Time is running out, there is less than two weeks until April 15, the deadline for filing your federal and state tax returns.
The good news: With very few tax changes for 2013, there aren’t any big head-scratchers to sort out this year. That’s a big change from a year ago, when the tax-filing season was delayed by a flurry of last-minute tax-law changes enacted by Congress.
But that doesn’t mean you can coast entirely this year. It’s still easy to trip yourself up with math errors, filing mistakes or even forgetting to report your fantasy football winnings.
Here are some last-minute items worth noting:
Don’t panic, but do file
“A lot of people panic this time of year,” said California Franchise Tax Board spokeswoman Denise Azimi, either because they can’t pay what they think they owe or don’t have all their paperwork together.
If that’s you, don’t avoid the April 15 deadline. You’re better off filing the return on time and paying what you can, then waiting 30 days for a billing notice with the exact amount of tax due. “You can then get on a payment plan and pay it off over time,” said Azimi. “It’ll save you a lot of headaches and money down the road.”
If you don’t file, you could be subject to penalties and interest, which can only add to your tax burden. Monthly installment plans, with a one-time startup fee, are offered by both the FTB and Internal Revenue Service.
Avoid the easy errors
One of the biggest mistakes, especially for those filing a paper return, is basic math. Double-check everything before you file.
If you’re filing an electronic form – and more than 80 percent of California and federal taxpayers now e-file their returns – the math computations will be done for you. But you can still make errors by inputting the wrong Social Security number, the incorrect tax-filing status (married, head of household, filing jointly, etc.) or mistyping your bank routing number for direct deposit of a refund.
Another common error is misstating what you paid last year in estimated tax payments. In California, it’s the No. 1 mistake on state tax returns, said Azimi. To see what was paid for 2013 taxes, taxpayers can go online and create a “MyFTB” account to access their tax history and other information.
And above all, don’t forget to sign and date your return.
Don’t overlook tax credits
When filing, be sure to look for state or federal tax credits that might apply, such as home energy-efficiency improvements, college costs, child care expenses and charitable donations.
One of the commonly overlooked credits is the federal Earned Income Tax Credit, known as the EITC. Designed to help low-income working adults, it’s a refundable credit, so even if you don’t owe taxes, you could still get money back in your pocket. (It’s federal only, not available on state returns.)
It’s based on income and family size, but can be as much as $6,000. Generally, your 2013 earned income must be below $51,567 for couples filing jointly with three children or less than $14,340 for a single with no children. To see if you qualify, search for the “EITC Assistant” tool on the IRS.gov website. The average credit last year was $2,300, according to the IRS.
Fantasy football income?
Another source of tax return errors is not reporting all your income, even from that online fantasy football league.
“If you don’t report the income, you can expect to hear from the IRS,” said Sandra Block, senior associate editor with Kiplinger personal finance magazine, in an email. If you received a Form 1099-MISC for casino winnings or a Form 1099-DIV for dividends, for instance, be assured that the IRS received a copy, too.
“The IRS views fantasy football in the same way it views gambling and lottery winnings, which are also taxable,” said Block. “Even if you find buried treasure in your backyard – as happened to a couple in Northern California last year – the found property is taxable at its fair market value.”
And she wryly noted: Stolen property is also considered taxable, but “it’s unlikely that most criminals report it.
New for donors
For charitable contributions, three new funds have been added to California tax forms: the American Red Cross, Keep Arts in School and Protect Our Coast and Oceans. They are among 20 funds listed on state tax forms, including those for Alzheimer’s research, breast cancer, seniors’ programs and state parks. Taxpayers can check a box to make contributions – in any amount – that are either deducted from their refund or added to their tax payment.
In 2011, the last year that statistics were compiled, more than 294,000 Californians made more than $4 million in donations on their tax returns, according to the FTB.
Think twice on refunds
Lots of taxpayers relish getting that refund in the mail or direct-deposited to their bank. But personal finance advisers say that’s not necessarily a good thing.
“As much as people love getting a big check from the IRS, it’s not good money management,” said Kiplinger’s Block. “By adjusting your withholding, you can give yourself an automatic raise and use the money to pay off debt or increase your retirement savings.” She recommends asking your employer to adjust your W-4 form, so you’ll immediately get more take-home pay that can be allotted to savings or debts.
And she noted, being owed a refund can make you vulnerable to fraud due to identity theft, which has been a nagging problem for the IRS. In recent years, thousands of taxpayers have discovered that someone else, using stolen Social Security or other data, has filed a tax return in their name, stealing their tax refund. As part of a beefed-up enforcement effort, the IRS said this week that it prevented $17.8 billion in refund-fraud attempts in 2013, obtaining more than 1,000 indictments and 400 convictions of tax return fraudsters.
Ask for help
With the tax-filing deadline just days away, don’t despair. Sharpen those pencils or, better yet, hit the computer keyboard, pick up the phone or seek out free tax-preparation help that’s still available through April 15.
Last-minute help for filing taxes
Franchise Tax Board
For help with your California tax return, call (800) 852-5711 or go online: www.ftb.ca.gov. The website has tax forms, links for free e-filing and answers to frequently asked questions. Taxpayers can also chat online with an FTB tax agent weekdays from 7 a.m. to 5 p.m. (Click on “FTB LiveChat” on the home page). Walk-in help is also available, 8 a.m. to 5 p.m. weekdays, at the FTB’s Sacramento office, 3321 Power Inn Road, Suite 250. You can also find instructional videos on FTB tax topics at YouTube.com.
In Sacramento, the local IRS office, at 4330 Watt Ave., is open weekdays from 8:30 a.m. to 4:30 p.m. (The office will stay open until 6 p.m. on April 14-15.) Taxpayers can pick up forms and get tax-filing help from IRS staffers. Or call the IRS at (800) 829-1040 (7 a.m. to 7 p.m. local time) or go online to: www.irs.gov. The IRS has dozens of tax-filing videos on YouTube and a free mobile app – IRS2Go – for iPhone and Android phones.
Get free tax-preparation help through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, held at various community locations (libraries, schools, churches, etc.) in every county. Volunteers answer questions and will help file returns, primarily for those with incomes below $52,000, the disabled and those over 60. Search IRS.gov by ZIP code to find the nearest locations, including those with bilingual help in Cantonese, Russian, Spanish, Vietnamese and other languages.