Ten tips to make last-minute tax filing easier

Get some tips that might allow you to save time, avoid mistakes, and maybe lower your taxes.

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Filing your income tax return early is a worthy goal, but a last-minute rush to beat the mid-April deadline is an annual rite of spring for many taxpayers. Maybe you are waiting to receive all your documentation or to make an additional IRA contribution. Or, perhaps, you are simply a procrastinator.

Whatever your reasons for waiting, it’s important that you not allow the approaching deadline to distract you from filing a complete and accurate return, or from paying more tax than necessary, says Gil Charney, director of The Tax Institute at H&R Block.

“One piece of good news for people who haven’t filed yet is that the deadline is Monday, April 18, or Tuesday, April 19, if you live in Maine or Massachusetts,” Charney notes. “There can be a lot riding on filing a timely and accurate return, so a few extra days might help.”

To help you make the best of that extra time, here are some tips that might allow you to avoid mistakes and maybe even lower your tax bill.

Tip 1: Contribute to an IRA, SEP IRA, or HSA.

There aren’t as many opportunities for lowering your tax bill after the end of the tax year, but the options you do have—contributing to a traditional IRA, Simplified Employer Pension (SEP) IRA, or Health Savings Accounts (HSA)—can provide significant savings. If you qualify, you can contribute to any of these plans right up until the tax-filing deadline and your contribution may reduce your taxable income and, in turn, your 2015 taxes if you are eligible for the tax deduction.1

The 2015 contribution limits for an IRA are $5,500, or $6,500 if you have reached age 50. For an HSA, the limit for single taxpayers is $3,350 ($4,350 for age 55 and older), and for families, $6,650 ($7,650 for age 55 and older). The 2015 contribution limit for a SEP IRA, primarily used by self-employed individuals, is the lesser of 25% of compensation or $53,000. Before you make a contribution, however, make sure you understand the rules and limitations.

Tip 2: Evaluate whether itemizing deductions is worth it.

Itemizing your deductions, as opposed to taking the standard deduction, might significantly lower your tax bill. But for some taxpayers, itemizing can be a time-consuming process that produces little or no additional tax savings.

Itemizing is likely to be worth the effort if you pay mortgage interest or real estate taxes, make substantial contributions to charities, have large medical bills, or have large unreimbursed employee business expenses. Otherwise, you might consider taking the standard deduction, which for 2015 is $6,300 for single taxpayers, $12,600 for married taxpayers filing jointly, and $9,250 for head-of-household taxpayers.

Tip 3: Deduct all your eligible charitable contributions.

The rules for documenting charitable contributions have gotten stricter, but they aren’t as daunting as they might seem. All you need for a cash contribution of under $250 is a receipt. Contributions above that amount also require a letter from the charity. Most charities will issue a letter (and send it via email) if you can’t find it in your records. Learn more in the IRS article: Charitable Contribution Deductions

Also, remember that if you donate noncash items, you can deduct only their fair market value. Estimating the value of a 20-year-old sofa in good condition might sound like a lot of trouble, but most tax preparation software, as well as many charities, provide valuation guides to help make the process easier. 

Tip 4: Unless you have major medical expenses, skip adding them up.

If you decide to itemize deductions, you still might want to consider skipping the process of adding up your medical expenses. The threshold for deducting medical bills has gone up for the 2015 tax year to 10% of adjusted gross income (7.5% for people age 65 and older). That’s a high hurdle to get over for most taxpayers, so unless you had major unreimbursed medical bills or expensive long term care insurance premiums, your expenses probably won’t be deductible. Learn more in the IRS Tax Tip: Claiming a Tax Deduction for Medical and Dental Expenses.  

Tip 5: Remember the “extenders.”

Congress made a collection of popular tax breaks—often referred to as the extenders—permanent. Among the most popular are the option to deduct state and local sales tax instead of income tax, a deduction of up to $250 for teachers who buy classroom supplies with their own money, a deduction of up to $250 for workers who received commuting and parking benefits from their employers, and a credit of up to $500 for homeowners who make eligible energy-efficiency improvements.

Tip 6: Estimate your sales tax deduction if you didn’t keep receipts.

The option to deduct sales taxes rather than state and local income taxes has been a great tax saver for taxpayers in states with low or no income tax. But keeping receipts for an entire year’s worth of purchases can be a hassle. Fortunately, you don’t have to. You can estimate your annual state sales tax using the IRS Sales Tax Deduction Calculator.

Tip 7: Estimate your home office deduction.

Similar to the rule that allows you to estimate your sales tax to save time, the IRS recently implemented a rule that makes it much easier to calculate deductible home office expenses. If your home office qualifies as a deduction, you can multiply the square footage of your home that you use exclusively for business by $5 per square foot to arrive at your deduction amount (300 square feet maximum). Otherwise, you need to add up qualifying expenses for your entire home and then multiply by a percentage that represents the portion of your home used as an office. Learn more in the IRS article: Home Office Deduction.

Tip 8: Go online to find investment-related tax forms.

If you can’t located Fidelity investment-related tax forms you think you should have, go to your Tax Forms page (login required). Also keep in mind that if you made a contribution to a Fidelity IRA this year for the 2015 tax year, do not use the information on the Form 5498 earlier in the year to fill out your tax return. Instead, report the total amount you contributed, including the 2016 contribution applied to last year. Fidelity will send you an updated Form 5498 for your records, but you aren’t required to send it to the IRS.

Tip 9: File your taxes online.

E-filing your taxes, whether directly through the IRS website or using tax preparation software, can save time by allowing you to fill out your information when it’s most convenient, and save you a trip to the post office. Of course, you’ll still have to gather up all your documents and enter the data.

Tip 10: Ask for an extension if you need one.

If you find that you simply can’t complete your return on time, don’t fret. Filing for a six-month extension is easy, and it beats making a mistake and having to go to the trouble of filing an amended return or perhaps owing a penalty. Do keep in mind, however, that a filing extension is not a payment extension. You must still send the IRS at least 90% of your tax liability by April 18 (or April 19 in Maine and Massachusetts) to avoid a penalty.

If you get stuck in a situation where you can’t pay all the tax you owe, don’t make the mistake of not filing your return until you have the money. Not filing a tax return when required is considered income tax evasion. In addition to the interest charges that would accrue from not paying, not filing compounds the problem with a penalty and possible fines.

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Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

1. For a traditional IRA, full deductibility of a contribution for 2015 for those who participate in an employer-sponsored retirement savings plan is available for those who are married filing jointly and whose 2015 modified adjusted gross income (MAGI) is $98,000 or less, or for those who are single and whose 2015 MAGI is $61,000 or less, with partial deductibility for MAGI up to $118,000 (joint) or $71,000 (single). In addition, given that spouse A is covered by a workplace plan and spouse B is not, full deductibility of a contribution is available for spouse B if household MAGI is less than $183,000 for 2015, with partial deductibility for MAGI up to $193,000. In 2016, the range for joint filers increases to only $184,000-$194,000.
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