With April 15th looming, here are six last-minute tax tips to help you survive the season.
If you file your taxes electronically via IRS e-file, there is less chance for mistakes. In fact, paper filers are about 20 times more likely to make a mistake than e-filers. What’s more, electronic filers receive their tax refunds quicker.
Free File Alliance, a nonprofit coalition of tax software companies, has a partnership with the IRS to provide free help to eligible taxpayers. With Free File, taxpayers with an adjusted gross income of $60,000 or less can access industry-leading tax software to prepare and e-file their returns at no cost. Taxpayers with higher incomes can use Free File Fillable Forms, a service designed for taxpayers who are familiar with tax law and need no preparation assistance. Free File has been updated for 2015 to help Americans navigate tax changes related to the Affordable Care Act.
This might sound like a no brainer, but people get tripped up with this one. For instance, some separated couples aren’t sure how to file and there is confusion about who can file as a head of household. If you’re not sure, use the Interactive Tax Assistant on the IRS website to choose correctly.
Procrastinating can land you in trouble with the Internal Revenue Service, but a way exists to side step this problem. You can file an extension by completing Form 4868. An extension will give you up to six months of breathing room with your next tax deadline pushed back to Oct. 15. The extension, however, won’t buy you more time to pay. You must estimate what you still might owe and mail that check to the IRS by April 15. Keep in mind that if you low ball what your tax bill is, you will pay a penalty. If you’re actually owed a refund from the IRS, however, there is no penalty for filing late.
If you are self-employed and file an extension, you will have six additional months to fund your retirement accounts such as a solo 401(k) or a SEP-IRA. So, for example, a self-employed person would have until Oct. 15, 2015 to fund his SEP-IRA for 2014.
The IRS pulled together a list of common errors that include the following: