retirement

Extended Tax Deadline: Moves to Make Before October 15

Beware penalties if you don't get your tax return to the IRS on time.

Taxpayers who needed more time to file their 2018 federal tax returns may have received an automatic six-month extension from the IRS. That extended deadline of October 15 will soon be here.

Keep in mind that the extended deadline gives you extra time to file your return—but not extra time to pay any tax owed. Tax payments are generally due by April 15. People who pay late are typically hit with a late-payment penalty of 0.5% per month plus interest. If you didn’t already pay the tax you expect to owe, paying it now will limit the penalty damage. Extension filers who miss the October 15 deadline will also incur a late-filing penalty, which is typically 5% per month but can run as high as 25% of the amount due.

The extended filing deadline offers a chance to make a few smart moves. The self-employed can make 2018 contributions to a SEP IRA, for example, until October 15, according to Gil Charney, director of the Tax Institute at H&R Block.

The mid October deadline also offers a mulligan to taxpayers who contributed too much to a traditional or Roth IRA for 2018. Taxpayers can withdraw excess 2018 IRA contributions (including earnings) by October 15 to avoid a 6% penalty. If you already filed a 2018 tax return, you may need to file an amended return.

Most Popular

Will Your Stimulus Check Increase Your Tax on Social Security Benefits?
Coronavirus and Your Money

Will Your Stimulus Check Increase Your Tax on Social Security Benefits?

The answer to this question comes down to whether your stimulus check increases your "provisional income."
March 1, 2021
Where's My Refund? How to Track Your Tax Refund Status
tax refunds

Where's My Refund? How to Track Your Tax Refund Status

If you're waiting for your tax refund, the IRS has an online tool that lets you track the status of your payment.
March 2, 2021
4 Ways You May Be Sabotaging Your Career Success
careers

4 Ways You May Be Sabotaging Your Career Success

To be a success, it’s helpful to know what NOT to do on the job. An interview with the best-selling author of “The Art of Being Indispensable at Work”…
March 1, 2021

Recommended

Taxes on Unemployment Benefits: A State-by-State Guide
state tax

Taxes on Unemployment Benefits: A State-by-State Guide

Don't be surprised by an unexpected tax bill on your unemployment benefits. Know where unemployment compensation is taxable and where it isn't.
March 3, 2021
Tax Day 2021: When's the Last Day to File Taxes?
tax deadline

Tax Day 2021: When's the Last Day to File Taxes?

Many people are wondering if Tax Day will be pushed back again this year because of the pandemic. Here's what we know so far.
February 28, 2021
2021 Child Tax Credit Calculator
Tax Breaks

2021 Child Tax Credit Calculator

See how much money you would get in advance if President Biden's $3,000-per-child tax credit plan is enacted (it was just passed by the House and is n…
February 27, 2021
House Approves $3,000 Child Tax Credit for 2021
Coronavirus and Your Money

House Approves $3,000 Child Tax Credit for 2021

The proposal would temporarily increase the child tax credit to $3,000 or $3,600 per child for most families and have 50% of it paid in advance by the…
February 27, 2021