April 15th is approaching rapidly and you may be wondering if there are still ways that you can save money on your taxes this year. Well wonder no more. Here are 5 tax tips that can save you real money on your 2012 tax return, from your friends at Pronto Income Tax:
1. If you’re not going to be able to file your tax return by April 15th, file an extension. The Internal Revenue Service charges a penalty of 5 percent of the tax owed for every month or part of a month your tax return is late, up to a maximum of 25 percent of your tax due—yikes! Avoid the late filing penalty by filing an extension using Form 4868. You can also walk into a Pronto Income Tax office location and file an extension electronically. By filing an extension, you give yourself until October 15th, 2013 to file your 2012 tax return.
2. Bring all the documents and information you’ll need on the first trip to the tax office. Tax professionals are incredibly stressed and rushed as April 15th approaches. Clients who organize their paperwork ahead of time and make it relatively easy for their tax professional to complete their return will save themselves money and time. Use a comprehensive tax preparation checklist to make sure you’re ready for your tax prep appointment. This way, you will receive all the tax breaks you’re entitled to, as well as the best possible price on your tax preparation fee.
3. Remember often-forgotten deductions. Mortgage insurance (for instance, if you have an FHA home loan), non-cash donations such as giving furniture or clothing to Goodwill, and student loan interest are, in our experience, the three most often-forgotten tax deductions of 2012. Remember these deductions and save yourself a couple bucks, every dollar counts!
4. Don’t wait until the absolute last minute. Especially with this year’s IRS delays on certain tax forms, many, many, many people will be filing taxes last minute; some estimates are that up to 30 percent of all tax returns are filed in the last week before April 15th. To summarize, the last few days of this tax season are likely to be extremely chaotic. Get in before April 10th and increase your chances of getting your taxes done error-free and to your best advantage.
5. Contribute to a Traditional IRA. For taxpayers who qualify, a contribution to an Individual Retirement Account (IRA) may lower your tax liability considerably. Qualified taxpayers can contribute up to $5,000 anytime up until April 15th, and take a tax deduction for the contribution amount on your 2012 tax return. How much you can save depends on your tax brackets on both the federal and the state (ask your tax preparer). In many cases, a contribution of $5,000 to a Traditional IRA will result in an immediate tax income savings of $1,700 or more.