It’s October, and that means if you filed an extension on your tax return last April, your 6-month grace period is up. If you haven’t already filed, here are a few tips to keep in mind as you race to beat the Oct. 16* deadline.
Note: Following the recent destruction caused by Hurricanes Harvey and Irma, the IRS extended tax relief to natural disaster victims living in the impacted areas of Texas, Florida, Puerto Rico and the Virgin Islands. This relief includes an additional filing extension for individual taxpayers who filed 2016 tax extensions. Victims who originally needed to file by the Oct. 16, 2017 extension deadline, now have until Jan. 31, 2018 to file certain individual and business tax returns as well as make specific tax payments. Read the official IRS notice to see if this affects you.
1. Review, review and review again
This is your last chance to submit your tax return before incurring penalties. That means you need to get it right or risk losing more of your hard-earned money. As you enter information from your tax forms, documents and receipts, take a little extra time to review what you’ve typed in.
Double-check all numbers to ensure they are correct. Triple check your personal information, like names, birth dates and social security numbers, to make sure you didn’t mistype or forget a dependent. You’d be surprised how often that happens!
2. File by the tax extension deadline to avoid tax penalties
If for some reason you can’t locate all of your tax documents to complete your return by Oct. 16*, file it anyway. Yep, you heard us right. Even if you can’t find the exact number for your property tax deduction, electronically file your return anyway.
Why? Because there’s a late penalty fee if you miss the extension deadline. Late filing penalties are 5 percent of any unpaid taxes for every month your return is late (not to exceed 25 percent of unpaid taxes). As long as you file something, you likely won’t incur those tax penalties.
Don’t let one or two pieces of missing information stop you from completing the process. Simply make a reasonable estimate of whatever that missing amount may be and write yourself a note to check into it later.
Once you find the correct information, file an amended return. You have up to three years to file an amendment after you submit the original.
3. Save a copy
No matter what you file, always keep a copy of your tax return and all the corresponding tax forms, notes and paperwork. Save a PDF copy to your computer and print a physical copy for your file folders. There’s a good chance you may never need to refer back to it, but it’s always a good idea to hold onto your tax returns for at least three years.
There are also a variety of instances in which you may need a copy. For example, if you want to buy a house or take out a loan for a car – many lenders request a copy of your most recent tax return. Don’t be caught without one.
4. Last call for SEP-IRA contributions
While Oct. 16* is the tax extension filing deadline, it’s also your last opportunity to contribute money to an SEP-IRA. If you’re unfamiliar, an SEP-IRA is a variation of an IRA but built for sole proprietors, freelancers or any other type of small business owner.
If you are self-employed and have one of these funds, make any additional deposits before Oct. 16*. And don’t forget to update your tax return based on your contributions. Remember – you’re funding your account for the previous tax year not this year.
5. Plan to switch things up next year
Yes, the tax extension deadline will likely always be there for taxpayers who don’t want to deal with their taxes in April. However, if you traditionally default to this deadline, it may be time to consider changing your course of action when it comes time to file your tax return.
As we inch closer to the New Year, take this time to get organized for next tax season. With deductions and credits fresh in your mind, use the remaining months of the year to make some financial moves that will benefit your tax situation next time around.
*For tax year 2016