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Tackling Your Taxes

Get organized. You can significantly reduce the amount of time that it takes to prepare your tax return if all of your financial records are in one place. You will want to make sure that you have all your income and deduction documents handy and a copy of last year's tax returns available for reference.

Don't procrastinate. If you have lost paperwork or if some information is missing, waiting to the last minute may prevent you from obtaining all the forms and documents that you need to file your tax return on time.

• Paid earnings from employment including bonuses and commissions.
• Gains from investments including dividends and profits from the sale of an asset.
• Social Security benefits.
• Tax refunds for the previous year.
• Pension income.
• Unemployment compensation.
• Miscellaneous income such as interest on a savings account and rental fees.
• Monetary prizes and gambling winnings.
• Alimony received.
• Scholarships and fellowships.

• 401(k) salary deferrals.
• 403(b) salary deferrals
• Child support payments received.
• Gifts.
• Inheritances.
• Life Insurance proceeds received.
• Certain employee fringe benefits.

• One-half of self employment taxes paid.
• Self-employed health insurance premiums (limited).
• Alimony paid to an ex-spouse.
• Contributions to a traditional IRA (limited).
• Qualified moving expenses.
• Student loan interest paid.
• Penalty paid from prematurely cashing in a certificate of deposit.

• Medical expenses (costs that exceed 7.5% of your Adjusted Gross Income).
• State and local income taxes.
• Monies paid related to property including real estate taxes and mortgage interest.
• Charitable contributions (qualifications apply).
• Casualty and theft loss.

*If your itemized deductions do not exceed the standard deduction; it is better to take the standard deduction.

These lists do not include every possible item. If you have a unique situation or a question it is best to ask a professional or the IRS. The links below will help you find a professional in your area.

Other Resources

This is just a brief overview. For more information on taxes, check out these resources from FCIC and on the World Wide Web:

• Your Rights as a Financial Planning Client
• Top Ten Ways to Prepare for Retirement
• The Consumer Almanac

• Publications available for ordering from the Money Page

Websites*:

• Department of the Treasury: Internal Revenue Service
• H&R Block
• Tax Planning: U.S.
• Tax Resources on the Web
• The Tax Prophet
• Uncle Fed's Tax Board

*If you click on these links, you are leaving FCIC's website. Please bookmark us before you leave so you can return easily. FCIC is not responsible for the content of these websites.

February 2002
Revised: December 2005

For more information on other popular consumer issues check out FCIC's Consumer Focus Archive.

So Many Ways to File

When you are ready to sit down and put together the pieces of your tax puzzle, here are your options:

• Paper File: If you are traditional or just like the feel of putting pen to paper, you can: 1) order the forms you need by calling 1-800-TAX-FORM (1-800-829-3676), 2) printing copies of current tax forms, or 3) picking them up at most local IRS offices, participating libraries, or post offices.
• E-File: If you are ready to toss the paper aside, filing electronically is an option. Last year over 40 million Americans used IRS e-file to file their income tax return electronically. The IRS e-file program offers a fast, accurate, safe, and convenient alternative to filing a traditional paper return. Note that downloading or purchasing software is required and you will be charged a fee for this.

What's New

• Check www.irs.gov regularly for tax law changes.
• The Tax Payer Advocate Service represents tax payer's concerns within the IRS. Call 1-877-777-4778 for more information about this service.
• Many individuals will have new addresses to file their tax returns. You can check online to find out if the address you need is correct.

Information Is at Your Fingertips

If you have any tax questions from "how long should my refund take" to "what is a refund", the answers may be just a click away.

• Frequently Asked Tax Questions and Answers.
• Tax Tips for the Current Filing Season.
• The Volunteer Income Tax Assistance Program (VITA) will assist individuals whom paid assistance may be out of reach. You can get free telephone assistance with your tax questions or locate your nearest VITA by calling 1-800-829-1040.

• Tax Tips
• Tax Tools

Last Resort

If this is April Fool's Day and you are starting to panic because things are not coming together as nicely as you had planned, don't worry. You still have options.

If you can't immediately pay your taxes, one option is to set up an installment agreement. You can do this by filing a Form 9465 or calling 1-800-829-1040. This installment option will allow you to pay what you owe in monthly payments rather than one lump sum. Note that if you must make payments, interest and penalties will apply. If that does not fit your particular financial situation, you may have a special case and be eligible for the new Tax Payer Advocate Service.

If the clock is about to run out, request an extension of time to file. You can get an automatic four-month extension of time to file, to August 15. Call 1-888-796-1074, e-file or mail a Form 4868 to the IRS. Note that the extension does not give you 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.

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