With tax day right around the corner, many taxpayers may be scrambling around trying to get their taxes finished before the deadline. Yeah, we know the early bird catches the worm, but the truth of the matter is that not everyone files ahead of time. Some people wait till the last minute to prepare and file their taxes. It could be because they could get an earlier appointment with their tax professional, or may they were waiting for some important income documentation, or perhaps they are simply chronic procrastinators. Regardless, their taxes still need to be prepared and filed, on time. Here are some last minute tax tips before you file your tax return.
Last Minute Tax Tips To Help You Save
Most taxpayers want to save money on their taxes. So it is important to know how to identify possible ways you can save on your taxes. Leveraging you deductions is one of the best ways to save money on your taxes. Some common business tax deductions that may apply to you include:
- Operating costs – this could include rent, utilities, and insurance costs.
- Office equipment – did you purchase any new office furniture or computers last year?
- Office supplies – paper, pens, paper clips, staples…they can add up over time.
- Cell phone – if your business requires the use of a cell phone (which most do these days) a portion of your cell phone bill can be deducted.
- Travel expenses – did you travel for business last year? Airfare, hotel stays, and rental car expenses qualify
- Continued education – did you attend any educational course related to your industry?
These are just some of the possible deductions that may apply to your business that can significantly impact the amount you owe on your taxes.
Maximize Contributions To Retirement Accounts
Another tax tip that can help you save on your taxes, is to maximize contributions to your retirement accounts, like your IRA. IRA contributions are tax deductible up to the contribution limit. Last year the contribution limit was $5,500. For 2019, the limit is being bumped up to $6,000. What is great about the IRA tax deduction is you have until April 15 to make contributions for the previous year. So, if you find that you owe money on taxes, and you haven’t maxed out your IRA contributions, you can make a last minute contribution, and lower your tax bill. This is an above the line deduction, which means you can take advantage of it even if you don’t itemize.
Accuracy Is Key
Filing accurate tax returns on time is also and important tax tip to save you money. Failing inaccurate tax returns could land you in some hot water with the IRS. Likewise, not filing on time will cost you in penalties and fines.
Wait to Long to File? How to File and Extension
If you don’t have all the necessary information to file your tax return you can file an extension. An extension needs to be filed and accepted by April 15. Keep in mind, that a tax extension does not postpone your tax payment, it extends the date to file your return until October 15. To file a tax extension, form 4868 needs to be submitted to the IRS. Many states also accept accepted IRS tax extensions. Some important things to keep in mind:
- If you are unable to file on time, you can file an extension but you still owe your tax bill by the deadline.
- Always file or file an extension before the tax deadline of April 15 to avoid failure-to-file penalties.
- If you can’t afford to pay, know your options: pay by credit card, borrow from retirement account, or set up an installment agreement with the IRS.
- Even if you cannot pay by the deadline, always file on time. The failure-to-file fee is more than the failure-to-pay fee. Avoid both fees by filing on time or by filing and extension.
How to Avoid Last Minute Tax Filing Mistakes
Last minute mistakes on your taxes can be costly. Many tax filing mistakes can be avoided. Here are some common tax filing mistakes and how to avoid them.
- Failure to file on time – Like we mentioned above not filing on time will result in a costly penalty. Always strive to file on time, and if you can’t file an extension before the deadline.
- Always file complete tax returns – A tax return is not something you want to fudge. If you don’t have all of the information you need to file your tax return, file an extension. Tax returns need to be accurate to avoid any unnecessary scrutiny from the IRS.
- Report all income – This goes along with filing complete tax returns. Not reporting all income can result in costly penalties and fines.
- Don’t leave money on the table by not claiming deductions – Know which deductions apply to you and your tax situation and take advantage.
- Work with a tax professional – If you have a complicated tax situation, work with a tax professional. They know the tax laws, and which deductions and credits apply to your situation. This can help you file accurate returns on time.
Staying organized throughout the year can help you when it comes time to file your taxes. Have a good accounting system in place to keep track of expenses and income. And be sure to keep and record all receipts. For more tax tips for before you file your tax return, subscribe to our newsletter.