Haven't filed your taxes yet? Well, you're not alone. In fact, there are 40 million Americans in your company according to the IRS. “Today” financial editor and Money magazine editor-at-large Jean Sherman Chatzky has tips to get your taxes done and beat the deadline.
How much time do you have?
You have to file by midnight on April 15. That means your return has to be postmarked — or alternately, you can file electronically until midnight — by April 15. The IRS is making a big push, as it has been the last couple of years, to encourage people to file electronically. They're aiming to meet the government's goal of having 80 percent of people file electronically by the year 2007 and they're making good progress. This year more than 50 percent of people are filing electronically — many of them using the Free File Service that makes e-filing free. You can find a list of the 17 private companies offering Free File by going to the Web site of the IRS at IRS.gov.
If you haven't started, what's your best move?
If your taxes are relatively simple, go the electronic route by using a tax software program or Web site like TurboTax.com. Not only does this slash your filing time dramatically, but using tax software and then e-filing reduces your chances of making mistakes to 1 percent. Returns that are filled out by hand — paper returns — have an error rate of 20 percent.
What about tax preparation services like H&R Block?
We spoke with the folks at H&R Block and they say they'll stay open until the last client is served, all the way up to the midnight deadline if need be. Calling ahead to confirm is probably a good idea. If you go to an H&R Block office — or any other tax prep company — it's important to be sure that you have all of your documents with you. So get organized before you head in.
What sort of mistakes are people making?
The big mistake this year — and it's one that 2 million Americans have made so far — is with the Child Tax Credit. Last summer 25 million Americans got checks from the IRS that were advances on their 2003 Child Tax Credit. If you received one of those, you have to remember to account for it on line 49 of your form. If you don't do it, the IRS will make the correction for you, but it will slow your refund. Make sure you double check social security numbers and double check your math for accuracy. You should also double check the fact that you've signed your return. These types of mistakes are — and I don't want to beat a dead horse — yet another reason e-filing pays off. The IRS computers can match social security numbers as they come in. If you're missing a digit or have transposed a digit, your return will be bumped back to you immediately and you'll have a chance to correct the mistake.
What if you can't make the deadline?
If you can't make the deadline, then you can request an automatic extension by filling out form 4868. This form, like all others, is easily accessible at IRS.gov, though you can also pick many forms up at libraries and post offices. However, an extension is an extension to file, it's not an extension to pay. If you owe the IRS money, you have to pay at least 90 percent of it by the tax deadline or risk being subject to late payment penalties and interest currently running 5 percent a year. How do you know how much that is? A good rule of thumb is to use the amount you owed last year, particularly if your situation hasn't changed. But by all means, file even if you can't pay. The penalty for not filing on time is 5 percent per month of the balance owed. If you file more than 60 days late, the minimum penalty is $100 or the balance due, whichever is less.
Finally, the IRS says it's not necessary to send your return by return receipt mail — though you may want to do that for your peace of mind. If you e-file, you'll get an electronic return receipt within 48 hours.
Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Copyright © 2004. For more information, go to her Web site, .