Tax time is the highlight of the year for the majority of people. The extra income is exactly what you have been waiting for to do something fun, like a weekend getaway. People often begin to scramble at this time of the year; however, staying prepared all year long can ensure a successful tax filing season. Being prepared may take some effort, but it will be worth it in the long run. You may have questions lingering in your head about the tax deadline and how to make sure you can be prepared. No worries! Below, this article discusses all the tips and tricks you need to have a successful tax season.
All About the Deadline
The official tax deadline has been the same date for over 30 years. If the date falls on a weekend day (Saturday or Sunday) or a holiday, the deadline is then moved to the next business day (Monday through Friday). Often, extensive facilities like the IRS (International Revenue Service) are only open Monday through Friday until 5 pm.
The official deadline date is April 15th, 2020, for this year. As mentioned before, this is the usual deadline date, unless something was to interfere.
The Filing Period
Even though most employers give out your tax forms early in the year, you may want to wait until the filing date. This year, the filing date is January 27th and is when people receive their refunds the quickest. A good rule to remember is that the sooner you turn it in, the quicker you receive your money. When thinking logically, if you wait until March to file your taxes, you may not receive the refund until after the deadline date. Most of the population waits until closer to the deadline date to register because they need to refrain from spending their tax income too fast.
If budgeting is the reason you are holding off on filing, then consider a payment plan option with your tax company. Not every agency offers payment plans, but some agencies only use this method upon request. Even if your chosen agency doesn’t provide this option, there are various methods to discuss with them if spending is your issue.
An excellent idea to help you decide on when to file can be the fact of what you want to do with your money. Do you need a new couch because the new dog ruined it, or are you planning a small family vacation? No matter what you decide to do with your money, filing at the right time can help make your goals a success. If a holiday is your choice, then possibly wait until the end of February so that you can receive the money near the time of the vacation. Americans sometimes have trouble saving significant sums of money.
Problems with Filing Too Late
What happens if you file after the deadline? If you already have an idea that you won’t be able to make the deadline, there is an option to file an extension. Requesting a six-month extension can be done by submitting a 4868. Then, hold onto your regular tax return forms until you get a response. No matter when you file the extension, it’s set to six months from the April 15th deadline. In this period, you can register your original tax return at any given time.
There are many other different penalties if you don’t file your taxes on time. The worst punishment requires you to pay 5% of your unpaid taxes for each month your file is late. The penalty begins a few days after the deadline period. The IRS then gives you up to 60 days before they bill you with $140 or the amount you owe.
What happens if you don’t pay? When you don’t pay, the situation only worsens. You then receive another penalty and even more bills. Some acts protect anyone from paying more than 5% a month of what they owe. The only issue seen with these acts is the fact that the amount you owe can take much longer to pay off.
Even if you cannot afford to pay your taxes, you should still file. Think of it like this. Filing is better looking on your bank statement, rather than facing penalties and paying almost a third more than what you owe. Remember, you can also request a six-month extension!
Receiving Tax Income
The best part about tax season for some people is that they get some money back! If you file within the deadline period, you can expect a time frame of 21 days or less for receiving your refund. However, some attributes require a more extended receiving period.
Some people don’t believe in filing electronically and prefer to send their forms in by mail. Submitting the forms in by mail is a great alternative, except your tax return may take up to six weeks to earn anything back.
Another aspect that can affect the time limit on drawing your tax return is whether you choose to get your payment in a check or a direct deposit. The majority of people prefer direct deposit so they do not have to worry about any more paperwork. Typically, the older generations prefer a check so they can inspect the breakdown of their tax return. If you choose to accept a paper check, do not expect it until 31 days after filing. The 10 days is considered a grace period for postal services. More than likely, it should only take three to five business days to arrive.
How to Stay on Track
Whether you must pay each year or simply file a tax return, it is crucial to be prepared all year long. The tax filing process can take longer if you are not already prepared. Here are some tips and tricks to ensure your readiness for the tax season.
Staying organized is a task people often find to be complicated. When it comes to your tax information, you need to make sure you are keeping track of every little thing. If you are striving to be an elite organizer, you should consider the following: keep every receipt throughout the year; create a filing system for categories like groceries or bills; and invest in a finance book to sort out your bills each month.
It sounds like a lot, but this is the best way to keep track of where your money has gone all year. If you find yourself looking at your bank statement, wondering where your entire paycheck went, try these methods. Even if you are struggling to budget monthly expenses, take the extra time to file everything.
Taking the time to do some math at the end of each month is also a way to make the filing process go much smoother. Not only will it be more seamless for you, but also your tax agent. Being able to take some of the workload of your tax agent can have a positive outlook when filing your tax return or paying in.
If that much extra work scares you, then consider becoming an amateur at staying organized. Simply, you must file your bills and keep receipts from personal expenses. The best way to achieve this is to grab a box that has a lid and paperclip items by months. At the end of the year, sort out the papers and do a little math to prep for filing. Even this method can seem hectic to try and get it all sorted in one weekend!
Are you just trying to get the tax return filed? If you are not looking to do any added work, then relax through the year and submit your forms when the time comes. However, if you are someone who pays in on taxes, this is most definitely not the best option for you. When it comes to paying in, the more organized, the better.
Some people may find this odd, but paying attention to the tax withheld out of each check can give you an idea of what your refund may be. It is common to ask your employer about the ratio or tax percentage that comes out of each check week or biweekly. Inspecting the taxes withheld on your paycheck is a good routine and something to keep track of. The best advice is to buy a small notebook and paperclip each stub on one sheet of paper. Then calculate the amount withheld from each check and add it up at the end of each month. Therefore, you can have an idea of what to expect back at the end of the year.
The last trick to staying on top of your financial records is itemizing your deductions. Create time to review tax credits and deductions to see how many applications are in your situation. Pay very close attention to the tax credits, and they provide a dollar for dollar decrease to your tax bills, therefore, saving you from having to itemize or claim them. Keeping track of small details like this can ensure a breezy tax season.
All in all, the tax season is usually a happy time for most people. Sometimes, when looking at your check, it may bring your mood down a couple of notches. The taxes that are taken from each check can make you feel as if you are being robbed blind. However, at the end of the year, that large chunk of money missing from your pay stubs is coming back. Your taxes are a great way to learn budgeting habits and create good spending traits.
Be sure not to file too late. No one wants to have to back pay on their taxes. You may have to pay up to twice the original amount you owed.