The deadline for filing your taxes is looming… and if you’re like many fellow Americans, you’ve put off this tedious chore to the last minute. In fact, the IRS estimates that as many as 25% of taxpayers wait until April to file. But that doesn’t mean you need to do a haphazard job.
So let’s say you’ve woken up in a panic, realizing that it’s April already. There’s no need to get too stressed out. Here are Investor Junkie’s favorite tips for filing your taxes — and maybe even reducing the amount you owe — at the last minute.
1. Hire an Expert
If you want to take a huge stressor off your plate, consider hiring a professional to do your taxes for you. Unless you’re feeling really confident that you can do it on your own — or if you have a particularly easy return without many deductions, etc. — a professional could be a wise choice.
This is especially true if you have any sort of complicated tax situations (such as a Roth IRA conversion or property sale or if you’ve inherited any assets).
And if you’re self-employed, hiring someone to do your taxes for you is hands-down the only way to go.
If you’re still on the fence, we have an article with some pros and cons of doing taxes on your own versus hiring an expert.
If you insist on going it alone, we also have a write-up of some of our favorite tax software.
2. Get Your Paperwork Together
No matter if you’re hiring a friendly accountant or doing it yourself, you’ll need to make sure you have all of your paperwork in one place.
We here at Investor Junkie have got your back. We’ve put together a complete checklist of everything you need to organize your investments and get your taxes submitted on time.
3. Make Those Deductions!
If you have any legitimate business expenses or made a deductible donation to charity, be sure to make the most of them. Your accountant can help you figure out how to make deductions the proper way. But if you need a hand in keeping your receipts organized for next year, check out a service such as Shoeboxed, which digitally manages all of your receipts.
Make sure you get the deductions you deserve and are qualified for.
4. Minimize Your Tax Bill
There are two methods for reducing your tax bill: tax avoidance and tax deferral. We go into more detail and explain the differences of each in the linked article, so you can decipher the best strategy for your situation.
(There is a third way, tax evasion, but in absolutely no cases would we ever recommend it.)
5. File a Tax Extension
If you need more time to get your taxes done, you can always file a tax extension. It won’t save you from paying your tax bill, but it can save you from hundreds of penalties if you can’t file your tax return on time. Just file Form 4868 and follow the instructions. Then you’ll have until December to get it all together.
But of course you’ll still need to pay your what you owe by April 15. And if you estimate too low, you’ll likely end up owing the IRS a little bit of interest and maybe even a penalty. So guess well. And if you guess too high, the IRS will refund the difference.
Incidentally, I know someone whose birthday is April 15. He’s a big-time procrastinator, so instead of getting his taxes done early, he always files an extension every year! (Not necessarily recommended.)
6. Contribute to a Traditional or Roth IRA
There’s still time to open an individual retirement account and gain full advantage of the deductions and credits. You can open a new account or make a contribution to a Traditional or Roth IRA any time before the due date of your tax return, and it will still count as a contribution for the previous tax year.
You’ll want to confer with your accountant about which contributions are deductible on your return. Also note that if you file a tax extension, the deadline for IRAs is not extended. We recommend using a service like Betterment for its quick and painless process. You can also check out our best IRA promotions to maximize your contributions even more.
You deserve to get every tax deduction you qualify for, so take advantage of these tax-saving tips today.