For many, the tax season has been long over, but for some, it’s just about to begin. The tax extension deadline is a little over a month away, with all federal income tax returns needing to be filed no later than October 15, 2021.
Here are some tips and tricks to get you prepared to file your income tax return.
Tax Extension Checklist
1. Gather Your Documents
There are several pieces of personal information as well as documents that you’ll need to have on hand in order to file your taxes. Aside from your name, address, and Social Security number, you’ll want to gather all your financial records for the year, including:
- W2s (yours and your spouses)
- Investment income (1099-INT, 1099-DIV, 1099-B, etc.)
- Income from state and local income tax refunds (1099-G)
- Taxable alimony
- Business/farming income
- IRA/pension distributions (1099-R and Form 8606)
- Rental property income statements
- Social Security benefits (SSA-1099)
- Other incomes (ie. gambling, jury duty, scholarships, etc.)
Locating and filing all these forms now makes it much easier when it comes time to file.
2. Make Note of Income Adjustments
After reporting your income, you also want to report deductions. These reduce the amount of income that is taxed, which can either increase your tax refund or lower what you owe.
Some of the most common deductions that may apply to you include:
- IRA contributions
- Student loan interest
- Medical savings account contributions
- Energy credits
- Self-employed health insurance premium payments
- SIMPLE, SEP, or Keogh self-employed pension plans
There are also itemized tax deductions and credits offered by the government to lower the tax burden, including education costs, childcare costs, home mortgage interest, and others.
3. Decide How You Want to File
There are three ways to file your taxes. You can fill out IRS Form 1040 and by hand and mail it, file online using a tax software, or hire a tax preparer to do all the work for you. Unless necessary, avoid the first option at all costs.
Manually completing your tax forms and mailing them in requires much more lead time. You’ll need to mail your forms at least a week ahead of time to ensure they arrive before the tax extension deadline on October 15, 2021.
If you’re like most people, you’ve used tax software in the past. Use the same system so that all your information is carried over from previous years. This saves a lot of time.
For those who have a complicated tax situation, or if you want confidence that your return is correct, hire a tax preparer. These experts know the ins and outs of tax filing and can do the hard work for you.
4. How to Make Payments
If you owe after filing your taxes, there are many ways to pay the IRS, including electronic payments, debit and credit cards, and wire transfers. If you’re unable to pay all your taxes due at one time, set up a payment plan with the IRS.
You’ll make payments directly to the agency. Depending on how much you owe, you can set up a short or long-term payment plan.
If you’re getting a refund, set up a direct deposit so that the refund is put right put into your bank account. This way you can get your refund quicker. Be sure to track the status of your refund on the IRS website.
A tax extension is a perfect time to get your documents in order before the tax return deadline so you don’t get hit with late penalty fees. If you need help getting started contact the accounting professionals at Satty, Levine & Ciacco, CPAs. P.C. We are here to help!