receive 10.3 million extension requests by tomorrow. If you cannot get all of your paperwork together, you can file an automatic six-month extension with form 4868 either by mail or online at http://www.IRS.gov.
Keep in mind, requesting an extension only buys you extra time to file, not additional time to pay your taxes. If you think you owe money, you will need to estimate your tax liability and make a payment now. Any unpaid taxes will be subject to interest and penalties.