Yes, it’s that time of the year again. What? The other certain thing in life – yeah, filing taxes.

And you have to do it by April 15, which is less than 2 months away!

But then again, you might think there’s still plenty of time left. Indeed there is. That’s why I’m going to blog about tax deductions that you are most likely to overlook  in your 2009 tax return, hopefully until April 15 (if I find time to file my own taxes).

There’s $1.3 billion of unclaimed tax refunds sitting at IRS. Some of them could be yours! And the number of unclaimed refunds is going to increase again for sure, and I want a cut of that. If you want your share, continue reading…(duh)

Disclaimer: I am not a professional lawyer or accountant (I am a blogger), so anything written in this post might differ depending on your situation. You should seek out professional advice.

And that brings us to another point:

Don’t file your taxes without any help!

I’m assuming you’re not a tax expert of course, if you are more power to you.

Seriously, you need to get help when filing your taxes. You could be missing out on thousands of tax money you could otherwise get from IRS. So, to kick it off, I’m going to tell you what tools you have to file your taxes:

1) Professional Tax Preparation Services

These would be services like H&R Block. It provides personal tax services for you at a rather low price, and you can do it in person, via the phone, or online. The main advantage of this is that you get to meet real person if you want. After all, it could be kinda scary to expose your entire financial statement to someone else over the phone. Who knows if someone else hijacked the phone number, right? So yeah, if security is on your mind, go for H&R Block.

2) Online Tax Preparation Softwares

TaxAct and TurboTax would fit under this. I use TaxAct personally, just because I used it last year so it’s much easier to roll over prior year tax return. TurboTax has been the #1 online tax preparation software for years, and I also used it to identify potential tax deductions. Here’s a good review of the top ten online tax softwares.

If you digg online tax softwares, you should use both TaxAct and TurboTax your tax filing. As much as they try to maximize your deductions, they might differ in terms of your final amount of tax deductions. Use both, so you could be sure that you’re not missing out any tax deductions.

3) DIY

Do it yourself if you’re really really really determined. You can grab the tax forms from IRS. It’s probably the most time consuming method of all, especially if you’re not familiar with the tax codes and stuffs. Generally, you’d need the standard individual tax form, called Form 1040. You may also need many other supplemental tax forms if your situation is a little bit more complicated.

The whole DIY process is very complicated and tedious so it’s really a chore. You can still do it, and you should at least ask for some help from your friends who know what they are doing. But I really wouldn’t take the risk. After all, you don’t want the IRS agents chasing you down and taking your house away. Trust me, it’ll be your worst nightmare.

Be Prepared for Some Moola

Okay, now that I’ve convinced you to get some professional help (I hope), let’s talk about logistics.

Even if you think you have plenty of time (2 months is pretty long to some people), you should still make some preparation for April 15. The most common thing you need to do is to request MISC-1099 income tax forms from your banking institution, affiliate marketer, clients, employer, etc. Sometimes they forget to send you the tax form, or they send you a wrong one. You really don’t want to wait until April 14 to realize that you still don’t have your W-2!

Tax Refund = Lottery Money?

One of the main caveat of having tax refund is that you treat it as a windfall, or “lotto” money. After all, Uncle Sam just got generous right? Most of us would say yes.

But we’re dead wrong.

Tax refund is nothing more than a deferred payment of our salary. In other words, the IRS took your money before you had a chance to spend it, and they give you back if you behave during the whole year (or if you’re smart). Don’t be fooled by your mind, it’s not telling you the rational thing.

If you’re investing in Roth IRA, consider contributing the tax refund to your investment fund. You have to do it by April 15 though, yet another reason to file your taxes early! The limit of annual contribution is $5,000 for 2009, so let’s say you’d invested $4,500 for 2009, contribute another $500 into your Roth IRA account to lock in the tax advantage (your withdrawals will be tax free). Wicked!

Tax Payment is Not as Fun as Tax Refund

And finally, if you end up with a tax payment instead of a refund, sorry…

I’d suggest you to file for a 6-month extension if you owe a huge amount of taxes and you don’t have the money to pay for it. Alternatively, you could borrow from your friends and family and pay them back with 6% interest. Hey, it’s much better than paying 16% interest to your credit card companies!

Once you’re done with all these, maybe it’s time to do some mental housecleaning. Go get a beer because you’re all set to earn more money from Uncle Sam next year!

As usual, feel free to comment and have a good weekend!

Popularity: 32% [?]