RALEIGH, N.C. (WTVD) -- As it comes down to the final hours for filing your tax return on time, April 18th, a Raleigh CPA is helping with some tips and common mistakes.
Accountant Faith Bynum-Patterson says even though the deadline is looming, there's still a way to reduce your tax bill with a retirement account contribution.
"Your individual retirement account for the self-employment individuals, your SEP IRA's as well as your HSA, and your health savings account, you have until 11:59 p.m. April 18th to make contributions that can be attributed to your 2022 tax liability or refund," Bynum-Patterson explained.
Bynum-Patterson said the biggest mistake is not being organized and scrambling and the last minute, which can cost you.
"The biggest mistake is not being organized with all your documents and that can lead to missing out on deductions," Bynum-Patterson said. "If nothing else, use this as a reason to come prepared for your tax preparation for next year."
Bynum-Patterson recommends anyone feeling overwhelmed and not ready with documents file the extension, because it is not worth missing out on some important deductions that could be beneficial to your bottom line.
While April 18th is the deadline there are a few circumstances that can change that filing time for some.
If you live in a federally declared disaster area, have a business there, or have relevant tax documents stored by a business in that area-the IRS will extend the filing and payment deadlines.
If you're in the armed forces and are currently or were recently stationed in a combat zone filing and payment is most likely extended by 180 days.
And, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return.
Below are some more last-minute tax filing tips that might help you out:
So far this tax season, the IRS has received more than 100 million income tax returns for 2022.
That means tens of millions of households have yet to file their returns. If yours is among them, here are some last-minute tax-filing tips to keep in mind as the Tuesday, April 18 deadline approaches.
Not everyone has to file on April 18: If you live in a federally declared disaster area, have a business there - or have relevant tax documents stored by businesses in that area - it's likely the IRS has already extended the filing and payment deadlines for you. Here is where you can find the specific extension dates for each disaster area.
Thanks to many rounds of extreme weather in recent months, for instance, tax filers in most of California - which accounts for 10% to 15% of all federal filers - have already been granted an extension until Oct. 16 to file and to pay, according to an IRS spokesperson.
If you're in the armed forces and are currently or were recently stationed in a combat zone, the filing and payment deadlines for your 2022 taxes are most likely extended by 180 days. But your specific extended filing and payment deadlines will depend on the day you leave (or left) the combat zone. This IRS publication offers more detail.
Lastly, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return. But you may want to anyway if you think you are eligible for a refund thanks to, for instance, refundable tax credits such as the Earned Income Tax Credit. (Use this IRS tool to gauge whether you are required to file this year.) You also are likely eligible to use IRS Free File (intended for those with adjusted gross income of $73,000 or less) so it won't cost you to submit a return.
Your paycheck may not be your only source of income: If you had one full-time job you may think that is the only income you made and have to report. But that's not necessarily so.
Other potentially taxable and reportable income sources include:
- Interest on your savings
- Investment income (e.g., dividends and capital gains)
- Pay for part-time or seasonal work, or a side hustle
- Unemployment income
- Social Security benefits or distribution from a retirement account
- Gambling winnings
- Income from a rental property you own
Organize your tax documents: By now you should have received every tax document that third parties are required to send you (your employer, bank, brokerage, etc.).
If you don't recall receiving a hard copy of a tax form in the mail, check your email and your online accounts - a document may have been sent to you electronically.
Here are some of the tax forms you may have received:
- W-2 from your wage or salaried jobs
- 1099-B for capital gains and losses on your investments
- 1099-DIV from your brokerage or company where you own stock for dividends or other distributions from their investments
- 1099-INT for interest over $10 on your savings at a financial institution
- 1099-NEC from your clients, if you worked as a contractor
- 1099-K for payments for goods and services through third-party platforms like Venmo, CashApp or Etsy. The 1099-K is required if you made more than $20,000 in over 200 transactions during the year. (Next year the reporting threshold drops to $600.) But even if you didn't get a 1099-K you still must report all the income that you made over third-party platforms in 2022.
- 1099-Rs for distributions over $10 that you received for a pension, annuity, retirement account, profit-sharing plan or insurance contract
- SSA-1099 or SSA-1042S for Social Security benefits received.
"Be aware that there's no form for some taxable income, like proceeds from renting out your vacation property, meaning you're responsible for reporting it on your own," according to the Illinois CPA Society.
One very last-minute way to reduce your 2022 tax bill: If you're eligible to make a tax-deductible contribution to an IRA and haven't done so for last year, you have until April 18 to contribute up to $6,000 ($7,000 if you're 50 or older). That will reduce your tax bill and augment your retirement savings.
Proofread your return before submitting it: Do this whether you're using tax software or working with a professional tax preparer.
Little mistakes and oversights delay the processing of your return (and the issuance of your refund if you're owed one). You want to avoid things like having a typo in your name, birth date, Social Security number or direct deposit number; choosing the wrong filing status (e.g., married vs single); making a simple math error; or leaving a required field blank.
What to do if you can't file by April 18: If you're not able to file by next Tuesday, fill out Form 4868 electronically or on paper and send it in by April 18. You will be granted an automatic six-month extension to file.
Note, however, that an extension to file is not an extension to pay. You will be charged interest (currently running at 7%) and a penalty on any amount you still owe for 2022 but haven't paid by April 18.
So if you suspect you still owe tax - perhaps you had some income outside of your job for which tax wasn't withheld or you had a big capital gain last year - approximate how much more you owe and send that money to the IRS by Tuesday.
You can choose to do so by mail, attaching a check to your extension request form. Make sure your envelope is postmarked no later than April 18.
Or the more efficient route is pay what you owe electronically at IRS.gov, said CPA Damien Martin, a tax partner at EY. If you do that, the IRS notes you will not have to file a Form 4868. "The IRS will automatically process an extension of time to file," the agency notes in its instructions.
If you opt to electronically pay directly from your bank account, which is free, select "extension" and then "tax year 2022" when given the option.
You can also pay by credit or debit card, but you will be charged a processing fee. Doing so, though, may become much more costly than just a fee if you charge your tax payment but don't pay your credit card bill off in full every month, since you likely pay a high interest rate on outstanding balances.
If you still owe income taxes to your state, remember that you may need to go through a similar exercise of filing for an extension and making a payment to your state's revenue department, Martin said.
Use this interactive tax assistant for basic questions you may have: The IRS provides an "interactive tax assistant" that can help you answer more than 50 basic questions pertaining to your individual circumstance on income, deductions, credits and other technical questions.
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