PARAMUS, N.J. --- Where are you with your taxes, Bergen County residents?
If you haven't done them yet, you're not alone. The Internal Revenue Service reports that 20 to 25 percent of all Americans wait until the last two weeks before the April 15 deadline to complete their returns, leaving folks two alternatives: file pronto or request an extension.
Ridgewood resident Christopher LaBarbiera, CPA, a Managing Partner at Matthews, Panariello P.C. in Paramus, offers the following suggestions for last minute filers:
Money Saving Tips:
- If you are employed (W-2), you can contribute up to $5,500 to a traditional IRA, and if you are 50 and over, that contribution increases to $6,500. The contribution must be made by the (extended) due date of your return.
- If you're self-employed (1099), you can set up a retirement plan and make a contribution of up to 20 percent of your net profit. Again, this must be done by the (extended) due date of your return.
Most people know their income, but they may neglect to account for their deductions.
- For instance, even if you cannot deduct medical expenses on the federal level because of the IRS’ 7.5 percent income threshold, you may be able to do it for New Jersey, since its threshold is only 2 percent.
- Don’t forget education and child care credits. Credits reduce your tax liability dollar for dollar, whereas deductions reduce your taxable income.
- Consider itemizing deductions instead of taking the standard deduction. If you live in a high tax jurisdiction, your withholding taxes and any balances due paid on the prior year’s tax return may put you in a position to itemize this year.
- Most people contribute to charities more than they realize. It all adds up.
Ask For More Time:
- If you run out of time, you can file for a six month extension of time to file. However, be aware that it is NOT an extension of time to pay. If you think you will have a balance due when you eventually file your return, you must pay that amount with the extension.
Play It Safe:
- You cannot do your return by hand anymore. It is just too complex. Prepare it on one of the online services or hire a tax professional. The fee you pay them may be a small amount compared to what they may be able to save you in taxes.
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