Time doesn’t stand still for anyone—especially not for the procrastinator. Tax Day is just two weeks away. And if you haven’t started the filing process for yourself or your family, we’re here to help. Here are some last minute tax tips and reminders before to help you get started.
1. File for an extension.
If you’re worried about making the April 18 cut off, you’re not alone. But it’s important that you avoid falling into the line of thinking that “done is done.” When it comes to your taxes, getting them completed is only the first step. If you find yourself running into the tax day deadline, you do not have to feel pressured into leaving money on the table.
There are plenty of ways to get your taxes filed without worry. One of those is by filing a tax extension, which moves the filing deadline six months, from April to October.1 This allows you to spend a little more time to prepare your filing accurately and avoid late-filing penalties. In 2019, the IRS expected almost a third of Americans to file an extension request.2 And if you’re one whose taxes are more complicated than usual, utilizing an extension is a great option.
2. Don’t forget to claim your deductions.
One of the biggest mistakes you could make when it comes to doing your taxes is leaving money in Uncle Sam’s wallet. And the best way to avoid that is by claiming deductions. That’s right, if you’re a small business owner, there’s plenty of write-offs you can make to get the most out of your tax return. Did you keep track of your business mileage this year? What about any business expenses (including that computer, printer, and cell phone)? Do you have a home office? And don’t forget about travel! If you’re not sure how to claim deductions or which deductions you should claim, reach out to one of our advisors. We would love to help you with your small business tax prep.
3. Use Your Health Savings Account (HSA) as a write-off.
If you have a high deductible health plan, chances are, you’re probably contributing to an HSA. HSAs allow you to put aside tax-free money to pay for things like doctor appointments, visits to the dentist, and even certain health-related items. Not only is this kind of account a benefit to you and your family year-round, it also serves as another way to reap tax breaks on your 2022 taxes.
What Happens If I Don’t File an Extension?
Not going to meet the April 18 tax deadline? Make sure to file your extension as soon as possible. Why? Because if you wait too long to do either, you’ll be penalized—financially, of course. It’s called “Failure to File,” and the longer you wait to file, the more expensive your tax bill will be.
Here’s how the penalty works:
- Uncle Sam will send you a notice in the mail letting you know you’ll be paying a penalty. That usually adds up to 5% of your unpaid taxes calculated monthly. So, if you fail to file in April and May, you should expect to pay 10% of your unpaid taxes. Keep in mind, they cap it at 25%—but that’s still a chunk of money that you can avoid paying!3
- If you decide not to pay the penalty, you can expect to receive another notice in the mail labeled “Failure to Pay Penalty.” If you’re over two months late with your payment, Uncle Sam says you should expect a bill of “$435 or 100% of the tax shown on the return, whichever is less.”4
One of the best things you can do for yourself, your taxes, and your wallet is pay your taxes on time. If you want to keep your money where it belongs (in your wallet), we can help. Schedule a call with a SageSpring Wealth Advisor today and we’ll help you get the most out of your 2022 tax returns.
Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
