File Smart: It's time to make sure you've covered your tax bases
With just a month until the filing deadline, it's time to get serious about taxes.
Now it is true, of course, as financial adviser Mary Malgoire of the Family Firm in Bethesda noted, that "once the tax year is closed" on Dec. 31, "there's not much you can do" in the way of big strategic moves to save on taxes.
But that doesn't mean you can't save money by being careful and keeping up to date on all the little tweaks Congress and the Internal Revenue Service have given the tax rules over the past year or so.
Many of these changes can provide valuable savings, but it's easy to overlook some of them, and others have twists and turns that can cause you to miss out on a benefit you are due, or to claim one that you are ineligible for. Doing that will get your return rejected if you try to file electronically. The IRS can adjust a paper return, but that is likely to delay your refund or cause you to owe more than you thought.
Here are eight new or easily overlooked provisions to be alert for:
1.The new Making Work Pay credit can reduce your taxes by up to $400 -- or $800 for a couple -- if you had income (but not too much) from work. Nice, but you have to file Schedule M to get it.
Schedule M, in turn, will ask you if you received an "economic recovery payment" during 2009. That's a $250 payment the government sent out to Social Security recipients to make sure they weren't forgotten in all the economic stimulus money being doled out last year.
And Schedule M will also ask you about taking the $250 "government retiree credit." That is available to government retirees who aren't eligible for Social Security and would otherwise have missed out of the economic recovery payment.
If you aren't getting Social Security and are not a government retiree, this won't matter, but if you are and also had income from work, you need to check and see if you got the economic recovery payment. If you did, your Making Work Pay credit will be reduced. Likewise with the government retiree credit.
And you'll have to check your bank records; neither the Social Security Administration nor the IRS is sending out any kind of notice, such as a Form 1099, to remind you.