Tips to whip your tax returns into shape

Yep, the holidays are over and it's now time to focus on your taxes. Are your returns out of shape? Don't fret.

In anticipation for the 2010 tax season, we've assembled a few tips to battle that post-recession bulge. No weights or cardio work necessary.

So, what can you do to avoid mistakes and problems on this year's tax return?

Double check your numbers
Most importantly, make sure you got your social security numbers correct. Let's say you wrote down the wrong social security number for one of your children. The IRS will disallow the dependent, and send you a brand new tax bill. Do a thorough double check when you finish filling out the information. It's worth the extra time.

Round up your charitable contributions

You can't deduct your charitable contributions if you forget to document them. Deductions are allowed for political groups, foreign organizations, social clubs, donations to individuals, and for a mile driven in service for a charitable cause. So don't forget to document.

File your taxes electronically
Want to avoid the paperwork? File your taxes on the computer this year. Filing through online services like TurboTax will speed up your return, and save you from many errors that might not have been caught on paper. The IRS will give you a chance to go back and fix any mistakes before your return is accepted and processed.

Also, Consumer United has teamed up with TurboTax to make times a little easier. File your simple return for FREE with TurboTax Federal Free Edition. Click here to start saving.

Survival tips to whip your tax returns into shape

Are your tax returns out of shape? Don't fret. In a three-part series focusing on how to survive the 2009 tax season, we've assembled a few tips to battle that post-recession bulge. No weights or cardio work necessary.

Time for part two, so whip out that No. 2 pencil once again.

Question: What positive actions can I take now in order to turn my tax return around?

Contribute to Haiti Relief
Help a great cause this spring. Make a cash donation before March 1, 2010, and it can be claimed on your 2009 tax return. Remember to itemize on your return in order for the contributions to be deductible. Have you made a donation via text message? Print a copy of your phone bill to receive a deduction.

Purchase a home
Thinking about buying a home? If you qualify for home-buyer credit, a home purchased before June 30, 2010 (the home contract must be in order by April 30) can be claimed on your 2009 tax return for up to $8000 in credit for first time home buyers or $6500 for long-time residents.

Give money to an HSA
Give money to a Health Savings Account if you were covered by a high deductible health care plan in 2009. This contribution will provide an above-the-line deduction. Limits are $3,000 for individuals, and $5,950 for families. There is also a $1000 catch for those age 55 and over.

Give money to an IRA
Contribute to an individual retirement account before April 15, 2010 for an above-the-line deduction. Limits are $5,000 for individuals with a $1,000 catch for those age 50 and over. Income levels over $65,000 for individuals and over $105,000 for families are not entitled to a deduction.

Click here for part one and here for part three of the three-part series.

Also, Consumer United has teamed up with TurboTax to make times a little easier. File your simple return for FREE with TurboTax Federal Free Edition. Click here to start saving.

Last-minute tax advice for small businesses

With the Wednesday, April 15 tax deadline literally around the corner, there's still time to take advantage of some last-minute tax tips.

If you're really scrambling, you can file for an extension by April 15 and that will give you an additional six months to finish your returns. However, the extension doesn't allow for any additional time to pay your taxes. You still have to pay what you think you owe or face interest and penalties. With many people trying to save as much as possible and many businesses struggling this year, there are a few tips that could be particularly helpful in the days leading up to April 15.

If you own a business, for example, and it posted losses in 2008, you may be able to use those losses to offset some of the taxes you paid on earnings in the past. The rules on this can depend on both the amount you earned and your corporate tax bracket, but in some cases, you could end up with money back. This year's losses can sometimes also be used to offset future earnings, but in many cases, a company would have to lose a significant amount of money to make the effort of trying to claim this money worthwhile.

This year the government is offering a lot of incentives for small businesses to make environmentally friendly improvements and upgrades. The Database of State Incentives for Renewable Energy details many of the improvements that are available in each state. Some incentives are applicable to purchases as small as Energy Star appliances, and some states allow these environmental incentives to offset corporate and personal taxes.

No matter how tempting, it is extremely important to claim only the deductions that truly apply to you or your business. Since times are tough, the IRS is likely to be looking closely at returns that seem suspicious. Audits and penalties can be very costly, and informers get a big payout. In some cases, they can receive up to 30 percent of the additional tax collected. Though it's not always crystal-clear, you should be able to find all of the information you need to complete an accurate return at IRS.gov.

--Bridget O'Sullivan

Last-minute tax return advice for procrastinators

Your 2008 tax return is due to the IRS by midnight on April 15, 2009. Here are some last-minute tips:

Should you file yourself ... or pay a professional?

Maybe your tax returns are simple, enabling you to file them yourself. If your returns are somewhat involved, you may be better off turning to a professional for help. Be cautious of who you choose. Stephanie AuWerter of SmartMoney.com reports, "Look for somebody who is either a CPA or an enrolled agent."

Once it has been decided to file taxes on your own, there are a few options of tax software to choose from. CompleteTax allows you to prepare your federal and resident state tax returns online, and TurboTax offers a federal free edition as well.

You need more time to file

So you need more time to file. That's OK, as long as you pay your estimated taxes by Wednesday, April 15. File for extra time with an Application for an Extension of Time to File- form 4868. This grants you an automatic extension until October 15, 2009.

If you don't file anything, you will receive a Failure to File Penalty. The IRS will charge you 5 percent per month on all income taxes due. That breaks down to $50 for every $1000 you owe per a month.

You don't have enough money to pay

If you don't pay your taxes, you will be hit with an interest charges and 1/2% per month penalty on the unpaid balance. Fox Business reports a few options to help your taxes get paid:

1. Borrow the money- from family, relatives, etc.
2. Charge it- to be used if you have a low credit card balance
3. Payment plan- with a 52$ fee when you pay electronically and 8 percent interest
   

After receiving your tax refund

Look over it carefully. If your refund seems high, increase your exemptions. AuWerter says "Getting a refund is great, but ideally you want to shoot for getting a small one rather than a really big one."