﻿Alright, everybody, I’m Logan Allec, I’m a CPA, my firm and I help people owe the IRS
and/or their state tax department back taxes. If you owe more than $10,000 in taxes and you’d
like a free consultation for that, go ahead and call 844-321-TAXES, that’s 844-321-8293,
or email taxrelief@loganallec.com to schedule a free consultation about your back taxes situation.
But today I’m talking about three last-minute tax filing tips for you tax procrastinators
out there. And there’s no shame in that; I haven’t filed my own tax return yet either.
No shame, people. So I’m going to give you three tips today for last-minute tax filers. Number one,
file an extension if you don't trust yourself. Even though I'm a CPA, I don't trust myself
to file my taxes by the original tax deadline; I have clients to take care of! That's why I file
an extension to extend my tax return's deadline to October 15 (October 17 this year because October
15 is a Saturday). Filing an extension only takes a few minutes, and it saves me the risk of not
filing my return by the deadline and incurring possibly significant failure-to-file penalties. If
you haven't filed your return yet, I'd recommend the same. I mean, let's face it — it's about a
week before the deadline and you still haven't filed. I think that establishes that you're kind
of a tax procrastinator. And as a fellow tax procrastinator (at least with my own
tax return — clients come first), I make it a point to file an extension as early as I can
after my tax software is released. So consider dropping what you're doing right now (probably
reading this article) and using TurboTax or some other tax software to file your extension for
free. 2. Don't bury your head in the sand because you have a surprise tax bill. All too often, I see
this situation with last-minute tax filers: They wait until the second week of April to start their
tax return, and by the time they've finished it and are ready to file, they have a large surprise
tax bill on their return. And, unfortunately, what a lot of these folks do is simply not file because
they don't have the money to pay the taxes right now and so they bury their heads in the sand. No!
Don't do that! Go ahead and file your return if you've got it ready to go! Or at least file an
extension (which, of course, only extends the due date for your return — not your deadline to pay).
If you don't file your tax return (or extend it and file timely by the extended deadline)
and try to ignore the situation, you will face large failure-to-file penalties. The rate for this
penalty is a whopping 5% of your unpaid balance per month or part of the month that you fail to
file your return. So let's say you prepare your return this week and see that you owe the IRS
$2,000. If you bury your head in the sand and don't file your return (or at least an extension),
a failure-to-file penalty will accrue on your account in the amount of 5%
of your unpaid balance per month or part of a month that you have not filed.
In this case, that's $100 per month! However, if you file your return (or an extension),
you are not subject to this penalty. You are only subject to the failure-to-pay penalty,
which accrues at one-tenth the rate (0.5% per month or part of a month) of the failure-to-file
penalty — in this example, only about $10 per month. Oh, and if you don't file your return
(or an extension), both the failure-to-file and failure-to-pay penalties will accrue concurrently!
3. Take some last-minute tax deductions. If you are running up against a large tax bill,
consider taking some last-minute tax deductions by April 18 to reduce your balance or even score
yourself a refund. The most common last-minute deduction is the —. You can make your 2021
deduction to a traditional IRA all the way up to the unextended tax return deadline, which in this
case is April 18. While the 2021 contribution limit to traditional IRAs is $6,000 ($7,000
for taxpayers age 50 or older), taxpayers receive a tax deduction for every dollar they contribute
assuming they are eligible for the deduction. If you're in, say, the 22% marginal tax bracket,
a $6,000 contribution to your traditional IRA would save you about $1,320 in federal income
taxes — and this doesn't even include savings on state income taxes. Keep in mind, however,
the eligibility requirements for deducting your traditional IRA contributions. If you or your
spouse is covered by a retirement plan at work (even if they don't participate), your eligibility
to deduct your traditional IRA contributions may be limited or eliminated. Consult a tax
professional if you're not sure. Also keep in mind that in the long run, contributing to a Roth IRA
this year may make more sense, even though it won't benefit you on this year's tax return.
If you're not sure what to do, consult a financial advisor. Another common last-minute tax deduction
is for HSA (health savings account) contributions. Of course, you only qualify to make these if you
were covered by a qualifying high-deductible health plan last year — if you're not sure
if your plan qualifies, check with your employer's employee benefits department or,
if you're self-employed, your plan administrator. HSAs are particularly cool because not only can
you deduct contributions you make to them, but the earnings also grow tax free (and can be
withdrawn tax- and penalty-free) if you use them to pay for qualified medical expenses, including
accrued medical expenses you've saved receipts for over the years. And once you turn age 65,
you can tap into your HSA for even non-medical expenses, though you would pay tax (similar to
traditional IRA distributions) on the amount taken out for non-medical expenses. Alright,
folks, those are my three last-minute tax filing tips to all you tax procrastinators out there,
I have some other tax videos along the side of the screen here, one is for those of you who haven’t
filed your tax returns in a few years or more than a few years, there are specific strategies you
should know about when filing old tax returns, and I have another tax video right down here,
and I’ll see you in the next one, buh-bye.