The tax deadline is rapidly approaching, and 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 you can use 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, then you know you can deduct your contributions up to the annual limits, which is $6,000 for people under 50 years of age, and $7,000 for people aged 50 and above. But you may not know contributions can be made right 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 as well as quicker confirmation, more timely refunds, and more payment options.
- Do you still need to itemize? Because of the Tax Cuts and Jobs Act of 2017, the standard deduction has nearly doubled. That means if you’re a married couple and had 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 take 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 penalty imposed by the IRS 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 will allow you to file online for free. How can they do that? The free version usually doesn’t let you itemize deductions and they’re hoping you will upgrade to a paid service at some point. And many companies will 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 couldn’t get it together and you know you’re going to 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 get your taxes done on time, with positive results. But if you truly want a more significant return or pay the least, you should probably get started sooner next time and think about tax strategies throughout the year. Check with your employer 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.