Make a “last-minute’ Estimated Tax Payment
If you didn’t give enough money to the IRS over the course of a year, you may receive a large tax bill and owe significant interest and tax penalties. IRS rules state that you must pay 100% of last year’s tax liability or 90% of this years tax or you will owe an underpayment penalty. However, if you make an estimated payment by January 15, you can delete any tax penalties from the 4th quarter of the year. In order to remove penalties from all quarters, you must make an estimated payment at the end of each quarter. Remember: don’t pay too much, it’s better to owe the government some money than to expect a refund.
By organizing your tax records, your taxes will not be lowered, but you will find some rewards. Keep all of your documentation in order to avoid a panic at tax return time. The documentation includes the previous year’s tax return, the current year’s W-2’s and 1099’s as well as receipts. The personal finance software, Quicken, is one way to ensure that you will be organized and ready for tax season. Quicken will allow you to have quick and easy access to all the information you will need.
Find the Right Forms
You can find all of the forms and publications you will ever need at www.irs.com. This site contains documentation dating back to the early 1980s, which can be found by their number or date. The IRS will refer you individually to a private website that has state forms and publications. www.Turbotax.com is a helpful site that has all of the tax forms you need. Checking out turbotax removes the struggle of figuring out which forms you need.
File and Pay on Time
Make sure to file form 4868 by April 15 of the upcoming year if you cannot finish your return on time. Form 4868 gives you a six month extension on the filing deadline. On that form, it is important that you give a reasonable estimate of your tax liability for the previous year and pay and balance due. If you file and pay late, the IRS can tag you with a late-filing penalty of 4.5 percent per month of the tax owed and a late-payment penalty of 0.5% a month of the tax due. It is crucial to file a 4868 if you are running late on your tax filing and payments.