It’s tax season, and the deadline is just a couple weeks away! Maybe you were busy with work, you were still waiting to compile important documents, or you forgot about tax time altogether. Whatever the reason, last-minute tax filing is common; according to the Internal Revenue Service, 20-25% of Americans wait until the first two weeks of April to file.
When it’s this late in the game, you’ve got a couple options: File your taxes as soon as possible, or request an extension.
Last-Minute Tax Filing
- Get Organized – The last-minute tax filing process will go smoother if you’ve got everything you need in one place, so start there. Gather your W-2s, Mortgage Interest Statement (1098), your interest earned statements (1099-INT) and receipts for purchases and payments, which might include business expenses, education receipts and healthcare. You should also compile a list of deductions to have handy.
- File Online – Paying for an online program like TurboTax or TaxAct is worth the cost to ease last-minute stress. They can walk you through each step so you’re less likely to leave anything out. Plus, this system will speed up the filing process, meaning you can get your refund quicker.
- Take Your Time – Most mistakes on returns are thanks to small oversights or math errors. Double-check your addition, your social security number and make sure you’ve signed everywhere that it’s needed. As tempting as it might be, try to avoid settling for the standard deduction. If you have itemized deductions, it could be well worth your time to look into what they could get you.
- Add to Your IRA and/or HSA – If you’re contributing up to $5,500 (or $6,500 if you’re over 50) to your IRA, then that is tax-deductible and tax-deferred. As long as you contribute by April 18, it will count for your 2015 taxes.
Requesting an Extension
Request an extension on April 15 (or April 18 for 2017 filings) to receive an additional 6 months to complete a late tax filing. You can do this by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return here.
One important consideration: Extending your tax deadline doesn’t buy you more time for paying what you owe. Make sure you pay your balance by the traditional tax deadline. If affording that payment is your concern, you can discuss a payment plan with the IRS.
Prepare for Next Year
As you’re going through this year’s tax misery, take a little extra time to create a filing system. It might be low on your priority list, especially if you’re in a rush, but it’s worth it. Make a place for pay stubs, receipts, bills and anything else you find yourself needing as you’re working through your taxes.
After the taxes have been filed, assess your refund or payment. If you’re getting a substantial refund, think about increasing next year’s savings to your pre-tax 401(k) instead. If you’re self-employed and ended up paying a hefty amount at tax time, get started paying quarterly taxes throughout the year.
You will just need to save for it by regularly putting away 30 percent of what you make into savings.
Whether this was your first time waiting until April to file or you’re a habitual tax procrastinator, taking the time now and throughout the year to set yourself up will make next year’s tax season much less painful.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.