Tax Take Two
Our deadline is April 15th. If you file an extension—you can do that—it requires a payment. So you have to send the form in along with the payment that you expect to make.
You can e-file with tax software. And if you family makes below a certain income limit, you can file for free with that software online at www.irs.gov. Even if your income goes above that limit, you can get the forms there that are available to anyone who wants to have those.
There is a program called VITA (Volunteer Income Tax Assistance), which is the volunteer tax preparers. Most of the time you’ll find those at local libraries.
The IRS has a smartphone app (IRS2Go). So if you’ve already filed, you can check on your refund status, you can get tax tips, even get some of your very own tax records through that app.
And don’t forget those IRA contributions. Those are also due by April 15th. The annual limit varies depending on the year, so check the limit. (2012’s annual limit was $5,000 for those under 50 with an additional $1,000 for those 50 and over. 2016’s annual limit was $5,500 for those under 50 with an additional $1,000 for those 50 and over.) The question usually is: Should you do a Roth IRA or a Traditional IRA? Well, check with your CPA. But a Traditional IRA can lower your tax bill. So it’s better to pay yourself than pay the IRS. With the Roth IRA, you don’t get the tax break now, but it will lower your future tax bill. There are some income limits for those. These limits vary depending upon the year, so check the limit. (In 2012, the income limit for couple’s contribution to a Traditional IRA was $92,000 and the Roth phases out at $183,000 for a couple.) Check with your CPA or tax preparer on those.
If you’re lucky enough to have a refund, you can get direct deposit—there’s no charge for that. But don’t spend it all. Spend half, and save half. And get ready for the next year. Most people tend to spend all of it, so this is one of the rare times when you have a lump sum in your hands. Go ahead and enjoy half of it, but take half of it and put it in a good savings account.
For tax payments in, you can do them electronically. You can use a credit card or a debit card, but there are fees of around 2% for that. So, it’s better just to write the checks.