When it comes to saving for retirement, you know one thing to be true: more is always better. While this may be the case, some people don’t have enough time or earn enough money to reach their goals.
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Just a heads up if you haven’t already filed your income tax return - today is the last day to get your taxes paid on time.
Your mailed return must be postmarked or your e-filed return (with payment) must be electronically delivered by midnight to be considered on time by the IRS. Failure to pay the entire balance due can result in a late payment penalty.
This year’s April 18th due date comes three days later than normal. The Internal Revenue Service said taxpayers set a record this weekend for e-filed tax returns, topping 100 million for the first time.
If you owe more than $1000, be aware that you can be assessed an underpayment penalty. To pay this extra charge, you can either calculate it yourself or have your tax software figure it out for you and add the penalty amount to your tax payment.
Or, you can just pay your tax bill and request that the IRS send you a bill for the underpayment penalty. It may take them many months to get around to it, but you can be sure the IRS will send that bill eventually.
If you owe more than $1000 in taxes this year, consider changing your federal withholding with your employer to have more taxes taken out of each paycheck to avoid another penalty next year. You can fill out a new W-2 at any time of the year, and as many times as you need to.
If you are self-employed and owe more than $1000, you’ll need to send more to the IRS each quarter to cover your estimated tax payments to avoid a penalty next year.
Another option for self-employed people who also work a second job as an employee: raise your withholding at your regular job to cover your taxes for both your job and your self-employment income. Your paycheck may shrink considerably, but it will save you the hassle of saving for and sending estimated tax payments through the year.
Need more time?
If you can’t complete your tax return by the end of the day, request an extension. An extension gives you until October - another six months - to complete your return. The IRS doesn’t need you to give a reason for needing one.
All taxpayers can use IRS Free File to submit an extension. Taxpayers also can e-file an extension request using tax preparation software with their own computer or by going to a tax preparer who has the software. The IRS will acknowledge receipt of the extension request if you file by computer.
An extension only gives you extra time to complete your return, but doesn’t give you extra time to pay your taxes. Estimate your owed taxes as accurately as you can and send payment along with IRS Form 4868 by the deadline tonight or be subject to a late payment penalty from the IRS.
If you don’t owe any taxes or are due a refund, you will not be penalized for missing the tax deadline.
Internal Revenue Service