Tax Time Can be Taxing...Here are Some Helpful Hints!

Have you finished your taxes yet? If you're like many Americans, you will procrastinate as long as you can--especially if you suspect that you will owe the IRS.

Calculating your taxes as early as possible doesn't mean you have to file before the deadline, but it does give you time to prepare for the results. If you find yourself owing taxes and are not sure how you will pay, consider the following advice.

Start saving. Look for simple ways to reduce your daily expenses. For example, by brown bagging your lunch, you may be able to save as much as $100 a week. This would enable you to save hundreds before the big day.

File on time. The penalty for not filing on time is generally 5 percent of the balance due per month. The IRS recommends filing your taxes even if you are unable to pay. If you truly can't get it done by April 15, file an extension.

Pay on time. The interest charged on late payments is determined every three months. During the last several years the interest rate has ranged from a high of 9 percent to a low of 4 percent.

Get Help. There are many institutions - including the government - who will loan you the money for a price. To request a payment plan, complete Form 9465, Installment Agreement Request, and attach it to the front of your income tax return. If your obligations don't end with the IRS, seek help from the nonprofit Money Management International.

Don't compound the problem. If you are tempted to pay your taxes with a credit card, consider the true cost of credit. The last thing you want to do is roll your tax bill into a revolving credit card balance that you will be paying on this time next year.

Change your W-4. Be proactive to avoid being hit with the same surprise next year. Contact your company's personnel department to reduce the number of deductions you claim or have extra money withheld.

To make filing your taxes easier, consider using the Electronic Federal Tax Payment System (EFTPS). The EFTPS enables tax preparers, businesses and individuals to pay federal taxes electronically using a variety of payment methods.

Before you send...

According to our friends at Money Management International, before mailing your return, double check for common mistakes that may delay your refund.

Do Due Diligence. Make sure you supplied the correct social security number and verify that your return is signed and dated.

File on Time. There is a penalty for missing the deadline. Believe it or not, one of the most common mistakes is failing to file a return when due a refund. According to the IRS, taxpayers forfeit refunds if a return requesting a refund is not filed within three years of the due date.

Have a Plan of Action. Perhaps the toughest tax time comes after you file. Whether you are anxiously awaiting your tax refund, or find yourself owing the IRS this year, the key is to be prepared with a great plan. That's where SimpliFi can help!

Before you spend...

For many, tax time is the most anticipated season of the year. In fact, for consumers receiving a refund, it's "payback time." Before you take the money and run (to your nearest mall or entertainment venue), it pays to have a plan. Smart splurging can actually help keep your budget on track because it can keep you from feeling deprived. The following steps should help you self-indulge with a clear conscience:

Determine the treat. Make sure your splurge is worth every penny. Start by making a wish list and prioritize. For each item, ask yourself if it is something you will use, enjoy, or remember this time next year.

Make sure it works with your budget. Review your budget and make sure your priorities are paid first. The average family has a credit card balance of $7,000, and pays out $1,000 a year on interest alone; perhaps the greatest luxury is to pay down debt.

Be smart at checkout. Plan ahead and stick to your plan of what to buy, when to buy, and where to buy. Don't be trapped by impulse buying. Commit to shopping around for the best deal.

Stick to the refund. Don't allow this spurge to cost you later. If your refund amount is not enough to cover the cost of your splurge, consider having a garage sale, collecting spare change, or working overtime to come up with the extra cash.

Finally, it is human nature to "want" things that you don't really need. Understand that you will always have wants, but it may not be financially responsible to indulge in every desire. An occasional treat or splurge is more enjoyable when it is planned and affordable.

Source: Our friends at Money Management International help us educate and inform our consumers about their financial choices. They are not accountants and cannot answer tax-related questions. For tax information visit www.irs.gov.