Editors' pick: Originally published Oct. 7.
If you requested a six-month extension to your 2015 federal tax returns, that deadline is coming up fast: Monday October 17, 2017.
Consequently, the tax moves you'll make filing your return may well be different than the maneuvers you'd make if you filed back in April. To provide some clarity, let's take a look at some savvy steps late filers can take to keep more cash in their pockets, and less in Uncle Sam's.
- Don't wait until the last, last minute - "If you haven't filed your 2015 tax return yet, get 'er done," says TaxAudit.com, in an email to TheStreet. "Don't wait until the last minute to find out or 'rediscover' that you're still missing a document or receipt that you need in order to file your complete and correct tax return."
- Correctly handle IRA conversions - If you converted a traditional IRA to a Roth during 2015 and paid tax on the conversion with your 2015 return, October 17, 2016 is the deadline for recharacterizing the conversion, says Philip Lee, a certified financial planner at Financially In Tune, in Wakefield, Mass. "Recharacterization could save you money if your IRA has lost money since the time of the original conversion," Lee notes. "I'm not expecting this to be the case, as the equity markets have been strong this year, but it's worth looking into."
- Be sure to max out your retirement savings - "I typically see self-employed individuals who often file on extension and max out to either their SEP IRAs or solo 401(k) plans," Lee adds. "Of course, it's too late to open a solo 401(k) account for the 2015 tax year, so tax filers may want to think about establishing a solo 401(k) account before December 31, 2016, for contributions to be made for calendar year, 2016."