Missing the federal tax filing deadline on April 15 doesn’t mean you’re in Uncle Sam’s doghouse yet, but it does mean you need to rally in order to keep the taxman from knocking on your door.
Whether you’ve already received a late notice from the IRS or have just missed the tax deadline, stave off the panic of missing the last day to file taxes by following these five simple steps:
▪ Determine if you’re due a refund. If you are owed a tax refund, you have the luxury of taking your time filing a 2014 tax return, since the IRS isn’t necessarily itching to write a check out in your name. (But why wait?)
Most of the big tax preparation services offer free tax estimators that can help you determine whether you’ll receive a refund. You’ll need to submit basic information like your marital and filing status in 2014, as well as answer a few questions to assess your tax burden.
For those who find they are unlikely to get a refund, it’s time to round up all financial documents from the previous year to get a tax return submitted as soon as possible.
▪ Gather important documents. Depending on how you file your tax return – married filing jointly vs. single, taking the standard deduction vs. itemizing – you’ll need to procure various documents, receipts and statements to ensure that you qualify for your claimed deductions and credits.
Examples of necessary items include your Social Security number (SSN), your spouse’s SSN if applicable, W-2s, retirement income statements and documented income if self-employed.
Statements for savings and other investments, like IRAs, should also be accounted for, as well as tax-related interest documents, such as forms 1098 for mortgage interest paid and 1098-T for paid college tuition. Hopefully you also kept receipts for large expenses, like alimony, health care, child care, and prize money won through contests and lotteries.
▪ Submit your 2014 tax return ASAP. Once you gather the paperwork you need to complete a tax return, you’ll need to start the 2014 tax return process. The reason filing your tax return as soon as possible is so important is because the late-filing penalty (if you didn’t request an extension) is 5 percent each month of the taxes you owe until you file (up to 25 percent).
That’s 10 times more than the late-payment penalty, which is 0.5 percent every month until you pay (up to 25 percent).
Submitting a federal tax return should always be free, and you can turn in your completed return from the IRS website directly, or through third-party tax services like H&R Block or TurboTax online.
Sending your 2014 tax return electronically is an affordable, fast way to file taxes. Typically, the IRS sends filers email confirmation that their returns were received within a day or two of clicking submit. Electronic filing also erases the risk of delayed or lost returns via U.S. mail.
However, filing your taxes through the U.S. Postal Service can also be advantageous, especially when you’re trying to minimize late-filing penalties. Mailing your tax return Priority Express, which guarantees overnight shipment, might be costly, but in the long run, it could save you money. The post office also offers other proof of mailing services at a cost, providing you with proof that you filed.
▪ Pay taxes you owe. You’ve finally sent the IRS your tax return – but don’t pat yourself on the shoulder yet. There’s still that tax bill to contend with. As soon as you’ve completed and sent in your 2014 tax return, it’s time to pay what you owe, plus any incurred late-filing and late-payment penalties.
For more traditional methods, you can send payment to the IRS by mail in the form of a check or money order. If you choose this option, make sure to write payments out to the U.S. Treasury and include the following on your payment:
Name and address.
Social Security number or employer identification number.
Tax period and related tax form or notice number.
After paying your tax debt, it’s time to slow down and take a breath. The worst is over (unless you face an IRS audit).
▪ Keep a record of all confirmations. Finally, as the chaos settles, make sure you’ve kept a paper (or electronic) trail of all the confirmations and tax payments you’ve made in case there’s a hiccup in the process.
A general rule of thumb is to keep all receipts, statements, copies of tax returns and other related tax documents for the return year’s entire “period of limitations,” which ranges anywhere from two years to six years.
Jennifer Calonia is a personal finance columnist for GOBankingRates.com.