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Smarties: How to make tax time less taxing

Posted: March 11, 2010 10:19 p.m.
Updated: March 12, 2010 4:55 a.m.
Guess what? It is time to start thinking about tax time again. Yes, along with springtime thaws comes that less welcomed season: tax season.

It is no surprise that year in and year out, most of us need to file our state and federal tax returns by April 15. Still, it is easy to find yourself unprepared, especially in a harsh economy.

It has been a harsh winter. Many parts of the country have been buried in snow, in what has been nicknamed "snowmageddon." Fortunately, you can avoid being buried in your personal "taxmageddon" during the upcoming tax season.

The following suggestions will help you spend and save your money wisely to make tax time less taxing.

What to do before April 15:
* Get your receipts and income statements together. This process is much easier if you have a system of collecting necessary documents throughout the year.

* Find a good tax adviser. If your funds are limited or you are a senior, contact the IRS at (800) 906-9887 or AARP at (888) 227-7669 (888-AARPNOW) or

* Do not avoid filing your tax return on time and paying your taxes. If you are going to have trouble paying your taxes, remember that paying some of your taxes is better than paying none.

The IRS starts charging interest and penalties on the unpaid portion the day after Tax Day.

What to do after April 15:

* If you are fortunate enough to qualify for a refund, remember that your tax rebate is not "free" money from the government. Rebates are just your money finally sent back to you. You lost the funds when you paid taxes throughout the past year. At last, a part (only part!) of your money is being returned (without interest!). If you are "lucky" enough to "earn" a tax rebate, save or spent it carefully, not foolishly. 

* When the check finally arrives, cancel the celebration and the shopping spree. Instead, deposit the check with the rest of your savings or invest it to provide a steady source of income for the rest of your life.

Throughout the year, remember:
* It is easier to save for taxes gradually. If you start setting aside a little each month toward taxes throughout the year, your check for the IRS will be much easier to write in April.

* You pay taxes all year long. You pay many more taxes than you realize. You pay city, sales, excise, and possibly property and Social Security taxes throughout the year. Your obligation as a taxpayer extends far beyond your annual state and federal taxes.

* Not only do taxes nibble away your income all year long, inflation does, too. Inflation invisibly consumes a portion of your income and savings every year. If you are saving only at the rate of inflation, you are not going forward; you are just "standing still."

* To be able to spend $1.00, most people have to earn about $1.60. For example, if you are in the 38% tax bracket, you do not have to earn only $138 to keep $100. You have to earn even more, since you have to pay taxes on the $38, too. Therefore, it is far easier to save $1.00 than it is to earn $1. That is because you have to earn $1.60 to keep a $1. after taxes.

* A large income does not mean you have a lot of money. At the end of the day (or on April 15), the number that counts is not the amount that you earned last year, but the amount that retain after tax time. As the old saying goes, "It's not what you make; it's what you keep."

This article is written by Samuel K. Freshman and Heidi Clingen, authors of the new book "TheSmartestWayTM to Save-Why You Can't Save Money and What to Do About It," available at The book includes more tax-wise ways to save money and live well in our economic times. Contact:


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