Tax Tactics

"In this world nothing is certain but death and taxes."
-Ben Franklin

Despite this aphorism's veracity, a lot of people make excuses for procrastinating (or altogether not paying taxes) by saying that they "forgot" or didn't think they need to. But April 15 isn't necessarily the Date of Doom. This year, procrastinators have a two-day reprieve because 4/15 falls on a Saturday. If you haven't filed taxes yet, do it NOW!!! Don't wait until the last possible moment! If you're a low income procrastinator, look for free tax help offered at local libraries or other locations through VITA (Volunteers for Income Tax Assistance).

If free, live-in-person help is not available and your income stream is fairly simple (just wages and bank interests), the Internet makes doing your taxes easier. You can download forms and instructions from the IRS website and work on them into the wee hours of the night. California allows people to e-file for free on its own website; unlike the federal income tax, there's no need to buy some commercial software. The best part is that CalFile web forms are so easy to use (it does a lot of calculations for you) that it may take as little as 5 minutes to file. Despite the intimidating number of entries on tax forms, particularly the federal ones, it's actually quite easy to do your own taxes. You'll also save a lot of dough when you don't have to hire an accountant. If you're a bit insecure, think hard to see if you have a friend or friend of a friend who is a CPA; you'll have more confidence to work on your own taxes when you know there's someone to turn to for reassurance. In the future, it might help to get yourself some tax training. I plan to take a Federal Income Tax class next year so that I'll know for sure I'm doing things right. This isn't an option available to many people, but if you become a VITA volunteer, you'll get trained to help people in your community and keep the knowledge for your own use.

If it becomes clear that your procrastination ruled out the possibility of getting taxes done in time, file an extension. You'll have until October to finish the paperwork, but you'll have to pay now. Still, it's better than getting hit with heavy penalties and interests later.

After dutifully turning in your 1040/1040A/1040EZ/(insert other tax forms here) and state tax forms, reward yourself for being a good citizen. A lot of businesses take advantage of the annual Day of Collective Groaning and try to drum up businesses by offering to pay your sales tax. This is an especially big deal for big-ticket items, since you don't have to pay for shipping that comes with web purchases. Speaking of web purchases, things are not entirely tax free when you buy online from companies that incorporate in other states. State governments seemed to have caught onto the practice of buying high-priced merchandise online to evade the big state sales taxes. When I was e-filing my 540, there's a "use tax" box for out-of-state purchases; I don't think I saw it there last year. Hence, if you're one of those people in the "high risk" groups for audits, you might want to come clean about all online purchases that you didn't pay sales taxes for, particularly the big-ticket items.