Quantcast
StarBulletin.com

5 last-minute tips for Hawaii taxpayers


By

POSTED: Sunday, April 12, 2009

The deadline to file your taxes is only a few days away, but there's no need to panic.

It's not too late to employ some last-minute strategies that could help you avoid common filing-season hassles and possibly uncover savings you may have overlooked.

You can't go back and change what happened last year, but believe it or not, there are still things you can do now to affect your 2008 tax return.

There are also several tax-law changes that taxpayers need to keep in mind.

For taxpayers who haven't filed their tax returns yet, here are five tax planning tips for your consideration:

» Claim your stimulus rebate: You might have an opportunity to get an extra rebate check. The IRS mailed most taxpayers rebate checks in 2008 providing $600 for individuals, $1,200 for joint filers and $300 for each dependent. But the credit phased out for those with incomes under $3,000 or more than $75,000, and the calculation was based on taxpayers' 2007 returns. You can redo this calculation based on your 2008 situation, so you may be entitled to a bigger rebate if you added a child or your salary changed.

» Reduce income with last-minute contributions: It's not too late to make tax-free contributions to an Individual Retirement Account. If you're eligible to participate, you can set up these accounts and make deductible contributions until the end of this year's filing season.

Contributions to these accounts are especially valuable because they are deducted above-the-line, i.e., before you calculate your adjusted gross income. This means they are allowed in full and make it less likely that your other tax benefits will be limited.

» Don't miss the deadline for filing an extension: Don't bury your head in the sand if you're not going to get your return filed on time. Filing for an automatic extension with Form 4868 is painless and will spare you penalties for missing the deadline.

But remember, extending the filing deadline does not extend the time for making a contribution to an IRA, and it does not extend the time for payment. By the filing deadline, you must have paid at least 90 percent of your 2008 liability through withholding, estimated payments and any payment made with your extension.

» Consider filing electronically: Filing electronically will speed up your refund and can save you from simple mistakes.

Before the IRS accepts an electronic return, it checks for several critical errors, including whether Social Security numbers and names match. The IRS gives you the chance to correct the problems before it accepts and processes your electronic return.

» Check your numbers twice: Avoid math errors and make sure to get your Social Security numbers right. The IRS computers automatically match all Social Security numbers and check for simple math mistakes.

If you wrote down the wrong number for one of your dependents, the IRS will disallow the dependent, recalculate the return and usually send you a brand new tax bill. It can be a hassle to unwind.

Millions of returns generate math error notices that often come as unwelcome surprises to unsuspecting taxpayers.

Due to the Star-Bulletin's imminent format change, this will be the final “;Financial Matters”; column.

We have enjoyed sharing the knowledge of our accounting and tax professionals with you.

Mahalo for your interest and comments.

———

Deneen Nakashima is the tax practice leader for the Honolulu office of Grant Thornton LLP. She can be reached at   .(JavaScript must be enabled to view this email address).