Ease the Tension of Tax Time

Take Charge America Offers Last-Minute Tips for Taxpayers

PHOENIX, Ariz. (February 17, 2005)…The infamous Tax Day is right around the corner… For those of you taxpayers who promptly file your taxes as soon as you receive forms in the mailbox, April 15th may be just another ordinary day. However, for others who are dreading the tax deadline because they haven’t yet begun to prepare or file, Mike Sullivan, director of education for Take Charge America advises not to panic because it’s not too late!

According to Sullivan, there are several things that taxpayers need to remember when preparing their taxes. He offers the following five tips that should not be overlooked.

File taxes electronically and choose direct deposit – According to the Internal Revenue Service (IRS), more than 61 million people filed their taxes through E-file in 2004. If done electronically, transactions can be completed more quickly and refunds will be received sooner than if filed through the US Postal system. By choosing direct deposit, refunds will be received oftentimes in two weeks or less. In addition, refund checks are not susceptible to getting lost or stolen through the mail.

Taxpayers should also determine whether or not they qualify for “Free File.” Companies that are members of the Free File Alliance provide free filing to eligible taxpayers. If accessed by way of www.irs.gov, you can see which companies provide the service free and which charge fees. If you are eligible, the company you choose will file your tax return electronically with online software free of charge. But beware: these companies provide the service in hopes of selling additional services to the taxpayer --- so resist the temptation!

Don’t be fooled by Refund Anticipation Loans (RALs) – Fees charged by lenders who offer RALs are extremely high and, combined with tax preparer fees and electronic filing fees that are normally a part of the deal with the lender, you may pay 10% or more of your refund to get your refund 7-10 days sooner than you would by simply filing electronically using Free File. According to the Center for Responsible Lending, fees may be as high as $180 to $250! To make matters worse, if the amount of your refund is less than the loan and fees, you will owe the lender money which may result in extra interest if not paid immediately. Failure to pay in a timely manner could damage your credit. By taking loans against your return, you are paying interest to borrow your own money. Remember, the refund you are about to receive is not a “gift” – it is your money. You should never pay additional costs to get your own money sooner.

Remember to include student deductions – Depending on your family income and tax liability, you may be eligible for a tax credit for dependent college students as a result of the Hope Scholarship Credit or the Lifetime Learning Credit. Other possible education-related deductions may be available for those who have paid tuition and fees, student loans and other expenses. Check out IRS Publication 970 for details and eligibility. Beware of recent tax law changes – Some of the recently enacted changes include the following:

• Donating vehicles – Over the past few years, donating vehicles to charity has become the latest way to pull one over on the IRS. Donors deducted the maximum Blue Book value, despite the condition of the vehicle. But no more! Tax laws for donated vehicles have changed, effective January 2005…so if you didn’t donate before year-end 2004, you should check the rules carefully for future donations. Even for 2004, you should beware…the IRS will not necessarily accept your valuation without proof of condition.
• Teaching professionals – Elementary and secondary school teachers, as well as principals, instructors, counselors and aides can still deduct up to $250 in school supplies without itemization through 2005.
• Child tax credit – The Working Families Tax Relief Act has been extended to allow some parents to claim $1,000 per child under the age of 17. Check to see if you qualify.
• Sales tax credit – Taxpayers of states without state income taxes, including Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming can claim state sales tax deductions, which can be calculated from receipts or IRS state tables. Residents of other states may choose to deduct sales tax instead of state income tax.
• Tsunami relief contributions – Monetary donations made by January 31, 2005 to tsunami relief funds can be included in charitable deductions on 2004 tax returns. All donations must be itemized. If other types of donations have been made, such as food or clothing, these items can be deducted as 2005 contributions.

It’s not too late to invest in IRA accounts – The deadline for traditional or Roth IRA contributions to be considered for the 2004 tax year is April 15, 2005. The maximum amount that people under the age of 50 can contribute to IRA accounts is $3,000. The maximum for people ages 50 and higher is $3,500. Keep in mind that these amounts will increase in the next two years.

Filing taxes doesn’t have to be a stressful endeavor. With a little planning and research, you can find many resources to make your life easier. Visit www.irs.gov for additional resources, publications on specific topics and a list of free tax preparation resources. These services include the Volunteer Income Tax Assistance Program (VITA) for those earning $36,000 or less, Tax Counseling for the Elderly (TCE) and the Armed Forces Tax Council (AFTC). For more information on these services, call 1-800-829-1040.

About Take Charge America
Founded in 1987, Take Charge America, Inc. (TCA) is a non-profit 501(c)(3) charitable organization headquartered in Phoenix, AZ. TCA is committed to helping consumers gain control of their finances and offers a variety of services including education, budget and financial counseling, and when necessary, debt management.

TCA also serves as an effective resource for the business community. We help financially distressed consumers re-organize their finances and return hundreds of millions of dollars annually to financial institutions, professional service providers, and businesses of all sizes and descriptions that may otherwise have been lost to the economy in bankruptcy. TCA’s diversified programs are utilized by tens of thousands of families and single men and women throughout the United States each year.