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Tax season is in now in full swing and millions of Americans are scrambling to file their taxes before the Apr. 18 deadline. An estimated one-third of Americans wait until the last-minute to do their taxes according to a recent study by IPX 1031: 32% procrastinate because they don't think they'll get a refund and 25% state the process is too complicated and stressful.
Estimates vary, but it's generally noted that a tax return can take somewhere between 10-15 hours to complete. But with only days left, there are options to get it done much quicker.
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It's no secret that completing your tax return is usually a lengthy process, but that process can help deliver you a solid refund this year. According to the IRS, the average return so far this year is over $3,200. So investing time into carefully processing and submitting your return can pay off.
But with a few days left until the due date, it's urgent to start the process now of submitting your return. Here are the steps to begin your tax filing:
First, find all of your documents
Everyone's tax return will look different, but generally, most consumers will need one or more of the following documents:
- W2 or 1099-MISC (income earned from work)
- 1098 (mortgage interest deduction)
- 1098-E (student loan interest deduction)
- 1098-T (paid tuition deduction)
- 1099-DIV (dividends and distributions)
- 1099-INT (interest earned from bank accounts)
- 1099-G (government payments)
Each of these forms should have been mailed to you directly by the week of Jan. 31. If you haven't received those forms yet, reach out to get those forms before you start filing your tax return.
Use a federally-sponsored tax software if you qualify
Many large tax software companies you see advertising during the tax season typically have an associated cost, although many of them have a free version for simple tax returns. But if your adjusted gross income (AGI) was less than $73,000 in 2021, you qualify to file your taxes online for free.
To get started, visit the IRS website to find a tax software that fits your needs.
Use a free or low-cost tax software
There are several options for online tax software to use to begin processing your tax return. However, before you select one that fits your needs, be sure to follow these tips:
- It may be easier to file on a computer rather than a cell phone.
- When you file, be sure you're using a network that is trusted and secured. A public Wi-Fi network like at a library or coffee shop could leave your information vulnerable to theft.
- Evaluate what your tax return looks like for the year. If you're tax return is simple with one or two W2 forms and a few deductions, one of the simple tax return software solutions will work just fine. If you're a real estate investor or own a business, you may need something more comprehensive.
You may be able to use the free version to process your return with ease, but others may need to spend a bit more to maximize their refund. If you decide to pay for a service, take a look at your credit cards in your wallet. Several credit card issuers are offering discounts on tax software purchases when you use their card. For example, my Blue Business® Plus Credit Card from American Express has an Amex Offer where I can earn $20 off after spending $90 on TurboTax.
Here are some of Select's top-ranked tax software to use:
Costs may vary depending on the plan selected
For simple tax returns only. Not all taxpayers qualify. See if you qualify.
Yes, costs extra
$0 federal and state
Tax expert support
If you're scrambling and need more time, file an extension
If you need more time, that's okay. However, you can't simply just file your taxes after the deadline. By doing that, you will incur late fees and penalties.
To get an extension, you need to file Form 4868. Once you file this, you will have until Oct. 17 to complete your 2021 taxes.
However, if you believe you owe taxes, this extension doesn't buy you more time to avoid your tax bill. Your tax bill is still due Apr. 18. The IRS websites states, "When paying electronically, you must select Form 4868 as the payment type and the payment date to get the automatic extension."
There are three ways to file for an extension:
- Pay all or part of your estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System, or using a credit or debit card
- File Form 4868 electronically by accessing IRS e-file using tax software or by using a tax professional who uses e-file
- File a paper Form 4868 and enclose payment of your estimated taxes that are due
Filing your taxes can be a drag, but it's a necessary part of the personal finance journey. And if you're scrambling to meet the tax deadline, don't fret, as there are many services that can help make the process a bit simpler. But to avoid the same frenzy next year, setting up an organized system for your tax documents can make next year's tax filing a breeze.