This year, the deadline for filing your federal tax return is April 17.
But don't let the two-day reprieve lure you into complacency. Waiting until the last minute to file increases the chance you'll make an error on your return. And the sooner you file, the sooner you'll get your refund.
As you prepare for tax season, here are some things you need to know:
• You may be able to prepare and file your federal tax return for free through the IRS Free File program. The program, a partnership between the IRS and private tax software developers, is designed to encourage taxpayers to file their tax returns electronically.
This year, the program will be open to taxpayers with adjusted gross income of $57,000 or less. That covers about 70% of taxpayers, says Diane Fox, director of the Free File program.
About 15 tax-preparation companies are in the program this year, and all have different eligibility criteria that are typically based on age, income, state residency or military status. To find a program, go to irs.gov/freefile.
Taxpayers who are ineligible for Free File can use Free File Fillable, an electronic version of paper forms. The program won't give you tax advice, but it will do the math for you and contains links to IRS publications.
Once you've completed your taxes on Free File Fillable, you can e-file your federal tax return for free. You can find the forms at www.irs.gov.
• Tax software providers also offer free online tax preparation for taxpayers with simple returns. You can prepare and e-file your federal return at TurboTax Free Federal Edition Online (www.turbotax.com). A state return costs $27.95.
H&R Block at Home (www.hrblock.com) also offers a free edition for first-time filers or taxpayers with simple tax returns. Preparing and e-filing your federal return is free; a state return is $27.95.
TaxAct's Free Edition (www.taxact.com) is available to all, regardless of the complexity of their tax return. Preparation and e-filing of one federal return is free; a state return costs $14.95.
• Senior citizens, members of the military and low-income taxpayers may be eligible for free tax preparation. In addition to providing preparation assistance, volunteers can also help you file electronically. Volunteer Income Tax Assistance sites are located at libraries, schools, shopping malls and military bases. To locate one near you, call 800-906-9887.
In conjunction with the IRS, the AARP Tax Aide program offers tax counseling for low- and middle-income taxpayers 60 or older. To find the nearest AARP Tax-Aide site, call 888-227-7669 or go to www.aarp.org/money/taxes/aarp_taxaide.
• New IRS regulations require that all tax preparers have a Preparer Tax Identification Number, part of an ongoing program by the IRS to regulate tax professionals. Tax preparers must use their PTIN when they sign taxpayers' returns. If your tax preparer doesn't have one, find another preparer.
Hot issues for 2012
Last year, millions of taxpayers were forced to delay filing their returns while the IRS updated its systems to accommodate tax breaks signed into law in late 2010. This year will be free of such drama, and the IRS will start accepting e-filed tax returns from all taxpayers today. Still, there are issues to watch out for this year, including:
• Installment payments on Roth conversions. Taxpayers who converted traditional individual retirement accounts to a Roth in 2010 were given the option of spreading out the tax payments over 2011 and 2012. If you chose this option, half of your tax payment will be due by April 17.
• New rules for reporting investments. Last year, for the first time, brokers were required to track how much investors paid for common stocks and report this information, known as the cost basis, to the IRS. The cost basis determines how much you owe the IRS when you sell your investments at a profit, or what you can deduct if you sell at a loss.
The 1099 tax form you receive from your broker this year should show the cost basis for any common stocks you bought in 2011. The IRS will check this against the information on your tax return when you sell.
By Sandra Block