As the tax season is nearing, a lot of Americans are in a frenzy of retrieving the documents that they need in order to file for their tax. However, there are a lot of people who procrastinate and eventually experience stressful moments once they file for their tax returns late. Thus, here are a few last minute tips that late filers can do so that they will have a stress-free filing for their tax return.
File your taxes in the IRS E-file system
Electronic filing (e-filing) is not a new system in the IRS but there is an increase number of taxpayers who use it since it gives quicker returns for the tax refunds. In fact, tax refunds are determined two weeks after the taxpayer files the return in the e-filing system. Moreover, there are about 80 million American taxpayers who have used this system since 2009 since it is error-free and that it is basically free. The users are also saved from spending stamps at the post office if they file under this system.
File for an extension
For people who do not file until the last second, the best way to file for a tax return is to file for a six month extension. As soon as you submit your request before the tax return deadline which is the 15th of April, you will receive a six month leeway to file for your return.
However, here’s the catch. When you file for the extension, it is not the tax that you only need to pay but also the penalties and interests until you complete the payment. If you want to save money, then you better pay on time.
You can still pay even if you are short with your finances
If you are still stalling paying your tax return because you cannot afford to pay all of your debts, then you can always pay in partial. Paying a portion of the taxes can reduce the amount of penalty that will be incurred to you. Moreover, it also shows good faith to the IRS regarding your seriousness to hold your obligations when it comes to paying your tax. This also reduces the chance of the IRS auditing you.
There are a lot of times when paying using your credit card can be tempting but knowing that the interest rate of your card is high, you should not opt for this particular move the fact that you will be paying more than you have to if you pay your tax through your credit card.
Just to give you an idea, the penalty if you fail to pay the IRS of your tax is 0.5% for each month which amounts to 4% yearly. The failure to file for penalty is 5% monthly and can reach as high as 25%.
The penalties for failure to file for your tax can cost you a lot of money thus making your more incapacitated to pay for the tax that you owe to the federal government. Thus, it is important that you file your taxes on time or just pay in partial, if it cannot be helped. Moreover, you can also ask the IRS to devise a payment schedule if you are experiencing hard times.