How to Maximize, Save with Last-Minute Tax Tips

It’s “that time” of year again.

No, this isn’t a reminder of Spring, the warmer weather, birds chirping and thoughts of summertime dancing through your mind.

“That time” is tax time, of course.

But maybe this isn't a joyous occasion for you. Perhaps you're one of the many who frets, panics and procrastinates their way toward April 15 (although you have until April 17 this year since the 15th is a Sunday), you’re certainly not alone in the notion that you aren’t in any hurry to file a return.

Now, you might think otherwise when you consider the average tax return, as noted by the Internal Revenue Service, is around $3,120 as of 2015.^[1]

Another number worth noting as far as income tax goes comes from last year, with approximately 43 percent of the population not paying anything in income tax whatsoever, mostly due to not making enough to qualify to have to pay or tax breaks for nearly half of the United States workers just weren’t enough to have to pay.^[2]

Given the average return in 2015 (a number that was high compared to 2017 figures), and those not paying taxes at all, you might wonder why there’s such a delay in wanting to file. That centers on a few factors, namely a good percentage (more than half) who are paying the federal (and in some cases state and local tax bureaus) something, and just don’t feel as though getting around to it in February is much of a priority.

Consider, too, that the average refund in 2017 was $2,763 an increase of just 2 percent from 2016 and down from the 2015 number significantly.^[3]

Even close to $2,800 is not a bad piece of change, but you can’t discount those who delay and then begin to scramble on April 14 (or most likely this year on the 16th) to get organized, file and look for last-minute deductions or attempt to get a few more dollars within the parameters set forth by the IRS. Yes, that means even those individuals who get a refund wait until the last minute, too.

Numbers from 2015 show that almost 22 million Americans (one out of every seven people who file) asked for a tax filing extension, which in that case would have pushed back the due date to October 15, rather than the April 15 customary deadline.^[4]

That mentality of waiting until the 11th hour is adopted by more than just a handful of people, and you can question up and down why that is the case.

The fact remains is they’ll have to file; that’s a given, but they’re not different than the rest of people who file early: they’re still looking for ways to maximize a return.

That could include anything from adding to what they’ll get back or trying to deduct or find tax breaks where you’d least expect to find them.

Here’s a few ways to file safely, accurately and with your best interests in mind:

Basic Instinctual: Covering the common sense part of return often overlooked

So you’re under the assumption that you’re going to save more on your return or get back more than you’d imagine with tax tips galore.

While that is true, you also can’t miss the obvious, and that is all too common when you’re filing at the very last minute. The “obvious” as stated are things like putting in the wrong social security number or a bevy of errors that include anything from basic math to penciling (or typing) in the wrong number of dependents.

In addition, your last-minute heroics might be met with poor results if you don’t have all your paperwork that you need. Your company, place of business or part-time affiliate may have sent you a W-2 or 1090, but you can’t seem to locate it since you received it three months ago and maybe set it aside for the rainy day that was your tax-filing day.

The IRS doesn’t consider mistakes like this to be fraud, but rather innocent mistakes that are going to mean an amended returns.^[5]

Keep in mind that an amended return is recommended by the IRS if you have an incorrect social security number, filing status is wrong or dependents or income is mistakenly entered, but they’re quick to point out that simple math errors are often caught and fixed by the IRS as a whole, so an amended return won’t be necessary.^[6]

Free vs. Paid: Are you overpaying or just paying in general for tax preparation?

Often times, those who wait until the last minute are quick to find a tax pro or online source of filing and don’t have much leeway into how much they pay.

When you are procrastinating, you often feel you have little to no recourse on how much you have to pay, similar to individuals who holiday shop on December 24 and are so far removed from discounts and savings that they’re just have to pay whatever the sticker price is because they really don’t have a lot of wiggle room, time wise.

That isn’t the case for filling, particularly if you file online. There are a bevy of free services to choose from, and a lot of times you’re filing costs are predicated on what you make, a sentiment often overlooked by most just due to ignorance, quite frankly.

Such entities as VITA (Volunteer Income Tax Assistance), Free File or simple returns come with it free filing. VITA applies if you’re income is below $54,000 (among other items that also apply such as disabilities or age), while Free File lets you file at no charge online if your income is $62,000 or less.^[7]

Credit Karma, Turbo Tax, H&R Block and other larger-scale online prep companies are quick to hit a strong selling point regarding 1040EZ Forms and filing are at no charge. Some have even gone as far as offering free prep and filing for state, as well, along with allowing deductions at no charge, too.

The average cost of tax prep each year is around $261, so that’s money you could easily save if you qualify for a program or are paying outright for a filing status that would be considered free by most.^[8]

Credit Karma is one that stands out, despite being fairly new to the tax game. Most offer free filing for 1040EZ Forms, Credit Karma is telling potential clients that filing is free even with deductions, among other perks.

Bottom line: if you’re paying for a return, you might be taking what refund you are getting and cutting into it significantly or paying taxes on top of a preparation fee that is highly unnecessary most of the time.

Payment Panned: If you can’t pay or file on time, cover yourself wisely

Waiting until the last minute to file probably isn’t by accident, and chances are you’re not in a position financially to pay what you owe. We talked earlier about filing an extension and how that isn’t uncommon, but you have a few rules to keep in mind if that’s the route you want to take. This year’s extension date to file is October 15, 2018.

If you’re filing an extension, that doesn’t get you out of having to pay what you owe by April 17 but rather a break in late-filing penalties, and if you can’t pay what you owe but can file on time, that is advisable as well.

If you can’t pay, file anyway on time, because not filing is a 5 percent penalty on tax you owe each month return is late, up to 25 percent, which could get extremely costly on your part. Filing but not paying, you’ll be charged .5 percent penalty monthly on what is owed.^[9]

This advice suggests that your tax shortcomings aren’t the proverbial “end of the world,” but rather can be mitigated with more of an honest, forefront approach to your tax issues and inability to pay. The extension piece, of course, comes with it the importance of filing the proper extension forms, as well.

Filing late would require a 4868 form from the IRS directly. Other applicable forms also can be used if you have a business return or something other than the 4868, which applies to individuals seeking a return.^[10]

As for the return itself, itemizing often is a polarizing topic you’ll ultimately wrestle with as you observe whether a standard deduction makes more sense based on filing status. Your 2017 return comes with individual deductions of $6,350 for single, $12,700 for married, so take those figures into consideration when you opt which way you’ll go.^[11]

Itemization makes sense if you have more deductions than the standard on either front would give you, but waiting until the last minute means an itemized set of deductions is going to take longer to sort through said deductions and receipts, so you may end up taking standard ones because you're short on time. That said, the best advice if you are itemizing is not to try to do a tax return in one session. If you are waiting until the last minute, thankfully this year you don’t have to file until Tuesday, April 17, so you’d be advised to set aside the weekend of the 14 and 15 to go through what you have and itemize properly so that you can go over and above the $6,350 or $12,700 if that is applicable and a better source of paying less or earning more.

Most have opted, for the 2018 return year, to go with standard deductions since those aforementioned amounts for 2017 are set to double.

No one is going to suggest or argue the point that filing your income tax is enjoyable.

Unless you’re filing a 1040 EZ form or have the luxury of sitting at home, behind a computer and filling online, you probably still find yourself in the midst of receipts that you’ve managed to collect and somehow save and pondering what to do with them.

Thankfully, tax programs online are easy, step-by-step, which is why 43 percent of Americans file online.^[12]

Even with the online piece and the easier, less complex EZ form, you still have those who can’t bear to file early and would rather let it sit until the deadline has arrived and they’re racing to the post office before midnight to file (yes, there still are more people that file paper copies than online, surprisingly).

If that last-minute feel is what you’re accustomed to then so be it. The great news is that you can still find ways to save, no matter if you’ve filed before Valentine’s Day or make it a point to use that “by midnight” rule to you advantage.

The key, beyond staying organized throughout the year, is to find a means of filing that fits your schedule, is convenient and also understanding the various ways to earn a larger return or minimize the damage done by paying out from one year to the next.

Doing so will make “that time” of the year one that you don’t fret or regret because you’re simply unprepared to make the most of your return.