Fortunately for Americans who have really procrastinated on filing their income taxes, you get an extra three days this year. Today is Emancipation Day in Washington, DC, and because the IRS observes DC holidays, the usual April 15 filing deadline got pushed back to April 18 (April 19 if you live in Maine and Massachusetts).
So, to help those who have yet to file their Form 1040 avoid making mistakes and feeling overwhelmed, here is some last-minute tax guidance from the Illinois CPA Society.
Know Your Deductions
The standard deductions for 2015 tax filings, which can be claimed in lieu of claiming actual itemized deductions, are:
- $6,300 for those single or married and filing separately.
- $9,250 if filing as head of household.
- $12,600 for married taxpayers filing jointly and for qualifying widow or widower.
- Greater of either $1,050 or $350 plus dependent’s earned income up to $6,300 for a qualifying dependent.
In addition, qualifying taxpayers may be entitled to additional deductions on top of their standard deductions, including:
Home-office deduction. For taxpayers who are self-employed or work from a home office, the home-office deduction may be available. It’s calculated by deducting $5 for every square foot of work space used – up to a maximum of 300 square feet. So, the maximum deduction would be $1,500. The original calculation method also may be used – figuring actual expenses and how they may apply over the course of the year to a home office.
Health insurance premium deductions for self-employed. Business owners and self-employed taxpayers may deduct health insurance premiums, as long as they aren’t already covered under their employer’s or spouse’s employer’s plan.
Health savings account deduction. For 2015 tax filings, the maximum individual contribution limit to a health savings account was $3,350. The maximum contribution for family policies is $6,650. Contributions may be made up to April 15.
IRA Contribution Option
Looking to make a long-term investment that also offers a short-term tax break? Contributing to an IRA by the filing deadline might be a solid option.
Those in the 15 percent tax bracket who contribute $5,500 to their IRAs may earn a tax deduction of $825. Plus, taxpayers in the 25 percent bracket making the same IRA contribution would save $1,375. Special rules may apply if you or your spouse were covered by an employer’s retirement plan at work.
Filing Extensions and Penalties
Accounting professionals can help last-minute filers with Form 4868 for a six-month filing extension. No reason for a filing extension is necessary, but an extension is only for added time to file paperwork and does not buy you more time to pay. Tax payments owed to the government still must be made before the April 18 deadline.
Paying tax after April 18, even with a timely extension, may result in added interest and penalties. Late-payment penalties are 0.5 percent per month for every month payments are late and some minimum penalties also apply.