The 2020 federal income tax filing deadline was extended to May 17, 2021. Nevertheless, 20 to 25% of taxpayers will likely wait until the final 14 days before the deadline to file their returns, according to the IRS. There are various reasons for waiting to file:
- If you know you’ll owe taxes, you might delay the payment so you can earn interest on your money up to the last moment before you send it to the IRS.
- You might be so busy with your business that you keep putting off your tax preparation.
- Because of the change in the tax deadline this year, you might have forgotten the due date.
The best way to avoid the last-minute scramble is to stay aware of your taxes all year by updating your tax records, collecting relevant receipts as you receive them, and keeping a log of miles you drive if you take a deduction for business use of your car. This year-round tax mindfulness will have you primed and ready to go as soon as the tax season begins.
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1. Check off documents as you go
If you do wait until the last minute to do your taxes, it pays to have put all of your relevant tax documents in one place—a dedicated drawer, file folder, or even a shoebox—throughout the year. If you put a list of the important documents on the outside of your document holder, you can check off the various items as you receive them, giving you a quick overview of which documents you have and which ones you need. These documents might include:
- Form W-2 (your employer is required to report your earnings and the amount of taxes withheld by mailing this form by Jan. 31)
- Form 1099-INT, a statement of interest you’ve earned from a savings account or other source
- Form 1098, Mortgage Interest Statement, a form from your lender that reports how much mortgage interest you paid on your home loan throughout the tax year
- Receipts for deductible purchases and payments, including those for education, healthcare, childcare, and business.
In addition to documents, you’ll need to have your Social Security number handy when you prepare your return. If you’re filing jointly, you’ll need your spouse’s Social Security number, too. And if you’re claiming additional dependents, you’ll need their Social Security numbers as well.
For a complete list of documents you might need, see the TurboTax Tax Preparation Checklist. This list is designed for easy printing, so you can check off your tax documents as you receive them.
2. Take your time
Even with your documents in order, it’s easy to make small errors that can lead to big problems if you are rushing to complete your return. Misspelling a name, transposing two numbers, or leaving an important field blank can delay the processing of a return and slow a refund you’re due to receive.
Common last-minute errors include:
- Mistakes in math (which can easily be prevented by using a calculator or tax software)
- Incorrect Social Security numbers (double-check for accuracy)
- Failing to sign or date your tax return
It may seem counterintuitive, but when it comes to filing taxes, taking your time at the last minute can save you time and prevent problems in the future.
3. File electronically
One way to make up for the lost time is to file your tax return electronically. Online filing can eliminate minutes or even hours of driving to your post office and waiting in line to hand over your tax return. Filing online can also result in a more accurate return and a faster refund. The IRS reports that almost 1 billion tax returns have been filed electronically since 1990. In fact, 70% of individual taxpayers now file electronically, using a do-it-yourself program like TurboTax or through a tax preparer.
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4. Consider requesting an extension
Rather than rushing to complete their return, many late filers prefer to apply for a tax extension. According to the IRS, 7% of U.S. taxpayers—about 8 million people—ask for a federal tax extension each year.
To request an extension, you need to file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This form is downloadable at IRS.gov. You’re not required to explain why you’re asking for an extension in your initial request, but you do need to file the form by the tax deadline—midnight on May 17, 2021, for your 2020 taxes. The IRS generally grants extensions automatically when they’re filed by the deadline.
As with tax returns, applications for extensions can be filed electronically. Many people file for an extension for free using TurboTax Easy Extension. It takes only minutes to complete the form and you’ll know immediately if it has been accepted by the IRS.
Filing an extension does come with one important stipulation:
- If you owe taxes, you must pay the estimated amount by the original due date of the return. The extension provides you with more time to file. It does not extend the deadline for paying taxes that you owe.
- When you file Form 4868—manually or online—you’ll see a variety of payment options. To accurately estimate how much you owe, you can use an online tax calculator like TaxCaster.
If you’re concerned that you can’t pay your taxes in full, the IRS recommends that you file your tax return or your extension request on time and then call to set up a payment plan once you do file your return. You can also apply for a payment agreement on the IRS website.
For more information about filing your taxes at the last minute, visit TurboTax.com.