10 tips on taxes, refunds, rebate checks

What you don't know can hurt you - financially - when it comes to taxes.

For example: If you want an economic stimulus check, you have to file a 2007 tax return.

Even if you normally don't.

That's true for many folks getting social security or veterans benefits.

Most taxpayers need at least $3,000 in 2007 income to qualify, and social security recipients as well as veterans can count their payments to reach that threshhold.

Also, couples filing jointly can get two $600 checks, while those filing separately will only get one between them, according to IRS spokesman David Stewart.

For more, go to www.irs.gov and click on "Rebate questions?"

Consider that Tax Tip No. 1.

Here are nine more.

2. The IRS might owe you a refund from a previous year. There's no penalty to file late if the government owes you money. But if that refund is for tax year 2004, you have to file by April 15. Just in Pennsylvania and New Jersey alone, more than $80 million is owed to more than 85,000 people who never filed a 2004 income-tax return. The average unclaimed refund is more than $500. For more, go to: http://go.philly.com/refund.

3. Don't overlook the earned-income tax credit. Up to a fourth of those who qualify fail to take this credit, the IRS estimates. Yes, it's for workers in lower income brackets, but a family of four could earn nearly $40,000 and get $4,700 back. Go to: http://go.philly.com/eic.

4. Save taxes now by adding to a regular IRA. There's only one way to legally reduce your 2007 taxes now. That's by contributing to an individual retirement account. Those under 50 can put up to $4,000 in an IRA, those between 50 and 70-1/2 up to $5,000. Those over 70-1/2 years are ineligible. Another kind of IRA, the Roth, is not deductible, but its earnings can grow tax-free. For more, go to http://go.philly.com/taxira.

5. You may be able to prepare and e-file your tax return for free. Through www.irs.gov, you can find a list of tax-preparation companies that will help you do and e-file your federal taxes for free if your adjusted gross income is $54,000 or less. In Pennsylvania, 70 percent of taxpayers would qualify, Stewart said. Some services don't even charge for state returns. Go to www.irs.gov, and click "Use Free File to Prepare Your Taxes." Filing just to get a stimulus check? On the Free File page, look for a special link.

6. For more free tax help, you have several options. Generally, www.irs.gov is the best place to get accurate information, especially since it's always available and you don't have to wait your turn. Individuals can get live assistance by calling 1-800-829-1040, toll-free, Monday to Friday from 7 a.m. to 10 p.m. For recorded information, call 1-800-829-4477. It may be too late to get an appointment at a local IRS office, Stewart said, but you can find out addresses, hours and phone numbers by plugging in a zip code at http://www.irs.gov/app/officeLocator/index.jsp. Finally, to ask Stewart a question directly, or read his latest answers online, go to: http://go.philly.com/davidstewart.

7. Opt for direct deposit to get a faster refund. Your refund should be in your bank account within 10 days if you choose direct deposit. "The check is in the mail" option can take four to six weeks if you e-file, six to eight weeks if you snail mail your return. Payers need not fear identity theft, said Stewart. "It's very secure. We've never had our systems compromised."

8. Avoid dishonest preparers. Taxpayers, not preparers, are ultimately responsible for each return, the IRS advises. So check your return before signing it and question confusing entries. Never sign a blank return. Expect the preparer to sign it, too, and provide you with a copy for your records.

Be wary of preparers who claim they can get bigger refunds, base their fees on refund amounts, or claim phone customers can get hundreds of dollars in phone tax refunds, the IRS advises.

9. Be sure to have receipts and good records. The number of audits has risen for three years straight, Stewart said, and deductions made without supporting evidence will be disallowed, possibly resulting in fines and interest. The IRS examined 1.4 million returns filed for 2006, about 1 percent of all returns. "It's old advice, but it's still good as gold," Stewart said.

10. If you can't file on time, ask for an extension and pay what you figure you owe. Filing late when you owe money is like asking to be audited, according to some experts. At the very least, the taxpayer will face fines and interest penalties, Stewart said. If you're not sure how much you owe, paying as much as you did last year is a good rule of thumb for avoiding penalties, he said.

Filing for an extension, which gives taxpayers an extra six months, also puts the stimulus check on hold. Those eligible won't get them until after the return is finally filed, Stewart said.