Tax Deadline is Monday

Don’t forget, Monday is the final day to file your taxes.

Procrastinators have an extra three days to work on their taxes this year because the usual April 15 file date is Emancipation Day, a holiday observed in Washington, D.C.,  to mark the anniversary of the signing of the Compensated Emancipation Act, which president Abraham Lincoln signed on April 16, 1862. The act freed several thousand slaves in the District of Columbia.

There are a lot of different options available to help taxpayers file and pay taxes on time, including the option of filing for an extension.

Filing taxes online has become a convenient and popular outlet for many people. However, taxes that are more complicated may be better handled by a professional tax preparer.

“We are experienced, faster [than filing online], more efficient and know current tax law, with 30 to 60 hours of training each year to be current with tax laws,” Carolyn Krieg, a tax preparer forH&R Block, said.

Online outlets may be less expensive and offer the convenience of filing from home.

Sites such as TurboTax range from free for 1040EZ simple tax returns to $74.95 for people with investment and rental property, topping out at $149.95 for corporations, partnerships and LLCs.

Fees for tax preparers vary greatly, depending on the complexity of the person’s taxes, but can be several hundred dollars, or more for larger corporations or business. Aside from the cost, having someone prepare your taxes provides speed, convenience and accuracy.

“A trained professional who has studied tax rules in preparing taxes and is able to identify tax issues readily,” is what Robert Downum, franchisee owner for Liberty Tax Service in San Ramon, said people get by seeing a tax preparer in lieu of using an online tax service.

He said one common concern people have had this year is how to address cancelled mortgages, foreclosures and short sales.

“It’s pretty technical, and it’s not something everybody sees, but we’re seeing a lot of it because of the foreclosure crisis,” Downum said.

Other common questions include passive losses on rental properties and people who have compensation in the form of stocks from their employers.

There are also other deductions people can file but may not necessarily know about, such as education, child care credits and miles for a vehicle driven for volunteer work.

If you plan on having a professional prepare your taxes, you should have social security numbers, all income verification, such as a W2 or 1099, statements showing interest payments and mutual funds, stock sales and information for all deductions, including receipts.

“I would suggest that they not file deductions if they have not kept receipts,” Downum said.

One major tip Krieg provided is to never lie when filing.

“Do not lie about income and not report everything,” she said. “The reason why is because the IRS knows. Whatever statement we receive in the mail, that bank or business has sent the same information to the IRS and [the state Franchise Tax Board].”

Those filing on Monday should make sure they have everything prepared and ready, to prevent any delays that might cost them in fees and penalties.

Once your 2010 taxes are filed, it is not too early to prepare for 2011.

“I always recommend that people keep all of their documents in one file, broken out by items of income and items of deduction,” Downum said. “If you do that, you’re in good shape. Anything that has a tax implication, just keep in one file.”