Education
April 15th, Come She Will
With the rapid approach of Tax Filing Day (April 15, 2025, for Tax Year 2024), many Americans are hauling shoeboxes full of receipts to their kitchen tables, computer desks, or Tax Preparer’s offices. While the arrival of Tax Filing Day waits for no one, procrastinators abound, adding to the seasonal chaos.
We would be remiss if we didn’t mention that any taxpayer can file for an extension to the filing date. This is done using Form 4868, available at the website www.irs.gov. The filing extension is for 6 months, but there is a catch. All funds owed to the IRS for Tax Year 2024 remain due on April 15, 2025. Failure to get the money in on time will results in Interest charges and Late Fees. Knowing how much is actually due is the responsibility of the taxpayer.
These next 2 weeks present a great learning opportunity regarding your own tax situation, with an eye toward helping yourself, now and in future Tax Years. Here are a few reminders and pointers, for present and future consideration. These are just the “low-hanging fruit” in an educational process.
Deductible 2024 IRA deposits can be made until Tax Filing Day, saving tax dollars immediately. All or part of a Tax Refund can be deposited directly to a new or existing IRA. Also, consider making 2025 IRA Contributions as soon as possible, thereby providing more time for your IRA investments to grow in a tax-deferred environment.
Speaking of IRAs, if one spouse is not earning income, he or she may be eligible to open a Spousal IRA based on the earned income of the working spouse. The same tax deductibility applies, as does the tax-deferred growth for future years. This presents a win-win situation with no downside considerations.
Earned Interest on cash in taxable accounts can be increased using a High-Yield Savings Account at a prominent financial institution. With today’s rates, you generally earn more interest every month than you will in a conventional bank account over the entire year. After all, we should all have an Emergency Fund anyway, so why not maximize income on the “parked” funds?
Claiming the Standard Deduction, rather than itemizing deductions, is becoming the norm, as today’s historically large Standard Deduction frequently exceeds the value of itemized expenses. Due to the status of IRA Contributions as “above-the-line” deductions, these contributions reduce Taxable Income in addition to the Standard Deduction, making them more valuable than ever.
If you are owed a substantial Tax Refund, you have been loaning money to Uncle Sam for free. Changes in tax withholding can easily correct this situation.
If you are like most people, once your Tax Return is filed, all attention to learning more about your taxes gets put on hold until this time next year. Do it now to help yourself forever. April 15th waits for no one.
