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Tip of the Week
The Internal Revenue Service estimates that one-third of Americans wait until the last minute to file their personal income tax returns (for 2011 income tax returns, the deadline has been extended to April 17). If you count yourself among that group, it's important to realize the costs could be adding up - from missing important deductions that could affect the amount of your refund to incurring penalties from the IRS for not filing on time.
The keys to paying exactly what you owe and obtaining a refund sooner are timely filing, familiarity with relevant tax deductions and credits, and proper organization, according to FindLaw.com. To help you make the most of tax season, here are some tips from FindLaw.com:
- Start a file. Somewhere in your home, create a place where you can store all the documents you'll need to complete your taxes. When W-2 forms, mortgage statements and other tax-related documents are mailed to you, put them into this location, file or box them, and check them off as they come in. In addition, keep receipts of potentially deductible items such as medical and dental expenses, tuition, daycare and after-school care expenses.
- Get help. Don't have time to figure out all the ongoing changes to tax regulations? Don't have the interest? Then get the help of a professional tax preparer immediately after you receive W-2 forms from your employer in order to complete and file your taxes before the filing deadline. The IRS offers help, too. Visit www.irs.gov for information about filing your income taxes. Check out IRS publication 17, "Your Federal Income Tax," on the IRS website. It highlights everything you need to know about filing your personal income tax return. The IRS also offers help over the phone and interactive tax assistance through its website.
- Go electronic. Every year, more and more people file their taxes electronically. Why? Because it offers ease of use and quicker tax refunds, which are typically issued two weeks after filing. In 2010, nearly 100 million Americans (70 percent of tax filers) filed their taxes electronically, using off-the-shelf tax preparation software or the IRS website's filing page, according to IRS estimates. Electronic filing can reduce math errors and the cost of paying for return receipts at the post office. When you file electronically, consider using direct deposit, which authorizes the IRS to deposit your refund directly into your checking account instead of sending you a check in the mail.
- Don't avoid filing. Some people, especially those who are self-employed or have been laid off, worry that they can't pay the full amount of taxes they owe. Therefore, they avoid filing. Don't do it. It will only make matters worse. First, give yourself time by filing for an extension, which gives you up to six months to file a return. Second, it's better to pay something rather than nothing if you owe on your taxes. A non-payment of your taxes can result in penalties and interest. Even a partial payment can reduce your penalties and shows good faith if you're audited.
- Keep your returns. In the event that you're audited, it's important to have up to seven years of previously filed income tax returns on file. These are also useful in preparing current income tax returns, and may be valuable to your estate's executor if you become incapacitated or die unexpectedly.
Distressed consumers, worried about paying bills or buying food for their families, are turning to payday loans for fast cash. While many borrowers believe they can pay off the loans quickly, the Better Business Bureau warns payday loans may have long-lasting and devastating effects.
Obtaining a payday loan can be very expensive. Driven by the need for quick cash the borrower will generally write a personal check for the amount they want to borrow plus a fee charged by the lender. The fee may vary, but as a rule of thumb it is a percentage of the face value of the amount borrowed.
Once the consumer makes out the post-dated check, the lender will provide the cash amount of the money borrowed and wait until the consumer's next payday to deposit the check. The problems begin when the consumer is unable to pay off the debt and must extend the loan. These roll-overs come with a very expensive fee for extending the debt often ending with the borrower paying interest rates as high as 400 percent.
"Consumers should be extremely cautious when considering loans either from an online business or a neighborhood loan office," said Steve J. Bernas of the Better Business Bureau. "Payday loans can trap borrowers in a revolving door of debt that can be difficult to escape. When borrowers discover their loan repayments leave them unable to meet their bills, they are forced to take out additional payday loans."
For more consumer tips, visit www.bbb.org.
According to The Street, here are 10 cities poised for greatness in 2012:
San Jose, Calif.
Number to Know
3: According to meteorologists, January was the third warmest month in 50 years, and clothing retailers are hurting because of that. Quarterly sales were down at places such as Abercrombie & Fitch and Ann Inc.
Online retailer Amazon announced just before the Super Bowl that it is launching a Sports Collectibles & Memorabilia beta. The site will offer cards, jerseys and much more.
GateHouse News Service