The tax filing deadline of April 15 is just over a month away. A new study shows the average American only scores 51 percent, or an F, on a basic quiz about income taxes. In the latest Eye on Money segment, CBS News business analyst Jill Schlesinger breaks down the biggest questions.
"I think the big question is 'Oh my God, I have a month to go, what do I do right now?'" Schlesinger said Wednesday on "CBS This Morning." "... You will get through this, I promise, but you have to start somewhere."
First step: Get organized.
"Gather up your tax documents, the W-2s, the 1099s, take out your credit card statements from last year. You're going to be looking for some deductions," Schlesinger said.
It can also be helpful to use last year's tax returns as a guide.
Knowing whether to file online or on paper could also save you time and money. The IRS reports a less than 1 percent error rate for online returns compared to 20 percent for paper returns.
"It really is better to try to do it online," Schlesinger said. "I know there are people who are a little nervous about their electronic security -- do it online."
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Should you file yourself or hire help?
Schlesinger said for those with a simple financial life who claim the standard deduction, it isn't so difficult. There is even free filing software for people making less than $60,000.
"I should also mention there are some services that are really helpful for low and middle income taxpayers. This is the Volunteer Income Tax Assistance (VITA); there is also assistance for the elderly," Schlesinger said.
VITA's free service is generally for anyone making $53,000 or less and can also be helpful for people with disabilities or who speak a limited amount of English.
For anyone with a more complicated financial life, Schlesinger said a tax pro could come in handy.
"It'll cost you a few bucks, but it may be worth it because maybe you really do need some help," she said.
Whatever your decision, it's important to ensure your returns are error-free. Even though budget cuts slashed IRS funding, Schlesinger said about a million returns will still be audited.
"The big problem that flags an audit, a red flag, not claiming income that has been reported to you," Schlesinger said.
Most important: file, file, file. Even if you can't afford it, it's better to ask for help than try to hide.
"Penalties and interest can cost over 25 percent of what you owe, so you want to tell the IRS, 'Here's what I owe, I can't pay it now,'" Schlesinger said. "You can get a 120-day extension; you can try to get a compromise."
While she doesn't advise it, Schlesinger said you could put the amount owed on a credit card.
"Not my favorite thing because that's very costly," she said.
As for financial contributions toward an IRA, Schlesinger recommended $5,500, or for people over the age of 50, $6,500.
"Roth, you don't get a deduction right now. A traditional IRA, you do get a deduction today, but you have to pay tax when you pull the money out later in retirement," Schlesinger said.