5 Last-Minute Tips for Tax Procrastinators

If you expect to file your 2017 tax returns at the last minute, you’re not alone. Approximately 40 million Americans waited until the last few days before the deadline to file their tax returns last year, and there’s no reason to believe it will be any different by this year’s April 17 deadline.

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Last year, the week before the federal income tax deadline, I found myself driving to clients’ offices to collect money for their 2016 IRA contributions. I wanted to make certain they made these contributions to beat the deadline.

For people still procrastinating with these tasks and trying to determine the best strategies, here are a few tips to help ease the pain and get across the tax finish line:

Assemble All Documents Needed to Prepare Your Taxes.

Before purchasing TurboTax or making a call to a tax preparer, put together all of the documents you will need. These documents include:

• Last year’s tax return. You’ll need an electronic or paper copy of your 2016 federal and state return to prepare this year’s return.
• Income documentation. Round up all forms that show income received in 2017. The most important are W-2 and 1099 forms.
• Receipts. To take any deduction, you will need a form or receipt. Include receipts from any charitable organization for any donation, while homeowners deducting mortgage interest will need to provide Form 1098.
• 529 paperwork. Many states allow deductions for 529 college education savings plans, so be sure to include copies of checks showing those contributions.
• Deductions. Finally, include information on deductions that will go away next year. These include unreimbursed employee business expenses, such as union dues and costs of any job search; tax-preparation fees and fees for investment managers on taxable accounts.

Don’t Forget to Contribute to Savings Accounts.

People can contribute to their 2017 Individual Retirement Accounts and Health Savings Accounts until April 17 and receive deductions. People under 50 years old can contribute up to $5,500 to an IRA, and those 50 and over can contribute up to $6,500. The family and individual HSA contribution limits for 2017 are $6,750 and $3,400, respectively, with an extra $1,000 for those 55 and older in 2017.

However, the deadline for these contributions cannot be extended beyond April 17. Be sure any check for these contributions is mailed and postmarked by April 17. Also, some states may allow 2017 contributions for 529 plans through the April 17 deadline as well.

See Also: Tax Rules on 10 Different Retirement Accounts and Investments

Finding Expert Help at the Last Minute.

Accountants and other tax experts are swamped between now and the tax deadline and may not be in a position to take on new clients, so ask a financial adviser or attorney to provide a recommendation. If the request comes through an adviser, the accountant might squeeze in a new client at the last minute to keep a professional colleague happy.

Last-Minute Mistakes to Avoid.

People with taxable investment accounts need to make certain all 1099 forms sent in early February are still accurate and that they hadn’t been corrected later in the month. The initial forms sent in late January may have been updated, and you don’t want to file a return based on an incorrect 1099.

Also, don’t forget to include those tax documents that typically arrive later than most. Some aren’t required to be provided to you until late spring. For example, people who are beneficiaries of a trust or a member of an LLC may not receive a Schedule K-1 form until mid-March or later.

If Necessary, File an Extension.

The IRS allows anyone to file for a six-month extension simply by filing form 4868. While it may be uncomfortable to put off a tax return, it’s better to file a correct return instead of rushing headlong to beat the deadline and making mistakes in the process.

Note, however, that filing an extension does not provide extra time to pay your taxes. You still must estimate and pay what you owe by April. You will be charged interest on any amount not paid by the deadline.

See Also: What Everybody Needs to Know About Investment Fees

Jason Cross is a wealth adviser at Brightworth, an Atlanta wealth management firm with $3 billion in assets under management, serving more than 1,200 families in 48 states. He works with high net worth families in investment management, retirement transition, business succession and wealth transfer planning. Jason is a Certified Financial Planner™, Certified Trust and Financial Advisor and an active member of the Georgia Bar Association.

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