The tax filing deadline is just days away, and if you haven't yet filed your 2016 tax return, the finish line is looming just ahead.
As you crank through the things you need to do to get your returns prepared and filed, it's essential not to lose sight of some key ideas that smart taxpayers always keep in mind.
By being aware of these simple rules, you can do your best to pay as little tax as necessary and avoid unnecessary audit or other risks.
1. Not filing a return at all is never the right answer.
When facing an imminent deadline, more taxpayers than you would think decide not to file a tax return at all. This is particularly the case if you're strapped for cash and won't be able to pay any taxes that you owe. The temptation to try to avoid the notice of the IRS can be almost overwhelming.
However, you should always go ahead and file a return, even if you can't pay the tax you owe. The penalties for not filing a tax return are 10 times greater than those for filing but not being able to pay taxes due.
Go without filing your taxes for more than four months, and you'll face a penalty of 25% of your outstanding tax due -- along with interest on that balance. By filing, you can avoid most of those penalties and put yourself in much better shape going forward.
2. It's easy to get some extra time to file.
Just because you need to file eventually doesn't mean that you need to be in a hurry to do so by the April 18 deadline. It's trivial to get an automatic six-month extension of time to file your return. In fact, if you go to this portion of the IRS website, you can electronically file for that automatic exemption -- regardless of how high or low your income is.
However, remember that an extension to file isn't an extension to pay. Late-payment penalties of 0.5% per month start running after April 18 even if you don't have to file until October. Therefore, if you expect to owe tax this year, you should make an estimated payment with your extension request to get that balance paid off and avoid unnecessary additional charges.
3. There's help available for many taxpayers.
With just days to go, it'll be hard to find a professional tax preparer who can give you a last-minute appointment. But there are alternatives. For instance, the Volunteer Income Tax Assistance program provides specially trained IRS-certified volunteer tax preparers that can help taxpayers with basic income-tax preparation needs.
In addition, the VITA program provides access to electronic filing, speeding up the process and allowing taxpayers to get refunds faster. By helping you be aware of any tax benefits you're entitled to receive, VITA can be a big money-saver.
4. Take advantage of last-minute tax savings opportunities.
A few tax breaks are still available even as time runs out on the 2016 tax season. Contributing to a traditional IRA can help you reduce your taxable income by as much as $5,500 for those younger than 50 or $6,500 for those 50 or older.
In addition, if you qualify for a health savings account, you can make tax deductible contributions through the April filing deadline as well. These vehicles let you make contributions now that track back to the 2016 tax year, giving you one last opportunity to cut your tax bill for the year.
5. Filing electronically has some key advantages.
If you want to be sure your return gets filed in a timely manner, it's hard to beat electronic filing. You'll get an acknowledgment of receipt from the IRS shortly after you file, and you won't have to worry about whether the return gets through the mail properly.
In addition, the IRS processes electronically filed returns more efficiently and quickly, and refunds come more quickly. E-filing has gotten easier over time, and it's becoming an even smarter move for those who expect money back from the IRS.
Don't stress out about the tax filing deadline. You can still get your returns done, and by following these tips, you'll be in a better position to avoid unpleasant surprises and make the most of your tax saving opportunities.