10 tax tips: Experts offer advice as April 15 closes in

Kenneth Schachter for Newsday writes:   Millions of Americans look toward April 15, the federal and state tax filing deadline, with the dread typically reserved for a root canal appointment.  Torment comes not simply in writing a hefty check to the government but in gathering records, grappling with complex instructions and straining to understand how to cope with evolving regulations.  In 2011, Americans filed 143.6 million individual tax returns worth $1.3 trillion in gross collections.

To help our readers skirt the worst pitfalls, Newsday contacted several tax experts and asked for their best advice. Tax tips follow:

1) Tax considerations are a "tiebreaker" only
In general, don't make a financial decision based solely on tax considerations, said Arnold Berman, a certified public accountant, attorney and accounting professor at Pace University, which has a campus in Pleasantville. For instance, it doesn't make sense to buy a home and take out a mortgage just to get the tax deduction, Berman said.
"You spend ten grand to save three grand," he said. "The tax effect solely shouldn't drive decisions."

2) Get an extension if necessary
Dread creates inertia for many filers, leading them to put off working on their returns until the last moment. Then they rush. "My biggest suggestion is to not rush through the return," said Ken Coletti, an accounting professor at Marist College, based in Poughkeepsie. "To get an extension is not that hard to do. You're better off filing an extension than rushing through something and making a mistake."
Coletti reminds that, even with an extension, filers have to pay estimated taxes.

3) Watch for outliers
If you're working on your own taxes and the numbers seem out of whack to the positive or negative, recheck your work, Coletti said. Gut instinct is a good indicator something is off.

4) Sell losers, give away winners
If you are considering giving shares in a security that has lost value to a relative or an IRS-approved charity, it's better to sell the security and instead give away the cash, said James Bailey Jr., a partner at BlumShapiro, based in West Hartford, Conn. Cashing out of the security lets you take advantage of the capital loss on your tax return. On the other hand, if the shares have appreciated, you're better off giving the shares. The recipient will likely pay less in taxes than you, if you were to sell.

5) Base your tax return on reality
Business and freelancing expenses are legitimate, but the claims should be grounded in fact and documented. Likewise, if you donate goods to a charity like the Salvation Army or Goodwill Industries International, make sure the valuation is realistic and keep your receipts.
"It's better to try to prepare a tax return based on reality rather than fantasy," Berman said.

6) When in doubt, hire a pro
If you have a complex tax return, it pays to hire a professional. Some filers who have successfully prepared a relatively simple return with the help of one of the popular tax preparation software packages mistakenly believe that they can handle more complex situations.
"That ultimately can get you into trouble," Coletti said.

7) Don't lose track of the cost basis
Capital gains taxes are based on the price you paid for the investment -- the cost basis. When stocks and bonds are transferred from one brokerage to another, the new brokerage sometimes has "a challenge" in tracking the cost basis, Berman said. For that reason, it's incumbent on the buyer to keep good records.

8) Get ahead of the game
Major life events like marriage, divorce and a home purchase or sale have major tax implications. Most people simply react when the tax deadline looms, Coletti said. Instead, he said, taxpayers should weigh the tax consequences of their actions well in advance.

9) Check the websites
The IRS and New York State have websites that can help befuddled tax filers, Berman said.
"They're actually user-friendly," he said.

10) Bunch your deductions
If your itemized deductions will be just under or just over the standard deduction amount, consider bunching some expenses, Bailey advised. For instance, a homeowner could pay the coming year's property taxes by Dec. 31 and claim the current year's as well. The next year, skip the whole deal.