It's a phrase that makes most of us shudder: tax season.
The dread is real. So, it's no wonder that many Americans procrastinate when it comes to filing their tax returns.
According to the Internal Revenue Service, about 20% of Americans wait until the last minute to file their taxes.
This year, the deadline to file your taxes is April 17... just nine days from today.
So, for all you procrastinators out there, we've got some last-minute filing tips.
Get organized before you start your returns.
Unless you've had some big life changes – like getting married, buying a house, or having a baby – you can use last year's return to help get organized. Look at the forms you filed last year and compare them with the ones you need to file this year.
This way, you can see if you're missing a form or what additional information you'll need to include this year.
If you make online donations, put the confirmation e-mails in a separate folder in your e-mail account. This lets you quickly look up the names of the organizations and how much you donated.
Once you've filed, put all of the paperwork (including a printout of your tax forms) into a folder marked with the tax year so you'll be ready for next year.
Find help for free.
If you need in-person help, the IRS offers assistance through the Volunteer Income Tax Assistance program. If you earn $54,000 a year or less or are disabled, you can get free help from its tax preparers. In addition, the Tax Counseling for the Elderly program also offers free tax help for people 60 and older. And it specializes in pensions and retirement questions. Check here to find the closest locations for both services.
Veterans get benefits, too. In addition to the Volunteer Income Tax Assistance program, active-duty servicemen and women can use programs like TaxSlayer Military or TurboTax Military Edition. There’s also Military OneSource's MilTax, which offers free tax software for military service members and their families. You can find all of these programs right here.
File an extension if you're stressing out.
In addition to the rush to file within those last two weeks, about 10 million Americans file for extensions each year. That gives them an extra six months to file.
This year, you have to file for an extension by April 17. That gives you until October 15, 2018 to file your tax return.
But you need to understand this one rule: You must pay any owed taxes by the April 17 even if you have an extension.
If you don’t pay your estimated taxes by Tax Day, you’ll face penalty fees and interest on top of what you owe. The guidelines for estimating what you owe can get murky (see the full IRS write-up here). But a good rule is to see what you owed the prior year. Other sources of income also factor into what you owe, like dividend and interest payments, alimony, and business income. TurboTax has a brief explainer here. We recommend filing on time whenever possible to avoid this headache and any possible fines.
Just because 2017 is over doesn't mean you can't still make your 2017 IRA contribution. You have until April 17, and you should also take this time to make sure you haven't made an excess contribution to your IRA. If you don't withdraw excess contributions, you'll owe a 6% penalty on the excess amount.
If you want to know how to invest your IRA funds, you can read our issue on what to do with your IRA right here.
File for free.
The IRS has a program called Free File. Free File connects you with free ways to prepare and e-file your federal taxes. Families or individuals with income of less than $66,000 can use the software. If your income is over $66,000, you can use Free File Fillable Forms. But these forms are best with people who are able to do their taxes the old-fashioned paper way.
Although most states require you to pay a fee for state tax returns, some will allow you to file for free through Free File. You can learn more about IRS Free File, here.
How do you keep tax season from stressing you out? Let us know at[email protected].
Have a great week,
Laura Bente & Amanda Cuocci
April 8, 2018