Last Minute Tax Checklist: 10 Essential Tips

Are you finishing up your taxes? Think you have everything? Be sure! Use this last minute checklist to make sure you have all your bases covered!

Yahoo Finance advises…

As we approach the tax deadline, I’m sure that many of you are putting a lot of time and effort, blood and tears into filling out your tax returns.  As you do so, hopefully you are remembering to include everything necessary, but sometimes things slip through the cracks.  Below are 13 reminders for you – topics that you may not have thought about – that may help you as you prepare your tax return this year.  Good luck and many happy returns!

1. Don’t forget to make the IRA contribution that you said you were going to on your tax return. It’s perfectly legal to file your return before you make the IRA contribution, but you have to do your part and actually make the contribution by April 17, 2012 for the 2011 tax year.  Forgetting to do this will cause you to have to pay extra tax and most likely penalties and interest once the IRS catches up to you.

2. Don’t forget to include the IRA deduction. On the other hand, if you’ve made your IRA contribution much earlier in the year, or possibly by monthly automatic payments or some other arrangement, don’t forget to include that deduction on your tax return as you prepare it.

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3. Remember to file Form 8606 if you made nondeductible IRA contributions or Roth Conversions.This form is required for these options, so make sure you file the correct forms.

4. Check out the Saver’s Credit. If you make an IRA contribution, or participate in an employer’s plan like a 401(k) you might be eligible for an additional tax credit for your contributions of up to $1,000, or $2,000 for a married couple.  Income limits apply ($28,250 for single filers, $56,500 for married couples filing jointly).

5. Don’t forget to include the first half of your deferred Roth Conversion from 2010. If you took advantage of the Roth Conversion special provision in tax year 2010, which allowed you to defer paying tax on the conversion until tax years 2011 and 2012, your first half of the tax is due by April 17, 2012.  This could be easy to overlook but painful if you do.

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6. If you took the first-time homebuyer’s credit in 2008, you need to continue paying back. The first version of this credit was a loan to be paid back over fifteen years (beginning with the 2010 return).  If you’re one of the folks who got this credit in 2008, you need to keep this up until 2024.  If you got the credit in years after 2008 you don’t have to pay it back (sorry 2008 people, but it’s a fact).

7. Get a deduction for mileage for charitable causes. If you are itemizing your deductions and you have incurred mileage specifically for a charitable cause, such as driving to the Goodwill store to drop off your donations, you can be entitled to a deduction for the mileage.  The rate is 14 cents per mile for 2011.  Make sure you have a written log of your mileage.

8. Also, don’t forget mileage for medical causes. If you’re itemizing your deductions, mileage for the purpose of medical care is also deductible (subject to the general limitation of 7.5% of Adjusted Gross Income for all medical expenses).  The rate for medical mileage was 19 cents per mile from January through June last year (2011) and increased to 23.5 cents per mile for mileage in the latter half of 2011. Again, a written log is required.

9. Be certain to indicate if a portion of a dividend is from US Government Obligations. Often a mutual fund will have a portion of its investments in US Government Obligations.  When dividends are paid from the fund, the part of the dividend that is attributable to US Government Obligation might be non-taxable at your state level.  Check with your mutual fund company to determine which funds might have this type of dividend.

10. Likewise, make sure you get credit for foreign tax paid within certain investments. Sometimes international mutual funds have taxes paid within the fund.  As this is reported to you on your Form 1099-DIV at the end of the year, you are allowed to (within limits) claim this tax paid to receive a credit on your tax return.  Failure to take this credit is just like throwing money away.

Get more great tips from Yahoo Finance!

— Wealth Building Daily