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Last-minute tax advice

Haven't started your taxes yet? You're not alone. Here's some advice that will make procrastinating a bit less painful.

By MSN Money Partner Mar 24, 2014 12:07PM

This post comes from Stacy Johnson at partner site Money Talks News.


Money Talks News on MSN Money The deadline to file taxes is Tuesday, April 15. That's just over three weeks away.


If you haven't already filed, you're not alone. The IRS says 20 to 25 percent of us are going to wait until the last two weeks.


Those who have already filed are probably the lucky souls getting a refund. Those who haven't probably fall into one of two groups: They owe or they're only able to get motivated by deadlines.


Either way, we're here for you.

We'll start with some good news.


If you're getting a refund, you don't have a deadline

It's been drummed into our heads that the deadline for filing taxes is April 15. But that deadline applies only to those who owe. If you're getting money back, the IRS doesn't care when you file.


While it obviously doesn't make sense to let Uncle Sam hold onto your refund interest-free, it's nice to know that if you're getting money back, April 15 is just another Tuesday.


But if you use this excuse, be right. Because if you end up owing after all, penalties and interest will make the eventual bill higher.


For those who do need to file, here's the step-by-step:


Step 1: Get organized

Before you sit down to do your taxes, get your stuff together. Start by looking at last year’s return and make sure you have what you'll need to put together this year's, including W-2s, 1099s, receipts and statements.


If you didn't receive a W-2 or 1099, don't assume you got lucky and don't have to report the income. Those furnishing these documents were supposed to mail them no later than Jan. 31. If you still haven't received something, call the company responsible. If you don't get immediate action, call the IRS at (800) 829-1040.


You can learn more about the process of getting missing documents here


Step 2: See if you qualify for free help

If your annual income is $52,000 or less, you may qualify for free basic tax return preparation and e-filing from IRS-certified volunteers through the Volunteer Income Tax Assistance program, or VITA. There are thousands of VITA locations nationwide. Find the closest one by entering your five-digit ZIP code in the locator tool, or by calling (800) 906-9887.


But do it now. As you might imagine, the lines grow as the deadline looms.


There's also Tax Counseling for the Elderly through AARP and other organizations to help people 60 and older prepare their taxes. To find the site nearest you, visit the AARP website and search by your address or county. You can also call a toll-free line at (888) 227-7669.


Tax form © Brian Hagiwara/Brand X/CorbisLike doing it yourself? If your income doesn't exceed $58,000, you can prepare and e-file your federal return free through IRS Free File. And no matter what your income, you can file free by filling out online tax forms.


Step 3: Take a breath

As I said in the video above, while there's a deadline involved, this isn't a race and there's no need for panic. Rushing means making mistakes or, worse yet, leaving money on the table by missing deductions you're entitled to.


If you start running out of time, just file an extension. All you have to do is fill out this form (.pdf file) -- a 4868 -- and you'll buy yourself an extra six months. What you won't buy, however, is a payment holiday. If you owe, you'll need to pay by April 15.


And if you don't have the money?


Step 4: File something

As I said, your extension is only for your tax return -- not an extension to pay your taxes. So if you owe, you're supposed to pay by April 15.


What if you don't know what you owe? Don't freak. Just do the best you can to estimate. As long as you guess within 90 percent of what you owe, you'll pay interest on the unpaid portion, but you won't get hit with penalties.


The biggest mistake you can make is not to file anything. Even if you don't have a nickel to send in, go ahead and send in either an extension or a 1040. The reason? The IRS failure-to-file penalty is 5 percent per month of taxes due. That means every month you don’t file, you owe another 5 percent, until you max out at 25 percent. And the minimum penalty is $135.


But the failure-to-pay penalty is a 10th of that. It's 0.5 percent a month.


And if you pay with an IRS installment plan, that cuts your penalty down to 0.25 percent monthly. If you owe $50,000 or less and don't have any other problems with the IRS, approval is as automatic as the tax-filing extension.


You'll pay $120 to set up the installment plan, but that's reduced to $52 if you let the IRS take the money out of your bank account. You'll still owe interest on the unpaid portion, but at least you'll avoid stiffer penalties.


Bottom line? It’s easy to get caught up in the April 15 filing frenzy. But in contrast to deadlines like Christmas, anniversaries and term papers, this one is a bit more flexible.


So don't stress. Getting it done right is more important than getting it done within the next three weeks.


More on Money Talks News

VIDEO ON MSN MONEY

9Comments
Mar 24, 2014 1:48PM
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There is only two things for sure in life, death and taxes.
Mar 24, 2014 1:47PM
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Once again more examples of government services available only to a select group of US citizens.  This practice should be abolished along with any "means" testing for taking advantage of any government service or offering.
Mar 24, 2014 5:14PM
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I have a friend who enrolled in "Obamacare" this weekend by calling the 1-800 number and he makes $16,000 per year.  He was able to get an insurance policy thru Humana for:   get this people:

 

$.09 cents a month....yes nine cents per month...so affordable he paid for the whole year in advance....talk about affordable healthcare.

Mar 24, 2014 4:10PM
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After 5 years of democrat occupation of the USA: 51 million people on food stamps, 92 million people out of the workforce, poverty at a 50 year high, salaries at a 20 year low. Never vote for anti-American socialist democrat filth Ever.

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