Last-Minute Tax Tips

Jenny Handwerk |

Last-Minute Tax Tips 

With April 15 approaching the deadline for submitting your tax return 2023, you may feel pressure to file your return correctly and promptly. But don't worry: These last-minute tax advice can help you handle Tax Day like a pro and save you money and time.

File on Time

To be deemed "on time"—and avoid late filing fines and interest on what you owe—your returns must be electronically filed or mailed by midnight on April 15, 2024. This means you'll need to obtain a timestamp (for e-filed returns) or a postmark (for postal returns) dated April 15. If you cannot submit it on time, request a tax extension.

Remember that an extension to file a tax return does not extend the time you must pay any taxes you may owe. If you do not pay by the due date, you may face penalties and interest on the amount owed.

Penalties plus interest result in a relatively high interest rate on loans. So, don't think of an extension as a method to avoid the agony of paying.

Maximize tax deductions and credits.

Try to take your time with the opportunity to maximize your tax deduction. By taking advantage of every tax deduction and credit that you are eligible for, you can potentially save or put more money in your pocket. Remember that many taxpayers miss out on often-overlooked tax breaks and credits because they are unaware they exist.

If you haven't already maxed out your Health Savings Account (HSA) or regular IRA, you may be able to reduce your tax burden even more. The deadline is   April 15 tax  to contribute to your 2023 IRA or HSA accounts and claim the deduction on your 2023 tax return.

Maximizing Your IRA and HSA Contributions

One of the primary advantages of IRAs and HSAs is that you can make "prior-year" contributions up until the April 15 tax deadline. If you want to lower your taxable income and have the money, there is still time to max out your IRA and HSA contributions.

Imagine you only contributed $2,000 to your IRA in 2023 but have a $5,000 year-end bonus resting in a savings account. You can transfer $4,500 of that $5,000 to your IRA, bringing your total contribution to $6,500 for 2023.

To benefit from this move, you must notify your IRA custodian that you are making a "prior-year" contribution for tax year 2023 by April 15. However, if you're in the 22% federal tax rate, you might save an additional $990 in taxes simply by making this last-minute payment.

Don't Forget To Include Unemployment Benefits

Even if you have already paid taxes on your unemployment benefits, you must disclose the income on your tax return.

Many people must remember that they may only have received one or two cheques. These still have to be accounted for.
 If you record your unemployment income, your tax return may be accepted because it does not match the income you reported to the IRS.

Don't Overlook Tax Credits You're Entitled To

Several tax credits are offered for various activities that the IRS considers socially beneficial. Educational tax credits like the American Opportunity Credit and family-oriented ones like the Child Tax Credit are well-known. Still, you may also be eligible for several less well-known tax credits.

Several energy-efficient renovations for your home. This can include everything from energy-efficient windows to biomass burners. The list of credits can be vast, so it's a good idea to consult with a tax advisor to ensure that you don't miss any potential credits.

Bottom Line 

If you missed the tax deadline, you should still file your federal return as soon as possible. A penalty of 5% of the taxes due is assigned for each month or portion of a month that your return is filed after the deadline. Hence, the more fees you have to pay, the longer you wait to file. Even if you are unable to pay your taxes in full, you should still file as soon as possible because this penalty is different from the failure-to-pay penalty.