Here's to a Hassle-Free Tax Return

With taxes due soon, here are a few tips that will make filing as painless as possible. Below, we look at some common mistakes to avoid -- and the hassles you could encounter this year in particular.

First off, don't let Uncle Sam's generosity create problems for you. Already this tax season, many filers have made errors related to last year's tax refund checks.

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If you received the full refund amount last summer -- $300 for singles, $500 for heads of household, and $600 for married couples -- you don't need to worry much. You can simply skip the "rate reduction credit" line on your tax form, which appears on line 47 of Form 1040 (or line 30 of Form 1040A or Line 7 of 1040EZ).

Just don't make the mistake of entering your rebate on the credit line -- a mistake the IRS has already begun to encounter as it sifts through people's tax returns. When it comes to preparing your return, pretend the rebate never happened. You don't need to enter information about it anywhere on your tax forms.

The situation is a little more complicated if you didn't receive the full sum, or perhaps didn't get a check at all. In that case, listen up: You still may be able to receive a credit equivalent to the rebate. You could be eligible for the credit if your tax filing status has changed since 2000.

It works like this: The rebate checks were essentially an advance payment on the refund caused by the tax reduction in tax year 2001. But because the checks went out well before the end of 2001, the government had to use 2000 tax returns to determine who was eligible for the rebates. The IRS assumed that people who paid no tax in 2000 wouldn't be paying taxes in 2001, and therefore didn't qualify for a rebate check.

But some of those folks have since entered the work force. Their income in 2001 renders them eligible for the credit, even though they didn't receive a rebate check when they were sent out.

You may be eligible for a credit, for example, if you were a student in 2000 and didn't report any income, but you landed a job in 2001. Or maybe you were laid off in 2000, so you had little income to start with -- and when you added in exemptions and child-care credits, you didn't owe any taxes that year. But since then, you've gotten a full-time job.

You can figure out if you're owed a credit by using the IRS' rate reduction credit worksheet in the 2001 tax return instructions. If you need help filling out the worksheet, call the IRS at 1-800-829-1040. For more information about the credit, call TeleTax at 1-800-829-4477, press "3" to listen to recorded tax topics and choose topic 609.

Avoiding Silly Errors

The tips above are meant to help you with some of the latest tax changes. But year after year, where do people usually screw up on taxes?

(Sigh). They fill in the wrong social security number. "Probably the biggest error, borne out by IRS stats, is that the social security number you fill in does not match what's on IRS records or with the Social Security Administration," says John W. Roth, writer and analyst for CCH, a provider of tax information and software. Often, taxpayers not only mess up their own social security numbers, but also those of their spouse and dependents -- and that can wind up costing them.

For example, if you write down the wrong number for your child, the government will assume the child simply doesn't exist. It will recalculate your return without giving you an exemption for your dependent. In other words, you'll owe a lot more in taxes.

Social security numbers also can cause hassles for newly married women who've taken their husband's last name. In some cases, they forgot to tell Social Security that they've changed their name. So the new surname they write down on their tax return doesn't match their social security number.

In both cases, filing electronically makes it easier for a taxpayer to quickly fix the problem. If you file a return with a social security number that doesn't match IRS records, your return will immediately be rejected and you can rectify your mistake.

If you filed by mail, you'd have to wait weeks to get a letter from the IRS alerting you to the problem in the first place. It would certainly delay your refund, if you had one coming to you.

Ways to Save

Another tip: Be sure to take advantage of the filing status that's most advantageous to you. You don't have to be married to file as head of household. You may claim the status if you're single with a child as a dependent, or, in some cases, if you're caring for a parent or sibling. Either way, the filing status will afford you a more generous deduction. "A person doesn't have to live with you to be dependent," points out Donna LeValley, a tax attorney and contributing editor for the J.K. Lasser tax guides. "It could be a parent in a nursing home, or a child at college."

Also, consider whether you could save money by itemizing your deductions. If you itemize, you're allowed to deduct taxes, interest, medical and dental expenses (if they exceed 7.5% of your adjusted gross income), and gifts to charity.

Itemizing often makes sense for homeowners. "Many first-time homebuyers are not aware that they have a wonderful opportunity to itemize. They can now take deductions on mortgage interest and [property and local real estate] taxes, and that's often what puts you over the threshold of being able to [benefit from] itemizing," says Jackie Perlman, a CPA and senior tax research analyst for H&R Block. "Anyone can theoretically itemize, but unless you have the big [deductions] -- usually mortgage interest -- the other stuff doesn't usually add up to a hill of beans."

Indeed, if you don't own a home, you may be better off just taking the standard deduction (which is also easier because it doesn't require any figuring on your part). For the current tax year, the standard deduction is $4,550 for singles and $7,600 for married couples filing jointly. "Taking the standard deduction usually makes sense if your financials are simple -- a regular paycheck, a rented apartment, and no large expenses, such as medical bills, moving expenses, or loss due to theft or catastrophe," advises Eric Tyson, author of Taxes for Dummies.

Remember: Besides messed-up social security numbers, math errors are one of the most common problems with tax returns. So double check your math if you're preparing your own tax return manually, and if you're using a computer software package, take a second to make sure you've keyed in the information correctly.

Also, request a direct deposit to get your refund immediately. Good luck. When it's all over, may you walk away grinning with the biggest refund the law allows.