Five Tips To Avoid Tax Time Stress

For help with your Tax Return Preparation or Tax Planning, call Teri at 678-763-1372

IRS Tax Tip 2009-50

Are you looking for ways to avoid the last-minute rush for doing your taxes?  Here are some stress-relieving tips to help you.

1. Don't Procrastinate - Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

2. Visit the IRS Online - In 2008, there were more than 330 million visits to IRS.gov.  Anyone with internet access can find tax law information and answers to frequently asked tax. questions.

3. File your Return Electronically - Nearly 90 million taxpayers filed their returns electronically in 2008.  Aside fro the ease of filing, IRS e-file is the fastest and most accurate way to file a tax return.  If you are due a refund, the waiting time for e-filers is half that of paper filers.  

4. Don't Panic if You Can't Pay - If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest.  You also should contact the IRS to discuss your payment options at 1-800-929-1040.  The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise.  More than 75% of taxpayers eligible for an Installment Agreement can apply using the Web-based Online Payment Agreement application available on IRS.gov.  To find out more about this simple and convenient process type "online Payment Agreement" in the search box on the IRS.gov homepage.

5. Request an Extension of Time to File - But Pay on Time - You can get an automatic six month extension to file to October 15, 2009.  However, this extension of time to file does not give ou more time to pay any taxes due.  You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90% of your total tax by that date.  See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Tax Return for a variety of easy ways to apply for an extension.  Form 4868 is available at IRS.gov or by calling 1-800-TAX-FORM (800-829-3676).  Taxpayers needing a Form 4868 should act soon to be sure they have the item in time to meet the April deadline.

RMD suspended for 2009

The new Worker, Retiree and Employer Recovery Act of 2008 was passed and signed into law by President Bush in December 2008.  The law provides a break for elderly taxpayers who normally have to take their RMD (required minimum distribution) from their IRAs and other qualified plans each year.  These RMDs have been suspended for 2009.

This does not apply to RMDs that have been postponed from 2008.  If you missed fulfilling the 2008 RMD, you are not exempt.  You must still complete the RMD withdrawal plus and resulting penalties to the IRS.  Also, if you turned 70 1/2 in 2008, you have until April 1, 2009 to fulfill your 2008 RMD.  For your first distribution, you may wait to take that distribution until April 1st of the year after you turn 70 1/2.

Additional Standard Deduction for Real Estate Taxes

Do you pay state or local real estate taxes but don't qualify to itemize your deductions?  

For Tax Years 2008 and 2009, if you pay state or local real estate taxes, you may take an addition to the standard deduction.  

What you need to know about the additional standard deduction for real estate taxes:

1. The additional deduction is equal to the amount of of real estate taxes 

paid up to $5oo for single filers or $1000 for joint filers.

2. You must have paid the taxes during your tax year and the taxes must 

have been imposed on you.

3. The taxes must be based on the assessed value of the property.  Taxes 

imposed for improvements to property, such as assessments for 

sidewalks, usually cannot be deducted.

4. Real Estate taxes paid on business or foreign property do not qualify.

5. You must file Form 1040 or 1040A to claim the additional deduction.

Form 1040 - check box on line 39c

Form 1040A - check box on line 23c

Time to Rebalance

With all the recent activity in the market, investors are uncertain what they should do.  Is it time to pull out of the market?  When is the time to get back in?  

I would like to take this time to reassure you and remind you that long term strategies are your best option.  The purpose of a long term strategy, keeping your individual goals in mind, is to diversify against risk and to hedge your portfolio against inflation.  If you have a well balanced portfolio and rebalance periodically as needed you accomplish these goals.

If you haven't rebalanced your portfolio, now is the time to do it.  The market is low and there are a lot of great deals out there.  No one can time the market, but don't wait until the market has recovered to buy!