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Last-minute tax tips
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April 11, 1997: 4:26 p.m. ET
Author and CPA Martin Kaplan has a few hints for procrastinating tax filers
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NEW YORK (CNNfn) - It's the least wonderful time of the year. With the April 15 tax deadline looming, a little last-minute tax advice may be in order.
Martin Kaplan, Certified Public Accountant and author of "What the IRS Doesn't Want You to Know," stopped by CNNfn's "Business Day" Friday with some tips.
Kaplan said that taxpayers may get some unexpected assistance from technology -- or the lack of it. He explained that the Internal Revenue Service's computer system has experienced numerous problems and is in the process of being upgraded.
While stressing that tax cheats could still be uncovered, Kaplan said that the IRS has become less effective at weeding out fraud due to its computer woes.
Kaplan said that most people, for fear they are not reporting all their income, often report too much income by listing dividends from things such as stocks that may have already been sold.
"You're not going to get a letter from the IRS that will say 'Dear taxpayer, you overpaid us. Here's your refund check.' So, be very careful with that," he said
Kaplan said many often make mistakes with paying too much on their mutual fund earnings when they are in a dividend reinvestment program. (174K WAV) or (174K AIFF)
There are three main contributions that he said are among the most overlooked.
- Non-cash contributions. These are things like donations of clothing to charitable organizations. If the taxpayer gets a receipt, these can add up.
- Late mortgage payment penalties. The late fees can be very substantial -- perhaps 5 percent of the monthly payment -- and are tax-deductible as mortgage interest.
- Business expenses. This is where many taxpayers run into trouble. Many expenses are deductible but others are not. Clothing and make-up are deductible only if they cannot be used outside of the workplace. Legal fees and educational expenses are also outside the rules.
One thing Kaplan said taxpayers can take comfort in is the fact that tax refunds this year are expected to remain stable from previous years because little has changed in the tax code, or in the frustrations it contains.
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