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Not many people enjoy tax time, but there are ways to make it less painful. Here are some tips to reduce stress and make it less likely that the IRS will come knocking on your door:
By Times staff writer
© St. Petersburg Times
published February 23, 2003
1. Organize your paperwork. Assemble W2, 1099 and other tax forms you've gotten in the mail, along with receipts or other records to substantiate deductions. If you have sold an investment, locate records of your purchase and any dividends reinvested.
2. Check the numbers. Compare your W2 and 1099 forms to paychecks, bank and brokerage statements and other records in your possession. If you find a mistake, ask the issuer to send you a corrected form.
3. Learn from history. Look at last year's return to make sure you aren't overlooking any deductions or credits. Also, check for investment losses that can be carried over to this year's return.
4. Consider a pro. If you own a business or rental property or have complicated investments, you're an obvious candidate for professional help. You also might benefit if you recently made a major move affecting your finances, such as getting married or divorced, buying a house or retiring.
5. Stay up to date. Even if your financial situation stays the same, the tax law changes. If you do your own return, read up on the changes or use tax software at home or online (see www.irs.gov for links to free filing sites).
6. Master the math. Use a calculator or a computer to make sure your calculations are correct.
7. Skip dubious deductions. Don't try deducting credit card interest, health club dues, diet food, funeral expenses, life insurance premiums, vehicle registration fees or a loss on the sale of your home. They're red flags for IRS auditors.
8. Treasure your dependents. Make sure the names and Social Security numbers on your return match those on Social Security cards. When parents file separately, only one gets the exemption for the child, usually the custodial parent.
9. Keep a copy. Put a copy of your return and supporting documents in a safe place. Save your tax returns at least six years in case you are audited.
10. File on time. Make sure your return is on its way by midnight April 15, or file Form 4868 instead for an automatic four-month extension. If you file electronically, you can file any time and wait until April 15 to make your payment. An extension of time to file is not an extension of time to pay.
-- Compiled by Helen Huntley