50 Things to Know If You Haven't Done Your Taxes Yet
You're motivated by a deadline, you're busy, you're still getting organized — whatever the reason, you haven't filed your taxes yet. That's not a huge deal (there's a deadline for a reason), but still, waiting until the last minute to file your taxes means you might be rushed. And that means there's a higher likelihood of making mistakes or overlooking something important.
To help you avoid making a mess of an already unpleasant task, we put together a list of things you should keep in mind as you get ready to face the job you've been putting off for months.
1. The Sooner You File …
… The sooner you can get a refund. The IRS says it issues nine out of 10 refunds in less than 21 days.
2. Waiting to File Puts You at Risk
Taxpayer identity theft is no joke. It generally involves someone using your Social Security number to get a fraudulent refund — preventing you from getting yours in a timely manner.
3. If You're a Tax Fraud Victim, You Need to Prepare a Paper Return
"First, I would definitely contact the IRS, and you should also contact the credit bureaus, and then you would just have to paper file your return if they already e-filed using your Social Security number," said Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax.
4. The Deadline to File …
… Is April 18. No, that's not a typo. April 15 falls on a Saturday this year, and April 17 is a holiday in the District of Columbia. So Tuesday, April 18 it is.
5. It's a Hard Deadline
Your paper return must be postmarked by April 18. An e-file must be submitted before midnight on April 18. Otherwise, the IRS could slap you with fees.
6. But You Can Get an Extension
You can file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, which gives you an additional six months to file.
7. The Extension Is for Paperwork, Not Payment
If you think you'll owe taxes, you must make your best guess using previous years' information and an online estimate calculator.
8. Unpaid Taxes Carry Fees …
Interest on unpaid taxes compounds daily from the due date of the return to the date they're paid in full. The failure-to-pay fee is one-half of 1% of your unpaid balance for each month, or part of a month, up to 25%, until the debt is paid in full.
9. … & Even Affect Your Credit Score
If your unpaid-tax problem gets bad enough, the government may make a claim to your property until the debt is repaid. That's called a tax lien, and it will show up on your credit report. (You can see how a tax lien and other factors affect your credit by reviewing two of your your free credit scores on Credit.com, updated every two weeks.)
10. Make Sure You Have All Your Forms
"Keep a list of all of your jobs during the tax year," said Abby Eisenkraft, an enrolled agent and CEO of Choice Tax Solutions. "Some taxpayers receive numerous W-2s (think actors, temps, etc.). Freelancers — you may receive numerous Form 1099-Misc; be sure you received them all."
11. But Report All Your Income, Even If You Didn't Get a Form
"Some employers are sloppy and may not issue them to you by Jan. 31 of the following year. Regardless, you must report all of your income," Eisenkraft said. You can ask an employer for a copy of a missing W-2 or ask the IRS for transcripts of forms you think you didn't get. Of course, this takes time, so you may need to file an extension.
12. *ahem* ALL of Your Income
"The easiest way to get an IRS notice is to omit reporting all of your income," Eisenkraft said. "Also, remember that jury duty and prize money (lottery, etc.) are also taxable."
13. Plan to Wait in Line
At the post office, at your local tax preparer's office — anywhere that does anything having to do with taxes.
14. Take Advantage of Technology
There are several ways you can file your taxes for free without having to do them the old-fashioned way. Tax software can be a huge help when you're facing a time crunch.
15. Affordability Is No Excuse
"Many people put off filing their taxes because they can't pay the full amount," said Samuel Brotman, a tax attorney and owner of Brotman Law in San Diego. "You'll cause far more headaches if you don't even attempt to play ball with the IRS, though." See: aforementioned fees.
16. Make an Effort to Pay
"It's in your best interest to file and pay as much as possible by the April 18 deadline," Brotman said. "If you're just not ready or able to file by the deadline, make sure you file for an extension. The IRS will automatically grant a six-month extension, giving you additional time to get your taxes in order." Thinking about paying your taxes with a credit card? Read this first.
17. Or Get a Payment Plan
Keep in mind you must file your tax return before applying for a payment agreement, so get cracking if you think you'll need one.
18. The Chances of an Audit Are Low
Of all the individual income tax returns filed in 2014, the IRS audited 0.8% and 1.3% of corporate returns.
19. But You Still Need to Be Careful
Just because it's unlikely you'll get audited doesn't mean you shouldn't prepare your taxes as if you will. Not only could you get in trouble for a sloppy return, you could miss out on savings through deductions or credits you didn't look into.
20. Watch Out for Scammers
Whenever people need help, there are other people out there waiting to take advantage of them. If you're asking someone to prepare your taxes, make sure they're qualified to do the job and that they have a good reputation. This guide can help you determine whether or not you need a pro to do your taxes.
21. Ask for Help
If you can't afford or don't want to pay for a professional, that doesn't mean you're totally on your own. "Go to trusted friends or family with last-minute questions on anything that might be confusing. With a little elbow grease, technology and friendly advice, you can get your maximum refund back — painlessly," said Micah Charyn, a financial adviser with FTB Advisors in Nashville, Tennessee.
22. You're Responsible for What You File
Keep in mind that, ultimately, you're responsible for what's in your tax return, even if you used software or an accountant to help you. Don't zone out just because someone else is doing the heavy lifting.
23. 'Do You Spell That With a C or a K?'
Of course, you know how to spell your name, but don't leave anything to chance. This is especially important if you changed your name recently. Your tax return must have your legal name on it.
24. While You're At it, Double-Check Your Address
This is an easy one to mess up if you've moved. "Your state may ask you where you lived by the close of the tax year you are filing, but you must file with your current address," Eisenkraft said.
25. Your Social Security Number
"When you are tired or distracted, it's so easy to transpose numbers," Eisenkraft said. "And with so many numbers jumping out at you on the tax return, it's easy to miss. The IRS will reject your tax return if the Social Security number is incorrect."
26. Your Dependents' Social Security Numbers
You must have the right Social Security numbers to get associated credits.
27. & Your Bank Account Info
You want that refund ASAP, right? "One mistake that we've seen before is listing the wrong bank details on your taxes," said Jayson Mullin, the owner and founder of Top Tax Defenders, a tax resolution company in Houston. "This means your return won't end up in your account. If you notice you've made this mistake, you'll have to notify the IRS and wait an additional six weeks for a check to arrive in the mail." The same goes for making a payment: You want that go to through.
28. Make Sure You Can Legally Claim Dependents
"There are relationship tests, gross income tests, residency tests, etc. Make sure the person you are trying to claim as your dependent passes all of the IRS tests," Eisenkraft said. "And if your child is in school and working, remind him or her NOT to claim his own exemption."
29. There Are Lots of Deductions You Could Potentially Take …
This list of common deductions is a great place to start.
30. … Like Stuff You Bought for Work
"I call this 'looking for change in the sofa cushions,'" said Dominique Molina, a CPA in San Diego. "Go back through your bank and credit card statements and scan through, looking for expenses you haven't been reimbursed for. These can be deducted on Schedule A under Unreimbursed Employee Expenses."
31. Student Loan Interest
You can get the forms you need from your student loan servicer. They're usually right there in your online account.
32. Medical Expenses
"You can deduct out-of-pocket medical expenses if you itemize (file Schedule A)," Eisenkraft said. "You cannot deduct any expenses that are reimbursed by insurance. If your medical premiums are deducted pre-tax at work, you cannot deduct them on your tax return. No double-dipping! Be sure to keep all of your receipts."
33. & Job Search Expenses
You can deduct expenses associated with your job hunt, provided you're looking for a new job in your current field.
34. But Don't Get Carried Away
Some people try to take penny pinching too far. Check out these bizarre claims people have made to try and get out of paying taxes.
35. Itemize Charitable Gifts
So many people forget to do this, but it's important. You can count charitable gifts made until April 18 of this year.
36. Or Do a Last-Minute Spring Cleaning
Say you didn't get around to much charitable giving last year or you didn't keep records — you could always procrastinate a little more by cleaning the house and donating things you don't need. Don't forget a receipt. (But then you really need to get on that tax thing.)
37. Don't Skip the City Tax
Local and other state taxes, which you can check for at the bottom of W-2 forms, refer to a wage or income tax and may not be automatically deducted from your paycheck if you're self employed. If you haven't paid them, be prepared to cut a check.
38. Contribute to Your IRA
Want a last-minute way to reduce your tax bill? Unlike most other tax-saving strategies, which have to be in place by Dec. 31, you can contribute to your IRA up until tax filing day if you haven't already contributed your maximum for 2016. As TurboTax notes, for example, you can contribute $5,500, the maximum amount for 2016, and save as much as $1,925 in taxes if you're in the 35% tax bracket.
39. Don't Overlook Credits, Either
The IRS estimates that four out of five taxpayers are eligible for the earned income tax credit but don't take it. A tax pro or software can help you determine if you qualify.
40. Keep In Mind Things Change From Year to Year
Just because you got deductions last year or didn't qualify for credits last year doesn't mean the same is true for this tax year. Take time to think about what changed.
41. You May Not Have to File a Tax Return …
You're not required to file a tax return if you make less than a certain income threshold, which varies, based on a variety of factors.
42. … But It's a Good Idea to Double-Check
Even if you made less than the income threshold that applies to you, don't ignore tax season completely. "If they had federal taxes taken out of their paycheck or qualify for the earned income tax credit, they may have a refund coming," Greene-Lewis said of taxpayers.
43. Get a Past Year's Refund You Forgot to Claim
You have three years to claim a refund.
44. Think About the Best Way to Use Your Refund
Need some motivation to get your taxes done? The average tax refund for tax year 2015 was $3,120. You can finally buy that thing you've wanted to splurge on, pay down debt, or even use the cash influx to help yourself build credit.
45. Consider Adjusting Your Withholding
Getting a big refund isn't necessarily a good thing. Here, we explain why you may not want a big check back from the government every year.
46. Hold Onto Your Paperwork
IRS audits generally go back three years but can potentially reach back six. Keep a copy of your return in a safe place. You may also want to hold onto W-2s if you're planning on applying for a mortgage any time soon.
47. You Can Make Amends
If you made a mistake in your rush to file, you can amend your tax return. You won't need to do this for math errors (the IRS can fix those), but you'll have to file a Form 1040X if your filing status, number of dependents or total income is wrong or if you forgot to claim a certain exemption or deduction.
48. Make a To-Do List
Write down everything that gave you trouble this year or deductions you weren't sure you could get because you didn't document them. Maybe you won't make the same mistake next year.
49. Get a File Folder
For storing all those receipts and documents you forgot to organize this time around.
50. & Set a Calendar Reminder
So you don't end up in this situation again next year.
More on Credit.com:
