Maybe you're not a procrastinator -- you just had more important stuff to do until now. But having said that, by now you should certainly have received all of your individual tax return information for 2013, and if you have, then this piece is for you. As you well know, the end of tax is just around the corner -- are you ready? To help make sure you are, here's a list of five things to know about the final days of tax season, five things to watch out for, and five things to do before April 15 to help you maximize your tax experience this year and the sooner the better.Five Things to Know:
- You can file an extension to delay your taxes until October 15, 2014, but the extension is a delay for your tax forms NOT to pay your taxes. Taxes must still be paid by April 15 or you will pay interest and penalties on the late amount and perhaps incur other problems.
- You must file before midnight April 15. If time is a problem, consider e-filing your tax return; you will get an acknowledgement from the IRS showing the date and time the IRS received your return AND your personal information on the tax return is more secure.
- Verify the data on the tax return; if you make a mistake and instead owe the IRS rather than the refund you originally received, you will pay penalty and interest on the amount you owe until it is paid in full.
- If you need to make an estimated tax payment for 2014, your first quarterly payment is due April 15.
- You can make a contribution to a traditional IRA as late as April 15 to lower your taxable income on your 2013 tax return.
- If you are paying taxes with your extension to avoid the late payment penalty, you must pay at least 90 percent of your final tax liability or you will be assessed a late payment penalty.
- While the IRS doesn't penalize you for filing late when you are due a refund, many states do. In addition you can impact your security clearance or other background check considerations if you file late without an extension, even when you are due a refund.
- There are three new taxes this year:
- Additional .9 percent Medicare tax on wages greater than200,000 (250,000 if married filing jointly).
- 3.8 percent Medicare tax on investment income when adjusted gross income is greater than200,000 (250,000 if married filing jointly).
- 39.6 percent income tax on taxable income greater than400,000 (450,000 if married filing jointly)
- Itemized deductions phase out when adjusted gross income is greater than250,000.
- The IRS will notify you, and penalize you, when you forget to include income on your return. However, the IRS will NOT notify you if you forget to claim a deduction or credit you may have been entitled to.
- Locate last year's tax return. You or your preparer will find it a useful guideline for the information you need for this year's tax return.
- Locate all the forms W-2 and 1099s employers, banks, and others sent you in January and February. Don't forget to gather your receipts or statements for possible deductions like mortgage interest, charitable contributions and tuition and fees for yourself or other family members. If you worked and did NOT receive a W2 -- the income is still required to be on your tax return.
- Find a preparer or software you trust. Check the local Better Business Bureau to see if there are complaints against local tax professionals and check the internet for user's comments on a software product to help you decide.
- Prepare your tax return early; it is too easy to make a mistake and forget deductions, credits, or even income when you are rushed at the last minute.
- File your return by April 15 or sooner if you are ready.
If you have already filed your taxes, good for you. You may want to consider a refund review if you think you may have missed something. Have a professional look over what you have filed the last 3 years. It is typically free, and may find you some extra overlooked money.
If you have not filed, then what the heck are you waiting on? File as soon as you can and if a refund is coming -- enjoy that money sooner. If you owe a balance due, you can still file now and do NOT have to pay your tax payment balance due until April 15. That is right; you can prepare your taxes now, even file your tax return now and still not have to PAY the IRS until midnight April 15th. That gives you extra time to gather the funds needed to pay your balance due.
AND REMEMBER, you are not a procrastinator if you file in the next few days, well before the IRS due date. So file now and be an early mover and not a procrastinator.