Here are some important tax deadline tips for the procrastinator, as the April 15th tax deadline is just around the corner:
EXTENSION: All taxpayers are granted an additional six months to prepare and file a tax return. Individual taxpayers must file IRS Form 4868. The IRS extension can be filed electronically or through the mail. An extension to file, is not an extension to pay the IRS. Taxpayers are required to pay 90 percent of their prior year tax liability by April 15th tax deadline.
FILE ELECTRONICALLY: Filing electronically is the easiest and safest way to file a tax return. The IRS will either accept or deny the tax return, usually within 24 hours. Rejections are usually for minor errors such as incorrect date of birth or social security number. IRS acceptance of a tax return will acknowledge its filing date, unlike filing a return through the mail, in which verified acceptance can only be established through Certified Mail. Filing electronically will also mean receiving a refund quicker. Usually 9-15 days for direct deposit and up to three weeks for a check.
OWE MONEY: One of the biggest mistakes taxpayers make is not filing when they have a balance due. This mistake will subject taxpayers to additional penalties. The taxpayer who has a balance due should file the tax return and attach an Installment Agreement Request, IRS Form 9465. This form can also be filed electronically.
STATUTE OF LIMITATIONS: The IRS has three years to audit a taxpayer’s return. The statute of limitations runs three years from April 15, 2014 to April 15, 2017, for a 2013 tax return that is filed timely. Taxpayers who file extensions or file late will give the IRS additional time to examine or audit their tax return. Therefore, if a taxpayer files their 2013 tax return on August 16, 2014, they will giving the IRS until August 16, 2017 to audit their tax return.
FUND IRA OR HSA ACCOUNT: The IRS allows funding of individual retirement accounts (IRA) or Health Savings Account (HSA) until the April 15, 2014 tax deadline for 2013. Maximum contributions for IRA’s are $5,500 and $6,500 for taxpayers over age 50. HSA maximum contributions are $3,250 for individuals and $6,450 for families. Therefore, a taxpayer in the 25 percent tax bracket, with a balance due of $655, could contribute $3,000 towards an IRA, and would turn a balance due of $655 into a refund of $95. With the implementation of the Affordable Care Act or Obamacare, individuals covered under these plans would benefit by combining an Obamacare plan with a Health Savings Account (HSA).
FREE HELP: Taxpayers with incomes under $52,000 or less may qualify for free tax preparation and electronic filing from IRS certified volunteer tax preparers under the VITA program or Volunteer Income Tax Assistance program. VITA Locations Locator. Tax counseling for the elderly is also available through AARP. The IRS also has a free tax filing program for taxpayers with incomes under $58,000. This is geared for taxpayers who like to file their tax reruns on their own and electronically file. The link for the IRS Free File program is listed below.
By John J. Poltonowicz Twitter