In fact, millions of Americans are waiting until the very last minute to do their taxes this year. And with returns due Tuesday, April 18, time’s running out.
We put together some tax hacks and tips to help you get the job done:
Check (and recheck) to make sure you have all the documentation you need.
One of the first steps to filing a tax return is having the appropriate forms. Be sure to have the proper paperwork, whether it’s a W-2 or 1099, if you are determined to file before the deadline. And remember to keep copies of your tax return information and documentation.
File an extension if you know you won’t be able to meet the deadline.
If you’re running low on time and are worried about making costly tax mistakes, consider filing for an extension. This will give you up to six more months, but you'll still need to pay any taxes owed by April 18. Find IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Tax Return” on the IRS website and submit it before the filing deadline.
Take advantage of free tax services.
If you make $64,000 a year or less, you can use the IRS’ “Free File” software to file your taxes. Those making $54,000 or less, the elderly, anyone with disabilities or who speaks limited English can also use the Volunteer Income Tax Assistance program, which offers free tax help as well.
Be mindful of the midnight deadline.
Planning to mail in your tax return? Remember, it must be postmarked by midnight Tuesday night, but because post offices close at the end of the regular business day, you may actually only have until the end of the business day to get the necessary time stamp. And if you’re filing electronically, you must have a time stamp before the midnight deadline to avoid late penalties.
Opt to file your taxes online.
There are many upsides to filing your taxes electronically, one of which is the aforementioned post office hassle. It’s also useful for those pressed on time and wary of making errors. In fact, the IRS reports that the error rate among returns filed electronically is less than 1 percent. For paper returns, the error rate is considerably higher at 21 percent.
According to CNBC, there are several deductions that are commonly missed by taxpayers, such as:
- Student loan interest: You can deduct up to $2,500 of student loan interest paid in a given year, but be aware of income limits to this deduction.
- Moving expenses: If a new job or transfer required your relocation and if the new workplace is at least 50 miles farther away from your old home compared to the distance between your old workplace and old home, you may qualify.
- Property taxes: Do you have multiple properties or timeshares? Consider tax deductions for your additional properties, including RVs or boats.
- Non-cash charitable contributions: Do you donate to Goodwill or Salvation Army? Collect and include your receipts when you file for this deduction. You’ll need to use Form 8283 if your deduction for all non-cash gifts is over $500, CNBC reported.
- Contributions to certain tax-advantaged accounts: Have a high deductible health insurance plan? You could have access to a health savings account that could be used for future medical costs or for retirement savings. According to the IRS, for 2017, if you have self-only HDHP coverage, you can contribute up to $3,400. And if you have family HDHP coverage, you can contribute up to $6,750.
- Miscellaneous deductions: If you have costs that exceed 2 percent of your adjusted gross income, such as tax preparation fees, you can claim that amount of expenses.
- Medical deductions: You can deduct qualified medical and dental expenses that exceed 10 percent of your adjusted gross income for the year.
The deadline to file taxes this year is April 18, and even though 70% of Americans are expected to receive a refund according to the IRS, many will still miss the cutoff date.
Last year 111 million refunds were issued, with an average payout of $2,860. For those who are going to miss the deadline – don’t panic – but be prepared to act quickly.
Here is what you need to know if you are not prepared to file and pay your taxes by Tuesday.
File an Extension:
The best thing you can do if you know you are going to miss the deadline? File for an extension.
"File Form 4868 to extend the time for filing return. The extension could be effective for filing as late as October 16,” Ted Kurlowicz, professor of taxation at The American College of Financial Services, told FOX Business.
There are a variety of reasons people might need to file an extension, whether they don’t have all their sources of income and expenses identified or they need assistance, Tim Speiss, partner at EisnerAmper Wealth Planning LLC, told FOX Business. However, filing for an extension does not mean you also extend the timeline to pay your taxes.
"To have a valid extension generally—you need to pay in 90% of the tax due at the time of the filing, so in that case by April 18. If you can’t do that, pay in as much as you possibly can to avoid further potential late-filing and interest charges,” Speiss said.
So filing a 4868 form with payment, which can be done online, will keep you in the IRS’ good graces for the time being.
File and Pay as Soon as Possible
Generally people who miss the deadline either ran out of time or didn’t have the money, Kurlowicz said.
“You should do the least harm and file as soon as possible and pay the tax as soon as possible,” he said.
If you file and pay late you are most likely going to have to pay a price. A penalty is issued first for filing late. This is 5% of the amount of unpaid taxes each month, up to a maximum of 25%. The penalty for paying late is 0.5% of the amount you owe each month up to a maximum of 25%. If both penalties are due in the same month, the failure to file penalty is reduced to 0.5%.
"The late filing penalty could actually be higher than the late tax payment penalty so you should file as soon as possible to do the least harm your personal finances,” Kurlowicz said.
The IRS will not forget about your dues, so make sure you address them promptly.
"If a person is late with filing and late paying taxes, if they're diligent and proactive with the tax authorities, that’s the best way to position yourself for best possible outcome,” Speiss said.
If you have suffered a recent hardship, the IRS also may be receptive to your circumstances.
"You could negotiate penalties and interest, not usually the tax, but with a hardship you might be able to negotiate a tax settlement,” Speiss said.
There is a valid excuse for filing and paying late: being outside the country. In that case the deadline will be extended until June 15, Kurlowicz pointed out.
Ask for Help
If you are unsure of what to do or how to handle your financial situation, consult or request help from a qualified professional.
“It’s a very stressful experience for many people,” Speiss said. "If you’re in a situation where you don’t think you can meet the filing deadline requirement … it’s always best to go out and hire competent tax advisors to assist you."
Tax deadline 2017: When is it and why is it later than this year?
The deadline for Americans to file their annual tax returns is approaching once again, although slightly later than usual.
In great news for the nation’s procrastinators, the official deadline has been postponed two days.
If you've left it until now to start your returns, then may the odds be in your favour, and god speed.
Here is everything you need to know:
When is the deadline to file my tax returns?
The deadline is at 11:59 pm on Tuesday 18 April.
Why is it later this year?
Traditionally the tax deadline lands on 15 April, but two events have postponed it. Firstly, 15 April was a Saturday this year. There is a rule that the deadline has to be on the following Monday if this is the case.
So why wasn’t it on Monday? Because it was a holiday in the District of Columbia on Monday – Emancipation Day. This marks the day 31,100 slaves living in Washington were freed.
Despite the district's relatively minuscule population compared to the rest of the US, this further delayed the deadline, pushing it to Tuesday.