'Tis the season: avoid making the paper shuffle a "tax"ing event

Airman, March, 2005 by Elaine Aviles

Tax season can be a time of joy or terror. After people struggle to interpret new tax laws, short and long forms, and changing W-2s, they're faced with the all-important question: vacation in Hawaii or debt for a year? It all hinges on the tax return.

It's no wonder the phrase "tax season" can strike fear into the hearts of man (and woman).

America's love-hate relationship with taxes dates back to 1764 when the British parliament enforced a tax on imported sugar, then on every piece of paper, playing card and legal document in the colonies. Frustration and dwindling funds eventually led to the Boston Tea Party, when colonists tossed a shipload of heavily taxed tea into the harbor.

Fast forward 231 years and people still experience the same frustrations as they struggle with ever-changing tax laws, deductions, exemptions and a host of other confusing tax-related terminology. But, with tea-tossing no longer an option, people have to find better outlets for their frustration.

Although the urge is to bury W-2s and 1040 EZs under a pile of paperwork until the eve of April 15, there's another option--education.

Maj. Patrick Dyson, Legal Assistance and Preventive Law Division deputy chief and Air Force Tax program manager, helped decipher the mysteries of tax season. Hopefully, his tips will alleviate those inevitable tax-related night sweats and panic attacks.

1. Don't forget there's a free tax program. The Air Force's Volunteer Income Tax Assistance program offers free tax preparation assistance to servicemembers, their families, and, on some bases, Department of Defense civilian employees. Internal Revenue Service-trained volunteers guide people through the federal and state tax return maze. Every base has a tax center (except for deployed locations), so if you haven't found yours, call your local legal office to track it down.

2. Be prepared. The Boy Scout motto holds true. You can avoid a wasted trip to the tax center by bringing necessary documents: W-2s from full- and part-time jobs, Social Security number cards for all family members, bank interest statements, homeowners' statements with interest paid for the year, Individual Retirement Account contribution amounts, college tuition statements and any other miscellaneous tax forms you got in the mail. Bring it all--it's better to be over-prepared than under.

3. File electronically. If a vacation is riding on your tax return, electronic filing is your best bet. VITA volunteers can assist with this for federal and some state tax returns. You can have your refund electronically deposited into your bank account quickly enough to pay off that lingering holiday debt. People who want their return faster than a fast-food order should be wary of tax-time money-making schemes, such as same-day refund centers. The money is actually a loan from a bank, associated with the commercial preparer, based on the anticipated refund amount. If the preparer miscalculates and the refund is smaller than expected, you may be stuck with the difference, Major Dyson said. More importantly, the fees associated with the rapid refund schemes actually decrease the amount of your return.

4. Don't procrastinate. Besides avoiding the mad rush to file on time, early filing also allows you to go back and make corrections that can otherwise cause an IRS rejection. An amended return is necessary if you misreported filing status, total income, deductions or credits. For those who work better under pressure, don't wait too long. You only have until midnight April 15, to file your return.

5. Know the exceptions to the rule. If you are or will be deployed during tax season, don't panic.

The IRS offers a 180-day extension for military members deployed to a combat zone or a qualified hazardous duty area. As a bonus, Airmen also get extensions equal to the amount of time they were deployed during the filing season. For instance, if an Airman deployed to a combat zone Jan. 1 and returns May 1, they are given a 180-day extension plus 105 days for days missed during the filing season. Spouses get the same consideration. However, Airmen can also grant a power of attorney to a friend or family member to file taxes on their behalf. Servicemembers stationed overseas (excluding Puerto Rico, Alaska and Hawaii) also have some leeway; they're given an automatic two-month extension.

6. Get informed. There's relief in sight--tax relief that is. Several new tax laws offer advantages or relief for taxpayers. For example, a practice known as the Kansas Rule was abolished. This practice by some states was to include the military nonresident's income when computing the nonmilitary spouse's tax liability. The end result was the spouse owed more in state taxes. Another new law is a state sales tax option, which gives taxpayers who itemize deductions a choice of claiming their state sales taxes instead of state income taxes. There are many other new laws, but you don't need to track them down, the IRS did the leg work and published a complete list on their Web site. VITA reps can also point out ways to save during tax preparation.