The tax-filing deadline is fast approaching. The due date was extended to April 18 this year, because April 15 — the regular filing date — overlaps with Emancipation Day.
That means the countdown is on. If you haven’t started the filing process yet, here are some tips to help you gather your information and complete your return on time:
Determine your income for 2015: Over the past few months, you may have received a variety of tax forms for reporting your income to the IRS: Forms W-2, 1099, K-1, etc.
The IRS uses these forms to distinguish between the different types of income you may have received throughout the year, such as wages, interest, dividends and business income. Don’t forget to include your gambling winnings, as well — the general rule is that all income is taxable, unless specifically excluded from tax by law.
Itemize your deductions: The IRS allows you to deduct certain expenses against your income. You can either take the standard deduction of $6,300 for a single taxpayer ($12,600 for married couples filing jointly) or itemize your deductions. You can itemize deductions related to medical and dental expenses and state and local income taxes, as well as property taxes, mortgage interest, charitable gifts and other miscellaneous deductions, like job expenses. Some of these deductions are subject to phase-outs and other limitations. The important detail to note here: make sure you have documentation of any expenses you are claiming as deductions, and maintain these records until the statute of limitations expires for that particular return.
Draft the tax return: Instead of pulling your hair out trying to decide what forms you need to file, and what tax rates apply to different sources of income, consider scheduling a meeting with a qualified tax preparer, like a certified public accountant (CPA). The more organized you are, the smoother the tax preparation process will be. Tax law changes every year, so look to the experts to help you out.
Next steps for filing late: What if you can’t meet the filing deadline? The good news is that the IRS will allow you to request an automatic extension of time to file your return. The bad news is that the extension does not push back the deadline for paying your tax. You can include the payment with Form 4868, which is the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Visit the IRS’s website for more information.
The penalty for failing to pay tax is generally 0.5 percent of the tax per month, for each month the amount remains unpaid. So what should you do if you can’t make your tax payment? While the IRS does allow for payment plans or installment agreements, you must file all required returns before applying for these provisions. Here’s a more detailed run-down of the options that are available to you.
Now sharpen that pencil, grab a cup of coffee and get started!