Filing Late? Seven Last-Minute Tax Tips

C H I C A G O, April 3 -- The deadline for tax returns is only 12 days away, but if you are like millions of other Americans, your 1040 form may be stashed somewhere under a pile of credit card bills and mail-order catalogs.

In fact, roughly 40 percent of all Americans wait until the tax deadline day, April 15, to file their taxes. About 130 million individual tax returns will be filed this year, with about half of Americans doing it themselves, and the other half using a tax professional. Even if someone does your taxes for you, there is important work you need to do on the front end, and 2002 is definitely the year to get the ball rolling sooner rather than later.

The $1.35 trillion tax cut passed by Congress and signed by President Bush last June included 441 tax law changes that will make the filing process even more taxing.

This year, the IRS has reported that it plans to randomly select 50,000 tax returns for a special audit. In previous years, the IRS has targeted only suspicious returns. That is bad news for later filers. All too often, last-minute filing results in overlooked deductions, mathematical inaccuracies and trouble with the Internal Revenue Service. Here are some simple steps you can take to make filing your taxes less painful.

1. Gather Your Statements

No one said doing your taxes was fun, but it can be a terrible experience if you are not organized. Take the time to get all the paperwork together. Gather all your W-2 wage statements. These come directly from your employer and were required for all the work you performed in 2001 by the end of January 2002. In addition, if you have any investments (including a savings account), you need a Form 1099 from each bank, brokerage firm, investment company and mutual fund you invested with in 2001.

There are many different types of 1099 forms, including a separate form for interest, dividends, proceeds received from stock and security investments, government payments, royalty and rental income, distributions from IRAs and other retirement plans, and social security income. If you realize that you are missing forms, immediately contact your employer or the firm in which your money is invested and request they be re-sent to your attention. If you don't have them in time, consider filing for an extension on paying your taxes. Some mutual fund companies and brokerage firms say it could take up to two weeks for you to receive a duplicate of your 1099s.

2. Take Pictures, Keep Receipts

After you have accounted for and organized all of your forms and information, pull together your exemption, deduction and tax credit information. Just as you organized your income statements, you will need to do the same with all of your deductions. In addition, there are a handful of categories that commonly trip people up and raise suspicion from the IRS.