Tax Day is April 15
The only certainties in life are death and taxes, right? What’s not always so certain, however, is when those taxes are due, how much you owe or what you need to do to file them.
What is Tax Day?
Tax Day 2019 is April 15, and it refers to the deadline to file your individual income taxes on money you earned in the previous year. Usually, you pay taxes on income earned throughout the year as you earn it, either through withholdings via your employer or via the quarterly estimated self-employment tax you submit throughout the year.
Then, at the beginning of the following year (always on April 15 unless it is a weekend or holiday) you file your tax return with the IRS. Your tax return is the paperwork you file showing what you calculate to be your taxes owed, including all income sources and deductions. If you calculate that you owe more than what you’ve already sent to the IRS, send a payment along with your paperwork. If, on the other hand, you were able to take a lot of deductions and credits to lower your taxable income and you end up overpaying your taxes, the IRS will send you a tax refund, usually electronically or via check. In addition to filing federal taxes, you have to file state income taxes for income earned in that state. These taxes are usually also due on April 15.
If you live in Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida or Alaska, you’re in luck, as those states don’t have income tax on ordinary earned income, though you may owe on income from dividends and interest in Tennessee and New Hampshire. If you live in one state and earn income in another, you may have to file two sets of state income taxes. Check with your state’s Department of Revenue to determine filing dates and reciprocal agreements between states for your specific situation.
What You Need to Prepare to File Your Taxes
Sharpen your number two pencil and get out your calculator. Just kidding. Prepping to file really just entails rounding up all the documents you need. These includes:
- Your W-2 earned income report from your employer
- 1099 forms if you are a contractor
- Records of mortgage interest paid
- Student loan interest paid
- Records from the sale of stock
- Unemployment or social security income received
- Tuition paid
- And any records pertaining to your business and its income and expenses.
After you’ve compiled your paperwork, fire up the old online tax software or sit down with your CPA and get cracking. Know what your tax situation entails because that will tell you what forms you need to fill out. Everyone will start with the 1040 form, but if you have a business or are a self-employed contractor, you will also need to file a Schedule C. If you have mortgage interest to deduct, have investment earnings or have any other non-employment income, there are more forms for those situations as well.
Most people benefit from the standard deduction but if you have high medical bills, gave a lot to charity or paid out a lot in state or local taxes, it may be in your best interest to itemize. If that’s the case, you’ll need software or a tax professional to help you walk through that process to make sure you calculate correctly and find all the deductions available to you.
Where You Can File Your Taxes
If you just have employment income or another straightforward tax situation, you may be eligible to file your taxes online for free through IRS Free File, TurboTax, TaxSlayer, TaxAct or H&R Block. If you need the additional forms as mentioned above, make sure you sign up for the paid version of any of these software services that best suits your needs. Filing online is not as daunting as it may seem and if you sit down and slowly walk through the tax software an hour at a time, it’ll be done sooner than you think.
You can start and stop, and the software will save your progress along the way so there is no need to block out an entire weekend to do nothing but get up close and personal with tax forms. If, on the other hand, you feel you need some hand-holding or the online software makes your head spin, hire a CPA that you can sit down with and talk through your personal tax situation. It will cost you more to hire a tax professional but hiring a trustworthy professional to navigate these waters is a worthy price for peace of mind.
Working with a tax professional is best done in advance, with time blocked out for you to walk him or her through your returns and gather all the paperwork he or she requests. Showing up at a CPA’s office on April 11 with an armload of receipts will cause a headache and increased fees for both of you. Here's a comparison of our favorite tax prep software, TurboTax or H&R Block.
What To Do if You’re Not Ready to File or Need An Extension
If you need an extension, you can request a six-month extension as long as you get the request in by tax day. If you’re a member of the military, were in a combat zone and didn’t get around to filing, you usually have 180 days after you leave to file and pay your taxes. There is no penalty to request an extension, but the extension only extends the due date to file your return paperwork. The taxes are still due, and if you owe and end up paying late when you file late, you may be subject to a late-payment penalty.
Other Tips and Tricks
If you’re raring to get your taxes filed and off your to-do list for the year, you can usually file by late January or early February. In 2018, the IRS began accepting 2017 tax returns as early as January 29, so it’s likely they will do the same again this year. If you are due a refund, don’t delay filing to get your money back. That money is a free loan to the government that you could have spent or invested throughout the year. If your refund is based on overpaying throughout the year, check with your employer to update your W-4 and keep your withholdings as low as possible to cover your tax liability without overpaying.
Getting prepped for tax day doesn’t have to be daunting. Know in advance that you need to file by April 15 and get your ducks in a row so you file on time or early and avoid any penalties from the IRS.