Seven last-minute tax-filing how-tos

Right now, one-third of Americans are feeling, at best, a bit of stress, and at worse a whole lot of anxiety as the final hours to file their tax returns looms.

With the clock ticking and the desire to procrastinate no longer an option, H&R Block, one of the world’s largest tax services providers, offers these tips for filing last-minute returns:

1. Unemployed required to file – Even 2010’s 9.5 percent unemployed must file tax returns if the income for the year exceeds the filing threshold for the taxpayer’s filing status. All unemployment benefits will be taxed this year, unlike last year when the first $2,400 was tax-free.

2. Sandwich generation gets tax relief – “Sandwich generation” taxpayers – those supporting their parents and their own adult children – may be able to claim the $3,650 qualifying relative exemption. Generally, the taxpayer must provide more than 50 percent of the financial support for eligible expenses such as food, lodging, clothing, education, medical and dental care, recreation and transportation.

3. Education benefits extended – The American Opportunity Credit was extended, allowing taxpayers to claim $2,500 for the first four years of college education for each student. The tuition and fees deduction also was extended and could provide a reduction in taxable income of up to $4,000. Taxpayers can only use one education benefit per student.

4. 2008 homebuyer credit repayment starts, but not for 2009 and 2010 – The 2008 First-time Homebuyer Credit was similar to an interest-free loan and taxpayers must begin repaying it with their 2010 tax returns. In general, taxpayers must repay $500 a year for 15 years. If the taxpayer no longer lives in the house, then the credit must be repaid in full with the next tax return. Taxpayers who claimed the credit in 2009 and 2010 will not have to repay it unless the house is sold or is no longer their principal residence within three years of purchase.

5. Homebuyer credit exceptions for military – Military personnel who claimed the 2008 homebuyer credit and sold or moved out of the house after Dec. 31, 2008 due to relocation orders do not have to pay back the credit. Additionally, military personnel on extended leave outside the U.S. for at least 90 days between Jan. 1, 2009 and April 30, 2010 may claim the credit if they close on the house before May 1, 2011 (July 1, 2011 if the taxpayer enters into a contract before May 1, 2011).

6. Energy credit – The 2009-10 maximum credit of $1,500 is available for home energy-efficient upgrades installed in 2010, such as external windows and doors, insulation, roofing, HVAC and non-solar water heaters meeting specific energy guidelines.

7. Adoption Credit fully refundable in 2010 and 2011 -The Adoption Credit can be claimed for qualified expenses up to $13,170 for 2010, and the IRS will refund any amount of the credit that exceeds the adoptive parents’ tax liability. With domestic, private and agency adoptions costing up to $30,000, this means more money back in the wallets of adoptive parents.

Taxpayers who can’t file by the deadline or are concerned their return won’t be right if they hurry, shouldn’t settle for less than filing an accurate tax return. To help these taxpayers, participating H&R Block offices are offering free extensions to file through the April 18 tax filing deadline. For more information about applying for a free tax extension at an H&R Block office, visit www.hrblock.com or call 800-HRBLOCK.
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