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April08

Last Minute Tax Filing Resources

More than half of taxpayers have already filed their returns, but every year about a quarter of Americans wait until the last few weeks to file. If you are about to spend the weekend preparing your taxes, here are some resources:

IRS E-File: Less than 1% of electronic returns have errors, compared with 20% of paper returns

IRS Free File: Taxpayers who make $58,000 dollars or less can use software to prepare and file their federal taxes

Free Tax Preparation: The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $52,000 or less, persons with disabilities, the elderly and limited English speaking taxpayers who need assistance in preparing their own tax returns.

Direct deposit: 9 out of 10  refunds are issued within 3 weeks or less, compared with 6 – 8 weeks for paper-filed tax returns

Consider Itemized vs. Standard deduction: 75 percent of tax filers take the standard deduction, which is $6,100 if you’re single and $12,200 if you’re married filing jointly. But you may be able to maximize your deductions by gathering your receipts for things like charitable contributions and other expenses that could give you a bigger tax deduction and lower your tax liability.

IRA Contribution eligibility: A great way to save money on taxes is by contributing to an IRA by April 15, even if you go on extension. The maximum contribution is $5,500 or $6,500 if you are age 50 or older by the end of last year.

6-month extension with Form 4868 by April 15: Without an extension, you could face nasty penalties for late filing and late payment, which can total almost 50 percent of what you owe to your tax bill. Remember that extensions have a major caveat: The IRS gives you extra time to file, but not to pay. You must estimate your tax liability and pay at least 90 percent of what you think you owe to avoid a penalty.

If you can’t pay:

Apply for a 120-day extension: No cost, but interest and any applicable penalties continue to accrue until the liability is paid in full. For more information, call the IRS at 800-829-1040 (inds) or 800-829-4933 (bus)

Apply for extension of time for payment due to undue hardship (Form 1127)

Use an IRS installment plan (Form 9465)

Make an offer in compromise

Use a credit card: An expensive way to go because you’ll pay fees charged by your credit card company, which can be up to 2.35 percent. You’re better off paying by check or electronic funds withdrawal online

  • Posted by Jill Schlesinger
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