The April 15 deadline to file tax returns is quickly approaching. The paperwork and number crunching can be overwhelming for many Hoosiers. Fortunately there are tax credits and deductions as well as online and in-person assistance programs that can make filing less stressful.
Tax Credits
You may qualify for one or more tax credits, or dollar-for-dollar reductions on the amount of taxes you owe. Last year, the government created a tax credit allowing first-time home buyers who purchased a home before Dec. 1, 2009, to receive a tax credit equal to 10 percent of the purchase price, up to a maximum of $8,000.
This credit has been extended to include purchases where a contract was signed by April 30, 2010, and closed by June 30, 2010. Eligible first-time homeowners must submit their tax return by mail, along with a copy of their settlement statement and Form 5405 to claim the credit.
If you contribute to a retirement plans like a 401(k) or a traditional IRA, you may be eligible for a tax credit equal to a percentage of your contributions. However, keep in mind if you withdraw funds from your retirement account before the age of 59 1/2, you’ll be taxed on those funds and receive a 10 percent penalty when filing your tax returns.
Tax Deductions
The devastating earthquake in Haiti moved many people to donate to charities providing relief efforts. If you contributed to a qualifying charity before Feb. 28, 2010, you can list that donation as an itemized deduction on your 2009 return. Any donations made after Feb. 28 but before the end of the year can be claimed on your 2010 return.
A tax deduction for qualifying victims of investment fraud to help recover a portion of their losses exists under Internal Revenue Code Section 165. There are certain groups who target victims of investment fraud claiming to be Section 165 specialists. They typically charge between 15 to 30 percent in up-front or deferred fees out of any tax refund victims receive. In reality, any certified public accountant (CPA) is capable of helping victims claim this deduction for a reasonable fee. If you’ve been the victim of investment fraud, contact my office’s Securities Division at 1-800-223-8791.
Filing Online
I-File (www.ifile.in.gov) is an online, state-run system that lets you file Indiana individual income taxes quickly and securely. Your return is calculated automatically, and depending on whether you owe money or receive a refund, you can make payments electronically or have your refund directly deposited into your bank account. You can also check the status of your payment or refund on this site.
The Internal Revenue Service’s (IRS) Free File (www.irs.gov/freefile) provides free federal income tax preparation and electronic filing for eligible taxpayers. If your adjusted gross income is less than $57,000, you can use the traditional free file option which does all the math for you. For those with income more than $57,000, use the free file fillable form option and calculate your return manually. You can make payments electronically, request direct deposit for returns and track the status of payments or returns on this site.
Additional Assistance
The Volunteer Income Tax Assistance (VITA) program, in partnership with the IRS, United Way and several local groups, provides low- to moderate-income residents free tax information and assistance in electronic filing of their federal and Indiana tax returns. To find a VITA site in your area, dial 2-1-1 on your phone.
If you prefer working with an accountant, use the “Find a CPA” database on the Indiana CPA Society Web site (www.incpas.org) to search for a CPA in your area.
For more money management tips and tools, visit www.IndianaInvestmentWatch.com.
News
Tips for filing your tax returns
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