Tax Planning

You may have done the hard work to find your deductions and credits, choose your filing status, and even itemize, but it’s all for naught if you don’t file your tax return!

Thanks to technology, filing your return is getting easier and easier. But there are still some nuances to know. Find out which way you should file—electronically or by mail—and how to do it.

Electronic or Paper Filing?

E-filing is the preferred way to file, because it is faster, more convenient and more secure than paper filing.

Think about it: If you e-file, all your information is automatically entered into the system, while a paper return has to be retyped by an IRS employee, which introduces more opportunity for errors. If you e-file, you’ll get confirmation within 48 hours that your return was received. You can get your refund (if you have one) deposited directly to your account more quickly, typically in as few as ten days. For e-file users, you also have more payment options, including setting up an automatic payment withdrawal date for any day before the April due date. You can also pay by paper check or even by credit card!

However, there are some instances where you are not able to file an electronic return. You must paper file if:

• You’re married, but filing a separate return, and you live in a community property state
• You are claiming a dependent who has already been claimed by someone else
• You are filing forms that require paper documentation. For example, the first-time homebuyer credit requires paper filing
• You file before e-filing begins (it started on January 30th this year) or after it ends (October)

How to File an Electronic Return

There are several ways to file electronically:

If you’re paying a tax professional to prepare your return, they will e-file for you. Many are required by law to e-file, but still make sure to mention it to them so you get your refund faster.

If you are using commercial tax software, e-filing is included. Just submit through the software when you are done. Incidentally, e-filing is including in the discount TaxACT package every participant in our Ace Your Taxes Bootcamp receives.

If you’re preparing your own return, you can file for free. Those who have an AGI under $57,000 can use what the IRS calls Free File. If your AGI is over $57,000, you can use fillable forms, which are electronic versions of the IRS’s paper forms and are still free.

How to File a Paper Return

If you need to file a paper form, or just prefer paper forms and don’t mind the longer wait for your refund, you can do it the old-fashioned way. The IRS will not mail you your forms ahead of time like they used to, so first you’ll need to pick and download your forms. Find out which ones you need.

When you’re ready to send in your return, make sure your name and Social Security Number are on the front and back of every page. Make a photocopy of your return for your records. Then, check the IRS for where to send your return, according to which state you live in.

We recommend you send your return by registered or certified mail. You will be able to track its progress and see that it was delivered. Make sure the registered date is on or before April 15, 2013, this year’s filing date.

You can also send by private delivery service. Use an IRS-approved one such as DHL, FedEx or UPS, but beware that private delivery services cannot mail to post office boxes, so you must use the addresses in this list. Whichever mailing service you use, save your receipt.

How do you know if you need a tax attorney?

Tax attorneys are lawyers who specialize in the complex and technical field of tax law. According to this article from about.com, you definitely need a tax attorney if:

• You have a taxable estate, need to make complex estate planning strategies, or need to file an estate tax return.
• You are starting a business and need legal counsel about the structure and tax treatment of your company.
• You are engaging in international business and need help with contracts, tax treatment, and other legal matters.
• You plan to bring a suit against the IRS.
• You plan to seek independent review of your case before the US Tax Court.
• You are under criminal investigation by the IRS.
• You have committed tax fraud (such as claiming false deductions and credits) and need the protection of privilege.

But what if you’re already mired in tax debt and can’t afford to hire an attorney? Low Income Taxpayer Clinics (LITCs) represent low income taxpayers before the IRS and assist taxpayers in audits, appeals and collection disputes. These clinics, which are operated by nonprofit organizations or academic institutions, can also help taxpayers respond to IRS notices and correct account problems.

Another option is to seek assistance from a referral system operated by a state bar association, a state or local society of accountants or enrolled agents, or another nonprofit tax professional organization.

Debt settlement companies are not law firms and cannot provide legal advice. However, debt settlement can be a part of your solution to tax debt. Debt settlement means that your debt is negotiated down to a reduced amount and paid off in a lump sum. Settlement is a good choice if you have more debt than you can pay off within two to three years or are experiencing a financial hardship that has you falling behind on your monthly payments.