5 Tips for Last-Minute Tax Filing
With less than two weeks until the April 15 deadline, the race is on to file your taxes. If you procrastinated this tax season, you aren't alone. According to the IRS, more than 80 million returns had been processed as of March 20, leaving millions of U.S. taxpayers who still haven't filed.
People wait until the last minute to file their taxes for a variety of reasons -- and the fact it's one of the most stressful yearly events doesn't help. So if you are late to the party this year, don't worry. Here are some tips to make sure you stay on good terms with the IRS.
1. If you can't make the deadline, file an extension as soon as possible.
If you can't file your taxes by the April 15 deadline, then you need to file an extension, which is actually pretty easy. Just fill out Form 4868 over the phone, online or by mail. The extension will automatically extend your filing deadline by six months to Oct. 15, 2015.
While an extension buys you more time to file and helps you avoid a late-filing penalty, it does not give you more time to pay. If you owe, you'll need to file an extension, estimate the amount you owe and pay the balance on April 15. If the IRS thinks your estimate is too low, the agency might reject your extension and charge you a fee, so be reasonable in your assessment.
2. If you don't owe, stay calm.
If you are due a refund this year and haven't filed yet, here's some very good news for you: There's no penalty for filing after April 15. Let's just take a minute and breathe a big sigh of relief. Phew!
Are you curious as to why this rule exists? Late penalties are assessed on the amount you owe the IRS, not how much you are getting back. Now, if you don't file on time, you will have to wait longer for your refund. The main drawback to this is that waiting longer to file can increase your risk for tax refund fraud, so follow these steps to make sure your refund is protected.
Note there is an exception to this rule. If you converted a traditional IRA to a Roth in 2014, you'll have to file by April 15 or request an extension. But there's still more good news: Whether you file on time or get an extension, you have until Oct. 15, 2015 to either pay the tax or undo the conversion.
3. Ask for a payment installment plan.
If you can't pay your balance in full by April 15, you still have options. The IRS does have an installment plan, which allows taxpayers to make monthly payments on their tax bill. However, this service does not come free: You'll have to pay a setup fee of $52 (or $105 for plans without direct debit withdrawals). You'll also be charged interest that's adjusted quarterly and a monthly 0.25 percent late fee.
If you need to request an installment plan, you still need to file or request an extension by April 15 (check to see if your state requires a separate extension). If you don't, your tax bill will only increase. The IRS will charge you a 5 percent monthly failure-to-pay penalty, up to 25 percent of the balance. If you go more than 60 days overdue, the minimum penalty is $100 or 100 percent of the tax due, whichever is less. Ouch.
4. Don't rush.
If you are scrambling to finish your taxes by the April 15 deadline, try not to rush. You might overlook critical deductions that can lower your tax bill. Did you get married or divorced, have a baby or adopt a child in 2014? Did you spend money looking for a job or move for a job? Did you pay for dependent care, start a business or go back to school? These are all big life changes that might qualify for a tax deduction, so don't skip anything.
Also be careful not to input incorrect information. Doing so could delay your refund.
After you have filled out your tax forms, carefully look over the identification or Social Security numbers for each person listed on your return. Make sure you accounted for any traditional IRA or health savings account contributions, qualifying charitable donations or deductible medical expenses. Double check your figures and then check again. Finally, make sure all the necessary forms are signed.
5. E-file your taxes.
Most tax filers chose e-file. Not only does filing your taxes electronically reduce your chances of error, it's typically easier and offers quicker tax refunds.
And if you want your refund even faster, choose to have the funds direct deposited. Those who combine e-file with direct deposit can get their refunds in as few as 10 days, according to the IRS.
Morgan Quinn is a writer for GoBankingRates.com, a leading source for the best savings account rates, CD rates, personal finance news and more.
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