Q. What are important things to do before April 15?
A. Here is a list of important things to do before April 15:
Pay the IRS and your state
Pay income taxes
You are expected to pay your balance due for 2013 — even if you put your tax return on extension. The extension is for additional time to file — not to pay!
Pay estimated taxes
It’s time to start paying up for your 2014 profits and earnings. There is a lot of confusion on how much needs to be paid, especially when your income is earned unevenly throughout the year. It's best for you to get your bookkeeping done for each quarter. Or you need to have a solid idea of your investment income and/or business profits. Of course, you can often get away with simply paying one-quarter of last year’s liability to avoid the underpayment penalty. This doesn’t work when your income has increased substantially. In that case you’ll have to run the numbers to avoid the penalties.
Pay financial institutions
IRA or Roth IRA contributions
If you want credit for contributions to individual retirement accounts for 2013, you must finish funding your total contributions by April 15. You must also finish characterizing and re-characterizing your Roth contributions by this time. If you want to avoid complicated moves back and forth between IRAs and Roth IRAs multiple times during the year because you misjudged your income level, it's best to contribute to IRA or Roth IRA after your tax is done but before April 15.
What if you don't have enough money for the aforementioned payments? See our next blog post.
A. Here is a list of important things to do before April 15:
Pay the IRS and your state
Pay income taxes
You are expected to pay your balance due for 2013 — even if you put your tax return on extension. The extension is for additional time to file — not to pay!
Pay estimated taxes
It’s time to start paying up for your 2014 profits and earnings. There is a lot of confusion on how much needs to be paid, especially when your income is earned unevenly throughout the year. It's best for you to get your bookkeeping done for each quarter. Or you need to have a solid idea of your investment income and/or business profits. Of course, you can often get away with simply paying one-quarter of last year’s liability to avoid the underpayment penalty. This doesn’t work when your income has increased substantially. In that case you’ll have to run the numbers to avoid the penalties.
Pay financial institutions
IRA or Roth IRA contributions
If you want credit for contributions to individual retirement accounts for 2013, you must finish funding your total contributions by April 15. You must also finish characterizing and re-characterizing your Roth contributions by this time. If you want to avoid complicated moves back and forth between IRAs and Roth IRAs multiple times during the year because you misjudged your income level, it's best to contribute to IRA or Roth IRA after your tax is done but before April 15.
What if you don't have enough money for the aforementioned payments? See our next blog post.
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