MILWAUKEE -- Tax day is almost upon us and those who haven't filed yet may be feeling the pressure. Local financial advisor Brad Allen from Drake & Associates joins FOX6 WakeUp with a quiz and some tips for last-minute filers.
TRUE OR FALSE? WE CAN FILE AFTER THE DEADLINE.
The answer is True & False!
You can file after the new tax deadline of July 15th only if you file an extension. Even though the tax deadline was extended due to the coronavirus, some still may need extra time to get their taxes prepared. An extension will give you until October 15th to file. I have a link to the extension form on my website, wealthwisconsin.com.
Don't forget, even if you file for an extension, you can still get hit with a late payment fee if you owe money on your taxes and don`t pay by July 15th.
If you miss this deadline and don`t file for an extension, there are two penalties the IRS charges fees for: a late filing fee and a late payment fee.
BRAD: THERE ARE NO LAST-MINUTE RETIREMENT DEDUCTIONS YOU CAN TAKE. TRUE OR FALSE?
The answer is False! There is still time to lower your tax bill by increasing your retirement savings.
Contributing to your traditional IRA or 401(k) reduces your taxable income for the year. You can contribute to your IRA until July 15th of this year for your 2019 taxes.
Younger workers are capped at saving $6,000 in their IRAs for 2019. However, workers 50 and older can put $7,000 into an IRA.
You may even qualify for the Saver`s Credit depending on your income. Talk with a tax professional to see if you are eligible.
WHAT IS THE MOST COMMON MISTAKE PEOPLE MAKE ON THEIR TAXES?
A. Your Math
B. Your Bank Account and Routing Number
C. Your Social Security Number
It`s actually all of the above! Be careful entering numbers from your documents.
The IRS says some of the most common mistakes are wrong or missing numbers like your Social Security number.
If you`re using tax software, it will tell you of a math error, but it won`t know if you entered the number incorrectly.
Double check your bank account and routing number if you`re using direct deposit.
A wrong number could cause you to lose your refund entirely. There is no IRS procedure for replacing lost electronically transferred funds.
For a full checklist for your taxes from the IRS, visit my website!
NOW THAT WE`RE CAUGHT UP ON FILING THIS YEAR, WHAT DO WE NEED TO KNOW ABOUT THE UNIQUE TAX SITUATION WE COULD SEE NEXT YEAR?
The CARES Act allows for a $300 'above the line' deduction for charitable donations made in cash this year.
The new law also increases how much people can give of their adjusted gross income. Normally the limit is 60% of a person's AGI. The new provision allows cash gifts of up to 100% of adjusted gross income in 2020.
Remember, giving this year will have an impact when you go to file your taxes next year.
One thing retirees need to note: The CARES Act suspends required minimum distributions (or RMDs) from tax-deferred retirement accounts for 2020, allowing those who are 72 and older to forgo taking a required withdrawal from their account this year.
This might provide a significant tax break as retirees can leave money in their accounts and will not have to pay taxes on the distribution.