7 last-minute tax filing tips for 2022

It’s go time, procrastinators.

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The official Internal Revenue Service deadline for filing your 2021 tax return is today, and here’s what you need to know:

1. Make the deadline.

Filing your returns on time means either electronically filing or mailing your return by midnight April 18. Proving you did so requires either a timestamp for e-filed returns or a postmark for mailed returns that document the date filed.

2. Filing an extension is a perfectly acceptable option.

If you know you’re going to blow Monday’s deadline, filing an extension is your best bet for avoiding late filing and payment penalties. Not only does an extension buy you six additional months to file your return, it also allows you to dodge the automatic late-filing fee of 5% of your unpaid balance per month, capped at 25%, CNBC reported.

Remember, though, that extensions do not cancel taxes owed.

“If you do not pay your 2021 liability by April 18, you will be subject to penalties and interest on the amount you do land up owing for 2021,” Gail Rosen, a certified public accountant in Martinsville, New Jersey, told Forbes.

“Penalties plus interest are a very expensive interest rate on a loan. So don’t look at an extension as a way of putting off the inevitable pain of paying,” she added.

3. Paperwork. Paperwork. Paperwork.

Documentation is key to avoiding IRS scrutiny, so be certain you have the appropriate forms for each type of income reported, as well as the appropriate paperwork to support write-offs when itemizing. According to CNBC, the most common of these forms include, but are not limited to:

  • W-2 from your job
  • 1099-NEC for contract work
  • 1099-G for unemployment income
  • 1098 for mortgage interest
  • 5498 for individual retirement account deposits
  • 8606 for nondeductible IRA contribution
  • 5498-SA for health savings account contributions
  • 1099-B for capital gains and losses
  • 1099-DIV for dividends and distributions

4. Double-check those deductions.

Eric Bronnenkant, with New York-based financial advisory firm Betterment, told Forbes that filers often overlook two prime deduction opportunities: IRA deductions and HSA deductions.

Bronnenkant recommended “maxing out” traditional or Roth IRA contributions by the April 18 deadline to boost long-term savings.

“The 2021 contribution limit for [IRAs] is $6,000 for individuals under 50 and $7,000 for individuals 50 and older,” he told Forbes, explaining that traditional IRA contributions are made pre-tax, reducing your overall tax bill.

Meanwhile, contributions to Roth IRAs are not tax deductible, but can still help you maximize the annual IRS retirement savings limit, giving your money more time to grow, Bronnenkant said.

By contrast, health savings accounts provide an accessible pool of tax-free funds for medical expenses that he called “triple-tax advantaged” because not only are the contributions made pre-tax, but also the earnings generated are tax-deferred and “withdrawals for qualified medical expenses are tax free.”

According to Forbes, the 2021 contribution limit for taxpayers covered by a high-deductible health plan is $3,600 for single individuals and $7,200 for families, and each spouse who is 55 or older adds another $1,000 to the contribution limit.

5. Don’t forget that investment income.

Investment income often falls into the out-of-sight. out-of-mind category which can unintentionally complicate your return.

Ryan Marshall, a certified financial planner and partner at ELA Financial Group in Wyckoff, New Jersey, told CNBC that filers frequently forget about Form 1099-B for capital gains and losses and Form 1099-DIV for dividends and distributions.

“There is a common misconception that if a client didn’t physically receive payment from their investment, then it is not taxable,” Marshall said.

Meanwhile, Marianela Collado, a CFP and CPA at Tobias Financial Advisors in Plantation, Florida, told the network that forgetting to file Form 8606 for nondeductible IRA contributions can create headaches – and additional costs – because without such documentation, so-called “Roth conversions” that bypass income limits for Roth IRA deposits may result in your being taxed on the same income twice.

6. Omitting unemployment benefits can really bite you.

Even if you already paid taxes on your unemployment benefits, those earnings need to be reported because the IRS does not play when income figures do not match.

“Many people forget that they may have collected just one or two checks,” CPA and finance coach Tatiana Tsoir told Forbes, noting that your return can be rejected if those figures are out of balance.

7. Check for simple mistakes.

Before filing, ask yourself:

  • Did you spell your name correctly?
  • Is your Social Security number correct?
  • Did you enter your employer’s employer identification number on your 1099 or W-2 correctly on your return?
  • Are your calculations correct if you’re filing a paper return?
  • Is your bank information, including your routing and account numbers, correct?
  • Did you sign and date your return if filing by mail?