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Do You Know These Tax Tips for 2012?

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It's that time of the year again. Time to file your income taxes. Each year always brings changes. Being aware of the tips in this report may help you get that chore done more efficiently.

Filing deadline is April 17th. You have until April 17, 2012, instead of April 15th, to file your income tax return for 2011. The reason is that April 15th falls on a Sunday and the D.C. Emancipation Day holiday on April 16 in 2012, giving you two extra days. If you request an extension, you will have until Monday, October 15th to file your return.

Remember, the IRS no longer mails tax packages. If you need paper forms, you can download them from the IRS site or pick up the forms from a post office, library, or your local IRS office.

IRS2Go. This is a smartphone application that allows you to check the status of your tax refund. You can also get tax tips and other information and follow the IRS Twitter feed. IRS2Go is free and is available for the iPhone and Android.

IRS on Social Media. On YouTube, the IRS has short videos on tax related topics in English, American Sign Language (ASL) and a variety of foreign languages. On Twitter, IRS tweets include tax-related announcements, news for tax professionals and hiring initiatives.

Electronic filing. In 2011, around 80 percent of individual tax returns were e-filed. Were you one of them? The term e-file covers both preparing your return and sending it to the IRS electronically. When you e-file your return, your return is processed more quickly. The IRS typically processes an electronic return in less than 2 weeks. You'll receive your refund, if direct deposited, in about 10 days. Other advantages of e-filing are up-to-date forms and better accuracy. You can take advantage of e-filing in a variety of ways.

  • Use a tax professional to prepare and e-file your taxes. Starting last year in 2011, many paid tax preparers are required by law to e-file federal tax returns for individuals, trusts, and estates.
  • Use tax software to complete and e-file your return. You can use online tax software or load it onto your computer. Most tax software will walk you step-by-step through completing all the forms you need.
  • Use IRS Free File. This program is available only from the IRS site. If your AGI (adjusted gross income) is $57,000 or less, then you can use commercial online tax software provided by the companies of the Free File Alliance. About 70% of taxpayers have AGI that qualify. The IRS e-file program also provides free fillable forms, which are online versions of the paper forms, that any taxpayer can use. Check out this page on the IRS site for more information.

One other tip, the federal-state e-file program lets taxpayers file their state returns at the same time as their federal return. This is available in 37 states and the District of Columbia. You can check if your state is one at this IRS webpage.

tax timeFree tax return preparation. There are several programs available that offer free tax help for those who qualify. The IRS offers the Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs. This article from the IRS has more information.

Receiving your tax refund. Are you one of the millions who receives your tax refund by direct deposit? With direct deposit, you'll receive your refund faster than with a paper check. It also prevents your check from being lost or stolen or returned to the IRS as undeliverable. Did you know you can split your refund into multiple checking or savings accounts? Or buy savings bonds? To allocate your refund to more than one account or purchase savings bonds, fill out and include Form 8888 with your return. This article has more about these direct deposit options.

Tax Changes. As typical of any year, there are tax changes for 2011. This page on the IRS site covers the tax changes for individuals in more detail. Here are some of the more notable changes.

  • Nonbusiness energy property credits have been reduced. For qualified residential energy saving improvements in 2011, homeowners may deduct 10% of cost to a maximum of $500. (These figures are down from a combined $1500 for 2009 and 2010.) The IRS notes that because of the way the credit is figured and its requirement of subtracting credits taken in previous years, this credit may be most useful to homeowners who made energy saving improvements for the first time in 2011.
  • New way to report capital gains and losses. Most taxpayers will now use new Form 8949 to report capital gains and losses. Schedule D, where individual transactions were previously reported, will now function as a summary sheet. Instructions for the new form and information on Form 1099-B issued to taxpayers by brokers will help taxpayers correctly complete the new form and Schedule D correctly.
  • Standard mileage rate increases. For 2011, the standard mileage rate for business use of a car, van, pick-up truck or panel truck is 51 cents per mile for January through June of 2011 and 55.5 cents for the rest of the year. The mileage rate for operating a vehicle for medical reasons such as making a doctor’s office visit is now 19 cents per mile for January through June and 23.5 cents the rest of the year. The mileage rate for providing services to qualified charitable organizations remains 14 cents per mile.
  • Health savings accounts (HSAs) and Archer medical savings accounts (MSAs) change tax on unqualified distributions. The tax for distributions in 2011 not used for qualified medical expenses rises to 20% (from 10%) for HSAs and to 20% (from 15%) for MSAs.

Filing one’s taxes is never fun, but these tips should make the job a little easier.