Have you filed your tax return yet?
So even if you’ve procrastinated, there’s still time to prepare and file your return with these ten tips for last-minute tax filers.
1. Get Your Financials in Order… Pronto!
If you’ve been diligently tracking income and expenses all year, you should be in good shape. All you need to do is print reports for your tax preparer. However, if you’ve neglected your monthly bookkeeping, it’s time to get your financials in order.
Make sure you’ve recorded all revenue, entered all expenses, and kept copies of all receipts (either paper or electronic) in case your return is selected for an audit.
Whatever you do, don’t turn over a shoe box full of receipts and bank statements to your accountant. They’ll likely charge a higher hourly rate for the clean-up work. If you’ve maintained your financials every month, your tax preparer’s job will be easier (and cheaper).
2. Make Sure You Have All 1099s
If you’re a freelancer or independent contractor, make sure you have all 1099s you need from the clients and customers you worked for during the year. The government cross-checks the 1099s it receives on your behalf with the amount of income you report. If you underreport your income, you’ll hear from the IRS.
Keep in mind that businesses are not required to send you Form 1099 if you earned less than $600 during the year, but that income should still be reported on your return.
3. Secure the Biggest Allowable Deduction
If you drive your personal vehicle for business, make sure you get the biggest allowable deduction. The IRS gives you two choices:
- A standard deduction per mile the car was driven for business (worth 53.5 cents per mile for 2017)
- Actual expenses, including gas insurance, lease payments and maintenance, multiplied by the percentage of business use
If you use the actual expense method in the first year you use your vehicle for business, you must use that method for the life of the vehicle. But if you use the standard deduction the first year, you can switch between the standard mileage rate and the actual expense method each year. If you have a choice, calculate both methods and use whichever gives you a larger deduction.
4. Make Retroactive Retirement Plan Contributions
In many cases, you may be able to make deductible retirement plan contributions all the way up to the tax-filing deadline.
If you want to put away more money for retirement, you may be able to contribute to a SEP-IRA—a retirement account geared toward small business owners and the self-employed. If you apply for an extension of time to file your return, you have until the extended due date in October to make your deductible SEP-IRA contribution.
5. Contribute to a Health Savings Account
If you’re covered by a high-deductible health plan—defined as a minimum deductible of $1,300 for an individual or $2,600 for a family—you can also deduct contributions made to a Health Savings Account (HSA).
You have until the tax filing deadline to make a deductible contribution.
6. Don’t Rush and Leave Room for Error
With the deadline looming, it’s tempting to rush through preparation (or pressure your tax preparer to rush it for you), but that can be a costly mistake. Rushing often leads to missing deductions, typos and math errors that may delay your return, cost you money, necessitate filing an amended return, or even increase the likelihood that your return will be selected for audit.
Carefully check your return, including the spelling of any names. Check EINs and Social Security Numbers to make sure you didn’t transpose any numbers. Double-check that all income and expenses are properly included. If you catch a mistake, you have time to correct it before filing.
7. Will Miss the Deadline? File an Extension
If you just aren’t ready to file by the deadline, you can get an automatic six-month extension. Electronically file your extension request for free using IRS Free File. If you owe tax, you can request your extension when you make a payment with IRS Direct Pay. Just choose Extension as your reason for payment.
You can also request an extension by mailing Form 4868 (Form 7004 for partnerships, some LLCs and corporations). If you decide to mail your extension, be sure to mail the form and pay any estimated tax by the original tax deadline. It’s a good idea to send it Certified Return Receipt, so you have proof of mailing.
8. Pay What You Owe
Keep in mind that an extension gives you extra time to file, not extra time to pay. You should estimate how much you owe and pay that amount by the due date to avoid late-payment penalties and interest.
If you can’t come up with an accurate estimate of how much you owe, it’s a good idea to err on the side of overpaying. You can always have that overpayment refunded or applied to next year’s estimated taxes when your return is completed.
9. For Speed, Submit an E-file
The IRS encourages taxpayers to e-file returns because electronically submitted returns are generally more accurate. The software can help you avoid math mistakes, and the IRS e-file system flags common errors and kicks back returns for correction.
If you’re expecting a refund, e-filing can also help you get your refund faster, especially if you combine e-filing with having your refund direct deposited into your bank account. When you combine e-filing and direct deposit, the IRS says they process 90 percent of refunds within 21 days.
10. Pay Your 1st Quarter Estimated Taxes
If you make quarterly estimated tax payments, now is also the time to make your first quarter estimate. The U.S. and most states have a pay-as-you-go system, meaning they require sole proprietors and pass-through businesses filing at the individual level who expect to owe $1,000 or more in taxes to make estimated quarterly payments. Quarterly estimates are also required of corporations expecting to owe $500 or more. If you wait until filing time to pay, you’re more likely to be charged penalties and interest.
The whirlwind of last-minute tax filing can be stressful but don’t get overwhelmed and waste time worrying instead of working.
Make a list of the documents you need to collect and steps you need to take to complete your return. Estimate how long it will take to complete each task. And remember, you can file an extension.
Just make sure you work on finalizing your return within the next few months so you don’t find yourself back in the same predicament next fall.
about the author
Janet Berry-Johnson, CPA, is a freelance writer with over a decade of experience working on both the tax and audit sides of an accounting firm. She’s passionate about helping people make sense of complicated tax and accounting topics. Her work has appeared in Business Insider, Forbes, and The New York Times, and on LendingTree, Credit Karma, and Discover, among others. You can learn more about her work at jberryjohnson.com.