- Tax returns are due on April 18 this year.
- Here's how to tackle your return strategically -- and what to do if you just don't think you'll meet the filing deadline.
Put off your taxes for too long? Here's what you need to know now.
Most years, the IRS begins accepting tax returns in late January. But not everyone is able to file their taxes well ahead of the deadline. If you've yet to complete your return, you may be growing increasingly stressed out by the day. With that in mind, here are three tips that may be helpful if you're a last-minute tax filer.
1. File your taxes electronically
You may be used to submitting a paper tax return. But that's not a route you want to take this year.
The IRS is sitting on a massive backlog of unprocessed tax returns from previous tax years. And if you send your taxes in on paper, you might end up waiting a really long time for your refund to hit your bank account.
A better bet? File electronically. It generally takes the IRS half the time to process electronically filed returns as it does for the agency to process paper returns. Plus, if you file electronically, you'll be less likely to make a mistake. That could, in turn, prevent your tax return from getting rejected.
2. Max out your IRA or HSA if you owe the IRS a large sum
Now that you're finally getting around to your taxes, you may realize you underpaid the IRS in 2021 and now owe a lump sum you'd rather not have to part with. If that's the case, you're not doomed.
You have until the tax-filing deadline -- April 18 this year -- to max out your 2021 IRA or HSA. If you didn't contribute the maximum amount last year, and you sneak more money into either account by April 18, that could help eliminate or minimize your tax bill.
So, say you owe the IRS some money but only put $3,000 into your 2021 IRA. If you're under 50 years old, it means you might have been allowed to contribute up to $6,000 in 2021. If that's the case, and you put another $3,000 into your IRA in the next couple of weeks, you might end up owing the IRS less -- or, ideally, nothing at all.
3. Get an extension if you don't think you'll be finished on time
You may be plugging away at your tax return in the hopes of getting it done by April 18. But if you're starting to realize that won't be possible, don't just resign yourself to being late. Instead, request a tax extension.
The IRS does not require you to have a good reason for needing an extension. All you need to do is request one by April 18, and you'll automatically get six more months to file your taxes.
Why does an extension matter? If you don't owe money on your taxes, it doesn't.
But if you owe the IRS any amount of money, you'll be assessed a failure-to-file penalty equal to 5% of your unpaid tax bill for each month or partial month your return is late. And that's a penalty you're better off avoiding.
To be clear, a tax extension won't give you more time to pay your actual tax bill. If you don't pay the IRS what you owe by April 18, you'll start to accrue penalties and interest on that sum. But you'll at least avoid that dreaded failure-to-file penalty.
A lot of people get to April without having finished their taxes. If you're in that boat, do your best not to stress -- but rather, to approach your filing as strategically as possible.
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