THE FOLLOWING IS AN INTERVIEW WITH CERTIFIED FINANCIAL PLANNER BRUCE HAGAN:
ANGELA: With the tax filing deadline bearing down on us, what must our viewers be doing to minimize their tax liability?
BRUCE: A visit to the IRS website may be in order. Simply go to www.irs.gov. There's a great deal of information there and it seems to be better organized and easier to navigate than in the past. You can get a good idea whether you need to file the "short form" - 1040EZ or the regular form 1040. If you can file the 1040EZ you can do it for free online and since 1990 IRS has taken in more than 1 billion electronically filed tax returns.
ANGELA: What if you just can't get the filing done before the deadline?
BRUCE: Well, we have until April 17 to file this year and you can request an extension that delays your paperwork deadline until Oct. 15th. Importantly, though, is that your taxes are due on the April date so if you get a deadline for the paperwork you still have to estimate your tax liability and pay that amount with your request for an extension.
ANGELA: What are some ideas for saving on your tax bill?
BRUCE: From a big picture perspective you want to make sure you take the time to get it right. If you underpay your taxes and it's detected by IRS you will not only get a bill from them for the difference, but also interest and possibly penalties. Make sure you take advantage of all deductions and credits. There are lots of law changes each year and you need to be using the latest tax software, or better yet, pay to have a tax preparer ensure you claim what you qualify for and avoid leaving money on the table.
ANGELA: What are some of the major deductions people need to be aware of:
BRUCE: If you earn less than $49,000 you may be eligible for the Earned Income Tax Credit Last year almost 27 million individuals received over $59 billion in these tax credits. Some folks are eligible for a first time homeowner credit. There may be credits if you have a son or daughter in college. If you're self-employed you can deduct the cost of your health insurance premiums from your self-employment tax. You may find allowances for business start up expenses. You can claim the business portion of your office or storage space in your home. Depending on your income you may be eligible for a tax-deductable IRA. Our tax code is complex and you may want to seek the help of a CPA.
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