Tax season is almost over and the April 15th filing deadline is in sight. There is still time, however, to maximize your deductions and try to lower your tax bill or increase your refund before the deadline arrives. To help you accomplish this, we want to share with you a few ways to make last minute filing as efficient and effective as possible.
First, have you contributed to your traditional IRA lately? If you have a traditional IRA, you can still contribute to it for the 2018 tax year until the filing deadline. If you are under the age of 50, you can contribute up to $5,500, while if you are over 50, the amount increases to $6,500. If you do not currently have a traditional IRA but are considering opening one, there is still time to accomplish this before April 15th. Any amount contributed to the IRA up to the $5,500 and $6,500 caps may be deductible on your tax return.
Next, consider contributing to your health savings account (HSA). HSAs enjoy a unique tax benefit, as qualified participants can receive a tax deduction by contributing money to their HSA. These funds can be invested and can grow while being tax-deferred. Additionally, if you use any of the funds for qualified medical expenses, those withdrawals are not taxed, regardless of how much profit your investments have made.
Finally, we cannot stress enough the importance of filing your return in a timely manner. If you are worried about being unable to pay any taxes you owe, we encourage you to file your return anyway. The interest charged on an unpaid balance is 0.5% per month, while the penalty for failure to file is 5% on top of your balance. If your tax bill is higher than you were expecting, you may set up a monthly installment plan with the IRS to pay off your bill. You will still have to pay interest on any unpaid balance each month, but this may be an easier way for you to manage your tax bill.
Above all, remember that organization and preparation are key to successfully filing your taxes in a timely manner. Do not underestimate the value of an experienced, local tax attorney to help guide you through the process. If you have questions or are in need of further guidance when preparing your taxes, do not wait to reach out to us.