Man to Man: Don't Get Burned By Your Return

April 14, 2010

Well, it's mid-April and as always it's time to fork over mountains of cash to everyone's favorite Internal Revenue Service. But as much as taxes are a part of American Life, so is trying to pay as little as possible. So we're here with a few helpful hints about how you can minimize your pain and suffering as the Taxman has his way with you this April 15th.

Leave It to the Professionals

We all love to root for the underdog, but it's good to remember that Rocky lost that first fight.  Since the IRS is a much tougher opponent than Apollo Creed, you'll want to call in professional help. Since you're not an accountant, you're also not well versed in the ins and outs of preparing a return (and if you are an accountant you filed months ago, so this doesn't apply to you anyway.) Whether it's your friendly neighborhood number cruncher or a thinking machine super computer online, just remember- they're both way better at math than you are. Drop off your receipts and let them do their thing.

Work Those Withholdings

This is a long-term strategy, but worth the effort. When you fill out your paperwork for a job, you'll be asked how much you'd like withheld each week for taxes. While it's tempting to take the money and run, remember- it's not like borrowing twenty bucks from a friend, then hoping he'll forget. Eventually, you have to pay up. So even though it's a kick in the budget every time you look at your paycheck, you'll be grateful when you see that fat return come rolling back in the springtime. Then, because you've tightened up your belt all year, you can use that chunk of change on something really fun and unadvisable... jet skis anyone?

Avoid the Audit

While stretching the truth is one thing, if you take it past the breaking point you'll pay the price. Some creative deductions are fine; for example you may be able to justify a new TV with a VGA input as a "business related computer monitor." But try to claim a trip to a local "exotic dancing emporium" as a "research excursion" and you'll get slapped with audit quicker than you can say "tax fraud."  Always remember: nothing catches an IRS agent's eye faster than deductions for travel, vehicles, and entertainment, so save a headache and pony up the dough for your own road trip.

Don't Pay What You Don't Have

In the end all the advice in the world won't change the fact that your taxes are due in hours, and if you owe money, you owe money. It's tempting to pull out the plastic and be done with it, but if you can't  cover what you owe, don't panic- you've still got options.  The IRS will take the money in installments for a one-time set up fee of $105 plus 1% a month interest. That might not sound like the best deal, but compare it to the 20% some credit cards will charge you, and you'll see that 1% in whole new light... the light you'll be able to use because you can actually afford your electric bill.

Benjamin Franklin once said that nothing is certain but death and taxes. Which, frankly, is a downer. But as you're mailing off your hard-earned cash, remember one of Ben's more upbeat quotes, "Beer is proof that God loves us and wants us to be happy." So crack a cold one and console yourself with the knowledge that you have a full 365 days before you have to do it again.  Good luck, and be sure to share your worst tax time tales of horror in the comments below.

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