4 Things Tax Procrastinators Need to Know About Oct. 15
According to the IRS, more than 12 million taxpayers filed for extensions this year, and many of them haven't yet filed their returns.
If you filed to get an extension back in April, then your extra six months of preparation time is almost over. Here are some things you need to keep in mind as you finally get to work preparing your taxes.
1. You Might Still Have More Time
Even though Oct. 15 is the last-gasp deadline for most taxpayers, some special provisions allow certain people to get even more time to file their returns. Members of the military who are serving in combat zones, including Afghanistan, usually have 180 days after they leave the combat zone in order to file returns and pay taxes. In addition, due to the devastating natural disasters in Colorado, taxpayers in certain counties affected by flooding, landslides, mudslides, and severe storms will have until December 2 to file.
Most people, however, won't qualify for these rare exceptions. In particular, don't expect a government shutdown to save you from the Oct. 15 deadline, as you will still be responsible for filing your return on time -- even if there aren't any IRS workers to offer you assistance with your return.
2. Can't Pay? File Anyway
Many taxpayers assume that if they don't have the money to pay their taxes, then there's no point in filing a return. But the penalties that the IRS imposes are much larger for those who don't file a return at all than they are if you file a return but can't pay on time.
Specifically, the IRS will charge you 5 percent of your unpaid tax bill every month that your return is filed late, up to a maximum of 25 percent. But if you file on time and merely pay late, that penalty is just 0.5 percent per month -- a tenth as much.
3. Didn't Pay in April? You Might Owe Penalties
Even if you got an extension back in April, you could still owe penalties if you show an amount due on your October return. That's because the automatic six-month provisions only give you an extension of time to file your return, not to pay the tax you owe. Even if you paid some of your taxes based on your estimated tax liability back in April, you could still be on the hook for penalties if you guessed wrong. Be sure to look at this information from the IRS to see if you qualify for an exemption from penalties.
4. Self-Employed Workers Can Get an Extra Tax Break
One way that last-minute filers get extra tax savings is by contributing to a traditional IRA. Unlike most deductions, which have to be based on actions taken before December 31, IRA contributions can qualify up until April 15. But even if you get an extension, regular IRA contributions can't qualify for 2012 tax year deductions after the April 15 date.
However, self-employed workers who have either an SEP-IRA or a solo 401(k) plan can make additional contributions for the 2012 tax year through the Oct. 15 deadline if they requested an extension on their taxes. So if you have self-employment income and are looking for an extra tax break, funding an already-existing SEP-IRA or solo 401(k) can save you some money.
With less than two weeks before the deadline, you can't afford to procrastinate any longer. Use these tips as motivators to help you get your taxes done before it's too late.
You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+.