The tax deadline is almost here! Although it might not be the most enjoyable financial task, it's a necessary obligation that we each undertake every year.
The IRS recently announced that Tax Day has been extended for 2021 to May 17th for individual taxpayers. As we get down to the wire on the deadline, there are a couple of tips that can help you save money and time. After all, who doesn’t want to save as much as legally allowable on their tax bill?
We’re partnering with H&R Block to help you navigate tax season this year. If you’re looking for an easy way to file your taxes online before the tax filing deadline, check out H&R Block Online here >>
Here are the best last-minute tax tips to consider this season.
Don’t Miss The Deadline!
Although this one might seem obvious, many miss the tax deadline every year. It might not seem like a big deal. But a missed tax deadline could cost you hundreds of dollars in penalties.
Don’t let the chore of tax filing slip through the cracks. Make sure to complete your personal filing or request an extension by May 17th, 2021.
Otherwise, you might be forced to pay the IRS a penalty on top of your regular tax obligations. Remember, even if you extend your filing to October 15th, 2021, you’ll still need to pay any taxes due by May 17th to prevent a penalty for late payments.
Contribute To Your Traditional Or Roth IRA
Saving for retirement is a financial priority that can often be overlooked. But if you forgot to fund your IRA by the end of the 2020 calendar year, there is still time to make your contribution.
You have until May 17th 2021, to make prior-year contributions to your traditional or Roth IRA. With that, you can tuck away $6,000 into one of these accounts for retirement. It never hurts to tuck funds away into the IRA of your choice. The sooner you can start saving in these accounts for your retirement, the better off you will be in the future.
Explore the best IRA accounts if you aren’t sure where to get started.
Find Tax-Deductible Expenses For Your Side Hustle
So many of us have side hustles now. The ability to boost your income on your own terms is very attractive. But there is another benefit to building a side business. You can take advantage of the tax-deductible expenses associated with running your side hustle.
Comb through your electronic receipts to find expenses that count as tax deductible. A few might include the portion of your internet service required to run your business, your website maintenance costs, and your materials costs for generally anything you need to run the side hustle.
You might be surprised at the sheer number of tax deductible expenses to be found in your side hustle. Next year, keep careful records of these expenses to get the full value of this tax savings opportunity.
If your side hustle is becoming a full time hustle, you might consider looking at getting professional help as well. H&R Block has tax experts that can help you with any situation, from filing your taxes this year, to getting the help you need to set yourself up for success next year.
Use The Funds In Your Flexible Spending Accounts
If you stash savings into a Flexible Spending Account (FSA), then make sure you’ve used it all. Unfortunately, FSAs usually operate on a "use it or lose it" basis for the year.
Last-minute tax tips are all about taking full advantage of all the tax breaks you qualify for before you lose eligibility for them. With that, you'll want to take action to spend any money left in your FSA account ASAP. If you aren’t sure when the deadline is, check with your HR department.
The recent Consolidated Appropriations Act meant to provide relief from the financial pressures of the pandemic gave employers more leeway to provide extensions for employees to use these funds.
Check Out Tax Credit Opportunities
Tax credits can help to lower your overall tax liability. But if you don’t claim the tax credit, then you will miss out on these savings. A few to look into include:
Of course, these are just a handful of the tax credits you might qualify for. Take a minute to research tax credits for your unique situation. A quick search could help you significantly lower your tax burden.
If you don’t know if you qualify for any of these credits (or other ones), H&R Block Online will walk you through section by section and make sure you don’t miss anything you’re entitled to. And if you’re still not sure, they have a variety of help options - from live chat, to calls, to professional assistance. Check out H&R Block Online here >>
Watch Out For Typos
As you scramble to the tax finish line, don’t rush through the important details. A mistake on your tax form can lead to major headaches down the line.
Every year, we read stories about people who accidentally mistyped their name, address, or a number. While tax software can help spot obvious errors, it can’t catch some mistakes like entering the wrong bank account information.
So don’t rush. Make sure to file with the correct Social Security number and include all of the necessary signatures
File For An Extension If You Need More Time
Filing by tax time will relieve the stressful burden of filing your taxes. But if you need more time, then you can request an extension for your filing.
Keep in mind that an extension doesn’t delay your tax payment due date. Instead, you’ll have to estimate your tax liability for the year and pay any amount due by May 17th. You’ll need to file the extension request by April 15th. A granted extension will give you until October 15th to finalize your tax filing.
If you can’t come up with the funds in time to pay your taxes, you can request a payment plan from the IRS. You can work with the IRS to create a payment plan to cover your taxes within a set timeframe. However, there will be interest charges and fees associated with this option.
Bonus! Texas And Oklahoma Residents Have A Later Deadline
Although this tip doesn’t apply to everyone, it's important to note that residents of Texas and Oklahoma have received a tax deadline extension. The winter storms that created disaster zones in those states have pushed the IRS to offer an extension to those affected.
Taxpayers in those two states will have until June 15th, 2021 to file their 2020 taxes. Both individuals and businesses will be able to take advantage of this extension.
The Bottom Line
As you move toward with tax filing, take advantage of the last-minute tax tips above. Although they will guide you, help from a tax professional or tax filing service can help to illuminate any questions you have for your particular situation.
We recommend H&R Block Online this year. If you haven’t filed yet, there’s still plenty of time to get your taxes done. Simply sign up for H&R Block here and follow the prompts. Get started now >>
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.