Last-Minute Tax Tips

We have less than two weeks left before taxes must be filed, so here are a couple of last-minute tips.

• 2010 IRA Contributions must be made by April 18, 2011.

You can open an IRA account and make a 2010 IRA contribution up until the time you file your 2010 tax return.  The 2010 IRA contribution limit is $5,000.  Your IRA contributions are generally tax deductible.  Contact your tax adviser for details.  In addition, if you are 50 years or older, you are eligible to make a 2010 IRA catch-up contribution.

• You may not e-file if you are taking the home buyer credit.

Bob Meighan, vice president of consumer advocacy at TurboTax, notes that if you are taking the home buyer credit for a house purchased in 2010, you can’t file electronically because you have to submit your closing statement as documentation.  Give yourself extra time to fill out the paperwork! 

• Beware of tax scams.

In a press release to the public last month, the IRS warned of tax scams. These scams are illegal and can lead to problems for taxpayers including significant penalties, interest and possible criminal prosecution. The schemes take several shapes, ranging from promises of large tax refunds to illegal ways of “untaxing” yourself.  Common schemes can be found here.

• Donate and receive a tax deduction.

SmartMoney.com gives these helpful tips on charitable donations: 

1. Donors may not deduct labor or time, but they may deduct expenses such as mileage, uniforms and even the cost of taking some underprivileged youths to sporting events or movies. Board members or chosen representatives also may deduct unreimbursed expenses for attending a conference or meeting. For details, see IRS publication 526. 

2. Employees who give to charities via payroll deductions at work frequently forget to include them on their personal return. “The number is on the W-2 and there’s no letter,” says Melissa Labant, an expert with the American Institute of CPAs.