Remember those frantic times when your classroom assignment was due and you were running out of time to finish it? Millions of U.S. taxpayers are flashing back to those school days as they scramble to complete their 2016 tax returns by tomorrow, April 18.
But the tax stakes are definitely higher than that what you faced with that looming senior essay you put off too long. Literal dollars now are at stake.
Don’t panic. There’s still time to file and complete Uncle Sam’s annual assignment correctly.
These 10 last-minute filing tips can help.
1. Determine whether you need to file.
Most Americans who earn money, be it through full-time jobs or self-employment or investment income, do have to fill out a tax return. But some don’t. Make sure before you put yourself through the hassle.
Whether you must file depends on your income, filing status, age and whether you can be claimed as a dependent on someone else’s return. If you’re not sure whether you need to send the Internal Revenue Service a tax return, check out the tax agency’s online Do I Need to File a Tax Return? online tool.
2. Gather you tax documents.
OK, you have to file. To fill out your taxes properly you need all your tax statements. This checklist helps, but here are some highlights that bear repeating.
Start with earnings data. It is, after all, called the income tax. You’ll need W-2s from employers and assorted 1099 forms form any side-hustles or regular self-employment, as well as investment earning statements. Even if you didn’t get an official notification of earnings, you’re still responsible for reporting all your income and paying the appropriate amount of tax.
If you’re self-employed, you’ll also need supporting receipts for all the expenses you can claim.
For deductions and credits, you’ll want to make sure you have the documentation for tax claims such as mortgage interest and tuition payments, as well the confirmation of your charitable contributions or medical expenses.
And if you made quarterly tax payments, be sure you have a record of how much you paid and when.
3. Decide which deduction method to use.
Your tax document will help you decide whether this tax year you’ll claim the standard deduction or itemize your expenses.
Most taxpayers claim the standard amount. For 2016 returns, that’s $6,300 for individual filers; $9,300 if you’re a head of household; or $12,600 if you and your spouse file jointly.
If, however, you have enough expenses to exceed your standard amount, then by all means itemize them on Schedule A.
4. Don’t overlook tax breaks.
Regardless of which deduction amount you choose, make sure you don’t shortchange yourself. Every year too many taxpayers overlook tax breaks. Don’t be one of them. Check out these 10 sins of tax omission, as well as 12 more often overlooked tax breaks.
5. Don’t make common mistakes.
Similarly, lots of taxpayers end up owing more because they make common filing mistakes. No problem, you say. You didn’t make any of those 10 filing errors. Good. Now double check that you didn’t commit these 10 costly tax sins, either.
6. Contribute to an IRA or HSA.
Putting money into a tax-advantaged savings account may potentially lower your tax liability. Even better, money contributed now pays off down the road.
You have until the April filing deadline to contribute to an individual retirement account, better known as an IRA, either Roth or traditional, for the prior tax year. The 2016 maximum contribution amount for either type of IRA is $5,500 — or $6,500 if you’re age 50 or older. If your traditional IRA contribution is deductible, designating it by April 18 for the 2016 tax year could reduce your tax bill.
The same deadline applies to a Health Savings Account, or HSA. This medical account can be opened fi you have a high deductible health plan. The HSA funds provide a tax-saving way to pay for that medical insurance’s larger out-of-pocket costs. The 2016 contribution limits are $3,350 for an individual HSA owner and $6,750 for a family.
7. File electronically.
The IRS will process your tax return more quickly if you e-file. That means if you’re getting a refund, you’ll see that money sooner. You’ll get it even more quickly if you also tell the IRS to directly deposit your refund into a financial account.
You can e-file in one of three ways. First, directly through the IRS with Free File or fillable forms. Second, by using tax preparation software. Third, by hiring a tax preparer who’s an IRS-authorized e-filer.
8. Pay what you owe.
While the IRS wants your tax return, it also definitely wants any tax you owe. Even if you can’t pay your full amount due with your 1040, pay as much as you can.
Again, the IRS recommends that you use one of its various e-payment options.
And if you can’t pay your full tax bill, contact the IRS about setting up an installment payment plan.
9. File your state taxes.
Residents of 43 states and the District of Columbia also face income taxes in those jurisdictions. And most of those state returns also are due on April 18.
The five states that have other filing due dates are:
- Delaware on April 30
- Hawaii on April 20
- Iowa on April 30
- Louisiana on May 15
- Virginia on May 1
In most cases you’ll need to finish your federal return first, since states tend to use that information as a starting point for their more local taxes.
And who is lucky enough not to deal with double tax duty? In addition to me and my fellow Texans, you won’t face any state income tax at all if you live in Alaska, Florida, Nevada, South Dakota, Washington or Wyoming.
State income taxes exist, but are limited to interest and dividend earnings in New Hampshire and Tennessee, whose state governments collect taxes only on interest and dividend earnings.
10. Get an extension.
If you just can’t finish your 1040 and all the accompanying forms and schedules by April 18, then get six more months to do so.
It’s not hard. Just file Form 4868, either electronically or by mailing the paper form so that it’s postmarked April 18.
Remember, though, as tip #8 notes you still need to pay your tax bill or as much as you can when your file your extension.
You can find more tax filing help at IRS.gov and, of course, in the ol’ tax blog’s monthly collections of Daily Tax Tips.