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Tips for Filing Your Taxes at the Last Minute

MP900316868-1Have yet to file your taxes? One important last-minute tax tip is also a great move for retirement planning: contribute to an IRA. It would be better to work on retirement planning with a Fee-Only financial planner  throughout the year. However, if scrambling to find ways to lower your tax bill is what it takes to get you to add more to a tax-deductible IRA, that’s a start. In article on last-minute tax tips, MSN Money notes:

“Contributing has big benefits: a tax deduction, tax-deferred compounding, and the main benefit — survival when you’re retired.

The IRS says the maximum you can contribute for 2012 is $5,000 ($6,000 if you’re 50 or older).”

Go Slow (Even Though You’re in a Hurry)

Dreading taxes and doing them at the last second probably means that there are years when you have missed important, financially beneficial deductions. MSN Money lists some deductions that you might be able to take and depending on your lifestyle, you may pay less if you itemize:

  • Charitable donations.

  • Home mortgage interest and real estate taxes.

  • Higher education expenses.

  • State and local income taxes.

  • Medical expenses (but only what exceeds 7.5% of your adjusted gross income).

  • State and local sales taxes.

  • Job-hunting expenses.

  • Points paid to refinance a mortgage.

 

You also need to take your time to complete your return because you might make a mistake if you are in too much of a hurry. The moments it takes to look back over your tax form could save you a lot of headaches later on.

Get an Extension

If you really just can’t get your taxes done in time, you can file for an extension. You can fill out the extension form and pay an estimated amount to avoid penalties. Or you can ask for the extension and not pay—just be aware that you will pay 0.5% for each month your taxes go unpaid. Both of these options are better than not filing and not requesting an extension: “The failure-to-file penalty is 10 times worse — 5% per month of what you owe, up to 25% total.”