EDISON - Here are some last-minute tax tips from accountant Joseph R. Petrucelli:
1) It is not too late to make tax-deductible IRA contributions. You have until April 15.
2) File electronically so you do not have to worry about the dreaded postmark date. Avoid last-minute trips to the post office and the risk of your return getting lost in the mail.
3) Organization is critical and you must maintain your records for three years.
4) The following are some of the most common filing mistakes:
a.) Math errors
b.) Numbers are different on related forms (W-2 & 1099)
c.) Misspelled names (people who recently married or divorced should make the necessary changes).
d.) Recent changes to households (children moving out, age, etc.). This can effect dependency exemptions.
e.) If you are married, you can either file jointly or married filing separately but you cannot file as a single or the head of household.
f.) Only one person can claim a dependency exemption.
5) Do not forget to reflect any foreign bank account balances that are in excess of $10,000. Form TD F 90.22.
6) If you file an extension, make sure the taxes due are paid by April 15 as failure to do so will result in penalties. The extension is used to extend the filing of your return, not to help you avoid payment when taxes are due. Use Form 4868 to file for an extension.
7) Be cautious with home office deductions and make sure you check with your town to ensure that you meet the zoning requirements. See IRS Publication 587.
8) If you have three years of losses reflected on your Schedule "C" form in any consecutive five-year period then expect to get audited. These losses will trigger the Hobby Loss provisions of the IRS code.
9) If you have a Schedule "C" business and bought equipment look at Section 179 for an immediate tax benefit. Form 4562.
10) Statute of Limitations:
a.) Fraud has no statute of limitations. However, in most cases the IRS only goes back six tax years in its review.
b.) You are entitled to a refund if you file within three years of the due date of the return. If that date passes you lose the right to your refund. If you never filed your return and owe taxes, the IRS can come after you forever.
c.) The IRS cannot come after you after three years from the filing due date. If you filed before April 15, 2013, then the IRS has until April 15, 2016 to audit your return, unless you extend it. The earlier you file the sooner the statute starts.
11) Make sure that you have the supports to back up any deductions that you plan on taking. A simple example of a support is a picture of the items you submitted to a charitable organization. You can even prove that your property was damaged during a storm by taking a picture.
12) Make sure you have accounted for all needed documents such as W-2s, W-2cs, 1099s, K-1s, and 1098s, which are reported to the IRS.
This is not intended to be an exhaustive list, but rather a guide. Consult with your tax professional for additional information.
You can reach CPA Joseph R. Petrucelli at (723) 636-4400.