Getting Ready For Tax Time?
April 1, 2009
If you’re one of those people who waits until the last minute to file your taxes, you should be collecting the paperwork you’ll need to file your forms. In 2009, April 15 falls mid-week, so there are no fortuitous extensions this year.
Whether you itemize your deductions or not, you’ll need to get your papers together. If you’re employed, you should have received a W-2 form from your employer for 2008. This statement should show all wages and taxes you earned and paid, plus any taxable benefits you received, non-taxed income you paid into retirement plans, medical or child care reimbursement accounts, and life insurance premiums that you paid, or were paid on your behalf.
You’ll also want a copy of last year’s tax form. You may need information from it to document the taxes you paid last year. This can help you avoid underpayment penalties. Last year’s tax forms will also have your social security number and those of your spouse and dependents.
This year, the IRS reports that many filers are being tripped up by the stimulus check that most taxpayers received last June. In some circumstances, you may be eligible for a larger stimulus payment. This may be particularly true if you welcomed a new child into your home in 2008.
If you completed a short sale of your primary residence in 2008 and the mortgage lender forgave a portion of the principal you owed on the home, you may receive a waiver on taxes that would ordinarily be due on that forgiven debt. This waiver applies only to original mortgage debt on the primary residence. Cash-out refinances, second mortgages, and mortgages on vacation or investment properties aren’t eligible for favorable tax treatment.
If some of your non-mortgage debt was forgiven, you should have received a 1099-C from the creditor. This forgiven debt will count as income on your taxes, so be prepare! You may owe a lot more in taxes than you thought you would.
If you can’t pay your taxes in full, contact the IRS to arrange payment plans. The IRS can waive late penalties for incomplete tax payments, but they cannot waive the interest that will accrue. Talking to the IRS is critical; they’ll be less willing to waive penalties if you don’t help them understand your financial situation. Even if you can’t make your 2008 tax payment on time, file your return on time. This will help demonstrate to the IRS that you intend to pay your 2008 tax obligation.
