Once again, tax time is upon us. Here are four quick tips from the tax preparation specialists on the Zolman Law’s team.
1. File an application for automatic extension of time by April 17.
If your individual income tax returns will not be ready to file by April 17, then consider filing your automatic extension for more time instead (extends up to six months, or until October 15, 2012, for most filers). The time to file the tax return is extended, but the time to pay your taxes is not. Therefore, if you apply for an extension, you can avoid interest and penalties by estimating your tax liability for the 2011 tax year and including that amount with the application. IRS Form 4868.
2. Collect your green energy tax credits.
A true tax credit reduces the tax owed dollar-for-dollar. You’re probably familiar with the Earned Income Tax Credit and the Child and Dependent Care Credit. But did you know there were “green” energy credits available, too? By itemizing certain so-called green energy consumer purchases on your income tax return, you can lower the amount of tax owed. Take a look at the Nonbusiness Energy Property Credit, the Residential Energy Efficient Property Credit, and electric vehicle tax credits, among others.
3. Fund your IRA.
There is still time to fund your Individual Retirement Account (IRA) for 2011, but you will need to make your contribution before April 17, 2012. The general limit for 2011 contributions to a traditional IRA is $5,000 (add another $1,000 if you are 50 or older). If your income for the year was less than that, then you can only fund your IRA with the amount of your income. For example, if you are a 51-year-old who earned $4,500 in 2011, then your IRA contribution limit would be $4,500. You cannot boost it to $6,000 if you didn’t earn $6,000 in 2011. If you have or are contemplating an IRA, make sure to read IRS Publication 590 for detailed information.
4. Federal and Arizona tax returns are due Tuesday, April 17, 2012.
This year both Arizona and federal returns are due on Tuesday, April 17, 2012.
Why is the April tax deadline on Tuesday the 17th this year? President Abraham Lincoln’s signed the Compensated Emancipation Act of April 16, 1862, freeing thousands of slaves in the District of Columbia. In 2005, Mayor Anthony Williams signed legislation making April 16th an official D.C. public holiday – Emancipation Day. This year, Emancipation Day lands on Monday. The federal tax deadline was simply extended to the following Tuesday in observation of that public holiday.
In addition to providing Phoenix bankruptcy law representation, the Zolman Law provides tax relief representation and advocacy. If you’re not ready for the IRS and need tax preparation assistance, then we invite you to contact us at (480) 745-1770 today. We are pleased to offer tax preparation services to our individual and business clients.