As the federal tax deadline approaches, you may still have questions about submitting your federal, state, and business taxes. Think again if you believe your tax bill is set in stone at the end of the year. Despite most money-saving choices for deferring income or increasing deductions becoming considerably more limited after December 31, one can still do a lot to make tax season less expensive and easier. Talk to a Phoenix tax planning expert today to get the best help. Here are some tips to help you handle Tax Day.
- File on time
To be deemed “on time” and avoid late penalties and interest on what you owe, you must either file electronically or send your return by midnight on April 18. That way, by the time the deadline approaches, you will have a crucial timestamp (for e-filed taxes) or postmark (for mailed returns). You can file an extension if you cannot submit the file on time.
- If you can, file for free
According to the IRS, 70% of US taxpayers can submit their taxes for free through one of the IRS’s many IRS Free File partners. If you are concerned about being charged an unwanted forced upgrade fee at common online tax filing services like TurboTax, TaxSlayer, and H&R Block, check whether or not you qualify for free filing (including a free state tax return) before entering your financial information.
- Double-check your deductions
It is excellent if you are confident in the deductions your online tax software identified for your return. Nevertheless, there are two good chances for deductions that many taxpayers ignore, especially if you have some extra cash available:
- Make an IRA contribution: For the 2022 tax year, the limit is $6,000 for people under 50 and $7,000 for those 50 and above. Contributing to a traditional IRA can lower your tax burden. Contributions to Roth IRAs are not tax-deductible, but they can help you reach the yearly IRS retirement savings requirements, giving your money more time to grow.
- Max out your health savings account: If you have extra money, you can lower your tax obligation by maxing out your HSA and raising your deductions. Contribution limits for taxpayers covered by a high-deductible health plan in 2022 are $7,300 for families and $3,650 for singles. Each spouse who is 55 or older increases the donation maximum by $1,000.
