1. Take the telephone tax refund

IMPORTANT- Everyone who is a long distance customer is entitled to this!

The standard deduction amounts are as follows: [IR–2006–137 August 31, 2006]

• $30 – for a person filing a return with one exemption
• $40 – for two exemptions
• $50 – for three exemptions
• $60 – for four or more exemptions

2. Use the deduction method that gives you the biggest tax advantage

IMPORTANT - The standard deduction amounts have increased from last year!

The standard deduction amounts are as follows:

• $5,150 for single filers or married couples filing separately
• $7,550 for head of household filers
• $10,300 for married couples filing jointly

In addition, if you are over 65 years of age or are visually impaired by checking a couple of boxes you may qualify for larger deductions.

If all the receipts you saved last year add up to less than the standard deduction, throw them away. You do not need them. The less deductible receipts you have, the less your chances of being audited.

BUT…

For certain people, itemizing is the better option. Those who spent a lot on medical care, mortgage interest, state and local taxes, charitable contributions and other miscellaneous expenses may be better off itemizing.

IMPORTANT – Only medical expenses that exceed 7.5% of your AGI (adjusted gross income) can be deducted.

3. Timeliness of Filing is Important

Deadline Dates:

March 15, 2007	1120 or 1120-A, 1120-S due for corporations with fiscal year ends of December 31
April 17, 2007	1040 or 1040 E-Z (The 15th falls on a Sunday this year. And the 16th is a holiday in Washington, D.C.)

IMPORTANT - MAKE SURE YOU FILE ON TIME OR FILE THE EXTENSION AND PAY WHAT YOU OWE.  If YOU CANNOT PAY WHAT YOU OWE, AT LEAST FILE THE EXTENSION.  (It is automatic, but only if you file the extension.) The interest is much less than the penalty. Moreover, penalties are not deductible.

4. Select the best person to prepare your tax return

Your choices are:

• Chain or local tax preparation service
• These people are trained to some extent and are not highly paid.  They may be doing this as a second job.
• If your return is fairly simple, this could be an inexpensive option for you.  If your return is more complex, they may not take full advantage of those deductions.
• They can accompany you to a meeting with the IRS.  They are not authorized to appear in your place.
  
• Enrolled agent
• They are licensed by the federal government.
• They are either a former IRS employee or have passed a comprehensive exam.
• They can represent you with the IRS should the need occur.
• Many enrolled agents are experts in a certain tax area.  It is important to check this out.  Get assistance through the National Assn. of Enrolled Agents at (800) 424-4330 or on the web at naea.org
  
• Certified Public Accountant
• He/she has passed a state’s qualifying exam for accounting but may or may not be an expert on taxes. Ask about their experience.
• He/she can guide you through complicated financial situations that have resulted in a lifestyle change e.g. recently divorced, retired, opened or closed a business etc.
• He/she can represent you before the IRS.
• More information can be obtained at their website:  aicpa.org
  
• Tax attorney
• May be the best choice if you are interested in sheltering some of your income or you are involved in complex corporate matters. 
• They may be an expert in the latest tax law, but fewer experts on preparing the actual return. Again, ask about their experience
  
• Tax software - Before choosing a program, do some homework.
• Evaluate your personal situation.  Are your taxes fairly simple and straight forward? Or are they complex and tricky (e.g. Do you have a freelance job on the side?)  Don’t really know?  Look for a program that will explain everything and walk you through the whole thing step-by-step.
• If you do not feel you need many explanations, but you do want the software that will double check your math, find less complex software.
• Whatever you choose, be sure to run the final form check (if it is not automatic) and be sure to save your work in a file before shutting down. Make a printed copy, too.
  
• On your own – all by yourself. Allow about 13 hours from beginning to end.

5. Get all your tax credits [IRS 2006 2040 Instructions]

FYI credits are better than deductions. A tax credit is subtracted from the taxes you owe. A deduction is subtracted from your earnings; and then you calculate the amount of tax you owe.

• Tax Credits:
• 601 Earned income credit (EIC)
• 602 Child and dependent care credit
• 603 Credit for the elderly or the disabled
• 604 Advance earned income credit
• 605 Education credits – (Hope – up to $1,650/yr. for 1st two years enrolled at least ½ time; - lifetime learning credit up to $2,000/yr. {20% of all expenses} family credit so all expenses for children and parents apply)
• 606 Child tax credits
• 607 Adoption credit
• 608 Excess social security and RRTA credits tax withheld
• 610 Retirement savings contributions
• Residential energy credit
• Mortgage interest credit (low income tax payers – MCC [Mortgage Credit Certificate] issued by state or local government)