As you rush to meet the filing deadline, don't overlook money-saving tax breaks — particularly if there's no need to hurry.
About a fourth of taxpayers wait until two weeks before the deadline to file their tax returns. These last-minute filers typically fall into two categories: Either they owe the IRS money, which removes any incentive to file early, or they’re procrastinators who would rather wash a muddy dog than prepare their tax returns.
This year, the calendar is the procrastinator’s friend. April 15 falls on a Saturday, and because April 17 is a holiday in Washington, D.C., you have until Tuesday, April 18, to file your federal tax return.
If You Don’t Owe...
If you’re due a refund, though, there’s no reason to sweat this deadline. The IRS will gladly hold on to your money until you get around to filing your return.
There are instances in which you should file on time or file an extension even if you don’t owe the government money. If you converted a traditional individual retirement account to a Roth IRA in 2016, you have until October 16, 2017, to undo the transaction and avoid paying taxes on it. But to qualify, you must file your tax return or request an extension by April 18.
File for an Extension?
Filing for an extension will give you until October 16 to file your tax return. Approval is automatic. Use IRS Form 4868 to file your request. Most tax software programs provide this form.
Filing for an extension gives you more time to file your return, but it doesn’t give you more time to pay taxes you owe.
If You Can't Pay...
If you can’t come up with the money by April 18, you should still file a tax return or request an extension. Otherwise, your bill will be inflated by failure-to-file penalties, along with underpayment fines and interest on the balance.
If you need just a little more time to come up with the money, you can ask the IRS for an additional 120 days to make your payment. There’s no fee to set up this agreement, although you’ll owe interest and other fees on the balance until it’s paid off. To request an agreement, call 800-829-1040.
If the amount you owe is large and you can’t pay by April 18, consider requesting an installment plan with the IRS. With an installment plan, you can make monthly payments until the balance is paid off. Taxpayers who owe $50,000 or less can apply online. You’ll have to pay a set-up fee of $225 (or $107 if you arrange for direct debit from your bank account).
Another option is to pay taxes with your credit card. This may appeal to taxpayers who would rather owe money to Visa or American Express than the IRS, especially if they have rewards cards. But while the IRS will accept payments via credit card, it won’t pay the “convenience fees” credit card companies charge retailers. In 2017, the fees range from 1.87% to 2% of the balance. If you use tax software to e-file, the fees are even higher: TurboTax charges a 2.49% convenience fee. If you don’t pay off the balance by the credit card due date, you’ll also owe interest.
Avoid Last-Minute Errors
As you scramble to meet the deadline, make sure you don’t make these common mistakes:
Wrong Social Security numbers. Make sure the SSNs entered for everyone on your return match the names that appear on their Social Security cards. Don’t forget to include SSNs for all of your dependents; otherwise, you may not be able to claim them.
Bad account numbers. If you arrange for direct deposit of your refund, triple-check account numbers. Otherwise, your refund could end up in someone else’s account.
No signature. Sign and date your return. If you’re filing jointly, your spouse must sign, too.
E-filing PIN errors. When you e-file your tax return, you’re required to sign and validate the return electronically. In an effort to reduce tax-refund fraud, the IRS will no longer allow you to request an electronic personal identification number to confirm your identity. You’ll need to provide your 2015 adjusted gross income or the PIN you selected last year, plus your date of birth.
If you use the same tax software you used last year, that shouldn’t be a problem. The program will automatically transfer information from last year’s return. If you switch to a new program or use one for the first time, you’ll need to check your 2015 tax form in order to e-file. (It’s always a good idea to have last year’s tax return on hand when preparing your return, whether or not you e-file.) If you misplaced your return, you can find last year’s AGI with the IRS’s “Get Transcript” tool.
Procrastination Doesn’t Pay
Back in the pre-internet era, many post offices stayed open late on April 15. Some even hired bands to entertain the long lines of taxpayers desperately seeking a pre-midnight postmark.
These days, you can file online in your pajamas at the stroke of midnight on Tax Day, but you may end up paying more to file. (See our Guide to 7 Top Tax Software Programs for 2017.) Tax software providers have phased out the free programs they offered earlier this spring to attract new customers. H&R Block’s More Zero program, which was available to taxpayers who file 1040EZ and 1040A, along with itemizers who claim the most common deductions, ended on March 31. TurboTax’s Absolute Zero offer, which provided free tax prep and e-filing for taxpayers who filed 1040EZ and 1040A, expired on March 17.
There are still some free options available. Credit Karma Tax, which offers free tax prep and e-filing for one federal and state tax return, costs nothing and isn’t restricted to simple tax returns. One drawback: the program can’t handle multiple state tax returns. If you lived in more than one state last year, you can file your federal tax return through Credit Karma Tax, but you’ll have to go elsewhere to file your state tax returns.
If your 2016 adjusted gross income was $64,000 or less, you can use IRS Free File to prepare and e-file a federal tax return. Some of the software companies that participate in Free File offer a free state tax return, too. You can also use Free File to file an extension.
Don’t Overlook These Tax Breaks
As you rush to meet the filing deadline, don’t overlook money-saving tax breaks. For example, if you itemize, make sure you’re taking full advantage of the deduction for charitable gifts. In addition to deductions of cash contributions, you can also deduct out-of-pocket costs for charitable activities, such as the cost of mileage, parking and tolls in connection with volunteer work. If you donated used clothing or other household items during the year, you can deduct the fair market value of those items, too.