Checklist can ease annual filing headaches

This year’s deadline for filing your income tax return is April 15.

Check.

Now, here’s a more detail-oriented checklist for dealing with taxes this filing season:

¢ Bone up. Skim this tax guide and your tax instruction booklets to get a sense of what’s new – and where potholes lie ahead.

¢ Get organized. Sorting through your records is typically the most time-consuming task in preparing a tax return, consuming an average of nearly 16 hours. Avoid a last-minute search for W-2s, 1099s, receipts, mortgage reports, medical expenses and investment records.

Review last year’s returns, noting items such as carry-over losses and deductions you might forget. Double-check the tax basis of mutual funds and stocks you sold during the year.

¢ Check your federal and state tax account balances. Make sure estimated payments were credited correctly. Double-check whether you applied last year’s tax refund to this year’s tax bill.

¢ Verify your W-2s. Errors are not uncommon if you exercised stock options or sold stock acquired through an employee stock purchase plan. If they’re wrong, have your employer correct them as soon as possible. You risk an audit if the numbers on your return don’t jibe with computerized records sent to the Internal Revenue Service.

¢ Get your ID numbers straight. If you changed your name, notify the Social Security Administration. If you’re a nonresident or a resident alien, allow as many as eight weeks to obtain an Individual Taxpayer Identification Number.

Write names exactly as they appear on the Social Security card – and ignore the birth certificate. If you’re filing a joint return, enter both names and SSNs in the same order as in previous years. Jot down the SSN of every dependent, not just for kids. List the SSNs for ex-spouses to whom you pay alimony, too.

¢ Get the exemptions right. Many taxpayers check the boxes and do the math at the top but forget to copy the total in the appropriate box lower in the form. And remember: You can’t claim a personal exemption on your return if you can be claimed as a dependent on someone else’s return – even if the other taxpayer doesn’t actually claim you.

¢ Identify where federal and state rules vary. Losing track of these differences could cost you if, for example, you contributed to an IRA, Keogh or SEP-IRA during the ’80s and ’90s, if you’re depreciating business income, or if you have a federal mortgage interest credit.

¢ Download the software update. Tax-software developers often patch bugs as the filing season unfolds. That’s especially important this year because Congress approved key changes after the IRS printed its forms and instruction booklets.