It's the time of year for some last-minute tax tips aimed at procrastinators (such as myself) or those double-checking their returns.
First, a warning. The following includes more than you probably ever wanted to know about Oregon's deduction for 529 college savings plan contributions, but I'm going to tell you anyway.
In the meantime, some other issues worth knowing.
The new, &$*!%$& Form 8949.
It's causing preparers and taxpayers fits.
If you sold a stock this year, your brokerage sent you a
reporting your basis in (or original cost of) that stock. Unfortunately, the forms are not always accurate or complete.
You, however, must report your basis accurately and completely on the new
. In fact, you might have to file up to six of these forms per return, depending on the length of time you held the stock and the accuracy of your brokerage's 1099s.
Read the form's directions carefully.
. Or just file for an extension and get a tax pro to help you.
You might have to amend your return anyway if your brokerage sent you an incorrect 1099-B and corrects it after April 17.
Tax facts by the numbers
First-class stamped mail processed in Portland
April 15, 2009: 908,000
April 15, 2010: 809,000
April 18, 2011: 914,000
April 17, 2012: 790,000 (projected)
Cities with highest and lowest average net Oregon tax in 2009
Lake Oswego: $6,458
La Pine: $1,640
Counties with highest and lowest percent of income from capital gains, 2009
Hood River: 8 percent
Jefferson: 1 percent
Total individual federal returns filed through April 6:
99 million
Total federal e-filed:
86.3 million
Total Oregon individual returns filed through April 12:
1.25 million
Total Oregon e-filed:
1.08 million
Average federal individual tax refund:
2009: $2,859
2010: $3,003
2011: $2,913
2012 (through April 6): $2,794
Average Oregon refund
Through April 11, 2011: $604
Through April 11, 2012: $627
Average Oregon tax liability
2009: $2,633
2010: $2,790
Sources:
U.S. Postal Service, Internal Revenue Service, Oregon Department of Revenue
"(It's) gotten so bad now we don't recommend filing a return before the end of March for clients with a lot of investment activity," said Jerry Davis, a CPA and certified financial planner with
in Gresham. "Corrected statements could result in amended returns for clients."
So, as
, start paying attention to your basis.
New Schedule C and E questions.
Did you make any payments in 2011 that would require you to file Form(s) 1099? If 'Yes,' did you or will you file all required Forms 1099?
With those two new questions, the IRS is putting small businesses and self-employed taxpayers on alert that they need to report payments to contractors
"The IRS is trying to find unreported income," said Charlotte Sinclair, a certified public accountant in Lake Oswego.
Ignore at your own risk.
E-file Oregon returns for free.
For the first time, Oregon is allowing all taxpayers to fill out and
. It offers no tax-prep help as software programs do, and it won't import data you've entered elsewhere. But it will do some math for you. It also allows partly completed forms to be saved to return to later.
You'll need to complete your federal return first, either by hand or using software. About 7,500 have used it so far, Oregon Department of Revenue spokesman Derrick Gasperini said.
Taxpayers making $57,000 or less already qualify to file federal returns for free through about
. Most taxpayers can enter and file returns for free using
, the electronic version of IRS paper forms.
Relief for unemployed & underemployed.
If you were unemployed for at least 30 days since Jan. 1, 2011, or you're self-employed and saw your income drop 25 percent last year, the IRS will allow you to avoid paying penalties for six months, so long as you pay up by Oct. 15.
Some income limits apply, but eligible taxpayers need only submit
. IRS.gov has more information on
.
Also, the child or dependent care you hired to allow you to look for work might net you a federal tax credit. The rules are tricky, and the credit is capped at $3,000 for singles and $6,000 for couples. Be sure to check
for more details. You'll have to file
detailing the expenses.
Political contributions.
Don't forget Oregon gives you a credit for contributions to political parties, candidates and PACs of up to $50, or $100 if married filing jointly. Last year, 100,000 of you took advantage of it, reducing your tax bill by an average $64, Oregon Department of Revenue statistics show.
Still time to cut your bill:
Oregonians have until Tuesday to contribute to an IRA ($5,000 or $6,000 if 50 or older) or an
account ($2,120 singles, $4,240 married filing jointly) and still deduct the amounts on your 2011 federal or state tax returns as if they were made last year.
In fact, with Oregon's 529 plans, you can contribute more than the annual deduction limit and carry the excess forward for up to four years. In other words, a married couple could contribute $21,200 tomorrow and deduct $4,240 each year through 2015, beginning with their 2011 return.
Oregon 529 complications:
However, unlike with IRAs, if you've already filed your state return for 2011, you'll have some trouble contributing now and deducting it for 2011. Oregon law says you must contribute before you file your return.
That's an unfortunate difference from federal rules for IRAs, which allow you to make a prior-year's contribution up to the tax filing deadline, even if you've already filed your return,
notes.
But there are a couple of helpful exceptions to Oregon law, says Gasperini.
First, if you made the contribution before you filed your return, but simply failed to include the contribution, you can still amend the return.
Second, if you made the contribution after you filed the return, but do both before April 17, you might still be in luck. Just get an amended return into the department before Tuesday (or whatever the tax deadline is for a given year) and "it generally replaces the original" return, Gasperini said.
Call Aunt May to contribute:
Even if the 529 plan contribution came from an out-of-state resident, the Oregonian who owns the account can deduct the contribution, said Michael Parker, executive director of the state's plan. So get relatives on the horn tomorrow!
Reinvest that 529 deduction:
The big advantage to Oregon's college savings plans is this tax deduction. You get an immediate annual return on your contribution when you claim the deduction.
How big of a return? Roughly speaking, as big as your marginal tax rate. And for most Oregon taxpayers, that's 9 percent, says Raymond Roundtree, a financial planner and CPA in Portland.
Where else these days can you get such high, consistent one-year returns on your money?
Thing is, your future college student benefits from that return only if you plow the tax savings back into the account.
Do that this month. Calculate 9 percent of whatever you contributed for 2011. Then, contribute that amount this week to your account. So if you contributed $1,000 in 2011, deposit $90 this week. It's the best way to maximize the return of your Oregon 529 plan.
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