Comet Corner features alumni who are experts in their fields who provide tips and insight on relevant topics.
The annual certainty of taxes is right around the corner. If you’re like most taxpayers, you may procrastinate to file your tax return. If that’s the case, financial and tax advisor Martin Navarro MS’14 is here to help. The certified public accountant has years of experience delivering tax returns and has offered up a few last-minute tips for preparing your taxes.
- Confirm deadlines. For your 2018 tax return, the deadline to file is Monday, April 15. If you live outside of Texas, there could be a different deadline due to state-specific holidays.
- Identify necessary documents and information. At the beginning of the year, you likely received several tax documents, such as a W-2 for employee wages, a 1099 for other sources of income and a 1098 for mortgage interest, qualified education expenses or student loan interest paid. Stay organized and keep everything in one place so you can quickly access the information when you’re ready to prepare your tax return or give it to your tax professional.
- Avoid common mistakes and take breaks. Don’t be a flustered filer. Slow down when entering your information, and check for math errors, incorrectly entered Social Security numbers and missed signatures or dates. Don’t try to complete your return in one sitting. Take breaks so you can return with a fresh set of eyes and avoid preventable last-minute mistakes.
- Compare your 2018 and 2017 returns. Using last year’s return gives you a reference point for this year’s return. If your tax situation hasn’t changed significantly, looking at last year’s return should serve as a good benchmark to make sure there aren’t any glaring differences.
- E-file. According to the IRS, nearly 1 billion people have filed their taxes electronically since 1990. Electronically filing can mean a faster refund, more time to finish your return and more time to hold on to your cash that will be paid to the IRS.
- Know your responsibilities if you don’t meet the deadline. If you’re in a position where you cannot complete the return by April 15, you can request an automatic tax extension from the IRS with Form 4868, which gives you an extended deadline of Oct. 15, 2019. While an extension will give you more time to file your return and help you avoid any late-filing penalties, it will not give you more time to pay what you owe to the IRS.
- Understand what happens if you can’t pay. If you do not pay what you owe to the IRS when you file an extension, you will be subject to late-payment penalties and interest, so it’s important to pay as much of your tax bill as possible by April 15. If you file on time but do not pay, you will be charged a 0.5 percent penalty on what you owe each month until you’ve paid it off.
- Plan for next year now. Start planning now by estimating earning, deductions and what you may owe next year. Increase your withholdings or estimated tax payments if your estimated tax liability isn’t sufficiently covered by your current employer withholdings or estimated tax payments.