Happy Tax Day! Since we don’t have much time left, here’s the best tip I can give to those who haven’t filed their taxes yet, but plan to today: Where to find a post office that is open late. Check out this article: Select Post Offices Extend Hours for Tax Day.
For everyone else, here are my 4 top tax tips on Tax Day.
1. Filing an extension:
If you haven’t finished preparing your taxes, filing an extension is easy to do. The IRS grants them automatically as long as you file the extension by April 15 – that’s today. This gives you 6 months to get your paper work in order. Keep in mind that if you owe any tax, that payment is still due today. You can file an extension online through Turbo Tax and others.
2. Review your withholding:
If you owe a lot of tax or are receiving a big refund, you may want revisit the withholding form you filled out when you started with your company. Chances are things have changed, like having a child or two, getting a raise, or buying a house. All of these effect how much you should withhold. Make changes to your W-4 so you’re not left with a surprise tax bill or have lent Uncle Sam your money without getting any interest when April 15 comes again next year.
3. Smooth out your tax payments:
If you have irregular income because you receive commissions or big quarterly bonuses, your payroll system doesn’t know this. It does the math and assumes that you’re paid that amount all the time. So your tax payment may be under-withheld for your regular paychecks and your bonuses are taxed as if you’re in the top tax bracket. You can smooth out your tax payments by figuring out what you expect to make this year, and then have a certain percent withheld from your paychecks to better meet your tax mark.
4. Simplify your quarterly payment process:
I have clients who are over 70 ½ and taking their required minimum distributions from their IRAs. Rather than having to file on a quarterly basis with the Fed and State, my advice is to simplify, if possible, this process by increasing the amount withheld for taxes from IRAs, Social Security or a pension. No more filling out forms and writing checks each quarter.
Keep in mind, April 15 is a false deadline. The best time to prepare for your taxes is before December 31 each year when there’s still time to make and implement changes to reduce your taxes.