The time is drawing near. April 15th is right around the corner. What do you need to do before you file your income tax return?
- Don't panic…the return is due on April 15th. If you can't get your return completed and filed by April 15th, request an extension. This is done on IRS Form 4868. A state extension return will also likely need to be filed depending on the state you live in. The federal extension will allow you until October 15th to file your return. Keep in mind that filing an extension only extends the time to file a return. It does not extend the time to pay. If you owe tax, this should be paid by April 15th.
- Married couples should review if married filing jointly or married filing separately is better for them. This is one where you need to “run the numbers” to see which is a better deal.
- Compare your return to last year's. This will allow you to see if you have all of the items of income and expenses from last year that are applicable to this year.
- Check the math. I know—everything is done on computers now. It still makes sense to review the returns for accuracy.
- Fund your IRA's. If you are deducting an IRA or funding a Roth IRA, make sure they are funded by April 15th. The Roth is not income tax deductible and, therefore, will not change the tax. An IRA or Roth IRA must be funded by April 15th as there is no extension.
- If you have your returns prepared by a professional and they file electronically, you must sign and forward Form 8879, IRS E-File Signature Authorization, to your preparer. This authorizes the preparer to file the returns. The preparer cannot file the returns electronically without this authorization. If you are getting a refund, consider direct deposit. You will receive your refund quicker than by mail.
- If you do not file electronically and instead paper file, make sure to send them certified mail, return receipt requested. This will provide you with proof of filing your return and the date mailed.
ACTION ITEM: Don't rush to file your return. Take these seven practical steps before filing. If you can't get it completed by April 15th, file for an extension.
Thomas F. Scanlon, CPA, CFP®