Press Room

No-sweat tax-filing tips

Money Management

Monthly financial advice
from the MACPA

For release: March 2006

Many taxpayers find themselves facing unnecessary stress about filing their tax returns. By following a few no-sweat tax-filing tips, the Maryland Association of CPAs says you can get through the process without too much anxiety.

Do your research

Tax laws are always changing. Be sure you are aware of the many tax law changes that have gone into effect in recent years. Don't wait until the last minute to learn the laws that are most relevant to your situation.

Get organized

You will save time if you're prepared and organized. Make sure you have gathered all the documents you need — for example, your W-2 form(s) from your employer(s), 1099 forms showing how much interest or dividends you earned, and Form 1098 for reporting the amount of mortgage interest and real estate taxes you paid.

If you plan to itemize, you'll also need to locate records of charitable contributions and receipts for unreimbursed business, medical and other deductible expenses.

Don't shortchange yourself

Don't rush through your taxes so quickly that you overlook deductions or credits for which you are eligible. And bear in mind that there are many tax breaks available to you even if you don't itemize. Examples include IRAs, student loan interest, moving expenses, alimony, one-half of self-employment taxes and certain tuition expenses. Make a running list of those which you think you may be entitled to claim and review this with your CPA.

Compare with last year

Take time to review last year's return. A side-by-side comparison is a good way to be sure you're not missing any deductions. It can also point out any irregularities between the two returns.

Re-check your math

Be sure to double-check your math. The IRS reports that addition and subtraction mistakes are among the most common errors on tax returns.

Review your return

Start by checking to see that you have provided the correct Social Security numbers for you, your spouse and any dependents. Be sure to include your W-2s and any extra tax forms and schedules your return requires.

Remember, you and your spouse must both sign a joint return, even if only one of you is reporting income.

Try e-filing

There are several benefits to e-filing. When your return is filed electronically, the IRS computers automatically check for missing information and errors. After checking, the IRS sends you an electronic confirmation, telling you whether your return is accepted or rejected because of a mistake.

With e-filing, if you are entitled to a refund, you will receive it much quicker, especially if you select the direct deposit option — possibly within 10 days as compared to six to eight weeks for a paper return.

Get an extension

If you find you can't meet the deadline for filing your return, you can get an automatic six-month extension by completing Form 4868 and sending it to the IRS on or before the filing date.

Just remember that what you are getting is an extension for filing — not for paying any taxes due. You still must pay your estimated tax balance by the April deadline. Be diligent in estimating your tax liability, you may owe penalties and interest if you underpay.

Hire a CPA

This might be a good year to consult with a tax professional to be sure that you are taking advantage of every opportunity to save on your tax bill. When you use a CPA, you get the benefit of someone who is up-to-date on IRS tax law changes and on the wide range of tax benefits that pertain to your situation.

Start planning

It's not too early to start planning. Once the filing season is over, make an appointment with your CPA to discuss tax-saving strategies for next year.

Only CPAs are equipped to address your full range of financial needs with integrity and insight. In Maryland, CPAs must pass a rigorous two-day examination, adhere to strict ethical and professional standards, and, beyond college, complete 80 hours of continuing education every two years to be certified by the state — accountants do not.

Your doctor is certified; your lawyer is certified. Make sure your accountant is a certified public accountant.

For CPA referrals in your area, contact the MACPA at (410) 296-6250 or click here.

The Maryland Association of Certified Public Accountants (MACPA) is a statewide professional association that provides leadership, information and services for its nearly 10,000 CPA members, who are employed in private practice, industry, government and education. CPAs are business and financial professionals who have passed a rigorous two-day examination in order to be licensed by the state. CPAs are committed to protecting the public interest, and must adhere to stringent ethical and professional standards and continuing professional education requirements.

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