File tax extension: Official IRS dos and don’ts

Tax Day comes Tuesday. Ready? Not everyone is.

Five days before the deadline, about 104 million taxpayers had filed returns and nearly 40 million taxpayers had yet to file, federal officials said. The Internal Revenue Service expects about 13 million taxpayers will not file a full tax return by the deadline.

So what do you do if you think you’ll need more time?

DO: File for an extension by Tuesday, April 18. That buys you six months to file a full return by Oct. 16, 2017.

DON’T: Think this has no financial consequences.

“If you owe taxes, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 18,” an IRS statement says. “The interest rate is currently four percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.”

DO: Use IRS Form 4868.

There are three ways to request an automatic extension, the IRS says: 1. You can 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.  2. You can file Form 4868 electronically by accessing IRS e-file using your home computer or by using a tax professional who uses e-file. 3. You can file a paper Form 4868 and enclose payment of your estimate of tax due.

DON’T: Freak out.

“With the tax deadline approaching, taxpayers shouldn’t panic,” said IRS Commissioner John Koskinen. “The IRS has many options available to help people as they finalize their tax returns or if they need to get extra time to file.”

Tax season is here. File early to try to beat the tax refund thieves

Tax filing season starts Jan. 31
Tax filing season starts Jan. 23.

Tax season is here, and as you gather and receive information to prepare to file, the Florida Office of Financial Regulation warns that scammers are ramping up as well.

To avoid becoming a victim of criminals who file fraudulent tax returns using stolen identities, remain vigilant and file as early as possible, the OFR advises.

The IRS will begin accepting returns Jan. 23, and individual returns are due by April 18.

Many thieves see tax refunds as an easy target because they only require a name, Social Security Number and date of birth to file. Anyone who holds a Social Security Number may be at risk. Still, there are some simple, effective steps to reduce your risk of becoming a victim.

Here’s the OFR’s advice on how to reduce your risk:

  • Filing your taxes early in the season. Fraudsters typically file false returns as early as possible so that the IRS receives the false return before the legitimate one. Your risk for identity theft drastically decreases when you collect and file your information early.
  • Using a secure internet connection, if you file your taxes online. Also use an electronic device that you trust.
  • Taking your tax return directly to the post office if you plan to send it through the mail. Leaving your return in your mailbox can be risky and make you more vulnerable to identity thieves.
  • Doing your research before handing over your personal information to a tax preparer. Make certain that you are using someone credible and trustworthy.
  • Being wary of IRS phone and email scams. The IRS will never contact you by phone or email if they need information. Never provide personal information over the phone to a so called “IRS agent.”

April 18 is tax day: Americans to pay $1.62 trillion, up from $1.54 trillion

April 18 is tax day.
April 18 is tax day.

Tax Day is Monday, and  personal finance website Wallet Hub has released some startling statistics about income taxes.

This year income taxes are due by April 18, due to Emancipation Day, a holiday celebrated in Washington, D.C.

Americans will pay an estimated $1.62 trillion in individual income taxes, up from $1.54 trillion in 2015.

More than 200 million Americans interact with the IRS each year, more than three times any other federal agency.

The average refund is $2,945.

Here are some more factoids:

  • 30.5 Minutes: Wait time for calls to the IRS in 2015.
  • 62 percent: Of calls went unanswered in 2015.
  • 6.1 Billion Hours: Time it takes Americans to do their taxes each year (16 hours per person).
  • 35 percent: Of taxpayers would rather discuss sex with their kids than do their taxes.
  • 27 percent: Of Americans would get an IRS tattoo to avoid taxes for life.
  • 60 percent: Of taxpayers will get professional tax help in 2016
  • $270: Average amount spent completing and filing in 2015
  • 92 percent: Of the federal government’s revenue comes from income taxes
  • 1.2 million: People get audited every year.
  • 150 million: Income tax returns will be filed in 2016.

What are the top 10 most overlooked tax deductions?

Check to see if you qualify for some little-known tax deductions.
Check to see if you qualify for some little-known tax deductions.

It’s income tax time, and the hunt for deductions is under way. TurboTax has compiled a list of the top 10 most overlooked, little-known tax deductions and credits.

» RELATED: Obamacare’s impact is costly surprise for some taxpayers

Charity Mileage

Everyone knows you can deduct charitable contributions but not work you do for charity. But did you know you can deduct the cost of transportation to a charitable event? Heading to a fundraiser? Keep track of your mileage and deduct it come tax time.

» RELATED: Identity-theft related tax fraud remains the top scam

Home Office

The self-employed are eligible for a variety of tax deductions that other workers aren’t. They can deduct a portion of the cost of utilities or even rent for their home office as well as magazines they subscribe to or member organizations in their career field.

Disaster Recovery

If your home was struck by a natural disaster for which federal aid was issued, you could be eligible to deduct uninsured costs you paid in getting your life back together.

Mortgage Refinancing

Refinancing your mortgage could pay off in more ways than one. You will save each month on the interest for your home loan, and you can deduct any loan points you pay on the refinance.

Medical Insurance Premiums

You can deduct the cost of medical insurance premiums that surpass 10 percent of your adjusted gross income, even if you are covered in an employer plan; for those who are self-employed, the 10 percent threshold for health insurance premiums is removed.

Classroom Materials

Educators, including K-12 teachers, teacher aides, instructors or principals, can get an above-the-line tax deduction for materials they buy for use in classrooms. Because it’s an above-the-line deduction, itemizing isn’t required for this deduction.

Financial Planning

Keeping your finances healthy also could land you a healthy tax deduction. Tax planning and investment expenses can be deducted if you itemize and the costs exceed 2% of your adjusted gross income. Investment expenses could include phone calls to your broker or even subscriptions to financial publications like Forbes and Fortune.

Working parents

Parents who work and leave their children with a caregiver are eligible for a tax credit to offset the cost of a baby sitter, day care, nursery school or preschool. Limitations on the credit include the age of the child and the percentage of the credit.

Moving Expenses

Lucky enough to find a new job, but bummed that  it’s in the next state? You can deduct what you spend packing and moving your belongings as well some costs for storage, insurance, transportation and lodging associated with the move. There’s no limit to the deduction, but your new job must be at least 50 miles farther from your home than your old job.

Mileage from one job to another

For most people, the costs they incur heading to and from work every day are not deductible. For part-time workers, however, if you work two jobs, you can deduct a portion of the costs of getting from one job to the other.