Get organized
Early preparation for the imminent tax filing season is best. An MSN Money/Zogby survey for the 2006 tax season showed that two in five Americans procrastinate when it comes to filing their tax return. Begin now to organize your documentation. Using a checklist saves time and may jog the memory about items you might overlook. Many are available on the Web; just type in “checklists for tax preparation.” Once organized, you’ll be more efficient in completing the tax return.

Identify last-minute savings opportunities
Contribute to a traditional IRA. If you’ve missed maxing out your deferrals for 2007, consider an IRA. Eligibility for making deductible contributions to a traditional IRA depends on two factors: (1) if you are covered by a retirement plan at work and (2) your modified adjusted gross income (AGI). The maximum contribution limit for 2007 is $4,000 or $5,000 if age 50 or better. Remember, your nonworking spouse may be eligible for an IRA and an additional deduction can be beneficial. To qualify, you must be legally married at year’s end and file a joint tax return. For more details on IRAs, see IRS Publication 590.

Note: Making the most of a retirement plan is good for you now and good for you in the future. Whether or not you deferred the maximum for 2007, don’t miss out in 2008. The deferral limits for 2008 are the same as in 2007 (generally, $15,500 or if age 50 or better, $20,500). The limits for IRAs (traditional and Roth) increased to $5,000 or $6,000, if age 50 or better.

Make the most of tax deductions and credits

• Itemize deductions. The list is myriad and some impose thresholds in order to take the deduction. It can be tempting to take the standard deduction, especially if the filing deadline is nearing.
• Sales taxes. If your sales taxes are more than your state and local income taxes, take this deduction. The IRS provides an online calculator.
• Charitable contributions. Only contributions to a qualified organization are deductible. If you contributed to a cause other than your church or other widely recognized charitable organization, visit the IRS Web site. Not only can you verify if the organization qualifies, read about the IRS “Dirty Dozen,” which identifies the most recent tax scams.
• Claim tax credits. Not unlike deductions, there are various tax credits. The following bullets provide a summary of these credits. 
• Earned income credit. To qualify for the Earned Income Tax Credit (EITC), you must file a tax return even if you do not owe taxes. The EITC has no effect on certain welfare benefits and, in most cases, is not used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.
• Child tax credits. Eligibility for the Child Tax Credit (CTC) is subject to several rules such as residency, child’s age, your modified adjusted gross income and regular income tax liability. In addition, you may also be eligible to receive the Child and Dependent Care Credit.

Note: Deductions and credits help reduce your tax liability. For more information on these credits, check out the following publications on the IRS Web site: Publication 596 — Earned Income Credit (EIC), Publication 972 — Child Tax Credit and Publication 503 — Child and Dependent Expenses.

Read up on AMT relief
On Dec. 26, 2007, President Bush signed the Tax Increase Prevention Act of 2007, which provides temporary relief for the alternative minimum tax (AMT). Without this reprieve, more than 20 million additional taxpayers were predicted to pay the tax. The IRS Web site has an AMT Assistant to help you determine if you owe the AMT.

Note: If you don’t owe AMT for 2007, but paid AMT in one or more previous years, you may be eligible for a special minimum tax credit this year. Check out Tax Topics, Topic 556 — Alternative Minimum Tax on the IRS Web site.

Have IDs for dependents
To claim an exemption for dependents, or potentially, the child tax credit, you’ll need an identification number (usually a Social Security number) for each dependent. If you had a baby near the end of 2007, the IRS recommends asking for a filing extension date rather than claiming an exemption without an ID number.

Note: Absent an ID number, the IRS will deny the exemption and/or tax credit. Don’t forget, a tax credit reduces tax whereas a deduction reduces your taxable income.

File your return on time
Even if you can’t get your return filed by April 15, 2008, file Form 4868. This form provides an extension until October 15, 2008. Nevertheless, you’ll need to estimate your 2007 tax liability and include payment for the estimated tax with Form 4758. The IRS can impose a late-filing penalty of 4.5% and a late payment penalty of 0.5% of the tax due. Both penalties are assessed on a monthly basis until paid.

Note: File a Form 4868 to avoid the penalties or the denial of a claimed exemption. You’ll need to estimate your total tax liability and then subtract the amount of taxes paid. The excess, if any, is payable with Form 4868. You can use a credit card to pay estimated taxes. Accepted credit cards are listed on Form 4868.

Decide if you need help and where to get help

• The IRS Web site  offers a number of Fact Sheets, Tax Tips and a toll-free help number.
• The Tax Advocate Service (TAS) is a free, confidential service within the IRS, available to those experiencing economically difficult circumstances.
• The Internet offers copious tax helps.
• Tax preparation software and services are viable resources.

Note: Not all Web sites provide reliable tax tips. Also, be aware that “2007 tax tips” may refer to the tax return due in 2007 for the 2006 tax year. Similarly, some references to 2008 apply to tax changes for the 2008 tax year, not 2007.