Filing Taxes Last Minute? Here’s Some Advice
The official due date for federal taxes is Jul 15, 2020.
If you are one of the people who has not filed yet, it is time to turn in your tax return.
What Extensions Are Available?
Sometimes, people can automatically get an extension on their taxes because of a natural disaster or a similar emergency.
If you are not a taxpayer who qualifies for an automatic extension, you can still apply for an extension through the IRS website. An extension does not give you more time to pay. Instead, it just gives you extra time to file your taxes.
Because of COVID-19, there may eventually be another extension for tax filers. At the moment, the government has not actually delayed the July deadline for taxes. Because of this, you should plan on having your taxes finished and filed on time.
Organize Your Documents
Whether you are hoping for an extension or are ready to file, you will need to get your tax documents together. Staying organized throughout the year will make filing your return much easier. During the year, store all of your receipts and documents in the same location. You will need to have the following documents ready when it is time to complete your return.
- Form 1099-INT.
- Form 1098.
- Form W-2.
- Receipts for all of your medical, business and education payments.
Form 1099-INT involves the interest you earned from things like your savings account. Meanwhile, Form W-2 is something your employer mails out that includes your tax payments and earnings. You should have received your Form W-2s by January 31, 2020. If you owned a home during 2019, Form 1098 reflects the mortgage interest you paid on your mortgage during the year.
No one wants to pay more taxes than they need to. Before you file, prepare a checklist of the deductions and credits you plan on taking. Then, you need to make sure you have all of the documents and information you need to get those deductions and credits.
If you are married, you will need to have your Social Security number and your spouse’s number. You will also need to include the Social Security numbers of all of your dependents. Once you have gathered all of this information together, you can get ready to file your return.
Is It Too Late to Reduce the Taxes I Owe?
Ideally, tax filers should plan ahead for tax credits and deductions. If you are looking at a large tax bill, there may be a few ways you can reduce your tax burden.
One of the main options you can use is your individual retirement account (IRA). You can make contributions to your IRA up until the tax filing deadline, and it will still reduce your tax burden from the previous year. If you have a health savings plan, you can also limit your tax exposure by contributing to your plan.
File Your Taxes Online
If you are coming down to the wire on your taxes, you may need to file them online. According to the IRS, more than a billion returns have been filed online since electronic filing became an option. Today, around 70 percent of people file their taxes online.
Since you do not have to mail your taxes before the post office closes, you can literally file your taxes at the last minute if you file them electronically. Plus, filing online is the fastest way to get your refund back.
Avoid Making Common Mistakes
Sometimes, the IRS does not accept a tax return. This generally happens because someone made a careless mistake. Simple errors can end up delaying your refund or leading to a rejected return. The most common mistakes involve math errors, incorrect Social Security numbers, a lack of a signature or a missing date on the return.
A missing signature or date is a common error. Thankfully, it is an easy mistake to prevent. All you need to do is make sure that you and your spouse sign all of the correct spots on your return.
Tax returns are all about calculating percentages and completing math problems. Unsurprisingly, people sometimes end up missing a decimal place or writing down the wrong number. By using a calculator or an online program, you can avoid these types of mistakes.
If you put the wrong Social Security number on your return, it can lead to potential problems. Before you file this year, you need to make sure that all of the Social Security numbers and names of people on your return are correctly written. In addition, you need to include the Social Security numbers of your dependents in order to take advantage of tax benefits like the child tax credit.
If you plan on e-filing your return, you need to have a PIN to sign and validate it. To prevent tax-refund fraud, the IRS does not let you request an electronic PIN as identification anymore. Instead, you need to provide your electronic PIN or adjusted gross income from your previous return. Then, the online program you are using should automatically transfer information from your previous tax return.
Finally, you should watch out for mistakes involving your account number. If you plan on using direct deposit, you should check your account number multiple times before you file. While the IRS will still accept a tax return that has the wrong account number, your refund will end up going into a different person’s account.
What If I Underpaid My Taxes Last Year?
In general, you have to pay a tax penalty if you paid less than 90 percent of the amount you owed. Throughout the year, you are supposed to pay taxes as you earn money. If you are a self-employed worker, then you pay your taxes in quarterly payments. If you pay less than 90 percent of what you owe, then you have to pay a penalty. In addition, you will have to pay interest on what you owe. The only exceptions to this rule are if you paid 100 percent of the amount you paid last year or owe less than $1,000.
What If My Refund Was Smaller Than I Thought It Would Be?
Many people like having a large refund for major purchases or paying for vacations. In reality, having a small refund is actually a good thing. If you have a large refund, it means that the IRS was able to earn interest on all of that money. A small refund means you can earn interest on the money, or you can put it to use in your day-to-day life. If you do want to use your refund as a savings plan, you can always choose to increase the amount of taxes that are withheld from your paycheck.
If all of this sounds a little overwhelming, you are not alone. That’s why thousands are choosing to use an online accountant this year, saving them time, money, and stress. All you have to do is upload your tax forms, and a certified accountant (CPA) will take care of the rest. Check out picnictax.com to learn more.