Last Minute Tax Tips

If you've waited until the last minute to file your taxes, listen up; Stephanie AuWerter, Editor of SmartMoney.com, has some advice for filing down to the wire returns.

If you've waited until now to file your taxes, chances are you're going to need to file an extension. "The good news is it's a very short form," says AuWerter. "The bad news is that this is an extension on your paperwork - it's not an extension on any money that you owe to the IRS." That means that when you file for an extension, you should have already calculated how much you owe the government this year.

For most people, in order to calculate that number, you'll need to complete most of your tax forms anyway. But if you need some extra time to find some paperwork or are waiting on a professional consultation, an extension may be for you.

If you're having trouble paying your taxes in full, look into alternate payment options. You can charge your taxes to a credit card, but the government will add on a 2.5% convenience charge to your total. Or, you could set up a payment plan with the IRS, but there are extra charges with this option as well - a $52.00 set up fee and roughly 10% annual interest. Either option involves paying more, but if you're struggling to pay, these may be for you.

Of course, no one likes to owe money to the government. Getting a refund is more desirable. However, AuWerter suggests shooting for a smaller refund rather than a larger one. "Everyone likes a big refund, but it means that you've given an interest free loan to the IRS throughout the year," says AuWerter. If you got a large refund this year, increase the number of exemptions that you claim on your W4. Conversely, if you owed money this year, you may want to decrease the number of exemptions.

If a refund check is on its way to your mailbox, though, AuWerter suggests saving roughly 75% of it for emergencies. "A lot of Americans do not have an emergency fund right now and it's really important that you have one. You want to have 3-6 months worth of living expenses held in a cash account - particularly now when a lot of folks are losing their jobs," says AuWerter.

For more last minute tax tips, as well as additional personal financial advice, click here to visit www.SmartMoney.com.



By Erin Petrun
  • CBSNews

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