For years, I have done our tax returns myself using tax preparation software from Intuite or H&R Block. The reason for not using a CPA for our taxes wasn’t about a few hundred dollars we have saved by filing our taxes ourself, but that with software tools like TurboTax and TaxCut, I felt that we don’t really need to be a tax expert in order to file our own taxes. I mean whether it’s TurboTax or TaxCut, the software basically asks everybody the same sets of questions that pretty much cover every possible deduction we can legally have. And if tax pros are using the same software as I am, I don’t see why the two results should be significantly different. With this reasoning, I have resisted the idea of hiring a professional for our taxes and insisted on doing the job myself. The whole process usually only took a day or two to finish,  so it was a lot of efforts, even though we had a lot of forms needed to be entered into the software manually.

Even though I don’t mind keeping the task to myself, I have to admit that I am not very happy with the job I did so far. For the past few years, we owed taxes on the filing day every year. While paying more taxes means you make more money, I had no idea whether there was any dedution that we could have used, but was ignored instead because, after all, I am still not a professional and there are many rules that I don’t know, even with the help from the tax preparation software. And since there is nobody we could ask to check our filings, I am not entirely confident about whether I have done everything correctly or not.

This year, I got the TurboTax as I always did in the past and started preparing our 2011 tax returns in early March (I am in no rush to finish and file it early because, again, we will owe taxes even though I have made estimated tax payments throughout the year and withheld additional taxes on my paychecks). Then mid-way through the process, I changed my mind and wanted to have a CPA do the job for us. The reason was that I wanted to see whether there will be any difference between what the CPA does for us and my own preparation. Since I already have the software, I thought I could continue what I have already started as if I were still filing it myself and compare my data with the CPA’s at the end. If the accountant could reduce our tax liability by $400 (that’s how much the service will cost us) or more, then it’s worth it. Also, after the taxes are done, I want to hear from the CPA regarding what we could still do this year to lower our taxes in 2012, especially the business I run on the side.

So over the week, I had the first meeting with the accountant and turned over our tax documents together with last year’s 1040. Surprisingly, he didn’t ask for any additional document that I didn’t prepare for him, except the 8801 Form from last year. In about a week, I will know whether the $400 was well spent or not.

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Since we are only a few days into the new year, it’s still probably too early for many of us to consider filing 2011 tax returns, even though the 2012 tax season began on January 1st. Every year in the past few years, I waited until the last day to mail out our tax forms. This year, I will likely do the same because it looks like we will again owe taxes to the IRS.

The last day to file taxes is usually April 15th, but do you know when is the 2012 tax due date for your 2011 income taxes? Well, if you are one of those who always file taxes on the due date, or for whatever reason, could use a few extra days to prepare your taxes, there’s a good news this year. The IRS yesterday announced the 2012 tax deadline to file 2011 tax returns and we all get an extension automatically, because this year April 15 falls on a Sunday, and Monday is Emancipation Day, a holiday in Washington D.C. that celebrates the freeing of slaves in the district. thanks to a holiday in D.C which happens to be on Friday April 15th this year. So the new 2012 tax day for filing 2011 Federal income tax returns is April 17, 2012. That’s the last day to file your 2011 income taxes.

Taxpayers will have until Tuesday, April 17, to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16. According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year. Taxpayers requesting an extension will have until Oct. 15 to file their 2012 tax returns.

Isn’t this nice?

If you anticipate a refund, the sooner you file, the earlier you will receive your refund. The IRS will begin accepting e-file and Free File returns on January 17th.

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The 2011 federal income tax deadline, April 18th, is only a little over a week away. If you haven’t finished your tax return yet, there isn’t much time to wait now. I haven’t done with our tax returns yet, as many times in the past, I will probably wait till next Friday April 15th to mail the returns out. Even though I haven’t completed the filing yet, I am confident that I can get it done before the tax day. Therefor, I have no plan to file extension. However, if for some reasons that you think you won’t be able to file your 2010 federal tax on time, you should prepare to request an extension of time to file your tax return which will automatically give you another 6 months or more to prepare your federal tax. That should give you plenty of time to get thing ready for filing. But you must file the extension on or before the tax day.

If that’s the case, there are a few options for you to file an federal tax extension for 2010 income taxes, either free or with a small fee. Of these options that are to be discussed, I would recommend check out free filing first. There’s no reason to pay for the service if you can get it done for free. To file an extension for free, you can always use IRS’s free e-filing service. Currently, the IRS has two options for taxpayers seeking an extension: On IRS Free File page, you can use either

• Traditional free file, or
• Free file fillable form

to request an extension electronically. Even though there’s an income limit (less than $56,000) to use IRS Free File to file federal income tax, the Free File is free for any taxpayer to file a federal extension request from a home computer by April 15, regardless of income. As I mentioned earlier, using free e-filing to get an extension is fast, secure and convenient. Of course, you can always fill out the paper Form 4868 and mail it to IRS if you choose to do so

BTW, to qualify for an extension, you must

1. Properly estimate your 2009 tax liability using the information available to you,
2. Enter your total tax liability on line 4 of Form 4868, and
3. File Form 4868 by the regular due date of your return.

Then, there are also paid services. For example, FileLater lets you file a federal extension for $9.95 (regular price $17.95), which can be done on April 158th. Alternatively, you can also use CompleteTax to file an extension for $9.95.

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If you’re anything like me, you still have yet to file your federal income taxes for 2010. In my case, the work is already 99% done. The 1% that is left to be completed is printing out the form, writing a check and making a trip to the post office on Friday or Saturday. The reason I haven’t filed my return is that since I owe money for last year, I don’t have the urge to send the government my check. Whether you’re delaying parting with your money until the very last minute (this year’s tax day is April 18th) or you’re just a procrastinator, there are a few things you’ll want to make sure you pay attention to when you file your tax return during the next few days. Following are some last minutes tips to help reduce your tax liability.

Itemized Deductions

A lot of people will take the standardized deduction on their tax return because it’s less hassle and less paperwork.  But that thinking could be costly to you if you choose to ignore itemized deductions.  Anything from state and local income taxes, property taxes to medical expenses, mortgage interest and charitable contributions are all tax deductible.  Gathering all the necessary paperwork will require some extra work but do the smart thing.  Spend the extra time and save yourself some money.

Charitable Contributions

All of those little $20 donations can really start to add up for you but only if you keep track of all of them.  Dig up those receipts, confirmation letters and bank statements to make sure you’re not missing anything.

Keep in mind also that any contributions you made to Haiti relief during the beginning of 2010 you can deduct toward your 2009 tax return.  You won’t need to wait until next year.

E-Filing

This one has nothing to do with how much you’ll pay in taxes but instead the way you file your taxes.  Most Americans now choose to file their taxes electronically but if you’re one of the ones that still files via snail mail, consider making the switch to e-filing.  Among many benefits of using e-filing, your return will get filed faster and you’ll get your refund back faster too, if you are getting one.

IRA Contributions

If you’ve completed your return and find that your bill is a little higher than you’d like, you still have the chance to lower it by contributing to an individual retirement account.  The IRS gives you until April 18th to make your 2010 contribution of $5,000 into your IRA accounts.  Roth IRA contributions won’t give you any tax benefit this year but if you qualify to make a deductible traditional IRA contribution do it and take the tax deduction to reduce what you owe. There are many brokers offering incentive for starting a new IRA account (see which broker is the best for an IRA account).

Big Refund

Getting a big fat refund check in the mail from the IRS might be one of your favorite moments of the year but financially it doesn’t make a whole lot of sense.  That big refund ultimately is an interest-free loan you’ve made to the government.  Granted interest rates are miniscule right now but in normal times that money is better served sitting in your own account earning interest and remaining available for your use throughout the year.

If you’re one of those getting a big refund, contact your HR department to adjust the withholding on your paycheck so you get back that money throughout the year.

Filing An Extension

If there’s just no human way that you’re going to be able to file your tax return by April 18th, make sure you file Form 4868 to request an extension on filing your taxes.  This will give you until August 18th to get everything in order.

One thing though – filing for an extension won’t give you extra time to pay.  If you don’t pay up by April 18th, you’ll owe interest and penalties on the amount that you owe to the IRS.

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Nothing hurts more than actually shelling out cash to prepare taxes. Except, that is, shelling out cash to pay taxes. If you do happen to opt for the prior, you’re in good company. Many of us choose to employ the assistance of a professional to help whittle down what we owe to Uncle Sam. Fortunately, though, there are many ways to cut down the costs of this process, too.

Before plunking down money for any tax assistance, exploit all the free help that’s already out there, including free filing and free tax consultation. Many local libraries not only offer printed tax forms and publications for patron convenience, but also offer drop-in or by appointment tax help for completely free.

As with everything in life, the more you’re willing to do and take on yourself, the more you can save, including when it comes to preparing and filing taxes. The plethora of tax software and sites out there is a great mix of DIY and the professional guidance that makes maximizing your refund and lowering your liability easier. If this route appeals to you, consider purchasing the software at your club warehouse store at a discounted price. If you’d rather take advantage of an online tax service, find out if accessing it via your financial institution’s site or another site can actually save you money. As a service and added perk to members, many companies and organizations offer links to such services at tax time that provide a discounted fee when accessed via their site specifically. The financial difference between accessing and logging in to a tax service site directly and through a third-party site can be substantial.

If you have a simple tax situation, there are many ways to file your tax return for free. For more specific tax preparation savings opportunities, there’s a bunch of discount codes and virtual coupons out there just waiting for the taking (or rather clicking!). For example, on a website called savings.com, you can find coupon codes for tax preparation softwares, such as H&R Block At Home, TurboTax, as well as discount codes for in person tax filing services from Jackson Hewitt, etc.

Don’t forget, too, that knowledge is not just power, but the power to save. Go directly to the source to find answers to your tax questions for free: the IRS. While waits on the telephone can be admittedly agonizingly long (I’ve drained my cordless phone many times…), much of the same information can be obtained easily and at your own convenience 24/7 at their site. Should you opt to pick up the phone anyway, you can reach the IRS directly at 1-800-829-1040 Monday through Friday from 7am to 10pm local time. Be sure to have your tax paperwork with you when you call and a paper and pen ready. As soon as you’re lucky enough to have a live person on the other end, they’ll spit out their tax ID number at you faster than you can actually process the information. Do make a note of this information and the day and time you called, though, and tuck it away with your tax paperwork. It never hurts to be able to substantiate your efforts to do your taxes correctly. Remember, no one has the right to evade taxes, but everyone has the right to lower their tax liability to the fullest extent of the law.

BTW, there’s only one week until the 2011 tax deadline, April 18th. If you just start to prepare for your return, don’t forget to check out these last minute tax tips.

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