Tax Day Guide! Everything You Need to Know Before April 15

📅 Key Deadlines and Extensions

• April 15, 2025: Deadline to file your 2024 federal income tax return and pay any taxes owed.

• October 15, 2025: If you need more time, file Form 4868 by April 15 to receive an automatic six-month extension to submit your return. Remember, this extension applies only to filing, not to payment.

• Disaster Relief Extensions: Residents in federally declared disaster areas may have extended deadlines. For instance, those affected by 2024 disasters in certain states have until May 1, 2025, while residents of Los Angeles County, California, impacted by wildfires have until October 15, 2025.

💸 Penalties for Late Filing or Payment

Failing to meet tax obligations can result in significant penalties:

• Failure-to-File Penalty: 5% of unpaid taxes for each month your return is late, up to a maximum of 25%.

• Failure-to-Pay Penalty: 0.5% of unpaid taxes for each month the payment is late, also up to 25%.

• Interest Charges: Interest accrues on unpaid taxes from the due date until the balance is paid in full.

Filing on time, even if you can’t pay in full, can help minimize these penalties.

💰 Unclaimed Refunds and Credits

Don’t miss out on potential refunds and credits:

• Unclaimed 2021 Tax Refunds: Approximately 1.1 million Americans have unclaimed refunds from 2021, totaling over $1 billion. The median refund is estimated at $781. To claim these refunds, you must file your 2021 return by April 15, 2025.

• Recovery Rebate Credit: If you missed the third round of stimulus payments in 2021, you might be eligible for the Recovery Rebate Credit by filing your 2021 return before the deadline. 

• Earned Income Tax Credit (EITC): Eligible low- to moderate-income workers and families can claim the EITC, potentially worth up to $7,830. To claim the EITC for 2021, ensure your return is filed by April 15, 2025.

🛠️ Last-Minute Tax-Saving Opportunities

• Traditional IRA Contributions: You can contribute up to $7,000 ($8,000 if you’re 50 or older) to a traditional IRA for the 2024 tax year until April 15, 2025. These contributions may lower your taxable income, potentially saving up to $1,540 for someone in the 22% tax bracket.

• Health Savings Account (HSA) Contributions: If you have a high-deductible health plan, contributing to an HSA before the deadline can also reduce your taxable income.

🧰 IRS Tools and Resources

• IRS Direct File: A free, web-based tool available in 25 states, allowing eligible taxpayers to file directly with the IRS.

• IRS Free File: Available to all taxpayers, this program offers free tax preparation software for those with an adjusted gross income (AGI) of $84,000 or less.

• “Where’s My Refund?” Tool: Track the status of your refund within 21 days of e-filing.

⚠️ Common Tax Filing Mistakes to Avoid

• Incorrect Personal Information: Ensure that names, Social Security numbers, and addresses are entered accurately. Mismatches can lead to processing delays.

• Missing Income: Report all income sources, including freelance work, gig economy earnings, investment income, and gambling winnings. The IRS receives copies of all income forms and will notice discrepancies.

• Filing Status Errors: Choosing the wrong filing status can affect your tax liability. For example, some taxpayers mistakenly file as “Single” instead of “Head of Household,” missing out on potential benefits.

• Incorrect Bank Information: Double-check bank account and routing numbers to ensure timely and accurate direct deposit of refunds.

• Missing Signatures: For paper filings, ensure all required signatures are present. Unsigned returns are considered invalid.

👥 Special Considerations for Life Changes

• Newly Married Couples: Decide whether to file jointly or separately. Joint filing often results in a lower tax liability but assess your specific situation. Update your W-4 with your employer to reflect your new marital status and adjust withholding accordingly.

• First-Time Parents: Obtain a Social Security number for your child promptly to claim tax benefits. Explore credits such as the Child Tax Credit, Child and Dependent Care Credit, and the Adoption Credit if applicable.