14 Last-Minute Tax Tips Before the July 15 Filing Deadline

While the deadline for filing and paying federal taxes normally falls in April, things are a little different this year because of the novel coronavirus.

The IRS has extended the deadline for both filing and paying your taxes to July 15. This means you have more time to get your forms completed and send in any money you owe.

Still, filing taxes can be a hassle even if you have more time to do it. The good news is, these tips will make completing your 1040 forms easier -- and some of them could perhaps cut your tax bill a little bit too.

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While most states have changed their filing and payment deadline to match the new IRS schedule, some states have opted for earlier or later deadlines to submit and pay. For example, in Virginia, you only have until June 1 to pay taxes due without penalties.

Visit your state's Department of Revenue website to find out what rules apply to you so you don't end up missing the time limit where you live.

When you meet with an accountant or sit down with your tax filing program, the last thing you want is to have to stop mid-stream because you don't have the documents you need.

To make sure this doesn't happen, get everything together before you begin. This includes W-2s and 1099s reporting your income, interest statements from your mortgage and student loans, investment account statements, and documents backing up any deductions and credits you're claiming.

ALSO READ: 4 Key Forms You Need Before You Can Start Your Taxes

For some people, getting help from an accountant makes sense. This may be the right choice if you own your own business, have lots of income from non-traditional sources such as cryptocurrency, or you've had major life changes that affect your taxes.

But if you have a simple return or not much has changed from last year, doing your own taxes using online filing software may be a cheaper and more effective option.

There are lots of filing programs that allow you to submit your returns for free, but be sure to read the fine print because programs differ in what they allow you to do without charge. For example, while some programs let you use the free version to claim a deduction for student loan interest, others don't.

The first choice, and one of the most important choices, you'll have to make when doing your taxes is which filing status to claim. There are a few options including:

• Single
• Married filing jointly
• Married filing separately
• Qualifying widow or widower
• Head of household

You have to meet specific criteria for head of household or qualifying widow/widower statuses, but if you're eligible, they'll usually save you more than choosing to file as single.

And for most married couples, filing jointly makes the most sense as filing separately will affect eligibility for certain deductions. Still, there are some circumstances when filing a separate return makes sense, such as when either spouse is making student loan payments on an income-driven plan.

When you have a choice of possible filing statuses, carefully research the pros and cons of each so you can see which will save you the most.

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There are two ways to save on taxes: Credits and deductions. Of the two, credits are far more valuable. That's because they reduce your tax bill on a dollar-for-dollar basis.

If you owe $5,000 in taxes and are eligible for a $2,000 credit, that $2,000 is subtracted directly from what you owe and you'll only have to send the IRS a check for $3,000.

A deduction, on the other hand, simply reduces taxable income. Your savings comes from the fact you don't have to pay taxes on that income. If you're a single filer with $50,000 in taxable income and you claim a $2,000 deduction you'd be taxed on just $48,000 instead of $50,000. This wouldn't save you $2,000 on your taxes though. Instead, you'd save $440 since you'd otherwise have had to pay taxes at 22% on the $2,000 you were able to deduct.

Some tax credits that you might be entitled to include the Earned Income Tax Credit, the American Opportunity Tax Credit, and the Child Tax Credit. Some of these are actually refundable, which means you could get back more money than you paid in to the IRS, so it may actually make sense to file your taxes even if you aren't required to if you're eligible for them.

No one is taxed on all their income because everyone is eligible to claim at least some tax deductions.

For many taxpayers, the best option is to claim the standard deduction. This is a flat amount based on filing status. For the 2019 tax year, it's worth $24,400 for married joint filers, $18,350 for heads of household, and $12,200 for singles.

If you claim the standard deduction and have a $20,000 income as a single person, you'd be taxed on just $8,000 in income. Obviously, this deduction provides substantial savings on your tax bill. To figure out how much it will save you, simply look at what the deductible amount is for your filing status.

For many taxpayers, claiming the standard deduction both saves them more and is simpler. But you also have another option -- claiming deductions for specific things such as mortgage payments, local tax payments, and charitable contributions.

If you opt to deduct for spending you've done, this is called itemizing your deductions. You'll need to provide more information on your tax forms if you do this, but it can sometimes provide substantially more savings than the standard deduction if you have lots of deductible expenses.

The only way to decide which makes sense for you is to add up the deductions you could claim if you itemize and then compare this to the standard deduction amount.

When you do this calculation, though, don't include any deductions you could claim along with the standard deduction such as the one for student loan interest or IRA contributions.

ALSO READ: Your 2019 Guide to Tax Deductions

Most people know that they can claim qualifying children as dependents. And doing so could open up the door to tax breaks including the child tax credit and earned income tax credit, as well as deductions for medical expenses or student loan interest paid on behalf of a dependent.

But it's not just kids who can save you on taxes. If you have other dependents such as aging parents who you provide support for, you may be eligible for the "Other Dependent Credit" worth $500.

You don't have to be related to someone you claim as an "other" dependent, either -- you just have to provide more than half their support, their income must be below a certain threshold, and they must have lived with you for most of the year.

The IRS has an interactive tax assistant you can use to help you see who counts as a dependent. Make sure you use it so you don't miss out on tax savings for the people you're supporting.

One of the single best ways to cut your tax bill is to make contributions to tax-advantaged accounts such as an IRA or a health savings account (HSA). And there's great news for this year -- the deadline for contributing to these accounts was extended along with the filing deadline.

If you haven't already maxed out your IRA or HSA and you're eligible to make deductible contributions to these accounts, you'l have until the 15th of July to do so.

Aim to contribute as much as you can until the deadline so you can reduce the amount of taxes you pay while better preparing for retirement or to cover healthcare costs that arise.

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If you're going to get a tax refund, signing up for direct deposit will enable you to get your money much more quickly.

Typically, when you submit an electronic return and have your refund direct deposited, you can get your hands on the money the IRS owes you in as little as 21 days. It will take weeks to get your check if you need a paper one.

The extra money from your tax refund could come in handy as the novel coronavirus continues to cause adverse economic impact or could help you pay off debt or bulk up your emergency fund. There's little reason to wait for it, so have your bank account info ready when you submit your returns.

If you owe the IRS and aren't getting a refund, you'll have to make arrangements to pay your bill. In most cases, providing your bank account is the best and cheapest way to do that as there's a fee for paying via either debit or credit card.

While the debit card fee is a low flat fee, the charge for using your credit card is a percentage of the amount charged and it's close to 2% .

There's little reason to make your bill any bigger so avoid using a credit card unless you have a specific reason for doing so, such as taking advantage of a 0% APR card to give you more time to pay if you don't have the money available that you owe the IRS.

ALSO READ: Can You Pay Your Taxes on a Credit Card

Despite the extended deadline, some taxpayers may still have trouble coming up with the money they owe the IRS for last year's taxes.

If that's the case, be sure to file your return by July 15 even if you aren't able to pay your bill in full.

The penalty for not filing is far higher than the penalty for not paying and you don't want to end up being charged 10 times more in fees simply because you don't get your return in on time.

The Volunteer Income Tax Assistance Program and Tax Counseling for the Elderly are two programs offering free assistance to elderly people, those with incomes below $56,000, and people who speak limited English and who need help with their tax returns.

While both the VITA and TCE programs are currently closed due to COVID-19, there is a possibility they could re-open prior to the extended tax deadline. If you need assistance with your taxes, keep tabs on the IRS website for details about when they'll become available again to offer you assistance at no cost.

While the extended deadline has provided more time to file, there's little reason to wait until the very last minute.

In fact, if you're owed a refund, filing sooner rather than later could be a smart move so you can get your money from the IRS before mid-summer.

Delaying until close to the deadline also means you run the risk of being late in submitting your forms if you find you're missing some information or something else goes wrong. Start work on your taxes ASAP so you can get everything submitted in plenty of time.

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While it's a hassle to complete all your required tax forms, getting your paperwork together and giving yourself ample time can make the process easier.

Just be sure you've done the research into deductions and credits you can claim so you're not only prepared to submit your returns but so you're also saving yourself the most money you can. After all, no one wants to send more of their hard-earned cash to the IRS than what's required.

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