The last day to file your taxes is April 15. If you waited until the home stretch, you’re not alone: The IRS told the Lubbock Avalanche-Journal 20 to 25 percent of Americans wait until the last two weeks to file their return.
That’s not hard to imagine. After all, if you’re getting a refund, you file as soon as you get a W-2. If you owe, you wait till the last minute: No point paying a bill before it’s due.
Then, of course, there are also those of us who procrastinate.
Whatever your situation, if you haven’t yet filed, here are some last-minute tax tips:
Contribute to an IRA
One of the few ways you can still lower your 2012 tax bill is by contributing to a tax-deductible IRA.
You have until April 15 to do it. Contributing has big benefits – a tax deduction, tax-deferred compounding, and the main benefit: survival when you’re retired.
The IRS says the max you can contribute for 2012 is $5,000 ($6,000 if you’re 50 or older).
I once spent three days on the floor of my living room, sorting through a box of crumpled Home Depot receipts because I didn’t organize before I started my taxes. Don’t make my mistake.
Get what you need before you sit down, like:
- W-2′s from your employer
- 1099-MISC if you’re self-employed
- 1099-SSA for Social Security benefits
- 1099-INT and 1099-DIV forms
- 1099-G for state unemployment comp or state tax refunds
- 1098-T for paid college tuition
- Summary of paid real estate taxes
- Summary of paid health care costs
- Summary of child care expenses
- Receipts to back up potential deductions
Decide if you’ll get help
Before you spend hours struggling with tax forms, decide if you want to DIY or get help. If you made $51,000 or less last year, you can get free tax help from the IRS VITA program.
If you’re 60 or older, you might find free help through the Tax Counseling for the Elderly program.
If you don’t qualify for either, you can pick up cheap or free software by checking out vendors on the IRS Free File website.
Slow and steady wins the race
Some people thrive on deadlines. Others feel rushed and end up overlooking deductions or making mistakes. If you’re more the rushed type, slow down.
Mistakes on taxes can be costly: Enter the wrong info and you could end up paying more than you should, or not getting back all you could.
When you’re done, double-check your return before you file.
Don’t rush past deductions
Don’t feel tempted to take the standard deduction to save time. Hunt down itemized deductions and see if they’d save versus the standard.
Here are the basic standard deduction figures for 2012 from TurboTax:
- Standard deduction for single taxpayers – $5,950
- Standard deduction for married taxpayers filing a joint return – $11,900
- Standard deduction for head of household taxpayers – $8,700
Here are some common deductible expenses you might use to beat the standard deduction:
- Charitable donations
- Home mortgage interest and real estate taxes
- Higher education expenses
- State and local income taxes
- Medical expenses (but only what exceeds 7.5 percent of your adjusted gross income)
- State sales taxes
- Job-hunting expenses
- Points paid to refinance a mortgage
However you choose to do your taxes, be sure to eFile and request direct deposit.
If you request direct deposit, the IRS says you’ll get your refund in less than 21 days and you can track the status online.
And if you have to pay, you can also pay electronically.
Prepare for the worst
If you didn’t cheat or make a big mistake, odds are you won’t get audited. But play it safe and make sure you have everything you need if you do get the dreaded IRS letter.
Start a file for your 2012 tax return and store anything you might need:
- Copies of your filed form
- Statements backing up the deductions you took
- Copies of receipts
Get an extension
If you don’t owe – you’re getting a refund – you don’t have to file an extension, or file by April 15. There’s no deadline when Uncle Sam owes you.
But if you do owe, and can’t get your taxes done by April 15, no sweat. Just file an extension. That will buy you another six months, so your return won’t be due until Oct. 15.
Important: Extensions extend your time to file, not pay. If you’re going to owe, estimate your taxes and send in a check with your extension by April 15.
And if you owe and can’t pay?
Send in your form or extension anyway. You’ll be penalized: The failure-to-pay penalty is 0.5 percent of what you owe for every month it’s not paid, with no time limit.
So if you owe $5,000, your penalty will be $25 per month. Not fun, but not the end of the world.
The failure-to-file penalty is 10 times worse. The penalty for not filing is 5 percent per month of what you owe, up to 25 percent total.
So if you owe $5,000, not filing is going to cost you $250 per month. After five months, you’ll owe the max of $1,250.
Since filling out and filing an extension form only takes a few minutes (you can even file it free electronically with TurboTax’s free extension filer), you’ve got to be either rich, crazy, or both not to.
“Last-Minute Tax Tips” was provided by MoneyTalksNews.com.