Thursday, March 5, 2009

PersonalFinance: A survival guide for tax season

With all of the budgets, bailouts and stimulus bills flying around, one thing remains certain and, as always, it's taxes.

Confusion about all of these new provisions is not an excuse for missing the deadline that comes every year. You have to file your forms (or an extension), and pay your 2008 bill by April 15. If you're not sure what you can and cannot deduct, or where the newest tax breaks are hidden, it's time to get help.

Try not to feel bad -- after all, even Treasury Secretary Tim Geithner has gotten himself confused over his income taxes, and he's an economist and in charge of the Internal Revenue Service.

This tax season is extra complicated, but there's a silver lining to that, too: There are more ways for you to bulk up your refund if you know where to look.

Here's a guide that will save you money and anxiety at tax time.
  • Don't pay more than you have to to do your taxes. If you expect your 2008 adjusted gross income to be less than $56,000 and have a relatively straightforward return, you can prepare and file your return for free via the IRS's own file program. Start at and click on the "freefile" logo. If you're hooked on TurboTax, you can still save money by buying a lower-level of the program than publisher Intuit may try to sell you. All forms are in all versions, so even folks with self-employment income and stock losses can get by with the Deluxe edition (which includes one state's tax forms) and sells for $60 or less.
    You may get a second chance at last year's rebate. Remember those checks most taxpayers received last year? They were a $600 rebate for individuals, $1,200 for couples and $300 for each dependent child. Folks who didn't qualify earned more than $75,000 ($150,000 for couples) in 2007. But if their 2008 income fell under those limits, they may qualify now. If you didn't get the rebate last year, or if you added a child to your family last year, you may qualify for more of the rebate this year. There's a new line item on your 1040 that will let you file for this.

  • You can time-travel with your home purchase, too. If you're a first-time homebuyer who bought a house in 2009, you can get a tax credit on your 2008 taxes for 10 percent of the purchase price up to $8,000.
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