The deadline for filing a federal income tax return is approaching swiftly. Since April 15th lands on a Saturday this year and Emancipation Day is observed the following Monday on April 17, you’ll have until April 18th to file your return (or an extension). Even with a few extra days though, many procrastinators will be kicking things into high gear –a.k.a. panicking — to gather their paperwork in time. If that’s you, I won’t scold you for failing to file your taxes earlier. Instead, here are four tips to help you fly in your usual style.
1. File for an extension.
If you can’t get yourself in gear by the 18th, there’s always the option to file for a six-month extension by the same deadline. The downside is that if you owe the government money, then you’re still responsible for paying the estimated taxes when you file for the extension. In other words, it’s an extension for filing your taxes, not paying what you owe.
What if you can’t pay now? Failing to file for an extension will result in a penalty on top of the bill you already can’t pay. Even though it seems like the IRS’s policies are harsh, they do offer the option to set up an installment plan (for a fee, of course). You can do this online if you owe less than $50,000.
2. Make last-minute donations to retirement accounts to lower the tax bill.
One surprising way to make your tax bill less painful is a last-minute IRA contribution (why not pay yourself rather than the government?). You might wonder how that works since you’re filing last year’s tax information. Well, the IRS allows you to designate retirement contributions for the previous year until April 15th of the following year. Maxing out your IRA contribution limit for the previous year could save you upwards of $1,000 on your tax bill (of course, the earlier you contribute the funds, the longer they’ll be earning you interest. To get a head start on next year, automate your contributions and plan to max out).
If you’re under 50, the annual limit is $5,500, and if you’re over 55, the limit is $6,500. This limit is totaled separately from any contributions you make to a 401K.
3. File your taxes online.
Filing online is faster and easier, especially if you’re running late. If you’ve never filed your own taxes online before, a quick search will lead you to various tax prep businesses that offer free e-file along with paid services (like having your return reviewed by a tax professional). And, if your gross earnings fell under $64,000, you can use the IRS Free File Program.
E-filing requires an electronic pin you’ll use for e-signing; also, don’t forget to save digital and print copies of your taxes for your files.
4. Watch for hasty mistakes.
You’re more likely to make mistakes since you’re in a hurry to meet the deadline. The following mistakes are common – and costly – in more ways than one:
- Missed deductions. You might overlook important credits and deductions you qualify for (student loan interest, charitable contributions, home office, etc.) that could either lower your taxable income, reduce your tax bill, or earn you a heftier refund.
- Bad account numbers or Social Security numbers. This mistake is especially regretful because it could mean someone else getting your refund, gaining access to your sensitive information, or even stealing your identity.
- Missing signature and date. Your tax return must be dated and signed to be considered complete. Don’t let this simple mistake cost you.
Even though there are more ways to reduce your tax bill before the end of the tax year, and it’s almost always better to file your taxes early, these four tips can get you to and through Tax Day in better financial shape despite your perpetual procrastination.
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