Not Quite Last Minute Tax Tips

With just two weeks to go until Tax Day, many taxpayers are scrambling to finalize their returns. The race to finish up, however, can sometimes result in mistakes, including missed opportunities to save on tax dollars. Before you sign your return, consider these not quite last minute tax tips courtesy of Bloomberg BNA:

Double-check your direct deposit information. Making sure your direct deposit information is correct can save a lot of headaches should your refund get lost. Refunds sent to the wrong account can be extremely difficult or even impossible to recover.
Gather the required support for your charitable donations. Make sure you are not missing any required charitable acknowledgment letters and that you have qualified appraisals for donated items.
Save documentation of health care coverage. Make sure to keep records on hand to verify that you have health care coverage. Although the IRS does not require you to submit documentation with your tax return, this is a good time to make sure you have it should you need it in the future.
Don’t forget to get credit for energy-saving appliances you purchased. Make sure you don’t miss out on a tax credit for that energy efficient water heater or air conditioning system you purchased. But be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. If you didn’t keep the paperwork, you can usually find the certification on the manufacturer’s website. You don’t need to include this with your return, but it’s a good idea to save it now with your tax records.
Pay attention to the difference between Federal and state taxes. Don’t overlook state tax benefits that differ from federal. For example, some states allow a deduction that the IRS does not allow for contributions to their state’s education savings plan (also known as Section 529 plans). Also, tax-exempt interest for federal purposes, may not be tax-exempt in your home state.
Make use of a new IRS website to verify your return. In an effort to discover fraudulent returns, if the IRS suspects your return to be fraudulent, they will ask you to verify it. To make this easier, the IRS created a website for just this purpose: idverify.irs.gov. This will be significantly faster than trying to contact the IRS by phone.
Don’t overlook the tax benefits for education costs. There are many tax benefits available to help you save or pay for education costs for yourself or your children. IRS Publication 970, Tax Benefits for Education (downloads as a pdf), offers an excellent “plain-language” discussion of all the benefits.