Prepare Your Tax Returns for the IRS

April 15 comes all too soon for most of us. You can avoid the pain of a last minute rush by planning ahead. But file an extension if you must. Just remember if you owe taxes you will be paying interest on the amount owed for late filing. Use these strategies to make filing easier.

1. Check out the many computerized programs available for preparing tax returns. The most valuable features for such a program are its interview values. Programs use your answers to figure out which schedules or deductions is best for you to use.
2. Keep records through the year to avoid day-long scrambles to find important records and analyze them.
3. If you know you will receive a refund, file early. If you know you will have to pay file in April.
4. Plan for quarterly payments by opening a special savings account for tax payments and social security withholding only.
5. Electronic filing can speed up refunds by two or three weeks.
6. Consult an accountant about any special deductions you may be filing for, such as moving expense, owning a home or rent credits, and deductions for dependents.
7. Open an IRA. This deduction can save you taxes and allow you to build funds for your retirement as well.
8. Don’t be afraid to call the IRS directly for advice. This will not increase your chances for an audit.
9. Make sure all information is entered correctly and legibly. Mistakes can affect the process, and may become the red flag for an audit.
10. Remember that any regular employee of the home, such as a nanny or housekeeper must be reported to the IRS by both employer and employee.

To avoid or prepare for an audit:

1. Save all receipts, especially for unusual deductions or large purchases.
2. Keep a log for income not covered by paycheck, such as tip logs for wait persons.
3. Keep logs on travel and entertainment expenses, complete with person, company, date, and reason for the meeting. Keep a mileage log if you use your car for business purposes.
4. Check with your accountant regarding red flag items for an audit. Don’t ask to be audited by filing in a high risk category, such as deducting for home office space when you have a full time job away from home.