New year, new tax return; A&FRC offers tips for tax returns Published Jan. 25, 2010 By Kimberly L. Wright Air University Public Affairs MAXWELL AIR FORCE BASE, Ala. -- Tax time is here! Now is the time to get organized and prepare for your 2009 tax return. According to Gari Smith, personal financial management consultant at the Maxwell Airman and Family Readiness Center, several steps can be taken to ensure a painless and accurate tax return. Get prepared. Organization is the key to a smooth tax season. "Gather your receipts and other important documents including W2 and investment statements, as well as records of charitable giving," said Ms. Smith. According to www.mypay.gov, W2 statements for all active-duty members are available on the Web site Wednesday. Do not wait until the last minute to compile all of the needed documents or you may find it difficult to get missing documents in time to meet the April 15 filing deadline. Take advantage of free tax assistance and online filing. The 42nd Air Base Wing legal office will provide a tax center on base for military members, retirees, and their dependents from Jan. 25 until April 15. "Make an appointment and sit down one on one, and [the volunteers] will help you prepare your taxes for free," Ms. Smith said. Military OneSource's Web site, www.militaryonesource.com, offers free online tax filing for service members and their spouses. Many other organizations, such as AARP, provide free filing for its members, and according to www.irs.gov, taxpayers earning less than $56,000 a year may qualify for free e-filing. Online filing ensures faster returns, greater accuracy and is more environmentally friendly. Research tax deductions and credits. Ms. Smith also advises people to pay close attention to the increased number of tax deductions and credits available for the 2009 tax year. For example, taxpayers who bought a new vehicle this year may be entitled to deduct state and local sales and excise taxes. Common credits that taxpayers may be entitled to are the child tax credit, the earned income credit, the first-time home buyer credit, the child and dependent care credit, and the recovery rebate credit. "The earned income credit can put a maximum of $4,824 back into your pocket if you qualify," said Ms. Smith. The first-time home buyer credit of $8,000 was extended to include homes under contract by April 30, 2010, and closed on by June 30, 2010. Home buyers who claim the credit for their 2009 returns must file a paper return. Military members serving outside the U.S. may qualify for extended deadlines on the home buyer credit. Another tax credit, the American Opportunity Credit, modifies the existing Hope Credit for educational expenses. "If you are going back to school, tuition and fees up to $2,500 may be claimed as a credit for the taxpayer, spouse, or dependents." In addition, a qualifying tax payer can claim a credit for long-term capital losses of up to $3,000 this year. Military members may be eligible for a host of additional deductions including expenses related to a permanent change of station, non taxable combat pay, reservists' uniform cost and upkeep, travel to reserve duty, and the transition back to civilian life. Also, the newly signed Military Spouses Residency Relief Act means a change in tax laws for military spouses. "I recommend that everybody look at the user-friendly IRS Web site to research any deductions or credits they may be eligible for," said Ms. Smith. "Think about all of your spending including purchases related to your home, your car and your job. There are so many different ways to reduce your tax liability." A tax professional or a tax preparation software program can also be a tremendous help. Avoid refund anticipation loans. This type of loan is a short-term loan secured by a taxpayer's expected tax refund and is designed to offer customers quicker access to funds than waiting for their tax refund. "Basically, it's a high-interest loan with rates as high as 700 percent," said Ms. Smith. "Remember, those who file electronically may receive their refund in as little as one week," she said.