By
msnbc.com contributor
updated 4/4/2007 5:58:32 PM ET 2007-04-04T21:58:32

Haven’t done your taxes yet? You’re in good company — the Internal Revenue Service says about a third of all taxpayers will file in the last two weeks before the April 17 deadline.

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That’s right — April 17. The 15th is a Sunday this year, and the 16th is a holiday in the District of Columbia, Emancipation Day, giving us all an extra day.

Still, there’s not much time, and there are some tax-law changes this year that could be too confusing to figure out at the last minute.

There are special credits, for example, for homeowners who made energy-saving improvements in 2006, and for folks who bought hybrid cars. Almost all individual taxpayers qualify for a one-time refund of $30 to $60 on money that phone companies collected for taxes, but the IRS says millions of taxpayers are failing to claim it. (Use Form 8913.)

The IRS has an extensive Web site at www.irs.gov, providing any forms you might need as well as publications explaining tax rules. And most bookstores carry comprehensive, phonebook-sized tax guides written for ordinary folk, such as J.K. Lasser’s "Your Income Tax" and "The Ernst & Young Tax Guide."

The IRS site has instructions on filing electronically, which can get your refund to you in 10 to 14 days compared to six weeks if you file by mail. For most Americans, electronic filing is free.

Most opportunities to trim your tax bill are long past. It’s too late, for example, to reduce your 2006 income by postponing a bonus at work, or to cut your capital gains tax by selling money-losing investments. Those maneuvers had to be complete before Jan. 1.

But you still might qualify for a tax deduction by making a 2006 contribution to a traditional Individual Retirement Account before the tax deadline. Rule changes allow people with bigger incomes to take these deductions for 2006 (There’s no deduction on contributions to Roth IRAs.)

If you qualify for a deduction, putting in the maximum allowed, $4,000, would cut your tax bill by $1,000, assuming you’re in a 25 percent tax bracket. People who were 50 or older at the end of 2006 can contribute another $1,000, cutting tax an additional $250.

Not everyone qualifies for a deduction. The rules, which are pretty tricky, are explained in IRS Publication 590. People who have retirement plans at work and make healthy incomes — $50,000 or more for singles, $75,000 or more for couples filing joint returns — are less likely to get full deductions. However, most people who do not have employer-sponsored retirement plans can deduct everything they contribute.

If you don’t have an IRA or enough time to research the best investment, start one at your bank, investing in short-term certificates of deposit. You can transfer the funds elsewhere if you find a more appealing investment later.

Homeowners who made energy-saving improvements in 2006 can claim a variety of tax credits for the first time: up to $2,000 for solar water-heating or electric systems, up to $500 for insulation or heat-reducing metal roofs, as much as $200 for energy-saving windows. (A $500 credit cuts your tax bill by $500, while a $500 deduction would merely reduce your taxable income by that amount, cutting tax by $125 for a person in the 25 percent bracket.)

There also are credits for purchase of energy-efficient vehicles, such as gas-electric hybrids. These credits vary by vehicle. Publication 17 describes energy credits, which are claimed with Form 5695.

People who have investments in their children’s names for college or other purposes face new “kiddie tax” rules for 2006. This applies to unearned income, such as investment returns.

Basically, income above $1,700 a year is taxed at the parents’ rate, which is usually higher than the child’s. Starting in 2006, the parents’ rate applies to children under 18 rather than under 14. Use Form 8615.

Think you can’t get it all done by the 17th? Then file for an automatic six-month extension, using Form 4868. In previous years, the extension was just four months.

Remember, though, that an extension to file is not an extension to pay any additional tax you owe. If you have not paid 90 percent of what’s owed by the 17th, you could be stung by penalties and interest.

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