You’re not alone if you wait until the last minute to file your tax return. About 20 percent to 25 percent of taxpayers typically file in the final two weeks of tax season, according to the IRS.
Some people delay filing because they want to avoid the process, especially if they know they’ll owe money. “Nobody likes to deal with taxes,” said Jonathan Barsade, CEO of Exactor, which provides sales tax compliance software. “There’s a thought process: ‘Maybe if we delay it long enough, it will go away.'”
You can’t ignore the tax-filing deadline, though, because you’ll face civil or criminal penalties if you don’t file a return.So with only a couple of weeks left before your 2015 tax return is due, here are 15 tax tips to remember for filing last minute.
1. Know the filing deadline
You have until Monday, April 18 this year to file your 2015 tax return because the Emancipation Day holiday in Washington, D.C., falls on April 15. If you live in Maine or Massachusetts, you have until Tuesday, April 19 because Patriot’s Day is celebrated in those states on April 18.
2. Make sure you have all the necessary documents
To speed up the process of filling out your tax return, gather all of the necessary documents so they’re on hand. Make sure you have your W-2, which shows wages and taxes withheld, and Form 1099, which will show any freelance income you had or interest earned on a bank account or money fund. If you’re missing these forms, you might be able to access them online (some employers and financial firms offer this option).
If you own a home, you’ll also need a Form 1098 that shows the mortgage interest and real estate taxes you paid. Also, gather receipts for any expenses or charitable contributions you plan to deduct.
3. Don’t wait for Form 1095-B/C
There’s a new wrinkle this year with one of the forms taxpayers should receive, said Barbara Weltman, spokesperson and contributing editor for J.K. Lasser’s Your Income Tax 2016.
Healthcare providers and employers have to issue a 1095-B or 1095-C to taxpayers to show whether they had health coverage in 2015 as part of the reporting requirements of the Affordable Care Act. However, the deadline for insurers, coverage providers and certain employers to provide these forms has been extended to March 31, 2016.
If you haven’t received this form yet, don’t worry, she said. You can file your return without it.
4. Wait for Form 1095-A
You should get a Form 1095-A if you got health coverage through the Affordable Care Act insurance marketplace. If you have not received this form yet, you should wait because it has information you’ll need to accurately file your return, according to the IRS. Contact your marketplace provider to get the form.
5. File your return electronically
Filing your tax return electronically is the fastest way to get your return to the IRS, which is important if you’re filing at the last minute. Plus, using tax software is the best way to avoid math errors, Weltman said.
If your income is below $62,000, you can use free tax software through the IRS Free File program at IRS.gov to prepare and file your federal return. Otherwise, there are plenty of affordable tax software programs available that will help you complete your return quickly, Barsade said.
6. Take advantage of the import option
If you use tax software, you can make the process of preparing your return even faster by taking advantage of the import data option, Weltman said. Depending on whom your employer and financial institutions are, you may be able to have your employment and investment earnings automatically imported through your tax prep software. “It not only saves time because you don’t have to enter all the numbers, but it’s also accurate,” she said. If you use the same service you used last year, you can also have a lot of other information imported, such as Social Security numbers. Even if you used a different program, some services will import data from a return prepared with a competitor’s service.
7. Use last year’s return as a reference
If you’re not using the same software program you used last year or are filing by paper, Barsade recommends using the last return you filed as a benchmark for this year’s return. If your tax situation hasn’t changed much, you should have a good idea of what your sources of income are, what tax deductions you can claim and what tax forms you need to file based on your 2014 tax return.
8. Don’t overlook the ability to make an IRA contribution
Even though it’s already 2016, you still can contribute to an IRA for 2015 and deduct your contribution on your federal tax return. Weltman said you have until the due date of return to make a contribution for 2015.
You can contribute up to $5,500 to an IRA — or $6,500 if you’re 50 or older. You can deduct all of your contribution to a traditional IRA if you weren’t covered by a retirement plan at work or if you earned $61,000 or less and were covered by a workplace retirement plan. You also may qualify for the saver’s credit that can reduce your taxes up to $2,000 if you file a joint return and meet income requirements.
9. Avoid careless errors
Because you’ve waited until the last minute to prepare your return, you’re more likely to make mistakes, Barsade said. So it’s important to double-check your return and have someone else — such as your spouse — review it, too.
A common mistake taxpayers make is incorrectly entering numbers, including Social Security numbers. Although tax software won’t let you make math errors, it won’t detect whether you’ve entered numbers incorrectly, Weltman said. Also, make sure you’ve entered names correctly and that you sign and date your return.
10. Take breaks
If you’re down to the wire, don’t force yourself to work nonstop to complete your return.
“Take breaks,” Barsade said. “Don’t sit for eight hours straight. Your eyes are going to glaze over.” Stepping away occasionally from your tax return will give you a fresh set of eyes and help you avoid making mistakes.
11. Get to the post office on time
If you use paper forms to prepare your tax return and need to mail them, make sure you get to the post office on time. Your return doesn’t have to arrive at the IRS by April 18, but it must be postmarked on that day.”Timely mailed is treated as timely filed,” Weltman said. She recommends using certified mail to get a time stamp on your envelope as proof that it was mailed on time. Be sure to hang onto your receipt. Make sure you know what time your post office closes on tax day, too. Many are open late, but not all are open until midnight. Here’s a guide to post office hours in all 50 states.
12. Get more time to file
If you can’t meet the April 18 deadline to file your federal return, you can request an automatic six-month extension with a Form 4868, Weltman said. You can access the form and file it electronically through the Free File link on IRS.gov.
A tax extension will give you more time to file your return and help you avoid a latefiling penalty. But, you’ll still have to pay what you owe by the April 18 filing deadline to avoid late-payment penalties and interest, Weltman said.
13. File even if you can’t pay your tax bill
Don’t avoid filing your tax return because you can’t pay what you owe — you will only make matters worse. “Don’t let your inability to pay prevent you from filing on time,” Weltman said.
If you owe taxes but can’t pay them, you can limit the damage by filing a return on time. The failure-to-file penalty is 5 percent of the tax owed each month your return is late, up to a maximum of 25 percent. If you file but do not pay, you will be charged a 0.5 percent penalty on what you owe each month until you pay in full.
Also, if you can’t pay your entire tax bill, you should at least pay a portion of it. “You can reduce additional interest and penalties by paying as much as you can with your tax return,” according to the IRS.
14. Get an installment agreement
You likely can work out a payment plan with the IRS if you can’t pay what you owe by April 18. “Do it in a pre-emptive way — don’t wait for assessment,” Barsade said. “If you can convey the message to [the IRS] that it was an honest one-time mistake, they’ll work with you. My experience is that the tax agents are not out to get you.” If you’ve filed your tax return and owe less than $50,000 in tax, penalties and interest, you can apply for the IRS Online Payment Agreement — which allows you to avoid the hassle of calling the IRS or visiting a field office to apply. The IRS will let you know immediately whether your application has been approved, Weltman said.
15. Don’t get in this situation next year
Don’t let filing your tax return at the last minute become a habit. “This process should be a lesson going forward,” Weltman said. Keep tax-related documents organized throughout the year, and collect tax forms in a folder as they come in during tax season so you don’t have to scramble to gather this information to meet the tax-filing deadline. And make sure you have the funds available to pay your tax bill by opening a separate savings account for taxes and setting money aside each month, Barsade said.
“When tax season comes, you’ll have the money you need,” he said.