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Kara McGuire: Let's talk tax returns

I finished my taxes last weekend. Yes, I know it's odd that I so look forward to tax preparation. But the tax code is complex, so you never know whether you'll owe or are owed. And I can't stand the suspense! This year, my family owes about $1,00...

I finished my taxes last weekend. Yes, I know it's odd that I so look forward to tax preparation. But the tax code is complex, so you never know whether you'll owe or are owed. And I can't stand the suspense! This year, my family owes about $1,000 in total to Minnesota and the U.S. Treasury. I'm not looking forward to paying, butI try to think of it this way: We received an interest-free loan from the government for last year's summer vacation. Not a bad deal.

The IRS says that only about a quarter of Americans file their taxes by mid-February. That's no surprise. But the clock is ticking. So let's get started.

Q: Deanna Sylte of St. Paul is looking for a tax preparer and wants to know how to find one and what's a fair price.

A: Look for a preparerwho has satisfied, repeat customers. Ask for referrals from friends andco-workers who are in similar circumstances. The tax code is extremely complex (have I mentioned that before?), so it is importantto find a tax preparer who is familiar with cases such as yours. I'd also ask them how they keep track of the many changes every year to thetax code.

You also can receivereferrals from state chapters of professional associations such as the Society of Certified Public Accountants and the Society of Enrolled Agents.

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As for cost, that varies, depending on a preparer's experience and the complexity of a return. Accordingto the National Society of Accountants, the average cost for an itemized return is $205.

Q: Reader Charlie Anderson wants to know whether it's safe toe-file, and how to select a legitimate program to use.

A: The IRS assures taxpayers that electronic filing is safe. Maybe this year you'll qualify for Free File -- the IRS alliance that offers freee-filing. Go to www.IRS.gov , and use its "guide me to a company" feature to find the best program for you. Be sure to read the software company's fine print.

As for a program's reliability, the IRS says the error rate on e-filed returns is less than 1 percent, compared with about 20 percent for paper returns. And refunds typically come in 10 days or less, versus as long as six weeks for paper returns.

Q: What are somecommonly missed deductions?

A: Certified Public Accountant Chuck DeNet of St. Paul said that some people fail to claim the charitable donation of goods or deduct small monetary donations, because "people keep lousy records or don't keep records at all."

These can add up. New this year: A receipt or canceled check is required for financial donations, large and small.

Don't forget that mileage can be deducted at 14 cents per mile if you drive for a charitable cause, so start logging your trips now.

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CPA Todd Koch of Falcon Heights, Minn., said the Saver's Credit is often missed, and wishes more employers would mention it in 401(k) plan enrollment meetings. If you save for retirement in a workplace plan or using an IRA, you may qualify for up to a $1,000 credit if your total income minus certain adjustments is less than $52,000 for married couples filing jointly and $26,000 for single filers.

Q: Where's my stimulus rebate that President Bush just signed?

A: The IRS will begin mailing payments, or direct depositing them in the same account set up to receive an income tax refund, to eligible taxpayers in May. It will later announce further details about who gets paid and when. But you have to file a 2007 tax return to receive it, so don't delay.

As for how to spend your rebate, I say, don't. Pay down debt. Or save it. If you save already, go ahead and splurge.

But if you're on the edge, don't take advice from an indebted government. Get your own financial house in order.

Kara McGuire writes about personal finance for McClatchy Newspapers. Write to her at kara@startribune.com .

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