Tax Information: What You Need To Know For Tax Day
Are you avoiding doing your own taxes? Avoiding filing your return altogether? It’s tax season, and for many people, that means it’s time to get their taxes done. It can be a daunting task—especially if you’re unsure where to start.
A lot of people dread tax season. But there are actually many things you can do that could make it a little easier for yourself. In this article, we will help you get up to speed on the basics of filing your taxes.
Here are four ways that could help make tax season easier:
1. Start early.
When you start your taxes early, you’ll have more time to gather all of your documentation, find any errors in your report, and make changes if necessary. This could make everything easier when it comes time to actually file your taxes.
2. Gather all the relevant documents.
This includes W-2s, 1099s, tax returns, and other forms that prove how much money you made during the past financial year.
3. Take advantage of all your deductions.
Annual income tax deduction limits for gifts, public charities and donor-advised funds are up to 30% of adjusted gross income (AGI).
4. Don’t forget to file for an extension if you need more time!
You can file for an extension by submitting Form 4868 electronically or by mail postmarked by April 18th to avoid any penalties or interest. Then you’ll have six months from the original deadline date to file your taxes.
When is Tax Day?
Tax Day is officially on April 15th every year. However, when this date falls on a weekend, Tax Day is pushed back to the next business day.To avoid any potential IRS penalties, you must file your taxes by this date.
What happens if you don’t file your taxes on time?
If you don’t submit your taxes by Tax Day, the IRS can fine you for every month that passes before you file. In most cases, the penalty for filing late is five percent of the taxes you owe.
However, that penalty can stack up each month, eventually maxing out at 25% if you continue dragging out the process.
Instead of leaving things up to chance, it’s best to contact the IRS immediately if you’re worried you won’t be able to file your taxes on time. The IRS can be understanding when a situation may make it challenging to file by the deadline. To help, the IRS has implemented several safeguards that can be used to avoid penalties should a difficulty arise.
The worst thing you can do is wait to file your taxes without asking the IRS for help. As a result, you could incur a huge fine and be subjected to an intense and time-consuming IRS audit.
How can you avoid late filing penalties?
The best way to avoid penalties from the IRS is to file your taxes on time. However, it is possible to file for a tax extension if you know that you won’t be able to meet the Tax Day deadline.
To request an extension, you must file an IRS Form 4868, which can give you an extra six months to file your taxes. Doing this can help protect you from the penalties associated with late filings and preserve your ability to receive a tax refund if you’re eligible.
However, filing an IRS Form 4868 does not protect you from the interest that accrues on the taxes you owe but have yet to pay. You will still be charged 0.5 percent interest every month your filing is extended.
Play it safe and file early.
As daunting as it may seem to file your taxes, you could relieve some of that stress by being proactive. If you’re getting closer to Tax Day and haven’t yet started the filing process, now may be the best time to gather all your materials to submit to the IRS. Unfortunately, there is no official reward for filing your taxes early, but the peace of mind you’ll experience once your filing is complete could provide the personal satisfaction you deserve.
