April 15, 2013
(Reuters) – Tax day this year falls on a Monday, making it all the more enticing for procrastinators to attempt to cram in all
their accounting on the weekend prior. If this is your plan, you have a little bit of an excuse: The tax season started slowly as the Internal Revenue Service reworked many forms, as required by the year-end tax changes. But that doesn’t make it any less painful now.
If you’re among the procrastinators, here are eight last-minute things to consider:
1. IRA contributions
If you’ve put off your taxes till the last minute, chances are you’ve postponed making contributions to any Individual Retirement
Accounts, too. That deadline is the same as your tax return. The 2012 limits are $5,000 ($6,000 if you’re 50 or older), and can go to either a traditional IRA, a Roth IRA, or be split between the two. If you’re among the minority thinking ahead, the limits go up in 2013 – to $5,500 for everyone, and $6,500 for those allowed to make “catch-up” contributions.
If you’re sitting at your dining room table on April 14 and still haven’t taken care of this, you can claim the deduction on your return before you make it, as long as you invest the money on April 15 – on your way to the post office.
2. HSA contributions
If you were covered by a high-deductible insurance plan in 2012, as Americans increasingly are, you also have until April 15 to make a tax-deductible contribution to a Health Savings Account. The maximums are $3,100 for singles and $6,250 for families (with catch-up contributions of as much as $2,000 for those over 55). Like an IRA, the money in an HSA grows tax-free – and you can withdraw it tax-free, too, as long as you use it for uninsured medical expenses.
The tax-time bonus: It’s a potentially large deduction that you can take even if you don’t itemize.
3. Education tax breaks
If you have kids in school, don’t forget to take your tax breaks, even if sorting them gets complicated. There are a few different credits and deductions, but the best one, if you qualify – undergraduate education only – is the American opportunity credit. It’s worth $2,500.
If you need records at the last minute for student loan interest or 529 Plan contributions, you should be able to find those through
your online accounts.
4. Charitable deductions
When you’re pulling your records together, don’t forget any under-the-radar charitable write-offs. If you gave money to a qualified non-profit through automatic payroll deductions, it is deductible. So, too, is that pizza you bought for a homeless shelter and the miles you drove (at 14 cents a mile) to help a qualified charity do repair work in a Hurricane Sandy-ravaged location.
If you’re looking for information at the last minute, go through your credit card statements (log on to your bank online if you didn’t save them in hard copy) to search for forgotten charitable donations, and search your calendar to jog your memory.
5. Medical expenses
Not everyone will qualify to write off their medical expenses, but if your health costs were high relative to your income – either because your earnings were squeezed or because you had medical issues – it’s a valuable deduction. You have to itemize to take this deduction, and you qualify only if your medical costs go above 7.5 percent of your adjusted gross income.
On the plus side: For tax purposes, medical expenses include a vast array of spending, from eyeglasses and hearing aids to travel to medical appointments (at 23 cents a mile), and even some long-term care insurance premiums.
To tally up all the year’s costs, review any records you kept, and then search through your credit card statements, your health insurance website to capture any co-pays that you might have paid for in cash and online prescription drug ordering history.
6. Capital gains, capital losses
The one bright spot to taking losses in this volatile market is that you’ll see some value at tax time. You can use those investment losses (including any “tax loss carry forward” rolled over from previous years) to offset your gains, and then take a $3,000 deduction against income.
Pay attention to the details: If you’ve been reinvesting dividends, you may need to account for the “wash sale” rule, in which capital losses are prohibited to the extent that you bought a similar stock or fund back too quickly.
The increased disclosure on “cost basis” (the purchase value of your investments for tax purposes) reported on the 1099 forms you received (and may have ignored) makes it easier to fill out your tax returns last minute.
If you find mistakes, though, you may need to file an extension in order to have time to sort out the issue with your broker before
filing your return.
If you just can’t get it together to get your tax return in on time, file for an extension to avoid the hefty penalties for late filing. It’s automatic, and it lasts for six months, until October 15th. But caveat emptor: Getting an extension does not extend the time you have to pay your taxes, so if you think you’ll owe, it’s best to send a guesstimated payment to minimize any late-payment penalties.
8. Check your return and check it again
Taxpayers make all kinds of errors on their returns, from basic math (though tax software has generally cut down on those) to forgetting to claim your kids as dependents (or, perhaps worse, claiming them at the same time your former spouse does) to messing up Social Security numbers. Go over your return carefully. And if you do owe, make sure you’ve got the cash in your checking account to cover the payment. The last thing you want is for your check to the U.S. Treasury to bounce.