3 tax moves to make October less scary
Tuesday, October 01, 2024
Updated Oct. 3, 2024, to include tax relief in newly declared major disaster areas.
October is a scary month. Of course, there’s Halloween. As an adult, I’ve learned one of the most frightening things is a bad Oct. 31 costume party!
It’s also the time of year when weather turns colder, sending a chill along the spines of those (me!) who prefer warmer weather.
And scariest of all, it’s the start of the final quarter of the annual tax year.
If you got a filing extension, you’ve got to face your fears and submit that extended Form 1040 by Oct. 15 or potentially pay the price in late-filing penalties. Beyond that, there’s only three months left to make some moves that could cut your 2024 tax bill.
I don’t want to add to the month’s fright fest, so let's make things easy. Here are just three moves to make this October.
1. File your 2023 tax return. You were smart to get more time earlier this year to finish your tax return. It’s much better to file later and correctly, than rush through the process in April and make costly mistakes.
But now you're in the same situation you were in earlier this year. Tax time is running out, quickly.
The deadline is Tuesday, Oct. 15. And it is the last day you have. No more extensions.
The Internal Revenue Service has some suggestions for very last-minute filers. My post back in August also has tips on wrapping up this tax task. But today, as the deadline nears, I want to focus on two topics.
First, if your adjusted gross income is $79,000 or less, you can use Free File, the IRS’ online no-cost tax preparation and e-filing tool. This year, eight tax software companies will be available for eligible taxpayers to use through Oct. 15.
Second, if you still owe taxes, you need to pay as much as you can, as soon as you can, and by Oct. 15 at the latest.
Unfortunately, too many taxpayers find themselves in this predicament every year. They underestimated their tax bill when they submitted Form 4868 to get the form filing extension. Then they panic when, in finally completing their Form 1040, they see their full tax due.
By paying at least some of your tax liability when your file your extended return, you let the IRS know that you know you owe. Then look into the payment options offered by the tax agency.
Yes, the IRS’ interest rate isn’t great. It’s been at 8 percent much of this year due to, you got it, inflation. But that’s still much less than the interest charged by credit cards or for a personal loan.
Even with the relatively low interest rate, you want to start cutting into your tax bill, since late-payment penalties and interest charges, compounded daily, will keep adding up until your tax debt is satisfied.
2. Make sure the Oct. 15 deadline applies to you. The United States has been ravaged by disasters this year, meaning the IRS has granted a lot of taxpayers across the country tax relief. That typically includes later filing deadlines for a variety of tax obligations.
In many cases, the Oct. 15 deadline for taxpayers in disaster areas who got filing extensions and other deadlines, well, extended. In fact, the IRS today added relief for taxpayers in seven states in Hurricane Helene’s path, as well as for some Illinois and Washington state taxpayers hit by severe storms and wildfire, respectively, this summer.
The box below lists the dates for affected states, along with links for more information, where the IRS has granted disaster-related relief, including later tax due dates.
Nov. 1, 2024, for taxpayers in the nine states listed below.
Feb. 3, 2025, for taxpayers in 13 states and 2 U.S. territories. They are in Connecticut, Florida, Illinois, Kentucky, Louisiana, Minnesota, Missouri, New York, Pennsylvania, South Dakota, Texas, Washington, Vermont, and the territories of Puerto Rico and U.S. Virgin Islands. May 1, 2025, for taxpayers in seven states in Hurricane Helene’s deadly path. The disaster areas cover the entire states of Alabama, Georgia, North Carolina, and South Carolina, and parts of Florida, Tennessee, and Virginia. If you're dealing with a natural disaster, you can find more in
|
Note, too, that members of the military serving in combat zones can get an extra 180 days from their last day in those dangerous areas to file their tax returns. You can get more information at the IRS web page on combat zone service extended deadlines and IRS Publication 3, Armed Forces Guide to Taxes.
3. Add to your retirement savings. The youngsters get bags full of goodies on Oct. 31, but we grown-ups can treat ourselves throughout the month by bulking up our retirement savings.
The sooner you contribute, the more the power of compounding will work, this time, in your favor. If you have a workplace retirement plan and your employer matches your contributions, make sure you’re putting in enough to get the most out of your company’s portion.
You also can contribute to an individual retirement account, either traditional or Roth. Sure, you have until next year’s Tax Day to make your 2024 contributions. That's up to $7,000 to either type of IRA; $8,000 if you're 50 or older.
While Roth IRAs mean no taxes on distributions when you retire, traditional IRAs are still popular because if you or your spouse don't have retirement plans at work, you can deduct your full IRA contributions.
And inflation adjustments to 2024 income ranges that apply to tax-favored retirement plans mean that more people can make tax deductible contributions to a traditional IRA, contribute at all to a Roth IRA, and/or claim the Saver's Credit.
Other October tax moves: If any of these actions or deadlines apply to you, make them this month. Definitely do so by the appropriate deadline(s).
And if you've already broken into your candy stash for trick-or-treaters and are on a sugar high looking for more October Tax Moves, check out the ol' blog's right column. The October 2024 tax tasks list is in its usual place, just under the digital clock counting down to the even closer Oct. 15 extended filing deadline.
Once you get your tax tasks out of the way, Halloween’s scares will be a piece of cake. Or rather a candied apple or a miniature candy bar or two or…!
Advertisements
🌟 Explore Prime for Young Adults 🌟
The text link above is an affiliate ad. If you click through and then buy a product, I receive a commission.
Comments
You can follow this conversation by subscribing to the comment feed for this post.