5 Last-Minute Tax Tips
Tax day always seems to roll around before you know it.
If you’ve already filed, congrats! If you’re not even close to being done, don’t despair — you still have some time. Here are my top tips to make sure you make all the right tax moves over the next week:
1. Consider an Extension.
Want an automatic six-month extension from the IRS? All you have to do is ask! To get an extension, fill out IRS Form 4868. You can use an online service such as TaxAct or TurboTax, either of which will let you e-file for an automatic extension for free.
While you can file an extension for paperwork, you can’t put off paying the taxes you owe. Use a tax calculator to estimate what you owe. If you’re due for a refund, no need to hand any money over. However, if you owe something, pay it now in order to avoid penalty payments or interest down the road.
2. Utilize Tax Tools
There are many tools out there to help you get your taxes done as seamlessly as possible. At LearnVest, we’ve created a (free) five-day Ace Your Taxes Bootcamp. In five steps, we’ll answer all of your biggest tax questions and help you get all the tax breaks you deserve. We’ll even help you get organized for next year (so you don’t have to cut it close)!
We’re also fans of the many tax apps out there, which do everything from estimating how much you owe or how big your refund will be to allowing you to actually file (by just snapping a pic of your W-2).
3. Know How to File
E-Filing is the way to go. It can save trees, time and money for the IRS and for you. If you use tax software, the forms you need will be built right in, and if you’re owed a refund, you’ll get it faster.
However, there are a few instances in which you must file a paper return. If you need to file a paper return, check out our guide to IRS forms, which will tell you which ones you need for your specific tax situation.
4. Do Not Get a Rapid Refund
If you work with a tax preparer, you might be offered a rapid or instant refund.
Do not take it. While it may seem like you are just getting your tax refund faster, this “refund anticipation loan,” as it’s called, is actually a short-term loan—one that likely has a predatory interest rate that will take a big chunk out of your refund; think $50 or more!
5. Remember that Audits Aren’t the End of the World
Yes, they are frustrating. But being notified of an audit won’t bring your financial world crashing down. In order to quickly process millions of tax returns, the IRS has certain flags that will automatically trigger an audit. That doesn’t necessarily mean you’ve done something wrong, just that your return has something that might signify you’re trying to defraud the IRS or that you made more than just a simple math mistake somewhere.
If you did everything correctly on your return, you should be able to prove that you are paying all of your taxes. If you made a mistake, you may have to pay more in taxes, interest or a penalty.
Tax day is inevitable, but take a deep breath and realize that you still have some time to handle your taxes. Plus, the sooner you file, the sooner you’ll get that refund!
// Alexa von Tobel is Founder and CEO of LearnVest.com //