Last-Minute Tax Tips
April is here, and Tax Day is a few weeks away. Since the 15th falls on Saturday this year, we get an extra two days to file or to procrastinate if that is your habit. It’s getting late to do much to reduce your tax burden, but here are a few last-minute tips that might help.
Collect Your Paperwork
I can’t stress this enough. Make sure you have your W-2s, any 1099s, and other supporting documents such as a 1095 from the Healthcare Marketplace. If you are a college student or the parent of one, you will also need a 1098-T to claim education expenses. Student loan and mortgage interest are also deductions; be sure you have paperwork to support those amounts.
Some Uncommon Deductions
Here are a few deductions that you might not have thought of, several aren’t ones that occur yearly. Again, you need documentation for all of them.
- Mortgage interest
- Theft and casualty loss
- Gambling losses (only if they exceed winnings)
- Energy efficient home improvements
- HSA contributions
- Tax preparation fees
Did you donate to a house of worship, a charitable foundation, or any physical items like clothing or furniture? You will hopefully have a statement or receipt, but a list of goods and the date you donated will suffice in most cases.
Child care is deductible if paid to a licensed daycare, and in many states, any contributions to a 529 College Savings Account are also deductible. Another great thing about a 529 account is that the distributions are tax-free, so there is a future benefit as well.
Still Not Ready?
You can file for an automatic extension if you don’t think you can get your return finished on time. When you file for one, you need to make a payment of the estimated amount due or there will be penalties and interest. Those of you who are expecting a refund won’t need to worry, though, there is no penalty for the IRS to keep your money longer. If you are ready to file but don’t have the money to pay your bill, the IRS will work with you to set up a payment plan. You’ll pay a fee, but there won’t be any penalties.
Save For Next Year
Your refund can automatically be applied to your next year’s taxes if you want. This is a great idea if you are self-employed or pay quarterly taxes for any reason. If you owe taxes every year, look at increasing your withholding now, or set up a savings account to use for taxes. You won’t earn much interest, but the peace of mind you’ll get from being prepared is immeasurable.
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