Time’s almost up—key tax move could save you a hefty fine
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As the calendar pages turn and April 15th looms closer, a sense of urgency grips many Americans.
It's not just any date—it's the deadline for filing your 2024 tax returns. Miss this crucial cutoff, and you could be staring down the barrel of a hefty 25% fine on your unpaid taxes.
But fear not, dear readers of The GrayVine, because we're here to guide you through the labyrinth of tax season with sage advice and practical steps to keep those penalties at bay.
Tax season officially kicked off on January 27, when the IRS began accepting returns.
Now, with the deadline fast approaching, it's imperative to understand the consequences of tardiness.
The IRS is unforgiving when it comes to late filings, and the penalties are steep—a failure-to-file penalty that can accumulate up to 25% of your tax debt.
Add to that the interest on unpaid taxes, calculated based on the federal short-term rate plus 3%, compounded daily, and it's clear why meeting the deadline is crucial.
Around 22% of Americans have confessed to waiting until the last minute to file their taxes. One out of five have filed their taxes late.
According to a study by Greenback Expat Tax Services, common reasons why people file their taxes late include financial challenges, missing or incomplete documents, forgetting the filing deadline, feeling overwhelmed by the complexity of the process, or choosing to request an extension.
Three Lifelines to Dodge the 25% Fine
1. Pay on Time, Even If You Can't File
Stephen A. Weisberg, principal attorney and founder at The W Tax Group, emphasizes the importance of paying your taxes by April 15th, even if you can't file your return by then.
The IRS imposes a failure-to-pay penalty of 0.5% per month on unpaid taxes, but the more you pay upfront, the less you'll be penalized. "The more you pay on what you owe, the less the failure to pay penalty," said Weisberg.
2. File for an Extension
If you're unable to file by the deadline, all is not lost. You can request a six-month extension by submitting Form 4868, which must be filed by April 15th.
This grace period extends your filing deadline to October 15th, without incurring the failure-to-file penalty. Remember, though, that this doesn't exempt you from the failure-to-pay penalties and interest if you don't pay by April 15th.
3. File as Soon as Possible
Sometimes, despite our best efforts, we miss the deadline. If this happens to you, file your tax return as quickly as possible.
The failure-to-file penalty is generally 5% of unpaid taxes for each month, up to 25%. The sooner you file, the less you'll pay in penalties.
Tax season doesn't have to be a source of anxiety. With some planning ahead, taxpayers can stay on track to file their 2024 tax returns by the April 15 deadline.
According to Arron Bennett, a tax expert and CEO of Bennett Financials, which specializes in tax planning and strategy, “both proper preparation and suitable tools are the best ways to submit a timely tax filing.”
Bennett told The US Sun that to file efficiently, Americans should gather all the required paperwork ahead of time.
“This includes W-2s, 1099s, investment statements, and receipts for deductible expenses,” he said.
After collecting all the necessary documents, Bennett recommended using tax software or working with a qualified professional to submit your taxes electronically.
E-filing with direct deposit is the quickest method to receive your refund and reduces the chances of errors that could delay your paperwork, he emphasized.
"Business owners, along with self-employed individuals, need to maintain year-round organization because tax season will become overwhelming if they do not," Bennett advised.
"You can save hours of time at filing season by implementing bookkeeping tools or working with a tax strategist to maintain organized income and expense categories," he added.
Source: @irsvideos / Youtube.
Planning Your Refund Wisely
A study by Talker Research, commissioned by TaxSlayer, reveals that many Americans plan their tax refund spending six months in advance.
With the average expected refund around $1,700, it's a significant financial event for most. While necessities like rent and groceries top the list of expenditures, some also allocate funds for paying off credit card debt, particularly from holiday spending.
A small percentage look forward to splurging on luxuries like new clothes or electronics.
As we march towards April 15th, let's take control of our tax situation. Start by reviewing your documents, consider filing electronically for efficiency, and if you need more time, don't hesitate to file for an extension.
Remember, paying as much as you can by the deadline will reduce penalties, and filing as soon as possible will prevent them from snowballing.
Do you have any experiences or tips for filing your taxes? Or maybe you have questions? Share your insights in the comments below! Let's support each other in making informed decisions and keeping our hard-earned money where it belongs—in our pockets.
Also read:
It's not just any date—it's the deadline for filing your 2024 tax returns. Miss this crucial cutoff, and you could be staring down the barrel of a hefty 25% fine on your unpaid taxes.
But fear not, dear readers of The GrayVine, because we're here to guide you through the labyrinth of tax season with sage advice and practical steps to keep those penalties at bay.
Tax season officially kicked off on January 27, when the IRS began accepting returns.
Now, with the deadline fast approaching, it's imperative to understand the consequences of tardiness.
The IRS is unforgiving when it comes to late filings, and the penalties are steep—a failure-to-file penalty that can accumulate up to 25% of your tax debt.
Add to that the interest on unpaid taxes, calculated based on the federal short-term rate plus 3%, compounded daily, and it's clear why meeting the deadline is crucial.
Americans who fail to meet the tax filing deadline of April 15 face the risk of a 25% penalty on unpaid taxes according to tax experts. Image source: ABC7 / Youtube
Around 22% of Americans have confessed to waiting until the last minute to file their taxes. One out of five have filed their taxes late.
According to a study by Greenback Expat Tax Services, common reasons why people file their taxes late include financial challenges, missing or incomplete documents, forgetting the filing deadline, feeling overwhelmed by the complexity of the process, or choosing to request an extension.
Three Lifelines to Dodge the 25% Fine
1. Pay on Time, Even If You Can't File
Stephen A. Weisberg, principal attorney and founder at The W Tax Group, emphasizes the importance of paying your taxes by April 15th, even if you can't file your return by then.
The IRS imposes a failure-to-pay penalty of 0.5% per month on unpaid taxes, but the more you pay upfront, the less you'll be penalized. "The more you pay on what you owe, the less the failure to pay penalty," said Weisberg.
2. File for an Extension
If you're unable to file by the deadline, all is not lost. You can request a six-month extension by submitting Form 4868, which must be filed by April 15th.
This grace period extends your filing deadline to October 15th, without incurring the failure-to-file penalty. Remember, though, that this doesn't exempt you from the failure-to-pay penalties and interest if you don't pay by April 15th.
3. File as Soon as Possible
Sometimes, despite our best efforts, we miss the deadline. If this happens to you, file your tax return as quickly as possible.
The failure-to-file penalty is generally 5% of unpaid taxes for each month, up to 25%. The sooner you file, the less you'll pay in penalties.
Taxpayers can take steps such as paying on time, filing an extension, or filing as quickly as possible to reduce or avoid penalties. Image source: ABC7 / Youtube.
Tax season doesn't have to be a source of anxiety. With some planning ahead, taxpayers can stay on track to file their 2024 tax returns by the April 15 deadline.
According to Arron Bennett, a tax expert and CEO of Bennett Financials, which specializes in tax planning and strategy, “both proper preparation and suitable tools are the best ways to submit a timely tax filing.”
Bennett told The US Sun that to file efficiently, Americans should gather all the required paperwork ahead of time.
“This includes W-2s, 1099s, investment statements, and receipts for deductible expenses,” he said.
After collecting all the necessary documents, Bennett recommended using tax software or working with a qualified professional to submit your taxes electronically.
E-filing with direct deposit is the quickest method to receive your refund and reduces the chances of errors that could delay your paperwork, he emphasized.
"Business owners, along with self-employed individuals, need to maintain year-round organization because tax season will become overwhelming if they do not," Bennett advised.
"You can save hours of time at filing season by implementing bookkeeping tools or working with a tax strategist to maintain organized income and expense categories," he added.
Source: @irsvideos / Youtube.
Planning Your Refund Wisely
A study by Talker Research, commissioned by TaxSlayer, reveals that many Americans plan their tax refund spending six months in advance.
With the average expected refund around $1,700, it's a significant financial event for most. While necessities like rent and groceries top the list of expenditures, some also allocate funds for paying off credit card debt, particularly from holiday spending.
A small percentage look forward to splurging on luxuries like new clothes or electronics.
As we march towards April 15th, let's take control of our tax situation. Start by reviewing your documents, consider filing electronically for efficiency, and if you need more time, don't hesitate to file for an extension.
Remember, paying as much as you can by the deadline will reduce penalties, and filing as soon as possible will prevent them from snowballing.
Also read:
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