The tax deadline is rapidly approaching; if you’ve been putting it off, you’re not alone. According to the Internal Revenue Service, 20-25% of all Americans wait until the last two weeks before the deadline to prepare their tax returns. While it may be too late to make any significant adjustments to increase your return or lower what you owe, here are a few last-minute tips to make filing as easy and profitable as possible.
- Organize your forms. Hopefully, you’ve been keeping all your W-2s, 1099s, 1098s and receipts together in one place. And to help you get started, Intuit has a Tax Preparation Checklist you can download to make sure you have everything you need.
- Max out your traditional IRA. If you have a traditional IRA, you know you can deduct your contributions up to the annual limits, which are $6,000 for people under 50 and $7,000 for people aged 50 and above. But you may not know contributions can be made up to the deadline of April 18th.
- File online. More and more people are filing their taxes online. About 44% of taxpayers, or 72 million people, are using do-it-yourself online services, according to IRS data. And if you’re running late, filing online gives you more time and quicker confirmation, more timely refunds, and more payment options.
- Do you still need to itemize? The standard deduction has nearly doubled since the Tax Cuts and Jobs Act of 2017. That means if you’re a married couple with less than $25,100 in itemized deductions in 2020 and not much changed in 2021, you can save a lot of time by not itemizing and taking the standard deduction.
- File even if you can’t pay. If you do not have enough money to pay your taxes by the tax deadline, you should file anyway. The IRS penalty for not filing is ten times worse than the penalty for non-payment.
- Find a free filing service. Who says you can’t get something for free these days? Several online tax-preparation services allow you to file online for free. How can they do that? The free version usually doesn’t let you itemize deductions, and they hope you will upgrade to a paid service at some point. And many companies charge for the state return. Two companies that offer free federal and state eFile tax returns are H&R Block and TurboTax.
- File an extension. If you can’t get it together and you know you’ll need more time to file your taxes, you can request a six-month extension from the IRS. While this may give you more time to file, it doesn’t let you off the hook for what you owe. Any taxes owed will still be due on April 15th, and you will incur interest and penalties until you pay.
Hopefully, these tips will help you complete your taxes on time and with positive results. But if you truly want a more significant return or pay the least, you should probably start sooner next time and consider tax strategies throughout the year. Check with your employer to see if enough tax is withheld from your paycheck. If you’re not sure if you are getting enough taxes withheld, the IRS has a withholding calculator to help you.
This blog is not intended to and does not constitute legal advice or financial / investment / tax advice. North American Savings Bank does not make any guarantee or other promise as to the results obtained. The consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.
