Tax season doesn't have to be taxing on your nerves

Its that time of year again. Its time to prepare your taxes. In an announcement from state Acting Commissioner of Taxation and Finance Barbara G. Billet, Ms. Billet advised taxpayers they can save time, effort and, in some cases, money, by preparing now for the upcoming tax filing season. The holiday season is behind us, and now we turn our attention to filing our personal income tax returns, Acting Commissioner Billet said. Taxpayers who plan in advance can reduce the time needed to file returns, especially if they e-file, and avoid errors that may reduce tax refunds. Taxpayers who prepare in advance have a better chance of maximizing their tax savings. Organization is of the utmost importance, said Lori A. Mercaldi, owner of tax preparation firm Financial Tally, Champlain. Out of all the misconceptions people have when it comes to preparing a tax return, Ms. Mercaldi said, the largest is how long its going to take. You should collect your records throughout the year; you shouldnt start to prepare your tax return in March because at that point you may realize that youve forgotten something. Then youre in a hurry, said Ms. Mercaldi. When preparing your own return or having it prepared for you, Ms. Mercaldi suggests your records be already compiled, including mortgage interest statements, interest statements from bank accounts or brokerage accounts and proof of charitable donations made throughout the year. Depending on how you file, whether it be a standard form such as a Form 1040EZ or a long form itemizing deductions such as a 1040, having as much information as possible when filing your return will be most beneficial, said Ms. Mercaldi. Wage statements for 2007, commonly referred to as W-2s, should soon be on their way, if you havent received them already, said Ms. Mercaldi. W-2s are to be postmarked to employees by Jan. 31. If you have not received your W-2 within a few days of that date, contact your employer to assure it was mailed and they have your correct address, said Ms. Mercaldi. If your W-2 hasnt been received by Feb. 15, you may contact the IRS to begin processing a Form 4852, which handles W-2s that are not received or lost. In addition to keeping organized records, receipts and other expenses, taxpayers should have their immediate past years tax return on hand, Ms. Mercaldi added. The return may be rechecked to see if any mistakes were made, and, if any additional refund is further due. If so, an amended return may be filed. The Internal Revenue Service suggests retaining records anywhere from three years to seven years, depending on the circumstances. Typically, if a taxpayer is to be audited, said Ms. Mercaldi, the process would happen within three years from the later of the due date of the return, or the date the return was actually filed. Having your return prepared by a tax professional, gives a taxpayer extra piece of mind, as tax professionals are required to keep records a minimum of three years. In Ms. Mercaldis case, her firm keeps records for seven years. That way, if you have clients who have a fire or lose their paperwork or are sitting at the bank and need a copy of their tax return, it can be securely e-mailed or faxed directly to the bank with the clients permission, said Ms. Mercaldi. Thats the benefit of having your return prepared for you. Many are choosing to file their returns through retail tax preparation software or on-line sites, which can be convenient, but Ms. Mercaldi cautions those who have never filed their own return. What I find, is that I get them the next year after theyve done their own, Ms. Mercaldi said of first-time self-filers. Theres some kind of issue about something they didnt check like they didnt know they had a pension plan through their employer. What they thought was a very basic tax return, all of a sudden, they get a notice or dont get the refund they thought they were supposed to get. The importance of security should also be noted, said Ms. Mercaldi, who has been preparing tax returns for 20 years. With the hot topic of identity theft, giving an insecure site as little information as your social security number and your date of birth, it isnt difficult for fraud to occur. Most importantly, those who dont file a tax return on or before the April 15 deadline will still be expected to file, said Ms. Mercaldi, though penalties may be accrued. Taxpayers who are running behind may file for a six-month extension a Form 4868 with the federal government and IT-370 with New York State though that extension is not an extension of time to pay, she said. If you are filing late, you need to estimate your tax to the best of your ability, said Ms. Mercaldi. If you think you owe money, send in what you can at that point. And remember, the penalty for failing to file is higher than the penalty for failing to pay. If you overestimate and pay too much in, youll receive a refund, which is better than not paying enough, said Ms. Mercaldi. State income tax return information may be obtained through the state Tax Departments Web site, www.nystax.gov , or by contacting the departments customer service representatives at 1-800-225-5829 for more information. Federal income tax return information may be found on-line at www.irs.gov , or by calling 1-800-829-1040. On both the state and federal Web sites, taxpayers may access information on how to obtain or download tax forms, determine whether they qualify for free online tax preparation and e-filing, how to obtain Form W-2 (an individuals wage and tax statement), or who to contact regarding an outstanding tax liability. Information about the states STAR school tax relief program for homeowners, tax help for individuals serving in and in support of the Iraq combat zone, how to find up-to-date changes to the states individual and corporate tax forms, and how to check on the status of your refund online or by phone may also be found on the state Web site. Earned Income Tax Credit qualifications, designed to benefit low-income families, may also be found on-line. Ms. Mercaldis business, Financially Tally, located at 596 Dubois Road, Champlain, may be contacted at 298-5009, or through her tax preparation and financial planning Web site, www.financialtally.com .

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