Filing your taxes at the last minute? Blame it on procrastination, chalk it up to forgetfulness, or claim that the dog ate your 1099.
Whatever the reason, the April 18 tax deadline is right around the corner, and you still haven’t gotten around to filing your taxes yet. If it’s any consolation, you’re not alone; data from the Internal Revenue Service shows that in 2016, 21.5 million Americans waited until at least the last week before the tax deadline to complete and submit their forms.
That’s not counting the nearly six million returns the IRS received late, postmarked after the final filing date. Where your finances are concerned, Internal Revenue has a big pet peeve with late taxes. You’ll be hit with a late income tax filing penalty of 5 percent of the taxes you owe for every month they’re not filed, and a half-percent late payment penalty each month your taxes remain unpaid, up to a maximum of 25 percent.
Don’t take these numbers as an inevitability, but a possibility. If you’re behind on filing your taxes this year, there’s no need to panic and submit a hastily prepared tax return just to meet that deadline. (Especially if it’s your first time.)
Here are some tips to assemble and file your taxes with time left to spare:
Request a tax filing extension
Obtaining or downloading a copy of Tax Form 4868 allows you to apply for an extension up to six months to file your taxes. Less stringent IRS requirements almost guarantee that you’ll be granted an extension. But remember, even if you get an extension to file, the IRS considers any amount owed to be due on April 18 and will start running the clock then on any late fees. So if you file an extension and pay your taxes six months later, be aware you could end up owing six months of late fees.
That means if you’re granted an extension, don’t hold off for six months and wait until the last minute again to file your taxes. A filing extension is designed to avoid late filing fees, but you should still be preparing your taxes, figure out what taxes you owe (if any), and pay them as soon as possible before officially submitting your tax return, since the IRS won’t wait for its money. (It also means receiving any tax returns owed to you sooner rather than later.)
Consider hiring a tax professional
The clock is ticking to file your taxes, and you’re faced with all those forms, all that paperwork, all those receipts, W-2s, 1040s and 1099s. Which deductions should you take? To itemize or not to itemize?
Those are the questions you may feel there’s just too little time to answer by yourself without messing up your tax return big time. With hardly any time to calculate, crunch numbers and see where you can save the most, consulting a tax preparer may be the most effective solution when time is of the essence.
However, choosing the first person calling themselves a tax professional could mean all the difference between your owing taxes and getting a tax refund. Do your research before hiring someone. A certified CPA will charge you more than a standard accountant, but may be worth it depending on your situation. Being on the lookout for phony and fake tax "preparers" can save you from falling victim to a tax scam. It may seem like a lot to vet, but better to find the right professional to ensure that your tax return will be done timely and thoroughly.
Also be realistic and remember that getting an appointment with a tax professional may be difficult, since you may be competing with plenty of other people looking to file their taxes at the last minute, too.
If you’d like to go the tax preparer route but unsure where to start or look, the IRS provides a searchable directory to find one in your area.
Keep calm and do your taxes yourself
Your other alternative to tackle a last-minute tax prep/filing is obvious: Do it yourself.
If you feel pressured or intimidated by such a short, daunting deadline, think about it: How is taking on your taxes a week and a half before the deadline any different than doing them early? It’s the same process, the same information, the same dollar figures and the same results.
The only difference is that you have less time, so to compensate, you’ll just need some more focus to hit that April 18 filing deadline. Keep some of these pointers in mind:
Electronically file your taxes. E-filing your taxes is a quick and efficient option that may make all the difference to getting your tax return in by April 18. Using software like TurboTax or a similar program does most of the heavy lifting and ensures that your calculations are more accurate than going the manual route. Even the IRS claims that e-filing reduces the chance of making errors on your return 20 times over.
If you earned less than $64,000 this past year, you can also file your state and federal taxes for free using the IRS’ Free File software. Income over $64,000? You can still access for free IRS fillable forms, which are e-versions of the documents you’d submit with your regular tax return.
Take it slow. Slow down when you’re in a hurry? That’s right; even with just a few days to complete your tax return, taking your time and following through ensures you won’t make any mistakes or enter incorrect information.
Frantically rushing through your taxes will only cause more stress than it’s worth. Even if you need to devote the entire weekend before the deadline to do your taxes (April 15-16), use the time to fully dot every i and cross every t.
Get all your documentation organized. Feeling rushed against the crunch of a deadline can mean losing track of the necessary paperwork needed to fill out your tax return, or worse, having everything you need at hand but getting your wires and numbers crossed.
First, get everything neatly organized. Experts recommend sorting your tax documents into three distinct sections:
Income, such as W-2s for salaried work with taxes withheld, 1099s for contract work without taxes deducted
Expenses, like a Form 1098 statement listing your mortgage interest and real estate taxes paid, and receipts and statements from throughout 2016: everything from medical bills, charitable donations, childcare expenses, or business costs, including travel and transportation expenses
Investments, both tax deductible and nondeductible, such as 401(k)/IRA/retirement account contributions, or other statements listing deposits, dividends, earnings or withdrawals you made last year
Sometimes the most innocuous miscalculation can throw off your entire tax return, so double check -- triple check -- everything before sending it off to the IRS. Two inverted digits in your Social Security number, a decimal out of whack, an extra zero where one doesn’t belong can result in an incorrect filing that needs to be redone. The same goes for your banking information (i.e. account and routing numbers), the tax deductions you’re declaring, and keeping your expenses separate from income.
It may sound obvious, but don’t forget to sign and date your tax return. All that work to come in before the tax deadline means nothing without a form that’s dated and endorsed with your John Hancock.
Start your tax return now, and you may even have some extra time to save extra money by making contributions to select investment/retirement accounts that can retroactively count towards your 2016 taxes, like an IRA, HSA or college savings plan.
DIY or with professional help, tackling your taxes at the last minute won’t be as taxing as you might think when you take the right steps and concentrate on meeting your deadline. If you find yourself scrambling this year to complete your tax return, make a promise to yourself that you’ll get a head start on them for next year, giving yourself, your taxes, and your finances the time they deserve.