Here's how late filers can save on stress and taxes
April, 03rd 2017
Still sitting on an incomplete tax return in early April? Keep calm but get cracking.
A good chunk of this year's filers are procrastinating. As of March 24, the Internal Revenue Service received 85.3 million tax returns, down 4.7 percent from the same point last year.
Even the stragglers can eke out a tax win this season, provided they don't haphazardly throw their return together and rush it out the door by April 18.
"The key elements are to double-check your return and make sure you get every deduction you're entitled to," said Brian Ashcraft, director of compliance at Liberty Tax Service.
Slow down and consider these tax tips before you file.
Ask for an extension
Secure an appointment as soon as you can. Just because your tax professional was able to get you an extension last year, you shouldn't assume that he or she can do it this year.
"They're not allowed to file an extension unless you request it or give them permission," said Cari Weston, director of tax practice and ethics at the American Institute of CPAs.
Also, if you haven't lined up a tax preparer, avoid strolling into the first practice with empty seats. Get a trusted recommendation first.
"The kind of people who might have availability now might not be the kind of people you want to work with," said Weston. "The better they are, the more in-demand they are."
Don't forget that extensions only give you more time to file the return. If you owe taxes, you'll need to pay them by April 18. Your preparer can help you with that, too. He or she will give you an estimate of what you owe so you can pay the taxman on time.
Find your cheat sheet
Whether you prepare your own taxes or you need to gather your documents for your CPA, take a peek at your return from last year.
This is especially important for individuals who receive piles of 1099s or who get income from Social Security: The last thing you want to do is forget to report some income you've received.
If you can't track down a 1099 — or if you have to do a little legwork to hunt down the cost basis of a stock — ask for an extension.
Your preparer can help you build your own cheat sheet by offering you a tax organizer when you get your taxes back or before you file. "It shows what you had last year," said Weston. "Use it as a guide."
The other reason you should go through your previous year's tax return is to make sure you don't miss out on any credits or deductions.
"The IRS will let you know if you forget to report income, but they won't let you know if you forget deductions and credits," said Weston.
Last-minute filers are likely to miss these deductions if they rush through the process, said Debbie Freeman, director of tax and financial planning at Peak Financial Advisors in Denver.
Student loan interest: You can deduct the lesser of $2,500 or the amount of interest paid during the year, subject to income phaseouts.
Moving expenses: You moved due to a change in your job and your new workplace is at least 50 miles farther away from your old home versus the distance between your old dwelling and your old workplace.
Property taxes: It's not just your primary home that can qualify, but also your second home and perhaps even your timeshare.
Noncash charitable contributions: Be sure to include your receipts. You'll need to file Form 8283 if your deduction for all noncash gifts over $500.
Contributions to certain tax-advantaged accounts: That includes your health savings account and your individual retirement account.
Finally, if you hurry through your return, you might miss out on the fact that you have to report your nondeductible IRA contributions for the year.
This way, you establish basis in your IRA, and when you start taking distributions in retirement, that portion will come out tax free, said Freeman.