On Tax Day, many Amer­i­cans find them­selves hunched over their laptop or scram­bling to their local post office to file on time. With this year’s April 18 dead­line looming, Tim­othy Gagnon, assis­tant aca­d­emic spe­cialist in accounting at North­eastern University’s Col­lege of Busi­ness Admin­is­tra­tion, explains sev­eral recent tax-​​code changes, and offers some tips on how to avoid the last-​​minute rush next year.

What are some sig­nif­i­cant tax-​​code changes for tax year 2010 that filers should be aware of?

One is that, for quite a few years, the amount of item­ized deduc­tions and per­sonal exemp­tions you can take has been phased out the higher your income rises. But those limits are gone for 2010. Another change affects par­ents who are divorced or sep­a­rated since 2008; now a Form 8332 must be signed by the non-​​custodial parent to get the depen­dency exemp­tion for the child.

Also, people should be aware that chil­dren 19 or younger or full-​​time col­lege stu­dents under 24 may be sub­ject to the “kiddie tax.” These chil­dren are not taxed on their invest­ment income up to $950, and they are taxed at a lower rate on the next $950—up to $1,900 total. But after that, the income is taxed at the par­ents’ higher rate.

What are some easy ways to avoid last-​​minute filing next year?

To avoid that last-​​minute flurry, if you sold some stock, find out what your basis—what you paid for the stock when you bought it, and the amount of any div­i­dend auto­mat­i­cally reinvested—was at that time so you’re not scram­bling for that figure at the eleventh hour, like many people do.
Being orga­nized is impor­tant. If you make char­i­table con­tri­bu­tions, keep doc­u­men­ta­tion in a folder. If you have rental prop­erty, keep one check­book for those prop­er­ties. If you run your own little busi­ness, have a sep­a­rate checking account and credit card for that busi­ness so you don’t have to sep­a­rate per­sonal and busi­ness trans­ac­tions later.

What are the biggest advan­tages and draw­backs to filing taxes online, com­pared to tra­di­tional paper filing?

The biggest advan­tage to filing online is the speed. Within three to five days, they could be cut­ting your refund checks. If you have direct deposit, you get your money even quicker. The dis­ad­van­tage is that, since the process is so fast, an error could cause your return to bounce and have to be amended on paper. That can take a while. Also, cer­tain things can’t be filed online, such as the first-​​time home­buyer credit.
The advan­tage of paper filing is you may put more thought into it. When you file elec­tron­i­cally, it’s so easy just to shoot your return off; you might not give it that last extra review. And with paper filing, you can easily make a phys­ical copy of your taxes, which may not always happen with online filing.

Even if you have a dig­ital copy, where’s your backup system? With paper copies, you stick them in the closet, and they stay there. With elec­tronic files, there’s always the chance you may lose them or your hard drive may die.