TOP X TIPS TO GET READY FOR TAX DAY
Spring is right around the corner, and that means warmer weather and longer days. Unfortunately, it also means tax season is upon us.
The sweet, siren song of Spring can make it easy to put things off. So can the fear that stems from navigating the web of tax laws.
No matter what’s holding you back, having a little bit of knowledge can help you avoid procrastination and get a jump on the task.
Here are a few tips that can help.
Get your dates straight
The traditional tax filing deadline of April 15th has been pushed back to April 18th this year. It’s also the last date to file for an extension.
Be aware that filing an extension does not mean you get longer to pay taxes owed. It simply means you avoid late filing penalties until Oct. 17th. You must estimate your tax liability and pay any amount due to get the extension.
There is no official penalty if you are owed money and don’t file on time. You are, however, giving the government an interest-free loan. That might sting a bit.
Know your options if you can’t pay
If you have a large tax bill and don’t have the funds to pay it by April 18, there are a few different options available.
One is to ask for an additional 180 days to pay. You’ll still owe interest, but you buy a little time, and there is no fee to set up the agreement. This only works if you plan to pay off the debt in its entirety within the agreed upon time frame.
If you can’t pay it all at once, the IRS may allow you to set up a payment plan. There are fees associated with this option ranging from $31 to $130. If the debt is less than $50,000, you can apply online.
Avoid common errors
One of the most common filing problems is making simple errors. Putting the wrong social security number for you or your dependents can delay your tax return. Putting in the wrong bank account number for direct deposit is also common. But the consequences are harsh. Your money could easily wind up in some stranger’s account!
Oh, and don’t forget to sign your return if you are not filing electronically. Ironically, this is another common mistake that can hold up the processing.
Know your resources
According to a recent Gallup poll, the IRS is one of the most disliked federal agencies in the United States. Its favorability rating dropped 13 points to 37% between 2019 and 2021.
But its website is still a wealth of information that can help you get ready for tax season. It has a services guide and tools page. It also lets you establish an account to help you get records and file your taxes for free.
Of course, tax preparers can also be helpful at tax time. Just be sure to consult a trusted CPA, attorney, or service.
Tax season doesn’t have to be a burden. With the right tools, you can put the task behind you and start enjoying the longer, warmer Spring days!