IRS Offers Quick Tips Towards Tax Savings

HARTFORD — The Internal Revenue Service wants to alert taxpayers that now is a great time to get a head start on their tax return.

“With less than a month to go before the end of the 2007 tax year, here are some quick IRS tips that might save you time and money when you file your 2007 tax return,” IRS Spokeswoman Dianne Besunder said.

*Get your records together

With the current tax year “winding down,” the Internal Revenue Service is encouraging taxpayers to take the time now to gather and organize their tax records to reduce stress at tax time. Generally, tax records should be kept for three years, but some documents, for example, records relating to a home purchase or sale, stock transactions, IRAs and business or rental property, should be kept longer. For more information on what types of records to keep, see IRS Publication 552, Recordkeeping for Individuals.

*Get ready to e-file

Nearly 80 million taxpayers used e-file last year or about 57 percent of all returns were filed electronically. E-file is the safe, accurate way taxpayers to quickly complete their taxes and get a refund faster. More than 22.6 million returns have been e-filed by taxpayers doing their own returns. Go to IRS.gov and click on the blue e-file logo.

*Get documentation for your cash contributions

To deduct any charitable donation of money, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. A bank record includes canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date. Prior law allowed taxpayers to back up their donations of money with personal bank registers, diaries, or notes made around the time of the donation. Those types of records are no longer sufficient.

*Get the most out of your retirement accounts

Are you maximizing your contributions to your retirement accounts? This year, you can contribute up to $4,000 in an IRA, as well as another $15,500 to a 401(k) employer plan. If you’re 50 or older, those numbers go up to $5,000 and $20,500, respectively. The Saver’s credit for low- and moderate-income workers helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Formally known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply. You can choose the split-refund option on your return to split your in up to three accounts including a retirement account.

*Get information about the Earned Income Tax Credit

Wondering if you might benefit from the Earned Income Tax Credit that is available to low- and moderate-income workers? Use The EITC Assistant on IRS.gov which helps determine eligibility for the credit, filing status of the taxpayers and if the taxpayers’ children meet the definition of “qualifying children” for EITC purposes.

*Get that 2006 Telephone Excise Tax Refund

This credit was available on your 2006 tax return. If you filed but did not claim this credit on your 2006 return, file Form 1040X, Amended US Individual Income Tax Return. If you were not required to file a 2006 return, see the 2006 Form 1040EZ-T, Request for Refund of Federal Telephone Excise Tax.

Remember for the genuine IRS website be sure to use .gov. Do not be confused by internet sites that end in .com, .net, .org or other designations instead of .gov.

The address of the official IRS governmental website is www.irs.gov. IRS.gov is the best place to learn about the latest tax changes. Be sure to avoid the tax scams and “phishing” email scams listed on IRS.gov. Send email tax scams to “phishing@irs.gov.”