There’s good news for tax procrastinators: just one more day of suffering! This year’s tax filing deadline is midnight April 18th and if you’re getting a late start, here are some last minute tax tips via Q&A:
What if you owe money, but can’t pay in full by the April 18th deadline?
You should still file on time and pay as much as you can, which will reduce potential penalties and interest charges. If you can’t pay all the tax you owe, there are four options:
(1) Request Additional Time to Pay through the Online Payment Agreement application or by calling 800-829-1040. The IRS may grant up to 120 days more to pay the bill.
(2) If 120 days is not enough time, you can apply for an IRS installment agreement, which for a fee will put you on a monthly payment plan.
(3) Make an offer in compromise, which is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed.
(4) You can use a Credit or Debit card, but that’s an expensive way to go because you’ll pay fees. No matter what, don’t ignore a tax bill!
What if you can’t meet the filing deadline?
File for a 6-month extension with Form 4868 by April 18th. Otherwise, you’ll 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 it to avoid a penalty.
If I file an extension, can I wait to fund my IRA?
No, the extension does not provide you with extra time to make your 2016 IRA or Roth IRA contributions — they’re still due by April 18th. SEP contributions can be made until the October extension deadline.
- Free Software: The IRS provides freetax prep software (“Free File”) to taxpayers whose incomes are $64,000 or less in 2016 (which amounts to more than 70 percent of filers) – electronic e-filing is available to all taxpayers, regardless of income
- Tracking Resources: The IRS2Gomobile app and the Where’s My Refund? tool allow you to track refunds within 24 hours after the IRS has received an e-filed return or within four weeks after you have mailed a paper return
- Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE):Low-and moderate-income taxpayers (people who generally make $54,000 or less) can get help for free by visiting one of the more than 12,000 community-based tax help sites staffed by more than 90,000 volunteers. To find the nearest site, use the VITA/TCE Site Locator
MARKETS: Over the past two weeks, there are worries that the “Trump Bump” in stocks could become a slump. The Administration has backed off from various economic pledges that it has made, some of which investors thought would propel growth and in turn, would spur a new bull phase in stocks. On top of the investor wish list was tax reform, but in an interview with Fox Business News, Trump surprised some by saying that he wants to do healthcare first. That means that any tax cuts that might have boosted growth are becoming doubtful until later this year — or even 2018, presuming that a deal can get done. Additionally, the $1 trillion infrastructure-spending plan is now looking more like a $200 billion dollar one. All of the sudden, “the art of the deal” seems to be hindered by the “magnitude of everything”.
Considering that much of the post-election rally was predicated on new fiscal initiatives, investors are reconsidering the value of stocks and bonds in a still-low growth world, where geopolitical concerns are bubbling up in a variety of places. There may be respite in the rest of the world, where “after six years of disappointing growth” there is finally some “momentum”, according to IMF Managing Director Christine Lagarde.
- DJIA: 20,453, down 1% on week, up 3.5% YTD
- S&P 500: 2329, down 1.1% on week, up 4% YTD
- NASDAQ: 5805, down 1.2% on week, up 7.8% YTD
- Russell 2000: 1345, down 1.4% on week, down 0.9% YTD
- 10-Year Treasury yield: 2.234%, from 2.382% week ago
- May Crude: $52.91, down 5.1% YTD
- June Gold: $1,290.10, up 11.4% YTD
- AAA Nat’l avg. for gallon of reg. gas: $2.41 (from $2.38 week ago, $2.10 year ago)
THE WEEK AHEAD:
Netflix, United Continental
8:30 Empire State Mfg
10:00 Housing Market Index
Tues 4/18: Tax filing deadline at midnight
Bank of America, Goldman Sachs, IBM, J&J, Yahoo
8:30 Housing Starts
9:15 Industrial Production
Morgan Stanley, eBay
2:00 Fed Beige Book
eBay, Mattel, Visa, Verizon
8:30 Philly Fed Biz Outlook
10:00 Leading Indicators
10:00 Existing Home Sales
- Posted by Jill Schlesinger